Thread by @mario_cibelli

I confess I find cryptos - digital scarcity/placeholders/uniques - utterly fascinating.

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I'm not an expert by any means but I think it’s possible that, like the internet, digital placeholders have a profound effect on the world and potentially rearrange winners & losers in select ecosystems.

My initial purchases of cryptos were simply to learn more about them and consider how they might affect companies I followed but since then I have continued to personally acquire portions of them at increasingly higher prices - primarily Bitcoin & Ethereum.

I first investigated cryptos while conducting due diligence on Xoom (acquired by PayPal in 2015) and while I did not think they were an immediate threat to the remittance industry, it was fairly clear to me that I should not be dismissive of Bitcoin et al.

BTW the Xoom acquisition has probably been an 8 to 10x for $PYPL in 5 years if I had to speculate...hats off to them as usual for aggressive but opportunistic M&A cc @TMFJMo & @NonGaap

Like other financial tools, there’s friction and costs attached to consumers acquiring & storing cryptos - especially for casual users - at this point but once in usable form some of the possibilities and use case scenarios are fascinating to consider.

A low cost, wallet to wallet instant transfer of value between consumers and/or businesses is what I find the most interesting at this point.

Ideally this would occur via financial intermediaries that have already established trust & sufficient utility to consumers such as $PYPL.

While cryptos do not have as much utility as currencies issued by dominant countries/unions at this point - and probably never will - the possibilities get very interesting when two different parties ascribe value to Bitcoin et al.

When this occurs there are a host of use case scenarios that become possible without the need for traditional financial gatekeepers.

Digital placeholders with sufficient belief/buy in from participants can work to reduce friction & costs and render some portions of the financial hierarchy less relevant.

Simply stated this is what drives my interest in cryptos.

I believe checking accounts/debit cards will continue to be the primary on ramp to the financial system but that other traditional profit pools within established financial networks may experience more robust competition from digital placeholders.

If digital placeholders increase penetration sufficiently they have the potential to keep some of the traditional profit pools more ‘honest’ so to speak.

Of course a million and one things could go wrong which is why cryptos should be considered extremely risky especially given their recent popularity.

And when I say risky, I mean risk at the very highest levels of the spectrum. A total loss of value - yes 100% - has to be considered a possibility for owners.

I have done some thinking and research around doomsday scenarios for cryptos and while I believe these are not high probability events and that safeguards/protections will naturally evolve over time, extinction events are possible.

Of course, this is not completely dissimilar to government issued currencies, especially over the long-term.

Of course attributing taxes from gains & losses to otherwise simple transactions is definitely friction for these instruments.

Again I’m not an expert and have no real opinion but certain Tether dynamics sound unusual to me.

Criminal elements/fraud are likely intertwined in parts of the crypto ecosystem though the same can surely be said of government issued currency and traditional financial intermediaries.

World governments will push back against unfettered growth in cryptos. Bans/attempts to ban seem increasingly likely as well as stringent regulations that will add more friction & costs for users.

Note: I haven’t mentioned the price of cryptos. The price of Bitcoin et al is actually one of the less interesting aspects of digital placeholders to me - provided of course the prices are at or above levels needed to sustain the ecosystem.

To me Bitcoin’s price is the visible vibration of its penetration among users.

In that sense, rising prices are likely increasing penetration above what would otherwise occur in a more stable pricing environment which ultimately allows for a greater likelihood of success in challenging traditional profit pools.

Optimally, major cryptos with high levels of penetration and user buy in will stabilize and lower/eliminate the price obsession that dominates current headlines.

Ultimately boring/low volatility cryptos are more interesting than ones with price charts that go up & to the right in an extreme manner.

So my opinion is that cryptos and other forms of digital scarcity - including artwork & collectables (cc $WWE) - are fascinating subjects that should not be dismissed by serious followers of businesses and the financial system.

I’m no expert and surely won’t offer advice on investing in any crypto other than the notion that Bitcoin et al should be considered extremely risky instruments to own.

This is just one equity investor explaining his interest in a shiny new thing. That’s all for now.

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