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2018: A Cryptocurrency Odyssey

Rayne Steinberg
Jun 8, 2018

I recently watched Stanley Kubrick’s brilliant 2001: A Space Odyssey (1968)in 70 mm at the Arclight Cinerama Dome in Hollywood. It was the first time I saw this classic in a theater and the first time I had been to this historic venue. Both the movie and space helped me think about my own journey in cryptocurrency, from its beginning to where it is headed. There are very interesting parallels between the crypto space and the odyssey from the dawn of man and the appearance of the mysterious technological monolith to the transcendence of man from his physical form.

My Dawn of Crypto

Like Kubrick’s apes at the beginning of history, I was completely unaware of the technology and innovation that was crypto, and my monolith was a blog post that alerted me to its presence.

I can still remember the first day I heard about Bitcoin. I was still working at WisdomTree late in the year 2011. Like everyone else in the financial services industry, we were dealing with the aftermath of the great financial crisis and I came across an interesting post on Zero Hedge, Do We Need Banks, Or Can We Cut Out the Middleman?. It made a very strong case for the damage central banks were doing to the economy and the corrosive effect they were having on our politics and society. This was not a particularly original idea, but what was unusual about this piece is that it actually offered a solution: Bitcoin.

Programmatic, decentralized money. Immune to the outside human pressures that banks and other centers of financial trust are susceptible to. How brilliant and prescient. We were right in the middle of the greatest monetary experiment ever launched, the various QE programs from the Fed. It was unclear how it was all going to turn out, but it was clear there was definitely some room for improvement in how the system worked.

I promptly decided to buy my first Bitcoins and the difficulty and confusion surrounding that transaction is enough for a lengthy story of its own. After considerable effort, I managed it and promptly forgot about Bitcoin for some time. Fast forward to the spring of 2013 and Bitcoin was making news again with an exponential rise, so I decided to liquidate my position. After it corrected rather violently, I congratulated myself for my foresight. When I look back from our current prices, I do not feel quite so clever. I realized that I, like our primate ancestors, really had no idea about the implications of this new technology.

Crypto, we have a problem…

Like the middle chapter, and often most remembered section of 2001, humans’ interaction with new technology in the form of the HAL 9000 and its terrifying conclusions were mirrored in cryptos development. Technological advance is not always straightforward and can be fraught with danger and unanticipated consequences.

I only returned to cryptocurrencies and blockchain in late 2016 as I was involved in industries that required alternative payment systems. It was amazing to see how the industry had exploded, and how the number of protocols offered had expanded. No longer the currency of anarchism and secrecy, crypto was going mainstream. 2017 saw the full realization of the ICO and both good and bad projects received massive funding on little more than a whitepaper.

The space, and the technology, was going through the growing pains of any new thing, but at a speed and trajectory that can only really be explained by the intersection of tech, financial services and an environment where asset bubbles seem to be looming everywhere. The question was, how to access this space and who to work with?

This led to meeting lots of interesting characters, crypto events in exotic locals and lots of frustrating false starts.The fact that became clear was that the majority of people in crypto and the systems and tools themselves were not suited for the launching of financial service products. Despite blockchain and cryptocurrencies offering decentralized trust, how does the uninitiated, or even the crypto expert, sort the wheat from the chaff? How do you tell the good actors from bad? There really was this feeling of technology run amok and us not being able to grasp the unintended consequences of our actions.

The Transcendence of Blockchain

In its final, allegorical and thought provoking close, Space Odyssey ends in a surreal post time and space reality with man transcending his earthly bonds. Crypto’s trajectory may be similar in that it can be world changing, but the form that it takes is anyone’s guess and is only limited by our own creativity.

I feel there is an opportunity for people that are committed to the highest level of compliance and ethics to help outsiders navigate this sector. Look for people and teams that have a history of ethical practices and a track record of delivering. What is interesting about blockchain is that it is not really clear the exact direction it is going, but what is clear is that it will massively disrupt industries that rely on centralized trust and the financial service industry in particular.

As we seem to be nearing the culmination of events recently kicked off by the financial crisis of 2008, but that find their roots in the original “mountain of debt” (See Niaill Ferguson’s excellent The Ascent of Money: A Financial History of the World), the need for decentralized programmatic centers of trust has never been more obvious. The public at large in sensing this feeling in their bones, and is therefore generating much of the interest in Bitcoin specifically, and cryptos and blockchain more generally. This brings me back to that enlightening Zero Hedge piece of 2011.

The interestingly pseudonymed blogger George Washington closes with:

If we cut out the giant banks as financial middleman, we might have a much more efficient economy, pay less in interest, fees and penalties, and restore a functioning political system and the rule of law.
Maybe we can build a functioning economy from the ground up.

Source

Like Kubrick’s Dave Bowman, we are about to venture into unknown and uncharted territory in the blockchain space. The form it takes is unclear, but what is clear is that it will be transformative and disruptive in a fundamental and far reaching way.

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