Raoul Pal Profile picture
Dec 6 9 tweets 4 min read
There is some magic happening here in Paris at the @Ledger #LedgerOp3n event. Firstly, the incredible event itself, which felt more like a fashion show or an art experience than a product launch. The new Ledger Stax is a game changer… /1
All designed by the killer dream team of @iancr Ian Rogers (Apple music, LVMH) and @tfadell Tony Fadell who designed the Apple IPod. Ledger Connect and Ledger Vault are to come too… all vital and groundbreaking.
But the real piece of magic is the people here who never would ordinarily get to meet from technologists, developers, product designers, fashion designers, musicians, brands, NFT artists, finance people - all deep into web 3 culture together.
It really makes you realize how special these times are - the early days of web 3. These magic moments won’t last forever as it goes mainstream over the coming years. @iancr has curated the cultural nexus impeccably here in Paris…
It only makes me more excited about where this is all going and how truly massive it is. It’s a combining of so many things into the new digital world; one that is optimistic and inspiring as so much of our lives gets tokenized to give us back our ownership….
From 2008 banking crisis to Cyprus banks, from Lebanon to Ukraine, from weaponizing foreign reserves to seizing assets with no due process, from Celcius to FTX - the trend is clear…Direct ownership of assets is ESSENTIAL and they need to be ultra secure too.
And layer on top of that the new systems of money itself, the fairer web 3 creator economy, the elimination of costly middlemen via smart contracts, the efficient transfer and settlement layers of money and IP and the change in ownership and verification of identity…
And onto the transference of the intangibles of brand and culture into tangible assets..

It all amounts to something bigger than most of us yet imagine.

Your “magic internet bean money” and “monkey jpegs” are all our future, like it or not.
Buy the ticket, take the ride.

It’s a wild one for sure but I think it will be worth it in the end.

But make sure you keep those future precious asset secure.

Not your keys, not your coins is something we all need to learn as the “truth” in this digital
age.

Bon chance!

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More from @RaoulGMI

Nov 16
Several of you asked for my Metcalfe's Law mode for ETH. ETH trades at a premium to its raw network value. I need to adjust for burning which makes up the difference but haven't yet done the work... 1/
The number of users is very steady, barring a couple of peaks... adoption in ETH remains robust.
But value of transactions have fallen (mainly driven by lower NFT values)
Read 6 tweets
Nov 16
Just an update to my Metcalfe's Law model for BTC. The model is the total $ value exchanged monthly x number of active users and has a correlation of 97% to total market cap. 1/ Image
Network activity peaked in 2020 and again in 2021 and has been drifting lower. The slow trajectory in decline in network activity is why this liquidity cycle correction in magnitude has so far been less than previous examples thus far.
It also prices the network correctly in value versus 2018.

For the network value to rise from here, we need to see the total value transacted increase or the number of active users increase.

The number of active users is pretty flat on average (Chart from @MessariCrypto ) Image
Read 7 tweets
Nov 14
The Crypto Cycle & Leverage and where we are now...

Crypto is cyclical. Always has been. Its value is derived from a simple formula:

Value of the underlying technology
+
Global Liquidity

This is why I often say it trades like a call option on the future. 1/
The global liquidity cycle leads to large boom and busts in the space. Each time we have a boom, everyone not in the space yells "Bubble!" and truly enough, eventually prices collapse and we get to the "It's all a scam! It's a Ponzi! It's never coming back!" phase of the cycle.
But prices never return to the previous low... more on that in a bit.
Read 16 tweets
Nov 11
If its any consolation, myself and many others went through something very similar to FTX back in 2011.

MF Global, one of the largest futures brokerages in the world, run by "superstar" ex-Goldman CEO, Jon Corzine collapsed in a very similar manner to FTX.. 1/
Brokerages MUST segregate customer and "house" funds.

Corzine decided to take a $6.5bn debt of EU gov bonds which went wrong.

The issue was that he did it with customer money! (hmm...familiar?)

Losses were estimated at near $2bn.

All customer positions were frozen.
It took about 7 years for us all to get 93% of our money back. If I remember rightly we got the first 50% back pretty fast, which I was grateful for!

It was my entire trading account.

Many hedge funds and asset management firms got trapped too. It was a total disaster.
Read 7 tweets
Nov 9
The lesson being learned in crypto (again) is that even with rapid adoption of the technology, it is hard to build businesses on top of a 85 vol asset class and its impossible and foolish to build a business with leverage on it. 1/
But the Austrian/Darwinian nature of the space means that bad actors get taken out in each cycle and only those with conservative business models, that over time benefit from the adoption, survive and thrive.

No government bail outs. No central banks. Just the market.
Crypto is essentially a

Technological adoption bet
+
Global liquidity

It has always been thus... the global M2 cycle as a proxy for liquidity drives the cycles, and adoption drives the secular trend.

You need to know your time horizon and your risk tolerance...
Read 12 tweets
Nov 5
It's Friday, wine night and time to write a thread on NFT's, inspired by my chat on @RugRadio. I think people are massively underestimating what is going on... and its only (very) partially to do degening with monkey jpegs and dickbutts...
Let's talk...

An NFT is a "smart" "contract" "stored on a blockchain". We all know that.

But have you thought what that really means???

Well, there are 3 component parts:
"Contract" - almost every single agreement in society in the broadest sense is a contract - be it written, implied, verbal from religious vows to airline tickets, from meeting a friend for a rum or using Twitter. Contracts are literally a base layer of society that build on trust
Read 20 tweets

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