Who will protect [us] from the cold?

My journey into the
world of Web3 and cryptocurrency

The world of cryptocurrency has slowly but surely taken a firm grip on my attention. I started by just peering over the edge, reading some articles about it. Soon after, I fell headfirst into the rabbit hole, and I’ve spent the last six months trying to climb my way out with NFT purchases, DAO funding, and a host of other projects.

This isn’t another cryptocurrency primer. There are plenty of people smarter than me who’ve provided that (here or here, for example). I want to tell you a little bit about my own journey to help bring the space to life. Here’s what I will be covering:

Two stories about making and losing money in the crypto world
(and my mixed feelings with each)
The areas that most excite and scare me about crypto
What’s next for me in Web3?
A cautionary tale

Note: This is the blind leading the blind here. I've been trying to wrap my head around this space for months, have made every mistake that you could make as a novice explorer. Yet, even after all that, I’m still head over heels, fully enthralled with the possibilities. None of this is investment advice. This is for informational purposes only. Actually, this is really just a way for me to document my own journey.

Part 1. Making and losing money in the crypto world

First story is about investing in the Ethereum ecosystem.

First, it's Ethereum. No, not Bitcoin. I still, to be honest, don't really get the appeal of Bitcoin. It's this form of currency replacement that can be traded on the blockchain, but there's not much that can be done with it. No matter how much I hear about it as a replacement for gold, I just don’t get it. I’ve never been interested in investing in gold, either.

Ethereum, from the day I started reading about it, I've been so bullish about the possibilities.

*Not Boring, my introduction to the world of crypto*

A network that doesn't just serve as a digital currency, but also as a platform where decentralized applications could be built and smart contracts could be enforced.

OK, what the fuck does that mean?

I'm still not sure. But I’ve been trying to find out. I learned about DAOs, or decentralized autonomous organizations - these headless companies with radical transparency and governance. Greg Kamstra, the CEO of Riverdog that I talked to about employee ROI - he’s been one of the people in my life providing me crypto red pills. Here's a snippet of a conversation with him trying to understand the power of DAOs with one of his favorite examples - MakerDAO.

Greg wasn’t alone in touting this project, and cool things like MakerDAO seemed to be popping up every other day. Some of the smartest people around me were all obsessing over this space. I started figuring out how to get in. I started simple, putting some money in BlockFi, earning great interest rates while investing in cryptocurrencies. Then, I dipped my toes in a little deeper, setting up a Coinbase account so I could buy MakerDAO and other coins.

I bought these coins as long-term investments, believing the next decade or two was going to see some major activity in this space and a ton of value being created. I'm someone who doesn't like to look at my investments much. I'm not a day trader. I'm a Vanguard index fund, check your portfolio once a year at tax time kind of guy.

What could possibly go wrong?

Funny you should ask. Well, at first, everything was going up. It was brilliant. I was brilliant. I was checking my portfolio constantly, putting more money in. More of my conversations with anyone who would listen became about crypto.

In fact, one of those people (a random acquaintance) started telling me how he was making millions on Dogecoin, and he was calling it “doggy coin”. Which, for those of you who don’t know, was a clear sign of complete incompetence. Dogecoin is essentially what the whole GameStop fiasco was for crypto, a joke that lasted so long that no one knew if it was a joke anymore. Anyways, this guy talking to me had got in, rode the wave, and got out up more than 3 million dollars before Elon appeared on SNL and Doge-mania ended. Let me repeat that. 3 million dollars up!

I suddenly felt a strange feeling that I’d never really felt about investing before. It was jealousy. I was jealous that I was only making thousands. I wasn't jealous of Doge, but the entire crypto market was booming. I was jealous that I didn't have as much strength in my clearly superior convictions. I tried to figure out ways to put more money to work.

This story could have taken a bad turn, but luckily for me, just as my jealousy and greed were ramping up and I was looking for ways to take out a second mortgage to fund my investments, the crypto market started crashing before I could execute.

It was a sorely needed bucket of cold water. The only thing that had saved me from losing more was that I didn’t have access to more money to invest in crypto at the time. When I last checked at the beginning of August, I had lost nearly $7,000 in total in my crypto portfolio, but I'm so thankful. You know why? Remember that friend who made $3m on Dogecoin?! I caught up with him recently, and he sounded depressed as he told me how he was now down 2 million dollars. Not $2m of his $3m winnings. He's lost $2m even with the $3m he won on Doge. How? He went so hard into all his crypto bets that when they went south, he didn't have any more money to put in. He just had to watch as 60% of his portfolio disappeared and hold on for dear life hoping it would recover. Luckily, things are recovering, but when I heard that, I couldn't help but feel thankful that I hadn't had the time or money to dig myself that deep a hole.

This isn’t the best crypto sales pitch so far. Maybe my next story will be better.

*The Currency - 9549. Protect from the cold. Damien Hirst*

Story 2 - When I said I fell in love with the possibilities of crypto, I didn't just want to invest in the space. I wanted to experience the space. Participate. Understand what cryptocurrency actually felt like as a tool.

Because I’m technologically illiterate, it took me a long time, but I finally figured out how to get Metamask and actually transact with cryptocurrency. I learned how to 'stake' tokens, though I still don't know what that actually means. I learned how to play Axie Infinity, a game that requires you to purchase NFTs to become your own little Pokemon trainer.

Wait, I’m moving too fast even for myself. NFTs, or non-fungible tokens. NFTs are basically the digital equivalent to sports cards, artwork, or other physical collectibles.

To be honest, my first thought was this seems stupid. Artificially-imposed scarcity? Can't I just copy the file of whatever the art NFT is? Then, I realized that most of our thoughts on scarcity for collectibles are artificial. You can reproduce a lot of great artwork in the physical realm with a good printer or even a good artist, but they won't be worth a fraction of the original.

Still, I didn't understand the hype around NFTs, but the energy felt so captivating. It reminded me of being in love with collecting hockey cards as a kid. (Which, by the way, was a perfect reminder to myself to exercise caution. The thousands I spent on hockey cards could have made me a lot of money if I had picked basketball or baseball cards instead. Instead, I ended up decorating my office with a bunch of hockey cards that I couldn't pay to get rid of. So, I knew the love of collectibles but also the inherent risk if you think of it as an investment.)

Anyways, I watched the NFT space from the sidelines for a while until I heard about the perfect way in. My buddy Dan Heyman, who had been in the Ethereum space since our time together in business school, was starting a new NFT ecosystem called Palm. He told me that his company was working with Damien Hirst, a contemporary artist so famous even I had heard of him.

My interest was piqued, so I looked up the project, called The Currency. Watch this video to get some background on what it was about.

10,000 pieces of spot painting artwork that seem frankly like my 5 year old could have made them. You have a year to decide if you want the digital NFT version or the physical artwork. Whatever you decide, after a year, the other is deleted permanently.

It was a massive social experiment that I just loved. And a friend was involved? And it's on a more eco-friendly Ethereum ecosystem? It sounded like the perfect entry point.

I applied to buy one of the 10,000 pieces of art and got the chance to. $2,000. Not a small sum for a piece of artwork. If you do the math, it’s $20m for the set of 10,000, or more than the $19m that Damien Hirst's most expensive piece of art went for at auction. So it's not like he's donating these pieces through a lottery. He's fractionalizing the ownership of the work into 10,000 instead of 1.

To give you a sense, I've probably spent a total of $100 on art in my entire life. I'm not exactly what you would describe as a person with refined taste. But this was the chance to be a part of something cool. A ticket to Charlie's chocolate factory. A part of a big social experiment. I didn't hesitate.

(I also felt confident the value would go up over the next year. Much like the GameStop investing experience, the ride would definitely go up even if it eventually crashed. I felt confident I would be smart enough to get out when the time was right.)

Again, for my technologically illiterate dumbass, it took me entirely too long to figure it out.

But I got it. This piece. 9549. Protect from the cold.

It felt so weird looking at it. Looking at all its precise measurements. Realizing it was mine. I wanted to see - what did the world think of my piece? I knew there was a marketplace for reselling. I didn't want to sell it at all. I knew I had a year, but I wanted to understand more about the social experimenting happening with this ‘currency’. I looked at the marketplace and saw that many of the pieces were on sale for $3,000 - $4,000, a nice markup from the $2,000 people had spent. Not bad for a couple days work.

But I didn't want to sell. So I priced it at $9,549, more to just experience the process of putting it up for sale.

Next thing you know, over the next few days, offers start coming in. $4,500. $5,200. $7,700. $8,200. $6,800. It felt crazy. Here I was. Less than a week in. And people were trying to buy my piece of art for what felt like insane amounts of money. These numbers didn't make sense. If each of these pieces was worth $8,000, that made The Currency collection worth $80m?!?! Like I said, Hirst's most expensive piece sold at auction was $19m. And 10,000 pieces shouldn't add to the scarcity, it should detract from it, right? I started to think about how fractional ownership works and how that might actually increase the value of the collective. I was obsessed, reading everything I could in chat rooms devoted to the project to try to understand what was going on.

One night, in bed on my computer, I looked over at my wife, and I showed her my computer screen. I showed her the piece of art and the following conversation ensued:

Me: Do you like it?
My wife: uhh…not really?!
Me: Well, I bought it. For $2,000.
My wife: umm…
(Note: I have a very understanding wife, but this was deliberately pushing my luck.)
Me: Before you freak out, someone’s offering me $8,000 for it right now.
My wife: For that? You should definitely sell it.
Me: I’m not selling. This thing is going to be worth a lot more…

Then, I woke up the next morning to an email.

*When you find out you no longer own a piece of history :/*

I was in a state of shock. How did this happen? I have to accept the offer and no way I did that while sleeping? I logged in and realized it wasn't a mistake. I only had the choice to accept the offer because it was less than my asking price. Someone had paid the full $9,549 for the piece.

I felt sad. I was no longer part of this experiment. I didn't get to decide if I wanted to own the physical piece or the NFT. I was off this little rollercoaster ride and there was still so much time left...I felt like there was a lot more fun to be had.

My wife tried to console me with my nearly 5x gain in 2 weeks, but it wasn't about the money. It really felt like I was in on something cool. I had this conviction that something was happening and I had actually taken the plunge.

It's been almost a month since I sold the NFT. You can track all the sales on the project site. The average price of the last 10 pieces sold is greater than $35,000. Ouch. (The price for pieces was nearly $70,000 a week ago. Maybe it was about the money?).

That's how making $7,500 feels like shit.

When you sell it by mistake and realize you could have made a lot more.

Part 2. What excites and worries me about crypto

Anyways, a lot of talk about money, but let's talk about crypto. What have I learned about cryptocurrency six months into my journey?

There are several things I love.

I love the possibilities of making middlemen matter less, which is what decentralized finance offers.
I love the idea of making play-to-work more of a possibility, which Axie Infinity is the first instance of but won’t be the last.
I love the idea of NFTs - these digital collectibles - offering new ways of forming tribes and taking ownership in the things you care about.

At the same time, there are things that really worry me about crypto.

The world of crypto seems to push polarization. There are people who love it, who become true believers, and those that think it's terrible and refuse to even understand it.
It seems to accentuate our gambling vices. Cryptocurrency seems to be so much more volatile, and those big swings up and down make it feel much more akin to a gambling experience than an investing experience, which I can't say I love.
And lastly, speaking of which, I think cryptocurrency also accentuates our obsessive tendencies. Unlike the stock market, which operates 930-4 Monday to Friday, crypto is 24/7, 365 days a year. That means, with a volatile asset, it's hard not to check your crypto portfolio a LOT more than is healthy.

So, unlike most pieces on crypto, I’m not all in or all out. I guess I think Web3 represents a transformative technology and will play a substantive role in our future. Or to put it another way (bastardizing MLK Jr along the way):

I think the arc of the crypto universe will be long.

Wouldn't it be awesome if we tried to bend it towards justice?

I don't know if I'm going to make money in this space. But it's a space I want to keep participating in, playing some small role in shaping the space in a way that’s more positive.

Part 3. What’s next for me in crypto?

Again, this is not investment advice. This is just how I’m thinking about participating in the cryptocurrency world, at least until my mind gets changed again.

I'm going to try and allocate something like 15% of my portfolio to crypto.
I want to do it on desktop (not through mobile apps) and look at it almost never. I’m hoping to treat it more like a Vanguard fund that I look at once a year.
But that’s just investing. I’m also going to try and participate.
I want to explore the possibility of insurance or payroll services through Opolis.
I love the idea of healthcare disruption. This company is offering decentralized healthcare through a DAO for freelancers and I'm looking for how I can participate there. If they can execute well, the idea seems super exciting to me to turn a cost item into a potential investment.
(Note: I invested a small amount in Opolis through an AngelList syndicate)
I want to try and buy an NFT (or a part of an NFT) from Rewilder.
It's an NFT to actually save physical land. It launches in a little over a month and I’m keen to find out more and see if I can participate in some way.
I want to find a way to participate in this new project called Station.
It seems basically like an educational project to get more people into crypto / Web3. (Sidenote: Web3 is a way better marketing word than crypto. The connotations to most people unfamiliar are way better with Web3 than the shadiness associated with the word crypto). As someone who personally found it incredibly difficult to engage with the ecosystem, the possibilities of this project really excite me. I’d love to do some writing or a few podcast episodes for them or find some other way to get involved.

(One line in particular stood out to me in their announcement. “We dream of a future of meaningful work for everybody.” That sounds awesome. That sounds like a team trying to bend the arc of Web3 towards justice. My own version as someone who is decidedly anti-work - I dream of a future of meaningful play for everybody.)

Judging by how fast this space is evolving, I wouldn’t be surprised if there’s a completely different list of projects a month from now. But these are a few that are capturing my attention now.

Part 4. A cautionary tale

One more thing. There’s this project that’s captured the zeitgeist this week called Loot.

It’s basically a randomly generated list of items (related to fantasy) that has absolutely skyrocketed in value and interest.

*An example of 1 of the 8,888 bags of Loot*

Now, at first glance, it’s not much different than The Currency project I participated in. Something seemingly inane that a community has ascribed a whole lot of value to. Except, in this case, it’s not just art. It’s a game. A game that’s being developed by the community around these items.

And this is where I start to get worried.

Because a lot of people are investing a ton of money in this Loot ecosystem. The floor price for one of these 8,888 Loot bags was $24,000 yesterday. And it seems like at the end of the day, the value of those bags and the project’s overall value will hinge on what gets created out of it.

Creating a compelling fantasy game isn’t about who does it first. Or who spends the most money. It’s about who does it best.

In my next post, I’m going to be going deeper on Quibi (and how it compares to TikTok), but for the purposes of this discussion, all we need to know is:

Quibi was an American short-form streaming platform that raised over $1.75 billion from investors who were supposed ‘experts’ in the space.
They finally launched their product in April 2020 with a lot of buzz, launching over 8,500 episodes and over 175 shows
Not even a year later, in December 2020, Quibi was shut down after failing to meet subscriber projections, eventually selling to Roku for less than $100 million.

There are differences, but Loot seems to have a lot of similarities. A ton of money invested by supposed ‘experts’ in the crypto space. Nothing more than a vague concept and a lot of hype. Hype that seemingly lacks any meaningful milestones that will justify value along the way, making this a scarily high-risk proposition.

In Loot’s case, there will eventually be a fantasy game or experience that is built around the items in these Loot bags. And when it is launched, the consumers will be the judge, jury, and executioner. And I’m not at all confident the value that people are ascribing to these items will be justified by the quality of the experience that is created. Like Quibi, once there’s a Loot game to be played, the world might realize the emperor had no clothes. If that happens, I am sure you won’t want to be the one holding the bag of Loot.

For all my excitement, it’s important to be careful out there. In the world of crypto, there’s no one but you who can protect from the cold.

Thanks a lot for reading. If you liked this, please subscribe to get more posts like this and share with someone who you think might like it. If you prefer this in podcast form, you can find it on YouTube, Apple or Spotify. And feel free to reach out if you ever want to talk crypto.

Who will protect [us] from the cold?

My journey into the world of Web3 and cryptocurrency

Part 1. Making and losing money in the crypto world

Part 2. What excites and worries me about crypto

Part 3. What’s next for me in crypto?

Part 4. A cautionary tale

I wrote a book!

How my 1-year-old taught me about diversity

My journey into the
world of Web3 and cryptocurrency