This post was adapted from a thread originally posted by @Flantoshi on Twitter
If there was a list of most desirable traits to have, sex appeal would definitely be top of the list for most people, with intellect or common sense a distant second and third.
It makes sense why we do this, we’re a sociable species that wouldn’t be able to hack it in the wild without the help and approbation of our peers. Looking for social recognition is embedded deep into our fight or flight instinct.
Unsurprisingly, we often fall prey to group consensus and don’t think for ourselves. We don’t only have these biases in the social arena, but we also bring them when it’s time to invest.
Just because some project is exciting, it doesn’t mean that it’s a good investment. On the contrary, as we will explore in this article, boring is profitable!
Boring is Profitable
A few years ago, I became a ghostwriter, and very quickly I learned there were two types of writers:
Those who earn pennies and write fun things like novels, and those who earn a fortune by writing complex instruction manuals that nobody reads.
As a general rule of thumb, the more niche, complex and tedious something is to write, the more profitable it is to produce. Not only that, but it’s easier to get your foot in the door as there are fewer people who even try to get good at it.
Consequently, I niched down to things I already had experience in, which was finance and marketing. And within a handful of weeks of doing that, I got to work with names you might already be acquainted with. Then came a client who ran a crypto startup, and my life changed overnight.
I’ve heard of people specializing in ghostwriting all manner of bizarre things, like cat furniture reviews, and other such arcana. Point is that instead of having to compete with a universe of hundreds of millions of wannabe writers, you end up competing with a handful of them and you can charge accordingly.
The same happens with investing — the news will focus on attention-grabbing headlines, not solid business fundamentals with sober management at the helm. As such, given that people default to names and ideas they’re already familiar with, they’ll go with exciting investment ideas that they’ve heard about before. You should do the exact opposite, don’t focus on something flashy, invest in projects that are relatively dull and distinctly unsexy but have high profit margins and solid business models.
Sexy investments have the danger of being very unstable and having less substance than you might expect.
Flash in the Pan
People often invest as a status symbol or to be considered part of the in-crowd. However, the problem with assigning a status symbol to an investment is that it becomes just like any other luxury good, and people become rather price insensitive.
Objectively speaking, is a Gucci bag really worth thousands of dollars? No, the mere fact that there are brand knock-offs that are identical to it but cost a fraction of the original price, should be enough to hint that there’s something else afoot (especially as it’s not a project dependent on R&D).
The same could be said about sexy companies like Tesla. Objectively speaking, is Tesla that far ahead of the competition to be worth basically the whole car industry, especially when it only makes 1/46th of the revenue?
Wall Street seems to disagree, as Tesla held the title of most shorted stock in the market for quite some time. In other words, investors were taking bets that the price was heading down in the near future.
Despite no longer being the most shorted stock out there, it’s unlikely the financiers have altered their minds. Nothing has fundamentally changed, except the juice might not have been worth the squeeze. To quote one of the grandfathers of modern economics, John Maynard Keynes, “Markets can remain irrational longer than you can remain solvent.”
Tesla’s position as a sexy company allows it to break the rules and get away with it. They can overpromise and consistently underdeliver, overleverage themselves and pay it off by putting equity as collateral, etc.
Tesla fanboys definitely did not bat in my corner when I wrote the Twitter thread that inspired this post. The argument went that I’m being most unfair by measuring Tesla as a car company, when it’s actually so much more, as they are developing a myriad of projects.
But I’m more of a practical sort, in Spanish there’s a saying “if my grandmother had wheels, she’d be a bike.” Or, put simply, you get measured by what you have, not what you could be.
Sexiness allows a company to break the fetters of reality. However, there usually comes a day where the spell wears off, and the castle in the air comes crashing down. It might not be today, it might not be tomorrow, and it might not even be this decade, but the spell does eventually wear off.
At that point, it’s anyone’s guess what might happen! Hype companies don’t need to deliver results until the hype dies and the bill comes — more often than not, they can’t pay it back.
Cardano Isn’t Sexy
Let’s face it, our leader looks like this, in what universe is this sexy? ☝️
Neither is peer review, decentralization, formal programming standards or meticulous care to prepare for upcoming global regulation something that excites most people. That said, it attracts the right audience — the type of person who doesn’t measure their attention span in days and weeks, but in months and years.
The Cardano community understands that there is value in building something with care. They also know that taking shortcuts by centralizing the infrastructure, using a programming language that is less secure but more user friendly, and not caring about the regulatory landscape in the future, would speed up the process, but at the cost of its potential.
For Cardano to succeed, it must focus on the boring — the unglamorous things nobody else wants to do, but everyone needs and is willing to pay for.
How to get Mainstream Adoption of Crypto
According to Pew Research, only 16% of people in the US have invested in crypto. From hearsay evidence, I’d guess most of these early adopters have dipped their toes in the blockchain world via FinTech apps like Robinhood.
In other words, when people buy Ethereum or any such project with utility, chances are that it’s sight unseen, and they’ve never actually interacted with any decentralized app (Dapp). Hence, when people talk about current adoption rates, it’s presently a silly metric.
Normal people see crypto as a scam, or a get rich quick scheme, not somewhere to invest and meaningfully use to conduct their financial life. We won’t be able to capture the other 84%, without a substantial change in our underlying ethos.
Are we genuinely creating long term value on the network when people are trading pictures of monkeys for more than the value of a house, or is it a vanity metric?
Charles Hoskinson, the founder of Cardano, has emphasised that he will only consider the project a success when people are meaningfully able to utilize the blockchain to enhance their quality of life, on a day to day basis.
This will come in many forms as real-world applications, like identity management systems, microloans, insurance markets, government infrastructure, logistics tabulation, etc.
Unsexy as all these things sound, they are useful, and people would instantly adopt them earnestly, as it qualitatively improves their lives. That’s how you gain genuine adoption!
What Real Success Looks Like
Look at Twitter and one thing you’ll constantly see is the Technical Analyst astrologers saying things like “Cardano is bleeding against Ethereum, now that it’s losing market dominance.”
I’ll ask you simply: who cares about what blockchain has what market percentage when there’s still over 84% of people to onboard, and most of the 16% who have dabbled in crypto aren’t properly integrated into the industry?
As far as I’m concerned, if you don’t have a plan to meaningfully bring these people into the fold, you’re just vapourware.
What drew me to crypto as an industry was when I understood that blockchain technology had the potential to absorb every industry in existence, much like personal computers and the internet did before it.
When you are intent on world domination, then you should have a plan, and actually act like you mean to take over the world.
Do you know how Pepsi and Coke measure their market penetration, given that most people on the planet already drink them?
They measure it in a metric they invented called “Share of Throat,” as in what percentage of liquid that people consume is theirs — why they didn’t call it “Throat Penetration” is anyone’s guess though.
Throat Share on the Blockchain
If world domination is our goal, let’s think in those terms. Our key metric should be “what percentage of people’s economic life can be run better on Cardano than elsewhere?” and “how does everyone else compare?”
The goal should be that if you perform any action whatsoever that moves something valuable (money, assets, intellectual property, data, etc) from one place to another, we should find a way to use the blockchain to improve the experience compared to what we already have.
We don’t need something “like a bank,” we need something better than a bank. And if we can’t improve on already existing systems, why bother putting it on the blockchain?
In either case, while the average person doesn’t care about peer review, decentralization or regulatory oversight (if it doesn’t translate to better user experience), governments and corporations certainly care!
Why Big Institutions Need to be Boring
Peer review and having solid programming foundations are essential when a single minor bug could cause a catastrophic system collapse. Just look at what happened with Y2K, where it was feared that, due to an accidental programming quirk having to do with memory usage, computers wouldn’t be able to cope with the switch from the year 1999 to 2000, and might collapse everything.
In the lead up to New Year’s, people started fearing the worst, and apocalypse survival gear sold out. Behind the scenes, big institutions were no less relaxed than the public, as their developers manically tried to fix everything.
The total cost of the work done in preparation for Y2K is estimated at over $300 billion ($451 billion as of January 2018, once inflation is taken into account) — and that’s when those kinds of numbers actually meant something.
In other words, if big institutions don’t focus on getting things done properly, it can cost entire countries’ worth of GDP to rectify, if it is at all possible to solve before a systematic collapse.
Cardano as an Underbelly
Did you know that over 1 in 16 websites run on Amazon Web Service (AWS) servers? Do most people even know what AWS is or do they care? It’s Amazon’s most profitable niche!
In fact, it’s so profitable that it’s what has essentially kept Amazon afloat. It wasn’t Amazon’s drones or fanciful mergers that made it money, but boring backbone infrastructure.
That’s what Cardano has in its future if it plays its cards right — if it manages to meaningfully onboard governments and companies enough that they feel comfortable running their key infrastructure on it, that’s its key to mass adoption.
True, in that scenario most people would not know (or frankly care) that Cardano even exists. This is what happens when you go for boring investments, you will reap the profits, but never the accolades.
Boy, this turned out a bit longer than the tweet thread, eh?
Blockchain technology has the potential to change the world. I view it as one of the great asymmetric bets of history — heads it goes to $0, tails and it takes over the world.
Every aspect of your economic life is up for grabs — banking, investing, identity management, etc — and in aggregate this is HUGE. Cardano has all the cards necessary to gobble huge swathes of this new frontier, but we need to focus on usefulness to everyday life, instead of hype.
In the long term, utilization and adoption will drive the price of blockchain projects — not partnership announcements, marketing gimmicks, or horrendously expensive and crudely drawn pictures of monkeys.
If you’re in the crypto or in the traditional finance industry looking for someone to ghostwrite content for you, please do not hesitate to message me. I’m a full-time ghostwriter.
Join the community over at @flantoshi on Twitter.
And if you would like to support this project and help me pay rent, I’ll pass on the tip hat and you can send ADA to: