The Unstoppable Train: Why I Am Suddenly Taking Cryptocurrencies Seriously

Some years ago, my younger sister approached me to buy some bitcoin, but I wasn’t interested. My investment credo has always followed that of my most admired investor, Warren Buffet: “Never invest in a business you cannot understand.” Or to simplify that, only invest in what you know. But at the time my little sis brought up the proposal, my sum total of cryptocurrencies and the underlying technology could be summed up as ‘zilch’!

Recently though, a couple of events have led me to start reevaluating this asset class now valued at around $2.1T. (Late to the party, I agree.)

First was the continuing devaluation of the naira – about 20% in 2021 alone – and the corresponding increase in material prices. This has severely impacted business, eroded the value of my income, decimated returns to shareholders, and given me enough sleepless nights.

The continuous devaluation of the naira has severely impacted business, eroded the value of incomes, and decimated returns to shareholders.

More importantly, I suddenly realized that many of the richest people in the world were deep into cryptos and I’m not so full of myself as to believe I know something these billionaires don’t know. The list is interesting.

Jack Dorsey of Twitter resigned a couple of weeks back (November 2021) to focus on Block , part of which has a mission ‘dedicated to advancing Bitcoin’.

Mark Zuckerberg of Facebook (now Meta) and the seventh richest man in the world, has been trying to setup Libra , a cryptocurrency ‘to rule them all’, for about 3 years now.

Jeff Bezos of Amazon and second richest man in the world is said to hold large amounts of cryptos. Amazon on the other hand is looking to build a ‘Digital Currency and Blockchain ’ team and is exploring having a token of its own.

And the king of them all, Elon Musk, the richest man in the world at about $278b, is a major fan of cryptocurrencies. Apart from personally owning #Bitcoins, #Ethereum and #Dogecoins, his companies (Tesla and Space X) also own Bitcoins and accept them as payment.

Of course, that is not to say cryptocurrencies are without major critics. Bill Gates of Microsoft (#4 on the rich list ) believes the world would be safer without cryptocurrencies , while Warren Buffett (#10 on the rich list) calls the whole thing a “mirage ”.

So, having laid the basis for my reevaluation, why do I think cryptos are an unstoppable train?

First of cause is the main reason already highlighted – there’s no way you can fight the kind of powerhouses supporting cryptocurrencies. Chances are that you will end up far far on the losing side. Meanwhile, the battle lines drawn by some regulators would only help to increase the value of these crypto assets as usually happens whenever access to something is restricted.

Second, the adoption of cryptocurrencies worldwide is large – owned by about 300 million people and accepted by about 18,000 businesses – and growing very fast. Obviously, this movement now has a life of its own and is not going anywhere anytime soon. The import of the numbers above should not be lost – a medium of exchange without geographical boundaries and outside the ‘meddling’ influence of authority figures! And Nigeria is apparently blazing the trail here. With about 13 million users in the country i.e., 6.3% of the population!

Finally, let’s talk about devaluation. With the runaway devaluation of the naira that has rendered every Nigerian from the cattle man to Dangote poorer, the issue of an inflation hedge has become all important. In general, most people are able to access the more popular ones – the dollar and real estate. (Please feel free to chat us up at Tetramanor for our best real estate offer yet!) However, these have their challenges – CBN makes it super-duper difficult to get dollars and real estate simply isn’t for the poor man. And that’s where stablecoins such as BUSD, USDT and USDC come in. Pegged to and backed by stable assets such as the US dollar or even gold, these cryptos maintain their value over time while providing a hitherto impossible ease of access & exit. Imagine, you can own dollars without owning dollars!

This last point for me is one too important to ignore as it solves a major problem of hedging against devaluation without any complex processes. It will continue to influence my investment decisions in times to come.

Many are of course concerned about the issue of regulation, what with CBN putting all sorts of roadblocks in the path of ‘Cryptonians’. But I’m not sure how long the CBN can continue to stand in the way of this moving train. All it takes is an app – Binance, Trust Wallet, Exodus etc and a smart phone, and one can immediately become a Cryptonian. In addition to the mouthwatering rewards recorded by cryptos (Bitcoin for instance has returned about 11,000% in 5 years and Solana, 26,500% in just 2 years! So, if you had put in $100 or N16,900 five years ago and waited, today you would have about $10,400 or N5,900,000), I believe this ease of access is responsible for the very high adoption rate. Without restrictions, permissions, or intermediaries like banks, anyone can join the new generation of billionaires.

All it takes is a smart phone and an app to become a 'Cryptonian' billionaire.

It is important that everyone understands what the whole crypto thing is about, from the underlying blockchain technologies, the coins & tokens, their utility & hype, and ultimately what they might mean to the world of technology, investment and finance. In obedience to the advice from the greatest investor (Warren Buffett), not only do I now spend time reading all I can about cryptos, I have also gotten a sensei to tutor me. And hopefully, I would be able to do a more knowledgeable writeup soon. But for now, all the best as you try to find your own reason to become a Cryptonian or not.