Crypto is struggling to become the alternative financial system we thought it would be

There is only one reason. People are trying to turn crypto into another Wall Street. The positioning of the brand is completely wrong. Influencers in the crypto space are telling people they can make money from crypto. They appeal to people’s greed.

And yes, a jolt of that is needed, and focusing on that could yield short-term gains. But there is a severe long-term loss. Let me explain.

When I started in crypto, I thought crypto had an inverse relationship with Wall Street. This means that if Wall Street bleeds, it is to the benefit of crypto. I believed him. I remember discussing this position with a colleague. Shortly after this argument, I was humiliated. Stocks turned red and bitcoin followed. Stocks rallied, bitcoin did not. I had to rethink my ideology.

In my book, Crypto Investing Strategies for Non-Greedy People, that was one of the points. There’s a lot of institutional capital in bitcoin, so its fate isn’t too different from stocks (or stonks, as it’s affectionately called). But most people in crypto don’t like to accept that fact. This brings me to a very controversial statement:

If the global economy crashes today, bitcoin (and other cryptocurrencies) will follow.

They will keep going down together until it gets to a certain point (which I don’t know) where the inverse relationship is going to kick in. And I’d bet the point where you start to see an inverse relationship between stocks and bitcoin would be below $20,000. And I think I’m being generous.

Ask yourself this question; how many people have bitcoins (and cryptocurrencies) but don’t own stocks, bonds or fixed income assets? If things got tough, would you sell your bitcoin or your real estate first?

You can start to see where this is leading. But I have no intention of going down that rabbit hole. Let’s talk about how things can be different.

I had a discussion with the founder of a crypto project. He is smart and enthusiastic about the potential of the crypto space in general. His project is a DAO and it’s quite exciting. But when we had our conversation, it was obvious there was a gap.

He told me that they collected more than the amount they needed by sending one email. And that’s a good sign. But let’s not forget where that money comes from. Anyway, that’s another topic for discussion altogether. The real deal is this question I asked him:

How is your project different from all the others?

He has a beautiful vision. But so does anyone who starts a crypto project. And the vision can be so intoxicating that you forget today. He told me all the wonderful things about his project and some parts of it are really amazing. But there is a BIG “BUT”…

The average person cannot tell the difference. And if you think the average person is going to sit around and watch you talk about your wonderful crypto project for 60 minutes, you’re kidding yourself. We live in the age of TikTok, remember? You have 5 seconds.

It’s way more powerful than most people realize. Far too powerful. If the average person can’t tell the difference, they’re dead on arrival. The Founders may not know it yet, but he is dead on arrival. I’m going to give you an example.

Several months ago I was chatting with a friend who is a casual crypto trader. I heard that Solana is the third most valuable cryptocurrency. I wasn’t that mainstream in the crypto space back then, so I asked my friend about Solana. I never heard of it in 2018 and 2019 when I was neck deep in crypto. So how can they be the delusional thing now?

Turns out the project started in 2019. No disrespect, but I asked my friend, “so they didn’t have a serious bear market?” His answer was “yes”. That was all I needed to hear. Get through a serious bear market and come out stronger, then you will have my respect. This is why we need the crypto bear market. And we need it to be long and hard.

The reason most projects fail the bear market test is that the founders want to be right, not successful. Everyone wants to create their own piece. This is not how an alternative financial institution is built. We should focus on building on what already exists, not trying to dig another foundation. Here is the billion dollar question for you:

How can we take bitcoin to the next level?

Not to the moon. Not to the next bullish price target. Forget about countries adopting bitcoin and whether the IMF likes it or not. The question is, how do you turn a fundamental aspect of day-to-day economic life from USD to bitcoin? If what you’re building can’t come out stronger after a 20-month bear market, is it worth building?

So, let’s conclude. Crypto has a branding issue. Bitcoin has a positioning problem. There is no argument for crypto that appeals to the common person who is not tied to greed. This is the big problem. Solve that, and a whole new world awaits.

When crypto influencers say things like “most people don’t understand,” they say it with such honor and confidence that it’s a good thing. And it is not. If most people don’t get it, that’s a serious problem.

If the solution to the “corrupt” financial system is complex, then it is not a solution.

The solution that the ordinary person will adopt must be simple.

And there is another problem with the crypto industry. There are no opinion leaders in space. There are only bullish and bearish voices. If bitcoin and crypto live up to their potential, there must be more pragmatic leaders (who are builders, not investors) in the industry.

So, crypto still has a long way to go to become the alternative financial system we all want it to be. And what the space needs is less hype, less emotion, and smarter conversations by people who aren’t attached to rising and falling prices.

The crypto industry needs a mature brand image. I believe he has the chance to change the world beyond what anyone thinks right now. It is because money rules the world. And when you change the money that runs the world, the way the world is run is bound to change.

I put down my file.



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Don F. Davis