Chapter 14

Investing within Yourself

“Money is just something you need in case you do not die tomorrow. Let this be a reminder for you not to obsess over profits and losses. In whatever you do, strive for enjoyment, focus, contentment, humility, openness.”

—Yvan Byeajee

It has been a journey.

As an investor and learner, you will always have ups and downs, but how you choose to throw yourself into the learning curve, the struggles, and the storm is what makes you wiser. If I wish I would have known a couple things sooner, they would have been this: Embrace change quickly. With technology evolving as fast as it is, the world is wide open to those who take the leap of faith into trying to understand, explain, and invest into emerging technologies.

When I talk about taking a “leap of faith,” what does it look like?

From all the individuals I interacted with in the investing and computer science domain, I can confidently say your work ethic, your attitude toward failure, and your habits are what define your ability to learn new information and then synthesize it into actionable steps.

This book aims to teach you what it means to take actionable steps to investing in cryptocurrency. It equips you with all the tools necessary to examine a cryptocurrency with qualitative analysis and even some with basic quantitative models. Your quantitative and qualitative skills are what separate you from the pack.

“Power is defined as an ability to do qualitative work with a quantitative passion, backed by a compelling conviction, directed by a propelling purpose, fulfilling a divine destiny.”

—Israelmore Ayivor

You now know how to plan your entries and your exits in advance and what it means to have a diversified portfolio. You now have a solid understanding of how blockchain works as well as what properties make it valuable. In addition, you also know how blockchain fits into the big picture, even in context of regulatory entities such as the US Federal Reserve and the IRS.

Human nature is limiting—we’ve explored stories of what happens to those who become greedy or fall prey to a range of cognitive biases and weaknesses. From Rob P. Gekwiak’s story of rags to riches and then back to rags again, all the way to Simon Golestan and his $337,000 portfolio dropping to $20,000. We’ve examined the story of cryptocurrency in Zimbabwe and how regulatory giants in the US are attempting to take down targets that are not decentralized enough (such as Enigma).

At the start of this book I introduced the “Skepticism Factors”: Volatility, Trust, and Tangibility. These are the barriers of entry for institutional investors, and for everyday people like you and me. As adoption increases and the technology improves, the skepticism factors will disappear as cryptocurrency begins to be perceived as having intrinsic value.

After inspecting volatility, you should now know it stems from a range of qualitative risks such as project complexity and liquidity. This does not make cryptocurrency a bad investment, it simply adjusts our expected return and gives us a foundational understanding of how much risk is involved with investing in the wild west of asset classes.

When it comes to trust, we’ve explored the exciting use cases of blockchain solving mistrust between mutually distrustful parties—from identity management, health care, and all the way to financial instruments.

Smart contracts are the wave of the future, replacing human third parties with the equivalent of digital vending machines. Every industry will be affected by this, and it’s a race to see who can incorporate and build the best possible blockchain that will have the greatest amount of adoption. We know blockchain creates trust, and we now understand what “trustless trust” means (immutable, censorship resistant transactions and smart contracts anyone can interact with). Soon, we will trust mathematics and immutable open-sourced code to be the facilitator of our peer-to-peer transactions, not centralized data silos and human third parties such as Facebook and PayPal.

Yet in order to make cryptocurrency feel tangible, you have to go out into the “wild” and play with it. That is the final step. Until you are sending Bitcoin to your brother to pay him back for Starbucks, you won’t quite be at the stage where crypto feels tangible. Now that you understand the gears and levers of blockchain, I would encourage you to purchase a small amount of cryptocurrency and begin to play around with a crypto wallet and its many possible interactions with thousands of decentralized apps.

If you want the tangible steps to purchase cryptocurrency, move it around, and interact with decentralized apps, you can go to “CarterLWoetzel GitHub,” where you can click on “Building Confidence in Blockchain—Next Steps.” There, I have also provided links to other helpful blockchain learning resources as well as my own quantitative models for you to play around with. The time for you to put the book down and actually take action is almost here, but first let me conclude our time together.

Together we have unraveled the tangled web of blockchain and mapped a more accurate and realistic view of the complicated and often misunderstood asset class that is cryptocurrency. You are now an empowered investor ready to tackle cryptocurrency as an asset class. However, the most valuable lessons you will learn about investing in cryptocurrency can only come from jumping into the deep end. Make mistakes and take informed risks but attempt to do it the right way.

You now have a fifty-thousand-foot view of the “magic of blockchain,” so when your coworker or friends ask, “How does this whole blockchain thing work? What is cryptocurrency and why should I care?” you can pause, smile, and then confidently say, “It’s complicated . . . but if you give me five minutes of your time, I can try to explain. . . .”

And that, my friends, is a beautiful thing.

—Carter Lee Woetzel