It’s a Done Deal: The Inevitability of Crypto

Now, I will concede that adding cryptocurrencies to life’s short list of assurances does seem overly exuberant. Pollyannaish, maybe. After all, rambunctious crypto bull markets have fallen victim to violent bear markets far more vicious than those on Wall Street. And the crypto industry overall has been marred by scam and scandal. Meanwhile, every other Tuesday, it seems, the U.S. Securities and Exchange Commission (SEC) launches yet another broadside against crypto, while Luddites in Congress rant and rave and threaten stifling legislation to regulate a technology they clearly fear and most certainly do not grasp.

As real as all of that is, however, the fact is that it’s all so much noise. A lot of sound and fury signifying exactly bupkis. I won’t even call it a tempest in a teacup. It’s an echo reverberating in a thimble — heard only by those who want to hear it, and who want to hide from it.

For the rest of us — those who’ve been active in crypto since last decade — we know one truth to be paramount amid all the current sturm-und-drang: crypto is the most inevitable trade and technology of the last 30 years.

In short: crypto is a done deal.

All that remains at this point is navigating the necessary regulatory shoals and onboarding the next five billion consumers. Big as those challenges are, they are just that: challenges. They are not, by any stretch, the end of the road for crypto.

Why can I so confidently assert that when the SEC seems so determined to destroy crypto?

One word: efficiency.

The business of running business is all about efficiency. The faster, easier, and less costly your business, the fatter your profits.

Business lives for fatter profits.

Why did the internet succeed? It certainly wasn’t because consumers were clamoring for a faster way to share cat pictures with friends. It was because business leaders and C-suite executives saw myriad ways the technology could reduce costs and speed up everything from customer service to delivery to supply-chain management. That’s precisely where the internet shone. It’s why Amazon succeeded.

And it’s precisely why crypto and the blockchain technology upon which it’s built will succeed.

Right now, wiring USD 1 million between Europe and the USA takes a couple days to complete and USD 4,000 to USD 5,000 in fees. With crypto, the same sum moves between the two continents in seconds, literally, and costs fractions of a penny.

Right now, hoping against piracy in the luxury goods market is wing-and-a-prayer stuff. Manufacturers have no way to combat the theft effectively, which means consumers have no way of truly knowing if what they’re buying is Louis Vuitton or Lewy Vutton. With crypto, manufacturers and consumers can track every step of the manufacturing and transportation process to know that a particular USD 3,500 Louis Vuitton OnTheGo bag was created from a particular piece of leather sourced from particular leather workshop in Spain. Technically, you could track back to the individual cow from which the leather originated.

To me and you, all of that might sound rather unimportant.

But to a business moving hundreds of millions of dollars around the world annually, saving tens and hundreds of thousands of dollars is significant. Authenticating goods in an unhackable way means thwarting pirates who annually steal more than USD 1 trillion from corporate pocketbooks.

And that’s why crypto — at a mainstream, every day, utilitarian level — is inevitable. Crypto allows businesses to save scads of money.

Equally important, it opens up fundamentally new venues for reaching consumers and their pocketbooks.

Take Nike, for instance. Since December 2021, the athletic-apparel giant has racked up USD 185 million in sales of non-fungible tokens, or NFTs, the digital art cryptocurrency most commonly associated with the Bored Ape Yacht Club and CryptoPunks collections. In Nike’s case, the company is selling digital sneakers, which sounds altogether goofy. Who needs digital sneakers?

Well, avatars need digital sneakers to amble about in style in the digital worlds — the metaverses — in which they roam.

Through NFTs, younger consumers are dressing their digital Mini-Mes in the same kind of branded swag they don in real life. And they’re spending real dollars doing so. Indeed, Gucci sold a digital handbag for USD 4,115, a price higher than the real-life version of that same bag.

But here’s where crypto tech ventures into the truly revolutionary in terms of corporate profits. Nike has also earned more than USD 93 million simply from royalties. Every time a Nike NFT trades, Nike collects 10% of the sale as the NFT’s creator. That’s ongoing free money with virtually no offsetting expense. Plus, as the value of Nike NFTs rises, the amount of royalty income rises, too. Such an arrangement has never existed. Now that it does, corporations have an entirely new income stream to pursue.

Such examples tell you why crypto is inevitable. Business want crypto because crypto is great for business!

All of which brings me to my overarching point, buried here at the bottom. The inevitability of crypto means that crypto today, in the wake of a bear market, is a replay of 1999 to 2001 — in other words, a fantastic opportunity to buy when blood stains the streets because we’re not likely to ever see these prices again.

You might remember the rise of Internet 1.0 and the subsequent dot-com bust of 1999.

Back then, I was writing for The Wall Street Journal’s Money & Investing section, so I had a front-row seat for the internet euphoria. I was talking to fund managers and dot-com founders and investors throughout the rise of the internet. It was the Next Great Thing.

And then it wasn’t.

The bust came.

Wealth evaporated.

Anger and animosity set in.

The internet, the media exclaimed, was never the Next Great Thing. It was, as London’s Daily Mail labeled it in a 2000 headline, a “passing fad”.

Amazon, one of the darlings of the dot-com era, saw its share price plunge more than 93% between April 1999 and September 2001.

Turns out, however, those who knew all along that the internet was going to change the world were right. Their assurances were solid gold. The internet, when it emerged in the 1990s, was the most inevitable trade and technology to date.

And look where we are today. We carry the internet in our pocket and live our lives almost entirely online.

That is the analog to crypto today.

Crypto, from the moment Bitcoin was born in 2009, was always going to become the most inevitable trade. And, just like early internet hype, there was always going to be a boom and bust.

We had the boom.

We’ve had the bust.

Now we’re in the stage where today’s crypto companies are building the future — the next Amazon, the next Google, eBay, Uber, take your pick. Those who recognize that — who clearly see the analog to the internet, circa 1999 — are the ones who are going to reap the rewards.

Oh, and by the way, Amazon … it’s up 47,000% since its dot-com bottom.