So you’ve heard about crypto, but you don’t understand why it’s important, why you should care, or why it matters.
Is it tulip mania all over again? Is it just one big ponzi scheme? Or is there something more to this so called magic internet money?
You’ve probably spent hours watching Youtube videos and reading articles about crypto, you’ve even read the Bitcoin whitepaper, but no matter how hard you try you can’t seem to wrap your head around why crypto is valuable. Staring at charts doesn’t do any good, either, other than to fill you with a sense of fear or greed depending on the hour.
Well guess what, I was you five years ago. Exactly five years ago today, July 16, 2017, I finally pressed the buy button on my Coinbase app and have been falling down the rabbit hole ever since.
So what have I learned over the course of these 1,826 days? More than you could possibly imagine. But I won’t bore you with the details of all the ups and downs of my journey. Nor am I here to give you financial advice, or to tell you what projects to invest in. What I am happy to do is share some of the insights I’ve gleaned for myself so you might benefit from my experience.
Perhaps the most important thing you can do is to actually try using crypto. And I’m not talking about depositing or withdrawing coins from a centralized exchange. I’m talking about sending it peer-to-peer, directly on chain. Then you can verify the transaction on any blockchain explorer so you can understand how a transaction works. It will reveal to you how private or public a cryptocurrency transaction really is, and how someone can track the movements of coins from one address to another.
Perhaps the most important fundamental aspect of crypto I’ve learned is the fact that it doesn’t rely on any central authorities or financial institutions to work. This is what is meant by crypto being censorship resistant. No one can censor your transactions the way Paypal or Venmo can. A proper cryptocurrency shouldn’t need centralized exchanges in order to process transactions. Because while governments can easily shut down Coinbase or Binance in any given country, they will have a much harder time shutting down a legitimate cryptocurrency network. This is what gives crypto its power. It’s what they mean when they say it’s permissionless. Because you don’t need to ask anyone’s permission to send any amount of value, to anyone, anywhere in the world. What you do with your crypto is entirely up to you. You can just as easily send crypto to someone in Ukraine as you can to someone in Utah. Maybe that doesn’t sound that exciting or transformative, which is why I recommend actually trying it for yourself. Like someone describing a magic trick isn’t nearly as effective as experiencing the magic trick for yourself, someone telling you what crypto is won’t be as effective as actually using crypto on your own.
Finally, and perhaps most important of all, is what crypto has taught me about the importance of economic freedom. Saying the world has changed a lot in the past five years would be an understatement to say the least. Inflation is running rampant everywhere. The value of our dollars, euros, and won continue to drop with no end in sight. Food and energy prices are soaring as governments around the world try to scramble for solutions. But they are the ones who created these problems, so why should you have any confidence they are going to be the ones to fix them? Meanwhile, they are also the same people trying to regulate and destroy the innovation that cryptocurrencies represent. You’ve been asking yourself what makes crypto valuable? It’s the fact that it can’t easily be regulated or destroyed. It requires no higher authority to function, and anyone can use it without having to ask for anyone’s permission.
It’s becoming harder to figure out how best to protect your money. We’ve recently witnessed more and more citizens around the world getting cut off from their personal finances. Whether it’s the Canadian truckers who had their bank accounts frozen for protesting the vaccine mandates, the people in rural China who’ve had their assets frozen through no fault of their own since April, or the Lebanese citizens who haven’t been able to withdraw their funds since 2019, it’s becoming increasingly obvious that things are getting worse, not better. By relying on these institutions to store your wealth, you put yourself at the mercy of other human beings who may not always have your best interest in mind. You might think this could never happen to you. You tell yourself you live in a first world country, a democratic republic, and you never break the law. But what if those laws change and become something you no longer agree with? What will you do then?
The value proposition that crypto offers me is the ability to opt out of a system that can take away my freedom at any moment for a system that can’t. While they might be able to shut down my bank account, I can have peace of mind knowing that my hardware wallets will be there ready for me to access at any time. This is why using crypto through custodial exchanges like Celsius, Voyager, or Coinflex are no better, because by giving them custody of your coins, you remain at their mercy.
While I understand not everyone is comfortable holding their own private keys, wouldn’t you rather have that as option than not? And sure the government could knock on my door tomorrow and try to forcefully confiscate my crypto, but at least that will be much harder to do than simply calling my bank and having them freeze my accounts. The advent of central bank digital currencies will only make it worse because the state won’t even have to call a bank to do their dirty work since they can just do it themselves.
Crypto is about enabling people to not only have the freedom to control their own money, but the right to exchange value with one another. Imagine doing something for someone in exchange for their gratitude. Now imagine doing something for someone in exchange for crypto. Why is that different? Why should governments restrict us from being able to accept whatever we want in exchange for our labor?
While crypto may still be a developing industry that has so far been used mainly for speculation, I hope to see a future where crypto gives us not only the freedom to take custody of our funds, but also to create new businesses and ventures without having to deal with financial institutions, local governments, or anyone else who tries to take their cut without providing value in return. Crypto offers us the ability to remove the middlemen, the regulators, and those who seek to stop innovation. That is the value proposition crypto offers. Now whether or not it will succeed all depends on if we want to let others decide our fate, or if we can reach consensus that the freedom to always act in our own best interests is something worth fighting for.