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PART THREE
57/ In this last part, I will share my key takeaways from this exercise & examine them in the context of a risk/reward framework. If you have been following along this whole time, I encourage you to share your takeaways as well!
57/ In this last part, I will share my key takeaways from this exercise & examine them in the context of a risk/reward framework. If you have been following along this whole time, I encourage you to share your takeaways as well!
58/ First, we can often surprise ourselves with what we can accomplish if we set our minds to something. Prior to transitioning into #crypto full-time, I had virtually no technical understanding of technology, computer science, or distributed systems (I was a PE/VC guy).
59/ Everything I covered in this 3-part thread, I learned for free, thanks to the (quite special) open source ethos of the #crypto community. The tradeoff was time – a sacrifice I deemed worthwhile, because I had a strong desire to learn more engineering & share those learnings.
60/ After this exercise, I believe I now have a basic foundational understanding of the tech. side of this industry – something arguably everyone should possess if in #crypto, especially if you’re managing investor money (unless you’re strictly trading).
61/ It boils down to risk management.. These are technological assets that are in their extremely early stages & are highly experimental in nature. Without understanding the technical picture, it’s not hard to chase high reward potential & greatly misprice the risks while at it.
62/ This is the 1st key takeaway – the need for technical diligence. Understand design vulnerabilities to anticipate cracks that could potentially form in a network in the future. Understand what solutions can be implemented & whether such solutions are backward compatible.
63/ The 2nd key takeaway is understanding *why* tradeoff decisions are made. Devs ultimately want to build atop a protocol they can trust. Self-sovereign or not, it’s important to know what these builders are attracted to. They’re shaping the direction of our future after all.
64/ The same can be said for investors. Identify the patterns/trends that are forming as a result of alignment between investors & engineers. The stronger & more widespread the alignment, the greater the systemic de-risking of a given network.
65/ A 3rd takeaway: security is a spectrum. Just as too much working capital can be inefficient for a company (b/c it means the amt of $ available within the company is much more than what's needed for ops), too much security can be inefficient as well.
66/ Thus I❔whether a security premium can develop irrespective of a monetary premium for base layer networks. A counter to this is that all base layer protocols are competing to be money. But not all data or information is monetary or financial (eg, identity, med records).
67/ I believe one of the most significant experiments that will take place over the next decade will be whether decentralized information networks can accrue substantial value without necessarily representing financial assets. Time will tell (though my guess is yes 😉).
68/ And that’s a wrap! I hope this 3-part thread was helpful – it was for me. Huge thanks to @iam_preethi, @KyleSamani, @mrjasonchoi @spencernoon, & so many others that inspired me to go far down the rabbit hole on a topic way outside of my comfort zone to get me to this point!
