1. Crypto investing is very much about community development and community formation. Can you explain the Crypto ethos to us pls?
- The crypto ethos recognizes the critical part that markets play in creating value. Crypto gives us the ability to introduce market dynamics to any digital asset. This practice of “tokenization” allows artists, communities, and even ideas to trade on an open market and gather financial backers. The “tokenholders”, or backers, or a project often get to decide on its direction and can even get involved in the day-to-day operations of the decentralized collective. When thousands or even tens of thousands of tokenholders are responsible for executing on different parts of a project, the need for community building and development becomes clear. Community stewardship is a foundational part of every crypto initiative. My favorite way of thinking about web3 is to picture sub-reddits or Facebook Groups that have an internal economy. This economy allows communities to grow, co-invest, and create works that bear financial fruit to the tokenholders. Imagine if your favorite Facebook Group could be your full time job!
2. The Millennial Generation as it’s dubbed invests with a social side in mind too. How does that play out in Crypto investment and how does that bridge to Real Estate?
- For a long time, social investing has meant taking a mark-down on profits for the sake of the greater good. Crypto economics pulls the time horizon on investments forward from the “company” stage to the “idea” or, more aptly, “vision” stage. There are countless crypto collectives and communities right now that are hotbeds for the next generation of talented founders, artists and contributors. For socially-minded investors, crypto provides the ability to put capital toward mission-oriented sustainability collectives that then go on to scatter talent to the more traditional “investable” categories of founders and operators. The web3 investing ethos is essentially raising funds to tackle a problem before the solution is fully formed (more on this below).
- Real estate is a category in major need of an overhaul. Home affordability is at an all-time low even as the debt burdens of new generations are growing. Meanwhile, the crypto world holds trillions of dollars of liquidity that’s looking for productive assets. This begs a need for thoughtful solutions that connect investors seeking yield bearing assets with people looking to get into homes. Rook’s particular model allows investors to participate in the upside of an appreciating home in exchange for a sum of cash lent to the homeowner.
3. With Crypto hitting the $3 trillion value recently, has it gone from “fringe” to “mainstream?” If so, what does that mean for the culture of decentralization and opportunity?
- There are a number of ways to measure crypto adoption. Current estimates place cryptocurrency ownership at around 5% of people globally. For context, global internet adoption was at 5% in the year 2000. In financially-rich and culturally fast-paced societies, crypto has gripped the public consciousness over the last few years. The headlines these days seem to be about the big sales and the big scams. The rest of mainstream crypto news is a spatter of vaguely confused reporting attempting to make sense of a rabbit hole that is just as deep as the concept of the internet itself. I think that, despite the market cap, 99% of people are unaware of the paths crypto can take to transform society.
- As far as the culture of decentralization, recent events have bolstered my confidence in its longevity. Geopolitical uncertainty and financial volatility has been a global staple of the past few years. Decentralized technologies that go to pain-staking lengths to provide secure and anonymous stores of wealth are primed to grow during tumultuous times.
4. You and Ed Messman of Rook Capital discuss the idea of shared risk/shared reward models in Real Estate. Where does the “On Chain” culture connect here and how can Real Estate be improved with Blockchain in general?
- While many blockchains maximize anonymity and privacy, crypto as a whole is fundamentally collaborative. Blockchain protocols are almost always open-source infrastructure that anyone can use, spin out (fork), and build on top of. Bringing real estate on-chain provides a new tool to the tool belt of the imaginative builder. While we’re used to viewing mortgages as the minutiae of getting into a home, or as a relatively stable investment class, who knows what new and exciting solutions will emerge with real estate at their foundation. The path charted by the internet has taught us that platforms enable innovation. The rise of smartphones brought us the sharing economy. The advent of video streaming and on-demand media ushered in the creator economy. These are fundamentally market-driven, bottom-up movements that enable people to relate to each other in new ways. The internet has shown us that builders, when given just a few building blocks, can transform the world we know into something much greater. Crypto is another stepping stone in the direction of interoperability, and real estate is just one asset class that, sooner or later, will be tokenized and offered as a Lego block for anyone that has an idea for what to do with it.
5. As a Web 3 influencer, what are your predictions for 2022-2024?
- Looking at the past, I’m cautious of making predictions about the future. Who in 1997 would have predicted the rise of social media? Maybe someone did, but it would have been reasonable to call them crazy. The future that will come to pass looks fundamentally far-fetched and unreasonable to the observer of today. However if there is one thing I’m fairly confident about, it’s that people will evolve their perception of crypto. I mentioned earlier that a big part of the web3 ethos is raising funds to tackle a problem before a plan for the solution is fully formed. This dynamic is often denounced as flagrant speculation, however I would argue that it’s simply a continuation of the decades-long phenomenon of shortening the investment timeline. Before the early internet, it was crazy to invest in companies that had no clear way to profitability. And yet this pre-profit funding is the foundation of the VC-fueled “startup ethos” that has produced so much of the civilizational advance we’ve seen over the last few decades. I think the free-form collectives and vision-before-product ethos of web3 is the next step in this process, and I think this is something that keen onlookers will come to realize over the next few years.
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