There has never been a better time to bet your career on crypto. A series of historic improvements to the fundamentals of the asset class this year have decreased the risk. Meanwhile, the potential rewards are as high as ever.
There's an old saying, "Nobody ever got fired for choosing IBM." The implication of this statement is that if you make a bold decision and it backfires, you can get fired. But if you make that same decision and de-risk it by hiring a reputable firm to support your decision, you're good.
This is a loser mentality but undeniably true. I've heard a similar axiom applied to institutional investing – "Nobody ever got fired for following Yale Endowment" – which was why Yale's foray into crypto was such a big deal. It de-risked the asset class for Yale's peers.
Here's a simple framework to help illustrate the point:
Most people in most jobs stick to boring activities. They won't get fired for these low-risk, low-reward decisions but they're unlikely to make a name for themselves either. They'd love to find low-risk, high-reward opportunities but those are harder to come by.
Another way to put it is by highlighting the quadrants that could threaten their survival in their role:
Anything high-risk could lead to firing. Unsurprisingly, most employers don't want their people acting stupid or outright gambling.
Crypto fell squarely in the risky half of the diagram for most people. Indeed, early adopters took on massive risk by starting companies in crypto or being the "crypto person" at their firm. It took deep conviction in the inevitability of the asset class to take on that risk.
The risk tolerance required to jump into crypto has decreased substantially over the last year with breakout successes from startups, endorsement from the who's who of institutional investors and a top-to-bottom-to-top market cycle, proving the resiliency of the asset class and those who believe in it.
This time last year I wrote for CoinDesk about the need for "lighthouse customers" to illuminate the way for high caliber founders and investors. We got that in spades, most notably in decentralized finance (DeFi). I mentioned MakerDAO, Compound and Uniswap as potential trailblazers. MakerDAO's DAI supply recently crossed $1 billion, Compound has more than $1.5 billion supplied on its platform,and Uniswap volumes have surpassed Coinbase's several months this year at tens of billions of dollars.
Endorsements from legendary investors including Paul Tudor Jones and Stanley Druckenmiller embolden other traditional investors. Major financial institutions such as BlackRock and Citi have changed their bearish tune. And previously skeptical influencers such as Jim Cramer have turned into vocal supporters. Last year, I struggled to find enough examples to illustrate my point. This year, there are dozens of similar data points that I have to omit for concision!
Market conditions have validated those who kept their heads down and built during the painful drawdown from 2018 to early 2020. A full top-to-bottom-to-top market cycle turns "crazy" crypto people into "visionaries." And BTC doesn't look like a pump and dump, it looks like a macro hedge.
Altogether, this shifts the risk profile of crypto out of the danger zone for many people. Betting on crypto can still get you fired, but it's less likely now that billion-dollar businesses have been built and some of the most well respected figures in institutional investing have made their positions public.
Meanwhile, the potential rewards are still immense. We have made tremendous progress but we are still in the embryonic stages of the industry. BTC is still a small fraction of the market cap of gold, and one could argue that its potential is much greater than that. While DeFi has exploded, it still represents only a nominal amount of capital compared to traditional markets. And companies everywhere have under-invested in crypto over the years, yielding white space for ambitious people looking for high potential opportunities.
Just as risk can jeopardize a career, so, too, can reward make a career.
Altogether, risk has gone down while rewards remain high. I expect ambitious people all over the world to recognize that.
Eventually the opportunity will sit squarely in the “boring” box as crypto becomes a part of everyday life. But now, the return on investment is as high as it has ever been. For everybody paying attention, the career risk has gone way down and it will take time for everybody to see that. Until then, savvy actors can take advantage of this asymmetry.
We'll get a wave of top talent looking for ways to make their mark in crypto. And they'll build alongside the battle-tested talent that has been here all along. That's something to get excited about as we enter the new year.
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