The first thing Fintech deal-maker, investor, entrepreneur and advisor Bernard Lunn wants to make clear is that he is not a moral Bitcoin Maximalist but just an economic one. Which utterly makes a huge difference in here. For the expert, buying Bitcoin doesn’t necessary mean that is any better for the world than buying an Altcoin. He just reassures the idea that Bitcoin will be better than Altcoins as an investment over the long term because there are plenty of short term trading opportunities in Altcoins.
Here are 5 reasons why Fintech Expert Bernard Lunn is an economic Bitcoin Maximalist in his own words:
- Brand and network effects. Step outside the cryptoverse for a moment. Do you have any trouble explaining Bitcoin to a normal person? Try Ethereum. Try hundreds of Altcoins. Building a crypto product/service? Building for Bitcoin is a no-brainer. Which Altcoin do you invest your R&D budget into?
- Not making any more of it. People who are fed up with money printing tend to like investing in land, gold…and Bitcoin. A big question for the mainstream user is, but how can we believe “they” won’t make more Bitcoin? Now ask that question of every Altcoin.
- Copy that. Sidechains and other technology allows entrepreneurs to copy most feature of a cool Altcoin. Like Smart Contracts? Use Rootstock/RSK. Like privacy? Use MimbleWimble/Grin. Altcoins as a sandbox for experiments are a “good thing”. As a donation to the community that experimentation is cool, as an investment thesis less so.
- Lightning Network. This crushes the BCH pitch that the only way to scale Bitcoin into a currency for daily spending is to increase the block size. The “will Lightning Network work in practice?” objection is looking less credible with each passing day.
- Flight to safety from both directions. Coming from Fiat, Bitcoin is an Antifragile bet against central bank money printing. Coming from Altcoins, Bitcoin is safe haven while still believing in Cryptocurrency.
Ethereum is a wonderful technology innovation. If Proof of Stake really works in Ethereum, Ethereum could become a true public alternative currency because Proof Of Work is expensive. But that is like saying that if we can easily transport solar energy we can get off fossil fuels – easier said than done. Watch this space, this is a wild card. If you are convinced of Ethereum, maybe your crypto asset allocation is 80% Bitcoin and 20% Ethereum. Well that sounds a bit more complex, so where do I send my invoice for x% of AUM and y% of Carry/Profit Share? Yep, thought so.
The Bitcoin is Bad, Blockchain is Good idiocy
People who made a fortune in Legacy Finance, tend to trash talk Bitcoin. To show that they are hip to new technology, they often spout the line that Bitcoin is bad, but Blockchain is good.
Even Warren Buffet is saying this. Another famous, super smart Legacy Finance titan (I am being polite by not naming him) was heard on CNBC trash-talking Bitcoin but lauding the underlying Bitchain technology. These Legacy Finance titans are super smart about Legacy Finance and super dumb about Blockchain Finance.
When they learn that Blockchain can be both Permissioned and Permissionless, they come down on the Permissioned side and trash-talk the Permissionless solutions. Then when Oracle proposes a distributed database version of their RDBMS that they call a Permissioned Blockchain solution, the Legacy Finance titan can sagely nod their assent in the board meeting.
The Crypto Fund Products you will be pitched soon
These Crypto Fund Products all justify an intermediation fee, but not all are worth paying for:
- Bitcoin Killers. This could be like trying to find Facebook killers in the social media era. Even if there is a Bitcoin killer out there, your chances of finding it (or finding the Fund that will find it) is statistically tiny.
- Index of all Altcoins. If you agree that finding the Bitcoin killer is too high risk, the lower risk approach could be to take a passive index approach and invest in all Altcoins. The problem is that the analogy with an S&P Index Fund is flawed. Altcoins are early stage ventures where 1 winner can make up for 99 losers. Compare that to the S&P 500 Index where all 500 companies are viable. What if the 1 winner does not do a Token but raises conventional early stage equity capital? You have 99 losers and no winner.
- Filling in the blanks for Bitcoin. Bitcoin is the protocol level and the world needs exchanges, wallets, custodians, sidechains, offchain networks and a load of application level/user facing ventures. This makes sense as an investment thesis, even if it does not sound super exciting. This strategy requires classic early stage investing skills. The problem is that backing a first time fund is high risk and the top tier funds are not open to new investors.
Watch what Family Offices do in Blockchain investing
Family Offices are like retail investors in that they make their own decisions and have no explanation risk. The difference is obviously that Family Offices invest far bigger sums than classic retail investors. Family Offices are Retail investors with clout. Watch what Family Office do in Blockchain Finance to see the future.
Hernaldo Turrillo is a writer and author specialised in innovation, AI, DLT, SMEs, trading, investing and new trends in technology and business. He has been working for ztudium group since 2017. He is the editor of openbusinesscouncil.org, tradersdna.com, hedgethink.com, and writes regularly for intelligenthq.com, socialmediacouncil.eu. Hernaldo was born in Spain and finally settled in London, United Kingdom, after a few years of personal growth. Hernaldo finished his Journalism bachelor degree in the University of Seville, Spain, and began working as reporter in the newspaper, Europa Sur, writing about Politics and Society. He also worked as community manager and marketing advisor in Los Barrios, Spain. Innovation, technology, politics and economy are his main interests, with special focus on new trends and ethical projects. He enjoys finding himself getting lost in words, explaining what he understands from the world and helping others. Besides a journalist he is also a thinker and proactive in digital transformation strategies. Knowledge and ideas have no limits.