Building through the crypto winter

So I miserably failed in predicting what would happen in crypto-land in 2018. Don’t expect 2019 predictions from me this year. This is so bad it is embarrassing to even talk about it. But I felt it was the right thing to do and I wanted instead to share how I felt about building a crypto service during that period.

Tl;dr: it will be hard, but it feels great.

What I got kind of right

I did predict correctly that most ICOs would self-destruct by failing to deliver and overpromising and thank god it led us to not chose the ICO path for funding our company. The market crash has indeed revealed the obvious: many tech-entrepreneurs are not solid treasury managers too ( for good reasons ) As for those who have enough funds left, I am convinced their projects will die not from lack of cash but from lack of drive or momentum (which will be kind of unprecedented in tech).

I also predicted correctly that Square would become a major player in crypto (although crypto is not their first use case) and that Coinbase would enter the decentralized exchange space. I was also right on the exponential rise of hacks and scams. This has only accelerated and security still remains one of the biggest issues of the industry.

What I got wrong (big time)

But I was totally off on the macro trend: 2018 was the year of the crash and not the year of bulls. I did anticipate some strong corrections but followed by recoveries up to a ridiculous 50 k USD/ BTC (never ever take any financial advice from me!). And for context when I wrote this BTC was close to 20k USD (its spectacular peak)

This is what happens when you anticipate growth faster than the music can actually play

I see very little signs that this should change any time soon.

To be fair this macro trend is not just specific to crypto but to finance in general. The stock market has taken a serious hit this year too and it is far from over. Looking back it was easy to anticipate that music would stop at some point. But it is always easy to look back.

The insanity is maybe over but the consequences we’ll suffer are far from being completely visible: the first layoffs and shutdowns already known are just the beginning of a tsunami of bad of news to come. And this is yet without the regulators becoming more involved in the system. I anticipate many more layoffs, shutdowns, disguised talent acquisitions and mergers, legal actions, dirty stories to surface about how investors were defrauded, and who knows what else……

A cozy but cold winter for Crypto Builders

Winter, winter

The question I keep asking myself, and I am sure many other founders do too, is how to surf this upcoming crypto winter and find enough energy and drive to build something meaningful.

I will say this: it is not going to be easy. Crypto is now off the radar of most people including VCs; Most engineers who wanted to join a new promising sector for a flourishing career are turning to other verticals like AI, Autonomous cars, …. The news headlines do not help either: Several high profile journalists cover crypto to better burry it. Crypto is not sexy anymore. Many will say it is “dead”.

But is it?

I am “lucky” to have known a few tech winters in my life. It makes it easier to understand and digest the (hype) cycles and minimize the effects of a crashing sector in particular when you still believe in the fundamentals.

And I still very much do.

There is an obvious negative correlation between the value of the Crypto market (soon plummeting below a ridiculous 100bn USD) and the amount of energy invested in building things.

There is a blatant need for better financial infrastructures in both developed and undeveloped countries and innovation has never been stronger in fintech services (see Robinhood’s latest foray into the “banking” world)

There are still billions of people who do not have access to financial services and use phones as their only computing device. There are people who cannot get a bank account because of who they are or because they live under an oppressive regime.

There is still a very dense group of builders highly passionate and motivated with the right resources to make it happen.

There are more and more institutions investing in the field (yes, Fidelity I am looking at you) and even governments (like France) who are clearly making efforts into building a friendly environment for crypto builders.

The future of money is digital, mobile first and requires a level of trust that clearly does not exist today via centralized organizations. We see evidence of this in the amount of financial scandals blossoming, increasing bank fees, taxes we are bombarded with. Not to mention millennials who have a totally different relationship to ownership and money than older generations, a relationship based on easy access, convenience, instant gratification, snacking, aversion for institutions/formalism and always on support.

Recover by building

To recover our sanity, reminding ourselves of the fundamentals that brought us to crypto in the first place is necessary. If you run a crypto company: you have a duty to be honest with yourself, your team, your shareholders (token holders) and eventually users. The coming period (at least 2019) will be hard. It should be publicly acknowledged and not brushed under a rug as if nothing happened. And I believe the best medication is building.

2019 will be a wintery cold year but one in which thousands of people will keep on building *and* shipping foundations with a better focus on what matters. If you are looking for a thermometer of the industry don’t check Coinmarketcap; check Github repositories, commits, and forks.

If we could all remove portfolio trackers from our phones, spend less time in long and violent Twitter threads and more time into building stuff that matters, the industry will be in better shape. We, the builders, need to be the signal in a world of noise.

The future of money will be decentralized, regulated and digital first. “Regulated” is the keyword here. No great innovation without better clarity on rules. This is by far (after the very real possibility of a systemic financial crash) my biggest area of worry: I hope the authorities will not be too slow to put in place strong clarifying rules about custody, KYC, security qualifications, ICOs/STOs. It is like trying to compose a great symphony without knowing the rules of harmony. No Beethoven, No Schubert, No Mahler, No Brahms without it.

Building in a regulated environment is the only way to build right.

The crypto industry will then deliver better services, better user experiences, better security, better bridges with the real world. This will probably take a decade. If you are a sprinter, go find another race. This is for marathoners. But I do believe it will be worth it and intend to spend winter by the fire.