To A Crypto Speculator, From A Crypto Developer

Let’s talk about promises.

Dear Crypto Speculator,

I see that you have been spending your last few months living in the mad adrenaline rush of watching a little (theoretical) money turn in to a lot of (theoretical) money. I started writing this before the Great Freefall started. Now it would seem that you may be in the middle of an unfortunate turn: watching a lot of (theoretical) money potentially turn in to a lot less of (theoretical) money. You are on the bleeding edge. You can use buzzwords like ‘blockchain’, ‘disruptive’ and ‘crypto-anarchy’ with impunity, occasionally peppered with other more archaic words. I have something important to tell you: I understand you.

I’m not being sarcastic.

I understand the sweet taste of being an early adopter on the Next Big Thing. I understand watching your friends’ faces go from dismissal to disbelief. I understand that you successfully saw this nascent technology, understood somehow deep down that it is tremendously important, and have had the near nirvana of following your heart, and watch it multiply your investment by large, large numbers.

I congratulate you.

I’m writing in the middle of the Great Freefall, by the way. I have no idea of knowing what is causing it, nor how long it will last, nor how low it will go. I don’t think that should stop you from being congratulated.

You see, I come from a different side of this space. I haven’t thrown in so much my money so much as my mind and my time. You’re investing money in crypto. I’m investing in the program. I strive to develop the platforms that you will invest in. This gives me a different sort of look at what’s going on in this space, and I’d like to share a little bit of that with you. After all, we developers are very grateful to you. Your contributions have not only funded these systems, but have pushed them into the limelight. We want these platforms to be adopted, and you’ve brought us that much closer.

Any time I’ve talked with a speculator, I’ve asked about their strategy. Mind you, most of the ones I know do not have a background in finance. I don’t know if that’s the case with you or not. I’ve always had to confront a kind of feeling that we’re actually talking about two entirely different things — maybe there’s another thing called Bitcoin that I’m not aware of? (No, I don’t mean Bitcoin Cash. Nor Bitcoin Gold, Bitcoin Clashic, Bitcoin Lite, Bitcoin Platinum or any of those other Bitcoins.) The points we focus on are so different!

The only times I’ve seen statistical analysis are in professional pieces I’ve read online. They’re fascinating, and I urge you to try to find them.

I’ve talked with other developers about this sort of disconnect between developers and speculators. They’ve all agreed, some more cynically than others. In any event, it’s made me think, and I decided that I wanted to get in touch, maybe share an idea or two in the hope of meeting with you somewhere in the middle between these two worldviews. I hope we make each other smarter.

After all, we may be in the middle of the Great Freefall, but tomorrow is another day, at least if you have a streak of cryptostubbornness in you.

I’d like to start with an analogy. If someone invests in Coca-Cola, there’s something in that investment that says that the investor believes that Coke is a company that is capable of putting out a quality product. (Or, alternatively, has been and will be consistently capable of selling profitable products. I’m going to stick to the former to make for an easier read.) That’s a statement of faith in not just the product, but also that the company can pull it off.

If we’re going to go back to crypto, the market right now seems only to be investing in the idea of crypto itself. That would be like investing in Coke because you believe in soda pop. Not strictly wrong, but, well, not educated. Maybe Pepsico is a better investment? The true fizzy beverage connoisseur won’t settle for just throwing his money at fizz, but will investigate the promise of each soda beverage. This is the concept I’d like to coin: promise.

Different cryptos are promising different things. Certain cryptos have changed what their promise is, and some are under fierce debate. Please, crypto speculator, get to know what each crypto is promising. Some are striving to be a stored value, which means a safe way to store (usually large amounts of) money, like gold was once upon a time. (That’s the meaning of the buzzphrase ‘digital gold’.) Some want to create decentralized and uncensorable applications. Some want to grant the freedom to have and spend money anonymously. Others are focused on the speed that transactions are processed and set into (digital) stone. Others focus on effecting specific industries. Get to know what each crypto is promising.

After that, there’s one factor that I think is a natural outgrowth of this: risk. I don’t mean the market risk, you’re already better than me at predicting that in the short-term. I mean how likely it is that any particular crypto will keep its promises. If a particular crypto has a history of making mistakes that should have been avoided, can it be trusted to get off the ground? Well, maybe. But it’s riskier. If experienced voices in the community are wary of a consensus system, does that mean the system can’t work? No. It could. But it’s a risk.

(And if you don’t know what a consensus system is, please find out. I hear speculators analyzing which cryptos could be corrupt, mainly through what I can only call pseudo-political analysis. To each their own. But please, take note: if the consensus system has problems, those can make a crypto more corrupt and lopsided than pretty much any power politics. If the consensus system is off, anyone who understands the flaw can simply take over the whole system and do whatever they want with it.)

I’m not in the mood to take sides. I’ve hinted at specific coins plenty, but the truth is that in most cases the choice really belongs to you. I just want you to be able to make an educated decision.

In Conclusion

We could sum up many coins into the categories of:

1. Low promise, low risk

These are coins from platforms that aren’t trying to reinvent the wheel, or implement a theoretical technology, and have a good team behind them, which could mean a dedicated staff of experienced programmers.

2. High promise, medium risk

These are coins that are part of a platform trying (promising) to do something new, or are at a roadblock in their development that they’re trying to break out of. They may have low risk because they’ve put out competent research, or because the problem is quite so big, or because they’ve been very transparent, and have published their progress (and had it peer reviewed by the community).

3. High promise, high risk

These are coins belonging to a platform making big promises, but is still in development, or is advancing, but only with significant duress. Duress could mean major infighting, creating insecure cryptography, or a host of other things. What I would like to emphasize is that things are not necessarily a death knell. People can learn from their mistakes, and get stronger from experience. I would merely posit that they represent risk.

3a. Buzzword Overcompliance

I would also like to propose that someone come up with an algorithm which will automatically put a coin in the third category if they use too many buzzwords. In general, if a platform has a high density of words that are more or less technically meaningless to people already educated in the field, it should be categorized as a risky project. The truth can be explained without gibberish buzzwords. That being said, I’m well aware that the truth can sometimes be better sold using meaningless buzzwords, so again I’m just talking about risk. I’m not denouncing anybody, even if they broadcast a quantum-ready neural network inspired hyperbounding multi-dimensional next-gen sharding plasma field with evolutionary unbreakable self-healing consensus mechanisms. (That was very fun to write.)

So, dear friend, I hope that this helps you in your journeys in these uncharted territories. I’m sure will meet up again soon, because even in this wide expanse, it can be a small world. Until then, straight roads and good weather.