Chokepoints
tl;dr: Experiencing chokepoints on the road into crypto and the road into US debt markets. But also reason for optimism thanks to PTJ.
One of the positive externalities of the coronavirus experience has been the introduction of a men’s support group into my life.
Fifteen years ago, I never would have thought that a place to talk about vulnerability from a male perspective would ever be a place where I was found, yet here I was.
The topic recently was, roughly, “speaking your truth.”
I said,
“you know, even though I had done a ton of research and studied it, for a long time, there was a part of me that was nervous about suggesting to people that they explore crypto assets and Bitcoin.
I guess, in the back of my mind, I know there was a possibility that I could wrong and I didn’t want to look like a fool.
Now, I honestly don’t give a damn.
My ‘truth,’ as it were is that it’s just flat out irresponsible to not explore crypto assets and Bitcoin.*”
That led to a call with John.
Crypto On Ramp Chokepoint
John is the group with me and followed up with me afterwards.
“I heard what you said and I’d like to learn more.”
We had a nice chat and he made the decision that it was something he wanted to pursue.
“Where do I start?”
So, I suggested 4 things he could do.
- set up an account at Coinbase (or Edge or Binance)
- install the Lolli browser extension to get cash back on ecommerce purchases in the form of Bitcoin
- get on the waiting list for Fold app
- download OpenBazaar and/or Haven to set up a storefront for payment in crypto
Unfortunately for John, Coinbase proved to a hassle of epic proportions.
First off, he hit the weekend before the halvening, which was when Coinbase’s site went down.
Then, he had all kinds of issues with bank verification.
Finally, once he had done that, his buying limit was set to $0 for some reason.
It was painful to watch from afar.
Look, we all know that Coinbase generally gets the job done.
Still, it’s immensely frustrating that at this stage in the development of crypto, there are still so many blockages causing friction in the onboarding experience.
It is better than it was, to be sure.
Further, with initiatives such as CoinMe partnering with Coinstar to build out a global ATM network for Bitcoin purchases, it will get better.
Patience is the word of the year for me in 2020, but I just wish it were easier because John, and millions of people like him who are seeing their wealth inflated away, need it sooner.
Leaving aside the highly centralized nature of these on ramps, the fact is that the customer experience chokepoints are still there in the interchange between fiat and crypto.
To be expected, but that doesn’t mean it’s not frustrating.
BlackRock and Pimco Chokepoints
I suppose money flows were on my mind then when I saw an article entitled Big Money Managers Take Lead Role in Managing Coronavirus Stimulus.
If I am reading it correctly, basically the Federal Reserve is going to give money to BlackRock and Pimco, which “two collectively manage more than $8 trillion, across markets from bonds to private equity” to manage and execute corporate and muni debt purchase program.
Essentially, these two private firms will get to decide where Fed money goes to support which municipal bonds.
The public will get all kinds of assurances such as
“The central bank said in preliminary disclosures that BlackRock would assess its own ETFs on equal footing with those of competitors”
https://www.wsj.com/articles/big-money-managers-take-lead-role-in-managing-coronavirus-stimulus-11589130185
and
“The Fed will use predetermined rules to guide its investments, to avoid picking winners and losers, said people familiar with the matter.”
https://www.wsj.com/articles/big-money-managers-take-lead-role-in-managing-coronavirus-stimulus-11589130185
But my concern comes from accountability and transparency.
It feels like we are setting ourselves up for even more control over the US economy to a handful of people, none of whom are elected.
The article, which looks to me like it was placed by the PR firm for BlackRock, is overly favorable.
What I would like to have heard more about was, “what will be the impact on the economy when all of this public money flow is directed by two, massive, for-profit investment managers?”
Here’s one scenario….
Fink has publicly stated the need to reshape finance in line with his perception of climate risks.
Now, I’m not saying that climate risk doesn’t exist. I believe it does.
What I am saying is:
“do we really want Larry Fink being the guy who decides which municipalities have their bonds purchased and which don’t based on his own personal definition of climate risk?”
Perhaps Fink buys more bonds of municipalities that he thinks are “green” and punishes those that he thinks are “not green enough.”
It could end up being a version of the Green New Deal but funneled through BlackRock.
Again, there will be all types of assurances and let’s hope that it works out, but if you subscribe to the “Don’t trust, verify” mentality, this set up is problematic.
Five years down the road, will we regret this decision?
Chokepoint Forks
So, while dealing with the emotions of these two chokepoints, I took some comfort in the public endorsement of Bitcoin that came from investing legend, Paul Tudor Jones.
This was an important moment in investment history.
I can’t find the tweet now, but Ryan Selkis said something like
“Paul Tudor Jones investing in Bitcoin is the equivalent for institutional investors as Fred Wilson investing in Coinbase in 2013.”
If that is correct, then it’s even bigger than I realized.
Fred is the godfather of VCs and, when he does something, the herd starts to follow because now, it is “safe.”
If PTJ has opened the door a bit wider for institutional investors to explore Bitcoin, that’s going to drive interest and demand.
And, the good news is that demand is where the market works best….because that will create more on ramps, with fewer chokepoints and less friction.
So, while one economy becomes more and more constricted as two behemoths take over, another economy will (hopefully) becomes more and more available and open as the herd starts pushing on the door.
It’s just going to take longer than I want.
#Patience.
*Note to SEC and FINRA and everyone else…this is NOT investment advice. Do Your Own Research. Crypto assets are still new, risky, and speculative.