My name is Derek, and I’m crypto-curious. That means that I’ve lightly followed the progress of crypto, and believe that it will coexist with FIAT, but still haven’t invested. 2022, however, is the year that my curiosity turns to action. You probably know many people just like me. My type has traditional investments with a traditional financial advisor or bank. We have a high-risk investment allotment for emerging markets or individual OTC picks (what my wife calls my “play-investing money”), but crypto hasn’t made the cut. I’ve never been against it. If anything, I’ve been waiting for its maturity. While you can’t spot us crypto-curious by sight, you can recognize our call, “I thought about investing but…” never did due to any number of reasons. Now, 13 years after the first Bitcoin, the adoption of DeFi investments is well into its early adoption phase, and I’m finally going to join the fray. Which begs the question, why now? Well, because I’ve taken the time to research the recent trends in DeFi, which is massive, and means I have much more to learn. As far as I can tell, we are on the precipice of an early majority phase (~3X increase from today) that will be short-lived due to a hyper-adoption phase that will take us right through to the late majority and laggards. Bold words, I know. But, I’ll use the following distinct categories to break down why I see big changes afoot: socio-economic environment; advances in blockchain technology; blockchain accessibility; and utility beyond cryptocurrency.
My path to crypto-curiosity started at university. By the time I could finally register for freshman writing courses (late on tuition payments), the legal writing course was the only option. As the late, great Bob Ross would say, it was a “happy mistake.” I loved it. I switched from my math major to political science and business. I found the relationship between laws, public policies, and private business to be fascinating. When I first heard about blockchain, I was just 2 years into my first career-path job. It was still a low-paying, entry-level, technical sales position at a small start-up in the heat of the Great Recession. From a technological standpoint, the benefit was obvious. Blockchain is simply the most trustworthy way humans have concocted to make transactions, period. And the first non-dark web use case was for a digital currency, Bitcoin. So, why didn’t I buy BTC back when it was pennies? Enter excuse number one: I could barely afford my student loan payments, rent, food, etc., let alone throw money at a hypothetical, fringe currency.
However, my first thought was that an accepted, trusted, and stable cryptocurrency would be world-changing. Developing countries often struggle with corruption. Such corruption (et al) is often related to money (see various countries in Latin America and Africa with inflation issues). Early in my career, I contracted with state agencies in developing nations, and it was tough to mitigate the volatility of their currency in the context of a subscription billing model. So, when I heard about Bitcoin, this is where I immediately saw potential.
My second thought was that no developed sovereignty would surrender its fiscal policy control without a fight. I was not confident in how it would be deployed/used in developed countries beyond a way to invest in the developing world. All state power inevitably has to do with control of fiscal policy–money is power. It wasn’t until I read The Bitcoin Standard that using a crypto-currency for central banking made sense for developed nations, as an intermediary currency rather than something to buy consumable products.
Let’s jump to now. It is 2022, and much has changed since 2019, let alone 2000 or 1980. The short of it is this: there has been a growing distrust of central banking for decades. This distrust is not unique to the United States, which has seen a steady decline in its middle class since the late 1980s; it’s global. In the last major recessions, we’ve seen losses socialized while profits are privatized, and people have taken note. Even worse, individual home buyers are being squeezed out of real estate markets by cash, institutional buyers. Wages are down, costs of living are up, and the idea that one can work honestly to better their situation is all but laughable. The impact of the 2019 pandemic took a bad-but-manageable inflationary situation and made it worse. People realize that socioeconomic mobility is getting worse, not better, and are looking for a place to protect their financial futures.
As Medigest CEO Filippo de Jorio said “we are seeing an anthropological shift.” The current largest demographic (Millennials) have been raised with digital currencies (gaming) and are quite comfortable with the concept. If we follow big money, just about every major financial house in the world is diversifying into crypto for themselves as well as scrambling to figure out how to provide such DeFi instruments to their clients while satisfying regulations. Those thinking crypto will go to net-zero aren’t paying attention. Even in the midst of major technical snafus like the UST crash, people are looking at crypto as either a way to YOLO as a get-rich-quick option or as a responsible, long-term strategy. As if all this change wasn’t enough, Gen Z finally stopped eating Tide Pods and is rallying behind digital assets just as fervently as their preceding Millennial brethren. Change is coming. But with only ~13% of Americans invested in crypto, compared to 59% invested in traditional assets, what’s holding the rest back? Like with most new technology adoption, it’s a combination of technology maturity, ease of access, and value.
All new tech goes through maturity cycles. We build something. Limits are found. Buttons are broken. New, better tech emerges. Repeat. If you’ve been on the sidelines, it may not be apparent that there have been massive improvements in underlying blockchain technology. For most, it seems as if the only change is the weekly pump n’ dump sweeping headlines, some new Ponzi-like coin, or digital art theft. But there’s been much, much more.
First, we had Bitcoin. The way in which the blockchain works for Bitcoin is quite limited in the total number of transactions that can occur over time — it’s simply not built to be a retail currency that five billion people are using on a daily basis.
In 2014, the virtual machine (VM)-based blockchain was born. Ethereum, being the major example, created immense flexibility to create things like smart contracts. This is useful for simple use-cases but runs into limitations with more complex financial instrument design, among other limitations. You can read more about that here.
Today, we have application-specific blockchains. Now we have the ability to easily create directly linked but sovereign blockchains for specific use cases. Want a blockchain for your organization to fundraise, operate and deliver an employee stock option program? Done. Essentially, through the Cosmos Ecosystem, there is a global network of interconnected but sovereign blockchains that allows for true innovation. With the technology evolving to satisfy the demands of larger market segments and the chain sovereignty to entertain regulators, values beyond cryptocurrencies are coming to fruition.
One of the big discussions around cryptocurrencies I’ve heard is “why wouldn’t I just get into Forex trading if all you can do is buy and sell coins? It seems like gambling to me.” But, the crypto-curious are aware of more than just cryptocurrencies. After all, who hasn’t seen a headline about some bored ape NFT stolen from Seth Green? But NFTs for digital art seems quite limited to many and worthless to most. So what other uses are there for blockchain beyond digital currencies?
Good question. This summer, I came across one of the most intriguing use cases for NFTs from a company called Smart Labs. You can read more about it here. They’ve come up with a way to create a bio-marker NFT to alleviate the time and cost required to prove the authenticity of ownership for blue-chip art and ancient artifacts. My mind was blown. They figured out how to give physical artifacts DNA, and how to tie that DNA to an NFT that can be used by auction houses, collectors, and museums to combat counterfeits. This is the type of utility I’ve been waiting to see.
Other use cases include the complete transformation of fundraising. Imagine that each new start-up now creates its own blockchain. The coins on the chain are then used to facilitate investment rounds as well as employee stock programs. This creates an immense amount of flexibility and transparency when it comes to such programs and could widely change the dynamics of venture capital as we know it today.
On top of these potential uses, we will see a future wherein any transaction of information, goods, or services is done via some form of blockchain. The industrial applications of this technology are just now going beyond the drawing room. Without a doubt, more technological maturity will occur as organizations push the boundaries of existing technology. Improvements in tech will continue to develop with the growing ease of development for organizations to start, test, and validate their theories thanks to ecosystems like Cosmos. The wave of blockchain-based utility is growing, but none of that matters if people can’t or won’t use or invest in it.
I started this article by saying that my status has changed due to taking the time to educate myself about the market. It’s true. I took the time. And that time was the biggest reason I remained crypto-curious for so long. Investing in crypto simply did not fit into my workflow. When it comes to adopting new technology, it’s extremely difficult to convince large swathes of people to change their behavior. It’s far more effective to fit into what they already do, or simplify current behaviors.
As with any market adoption cycle, we need entry barriers to be low. With blockchain, we have two sides of the entry coin to consider:
The technology advances, like with the Cosmos SDK, have removed significant portions of complexity from firms looking to develop new use cases on their own blockchain. The latter is more about adoption and is still coming together, which is ultimately why we crypto-curious aren’t already crypto-investors. Investing in crypto requires time and bespoke steps to do so. It’s not so much the complexity of these steps as it is their existence. We already have financial lives and workflows, and many people just don’t want to add more steps.
If I’m being completely honest, the biggest blocker for me personally, was getting a wallet. No joke. I searched “crypto wallet comparison” at least 10 times over the last 13 years, and the lists I saw varied so greatly that I decided to “come back to this later” each time. I wasn’t prepared for such extensive research, I just wanted to invest in something with my “play money” budget like I do every week. I already have workflows, reading, relationships, and accounts all set up for traditional investing, and if I could’ve simply done the same as investing in a new vertical farming penny stock, I would have.
Not just that, but the education. If I have a question about a stock, I can send an email or ring my advisor and get some good information I might not have access to myself. But for crypto? Nothing. My team can’t support me and I don’t want to find another team. It seemed that I would have to wait until my government figured out how they wanted to regulate this new asset class before I’d have such support. Or so I thought.
In early 2021, a colleague of mine introduced me to a crypto project he was working on, but I didn’t really have the time to engage. At the time, I didn’t really understand a whole lot about what he was doing, but I knew he was a smart, honest person. I trusted that it wasn’t some ponzi-pump-n-dump scheme like I had seen in headlines before. So, in early 2022, I decided to get involved and it became apparent that I had much to learn and even more to gain.
The project is RebusChain, and its mission is to build the first regulated DeFi platform that enables TradFi asset managers and advisors to carry DeFi instruments for their customers. If you’re like me and like to find investments that have real utility, look no further–they’re taking DeFi mainstream. From the perspective of DeFi go-to-market teams, that increases the total addressable market (TAM) by 4–6X if you support the Rebus chain. For me and other individuals, it reduces the time necessary to invest in DeFi and includes the support of the TradFi teams that I count on for sound advice on solid investments, not community-driven nonsense.
Not only is the project on track for a Q1 2023 launch of its financial products, but its utility coin is also about to be live on select exchanges, and is supported by partnerships with established financial institutions managing over $6 billion in assets globally. That means that even with a modest .5–1% diversification in DeFi instruments through the Rebus Investment Platform, that’s a huge amount of growth. And it’s only the beginning.
After 13 years, I finally acquired a wallet. I finally put some crypto assets into it. While I haven’t abandoned my traditional investments nor my traditional play money (vertical farming ftw), I have begun what is sure to be a long-standing DeFi investment portfolio and I hope my fellow crypto curious will join me. If not now, then I’m sure you will once your asset manager can oblige your curiosity via Rebus.