I love Madrid. I love the food, the weather and the people. I’ll go there (at least, in better times) at even the slightest excuse. And beyond the social culture, Madrid has a thriving business culture – especially when it comes to Fintech. In June 2017, it was the home to MoneyConf. That’s where my adventures in blockchain and cryptocurrencies began.
Amidst the hundreds of companies and thousands of attendees in attendance, I would meet both the founder and the lead investor of a new blockchain project with the goal of making property an accessible investment to the masses. Brickcoin was going to tokenise REITs (Real Estate Investment Trusts).
In just the span of two months, I had gone from knowing nothing about blockchain and cryptocurrencies to becoming the CEO and jumping headlong into the process of launching an ICO.
A personal challenge for me is that I have a technical background. Before I can get behind a technology I have to dig in deep enough that I understand how it all works. That meant spending hours watching videos, reading books and articles and talking to dozens of people. It was a tidal wave of information to absorb.
Not only did I have to get to grips with the principles of blockchain, but I also needed to understand the economics behind cryptocurrencies. The words token economies and tokenomics became popular – even if no one knew that they meant.
When not working on the whitepaper for Brickcoin and attending all manner of investing forums from Zurich to Cannes, I was following the hype-cycle as bitcoin and ethereum came into the public’s awareness.
And yes. I was in crypto. So of course, I bought some bitcoin. Just enough to taste the fever.
I was so excited that I wanted to give bitcoin to my nephews. Sadly, bitcoin had – and has – a terrible user experience when it comes to buying, selling or spending. As a side project, I built a site that would make it easy for anyone to share bitcoin with friends and family. That project levelled up both my technical and commercial understanding of how the system worked.
As the time for our ICO got closer, two things happened. The price of bitcoin started heading for its all-time high of just over $20,000 for a single bitcoin (You don’t have to buy a whole one. You can buy as little as 0.000001). And regulators in jurisdictions all over the world decided that it was time to get involved.
The next stage of my work would be understanding regulations and their requirements: Were tokens securities? Were they utilities? What were the guidelines? How could we assure that we were compliant? The project was moving at incredible speed as we tried to capitalize on the frenzy in the market.
But then I pulled the plug.
As I regularly tell my friends, “I don’t look good in orange.”
The investor pulled out. The project rolled up. And everything was gone in a matter of days.
With no project and a wealth of knowledge, I set about capitalising on the trends in the industry.
I had learned that ICOs started as a genuine effort by tech teams to get funding for their projects. It was a modern-day crowdfunding solution with the added benefit that investors could buy, sell and trade their investment using their tokens. But, there were other… challenges.
Tokens did not represent ownership in the project. They were not underpinned by any asset. And where the token was currency, there was a fundamental problem: Token holders wanted the price to go up – to the moon. But customers wanted stable, predictable costs for engaging with the ecosystem. The tokenomics never worked. Oh, and in most cases, there was no need for anything other than ethereum. No one could justify creating another token.
That didn’t stop a lot of people, more than 3,000 unique tokens were created. Many of them are no longer in existence.
But what about the major tokens: bitcoin and ethereum. What were the tokenomics for them and what would justify their prices today and in the future? More studying required.
Both bitcoin and ethereum provided some level of utility. Bitcoin started off trying to be money (but failed) and instead became positioned as digital gold – a scarce and tradeable commodity. Ethereum enabled new services that filled the description of “programmable money”. I believe that Ethereum will have a long term future (although the current hype of DeFi will eventually crash). And bitcoin will have use until someone hacks the encryption of wallet keys. But in the end, whether ICOs or major plays, tokens are a waste of time.
My focus shifted to understanding how blockchain can solve business problems. Where was blockchain being used in supply chain management? In identity management? In digital copyright? And how would blockchain in Fintech affect the ability for banks to meet their compliance obligations?
Just two days before the entire city went into lockdown, I went back to Madrid and met with several great blockchain projects. Spain is developing blockchain infrastructure at the city level like Madrid’s public transport solution. They are also working nationally and internationally across Europe and Latin America with significant projects from Telefonica, Alastria, and Cecabank’s financial blockchain consortium Niuron.
My journey through blockchain and crypto has taken me to many places, introduced me to many people and offered me the chance to learn so many things.
So where am I on my journey now?
I know that blockchain will continue to evolve and provide the infrastructure for new and innovative business models and opportunities. I look forward to continuing my adventures and learning more every day. And, I know that when it comes to cryptocurrency and investing, my “3 Day Vegas Rule” still applies.
Investing in crypto is like taking a three day trip to Vegas. You will have a whole lot of fun. You will meet some great crazy people. You might win big.
But you will probably lose it all.
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Troy Norcross, Co-Founder Blockchain Rookies