The next 100 million crypto investors.

Health, Wealth, and Happiness

September 30, 2022

“Cultivate an optimistic mind, use your imagination, always consider alternatives, and dare to believe that you can make possible what others think is impossible.”

― Rodolfo Costa

In today's issue: What do world champions Mark Cuban and Serena Williams have in common?

They're patient, even during the "boring times."

Whether it's practicing the 10,000th serve or reviewing the 10,000th investor pitch, they show patience and persistence in reaching their goals even when struggle, failure, or plain old boredom set in.

This week, we heard from them at Circle's Converge conference. Read on to hear their life lessons for investors.

Must Read

Today's most important story for crypto investors.

Decentralized Exchange Fundamental Analysis(Messari): We're always flattered when other research firms agree with our conclusions while questioning whether we're creating an echo chamber.

In this report on the top decentralized exchanges, Messari agrees with us that Uniswap remains the leader in the DEX market due to its first-mover advantage and continuous innovation (it's why UNI is one of a handful of tokens in our Future Winners portfolio).

Source: Messari

While Uniswap (the orange slice in the chart above) is the top DEX for the "spot" market (trading crypto-to-crypto), dYdX (the salmon slice) is the top "perps" exchange (speculating on future prices of crypto).

dYdX has a different revenue model than Uniswap. While all Uniswap trades come with a fee (as we described in our report Uniswap: King of the DEXes), trades up to $100,000 on dYdX are free. This has allowed it to grow quickly.

Our analyst Nick Marinoff has been covering the rise of dYdX in his Weekly Fundamentals column, which is available for Premium members.

Investor takeaway: Our view is that trading perps is too complex for most investors, as is the dYdX website. While it can build a profitable business, we do not see it ultimately unseating Uniswap from the throne.

However, for those looking to back the top two DEXes (not just Uniswap), the DYDX token may be worth a closer look.

Investing in Boring Times

by John Hargrave

I spent the week at Circle’s Converge Conference in San Francisco. Two of the most inspiring talks for crypto investors came from two unlikely sources: super-investor Mark Cuban and super-athlete Serena Williams.

Mark Cuban, billionaire entrepreneur and media personality, spoke with Circle CEO Jeremy Allaire and shared some rich lessons from investing in the technology field over the past several decades.

Here's the takeaway: we’re still early.

As crypto investors, it’s easy to feel like we missed the boat. "If only I had invested in bitcoin in 2015," some might be saying to themselves, but Cuban helped me see we're still at the beginning. He drew some parallels from technology history.

Cuban pointed out that when you wanted to stream an audio file in 1995, you had to download and install RealAudio, a separate application. You had to click a link to execute a batch file that called another file to start the stream. You then had to have enough bandwidth to keep the stream going or it sounded terrible.

“Sounds like Metamask,” Allaire responded.

The crowd laughed, but this was a great metaphor. While I think it’s one of the best crypto products on the market, installing and configuring Metamask is a meta-task. It's crude and clunky like that early streaming audio experience, and it took us about ten years to get from RealAudio to Spotify.

“Everyone says we’re in a crypto winter,” Cuban said (I'm paraphrasing). “I don’t see it that way. I just think we’re in the boring period. All technology goes through a boring period.”

Cuban told the story of selling IBM-PCs back in the day, which were the revolutionary machines that brought computers to the masses. At first, the machines sold like Covid test kits. They couldn’t make enough, but IBM-PCs were overpriced and easy to copy, so knockoff PCs started to flood the market.

Running on Microsoft Windows, these “clones” crippled IBM’s PC business and put a dent in Cuban’s sales. “After a brief period of fun, it got really boring, and that lasted a long time.”

We could add many examples to Cuban’s list. The dot-com boom of the late 90s was exciting, but then came the crash, and for many years, things were boring. Many people lost faith in the Internet, as in this news article I'll link again:

It was during this long, slow, boring period that today’s most powerful tech companies were launched: Google, Facebook, Twitter, etc.

Investors got bored and builders got busy.

As investors, these boring periods are where we really get to prove ourselves. Boring periods are good because they test our mettle; they provide resistance to our resolve, and they’re strength training for stacking sats.

This is another advantage to our steady drip investing method. You literally don’t have to think about it. It’s fun to refresh CoinMarketCap once an hour when the price is going up. It’s not so fun when crypto prices haven’t moved in months.

Monthly auto-investments mean you can move on to other things and let your wealth grow. Set it and forget it.

After listening to Cuban, I came away with a renewed appreciation for how long these boring periods can last. In retrospect, it can seem like Google and Amazon dominated the world overnight, but it was a long, slow, boring process.

I’m writing today’s column on a flight back from San Francisco. It reminds me of the time I asked my brother (who's an airline pilot) what it was like to fly a plane.

“Long periods of boredom,” he responded, “punctuated by occasional bursts of fear.”

Crypto investing is like that, except it is long periods of boredom punctuated by occasional bursts of pure adrenaline.

It’s like the amusement park. Standing in that long, snaking line for hours, the sun beating down on you and you're surrounded by tattoos and flab. Then, you finally board the ride. Three minutes of terrifying fun and you’re back to your normal, boring life.

Building wealth takes time. It’s long, slow, and often boring, but it was Serena Williams who gave me mind hacks you can use to stay motivated and excited during such times.

Mind Hacks for Investing in Boring Times

1) Focus on how far you’ve come. Years ago, I ran a marathon. Training for the marathon, I quickly found out that the secret of doing long runs was not focusing on how far you had to go. It was focusing on how far you had come.

If your goal is to become a millionaire, you can focus on what you’ve invested so far. You can focus on the saving or spending habits you’ve developed. You can focus on having a job, which provides value for others and wealth for yourself.

If you look at your crypto portfolio and think, “Down 50% from its all-time high,” it’s a motivation killer. Instead, stay focused on what you’ve built. If you’re in the red, at least you’ve started. If you haven’t started, at least you’re reading this.

You’re always, in some way, better off than you were before. Find that way and laser focus on it. Let it feed you and give you energy.

2) Make a roadmap for the future. In Cuban’s example of streaming media, we needed broadband. We needed media players built into browsers. We needed to figure out licensing and royalties, and we needed millions of content creators.

Now, look at Metamask. We really need Web3 wallets baked into the browser, not installed as plugins. We need every website to accept Web3 payments. We need to make blockchain transactions without the ridiculous gas fees, and we need to do all this on one freaking chain (and we shouldn’t even see the chain).

Today, no one thinks about all the protocols or the entire tech stack that's making YouTube possible. It just happens. We’re a long way from digital wallets that just happen. Thinking through the steps in this way can help reassure you that the future will eventually arrive (not to mention making you better at predicting when they will).

3) Reframe the negative as a positive. Another inspiring speaker at Converge was Serena Williams, who talked about overcoming difficult times in her legendary tennis career.

“Whenever I run into that initial difficulty, that initial resistance,” she said (I'm paraphrasing), “I see it as a good thing. It’s a sign that I’m heading in the right direction. It’s only by meeting that difficulty, by pushing through that resistance, that you get to success.”

Williams is not just the tennis GOAT; she’s also a successful investor through her firm Serena Ventures. She shared wisdom she received early on from one of her investing partners. When pitching to other investors, if they say no, celebrate the no. “The time has got to be right,” her partner advised her. “You want them to crave you.”

Reframing the negative as a positive is a superpower. If you grew up poor, reframe it as giving you an appreciation for money. If you despise your job, harness that energy to fuel your search for a new one. If you encountered hardships (as we all have), focus on the skills and strengths you garnered as a result.

As investors, boring periods are not bad; they’re good. They shake out all the halfhearted and noncommitted. They give us time to retrench and rebuild. As Serena says, they're signs we’re on the right track.

Embrace the Boredom

I once had a pastor tell me, “Whenever I give a sermon, I’m really preaching to myself.” As I write these columns each week for you, I’m also writing for myself. I’m reminding myself of the lessons I’ve learned, like Cuban, from working in technology for the last several decades.

Crypto is just the latest stage of technology evolution. It's an interesting and exciting stage, to be sure, but it follows the same laws as previous stages. It takes time for these technologies to mature, but patient investors are rewarded.

Think about how far you’ve come. Write a script for the future and always reframe the negative as a positive.

Embrace the boredom, and don’t worry that you’ve missed out on the best times... You’re still early.

Health, wealth, and happiness,

John Hargrave

Publisher

Bitcoin Market Journal

ICYMI