I have 10 pages of notes from today’s session, not counting conversations with the exhibitors. That’s a little too much to condense into one post, but here are some of the highlights.
It’s still all about people
If you’ve got some money burning a hole in your pocket – where are you going to put it?
Well, if you’re sensible, not in an investment of any kind if you need it anytime soon. But let’s say you’ve done the basics and are actually in a position to put some money into a market.
Many people will be only too happy to take your money in exchange for a promise.
Some will be charming and personable. Some shy and serious. Some will have a televangelist’s pitch, others a flamboyant show.
We need to look at them carefully – then look into them. Remember that a technology or an application will not in itself take over the world. Behind it is a person, a team that needs to drive it and take it to market – and it is that team you are investing in.
But it’s still too hard to invest with any real confidence
So, we have this new world of distributed ledgers and currencies. But, for most people, the only way we can access them is through an exchange – and these are the things that get hacked.
It also seems counterintuitive – we’re creating a distributed system and then accessing it through an exchange – a middleman – which centralises transactions and control once again. Where is the real peer to peer element in all this?
Distributed exchanges seem to be on their way, where we can actually transact with people we don’t know by creating a market where prices are posted and accepted – leading to transactions and commerce.
That’s quite exciting – it’s having a market that works – with lots of activity that becomes self sustaining and prosperous.
And when you do, understand what you’re getting – read the detail
The new phrase is Token Economics – which I assume is much like ordinary economics…
Basically, you’re giving someone money and they are giving you a piece of paper.
The piece of paper says what you get – is it a stake in the business, is it a share of profits, is it regular interest payments and return of the capital, can you convert your paper into a different kind of paper?
All these rules set out what you get from your investment, and they are likely to be similar to existing options in traditional markets – equity and debt being the main ones, for example.
Seriously… read the detail. In many cases you don’t get a stake in the company. You’re simply lending them money that they don’t have to give back if things go south.
Read Ben Graham, and then read him again
Ben Graham, the father of value investing, had a story about Mr Market – and this should be required reading for all investors.
Prices go up, and they go down. The market is there to guide you – in the short run it’s a voting machine and in the long run it’s a weighing machine.
You need to have a strategy. For example, I wrote previously on why I sold my crypto holdings. The updated chart on this is below.
Now, I’ve been lazy and not traded this as I could have, but on the whole, the sell still was the right call at the time – but this market is volatile and so at times it looks bad.
The point is that you can make money in an up or down market, if you have a strategy. And, depending on your position, you’re either sad about losing value or excited about buying something cheaper.
And that is basically how markets operate, so get used to the ride.
And, in case I haven’t said it enough, have a strategy before you jump in.
We still need to remember the purpose of the whole thing
The point about decentralised technology was that it could make things more equal, let those who had less also participate in the system.
In network economics with a winner takes all model, it’s easy to lose sight of the equity principle.
I don’t know how this will turn out – whether commerce will win or whether the system will create fairness… let’s wait and see.
Finally… don’t forget common sense,
The best presentation for me was one by Michael Messele of Pillar who not only went through his ICO story but also reminded people again and again to use common sense.
Want to get money? Then think about how you come across to people and pitch in a way that works for them.
Think about design, legals, management. Think about how you will deal with trolls, with your ICO going viral and your brand. Get help from experts. Create ways for people to work with you, in exchange for promises if necessary.
In summary… there is life in this market – and the big businesses are coming
The final takeaway is that this is starting to go mainstream. The big players are involved – the enterprise level players, and blockchain is going from a mathematical curiosity to a commercial proposition that we will see emerging over the coming years.
Any questions or if you’d like to talk more about any of the points here – please get in touch or leave a comment.