#25 Angelinvesting.it - From idea to Series A - Weekly Newsletter

Crypto hangover

3 Minutes to reflect

Yes, I remember that strong headache, a slightly upset stomach, a general feeling of fatigue, and some regret for what happened the night before, along with some doubts about the gaps in the memories of the evening. Yes, I mean the hangover.

In the crypto world, we are experiencing the aftermath of one of those parties that was insane, extreme. Fortunes were made and lost. Many small investors were left empty-handed around the world. Dreams melted away like snow in the sun.

Now that some time has passed since the party, it is perhaps time to wonder what happened in the crypto world. What went wrong? In my opinion, there is one main reason, plus two additional reasons that together have created an explosive mixture.

At the core of what went wrong is that the main promised benefit of blockchain technology did not resonate with users. For the average user, the benefit of owning their own data was something gimmicky, intangible, ephemeral. For the user, there is little difference in trusting Facebook or a decentralized network; in both cases, it felt like a request for trust in something.

Add to the main point that the technology is still in many aspects embryonic. For the average user who already didn't understand all this value, going through metamask, long strings of passwords, the risk of losing their key – it was a lot of effort for little reward.

The third point, which acted as the trigger for the uncontrolled party, is the element of speculation. The financial incentive scheme at the core of the Bitcoin project became an end in itself rather than a means. With Bitcoin, the basic idea was that there would be a reward mechanism whereby those who provide resources to make the blockchain work would be compensated. However, the Bitcoin and Ethereum frenzy gave way to speculation, to the infamous hangover.

After the headache subsides, will there be a new spring for cryptocurrencies? I believe so, more than not, instinctively. A decentralized network that self-regulates and supports itself is a profound idea. It seems so consistent with the evolutionary path of the internet not to happen, but how and when, I couldn't say.

2 Resources to pro level

A punchy blog post with a subtle title that delves into the users' lack of interest in decentralization: “Nobody Cares About Decentralization - They Just Want To Get Rich” (the article)

In the meantime, I continue to make some investments in the crypto world, particularly in projects where the technology has practical applications. In a previous newsletter, I talked about my investment in Takyon. (link)

1 Reason to be happy

A great reason to be happy this week is if you didn't buy a JPEG of a monkey thinking it was an investment. For example, the one owned by pop star Justin Bieber was purchased for $1.3 million in January 2022 and is now worth $60,000, with possibly no buyer even at that price.

Have a great weekend,

Simone

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