Each week we ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and we throw in a few random zingers to keep them on their toes!
Each participant then gets to remove one blockchain question — and a personal one — and they can substitute in two of their own for the next victim.
This week our 6 Questions go to Tom Shaughnessy, a co-founder of Delphi Digital.
Delphi Digital is an institutional crypto research and consulting boutique. Tom is involved in everything from extensive reports on specific projects to unbiased thought pieces on the industry for analysts, hedge funds, family offices, asset managers and investors.
Tom also hosts the company’s research podcast which features the founders of major projects. Prior to Delphi, Tom was on the cloud and communications equity research team at Oppenheimer. He graduated with a B.S. of Finance and holds Series 7 and 63 securities licenses, and Series 86 and 87 FINRA research analyst licenses.
1 — What kind of consolidation do you expect to see in the crypto industry in 2020/21?
I find it hilarious that chains masquerade as friends until push comes to shove and they realize they have to actually compete with each other.
There are a plethora of new layer 1 blockchains launching, and several new ones that are competing for a small pool of both developer mindshare and user engagement. I expect the majority of new layer 1 blockchains to fail due to limited user engagement, lack of developer mindshare or their assets becoming extremely illiquid. This isn’t meant to be too negative, I welcome all experiments in the space, it’s just a reality.
We’ve all seen Bitcoin’s children take a shot at the king and fail miserably (Bitcoin Cash, Bitcoin SV), but now we will see the next gen layer 1’s move into the ring together.
I expect Polkadot to openly attack Ethereum and expect every layer 1 new and old (Blockstack, Tezos, Nervos, Solana, Cosmos) to focus on viciously gaining mindshare, pitting themselves against each other.
Hand holding is done, blockchains are now holding guns.
2 — What’s the most interesting place you’ve ever visited, and why?
I really enjoyed the beaches of Tel Aviv, Israel. Everyone gets out of work and enjoys life outside playing volleyball on the beach and soccer on the shore. In New York people work every day until they burn out – but hey, I love it here and I love the people. Seeing NY’s resiliency in the face of Covid-19, it’s feeling of strength with an r0 that’s way higher than the virus. NYC and the world will beat this.
Off topic, but I am beginning to suspect that the majority of people may have already had Covid-19 and a major fund out there is building a long position based on serological testing results which could demonstrate this. I am not a doctor, and nor am I saying the virus isn’t a big deal, but we are seeing reports of people getting over minor cases and existing drugs (HCQ) working.
When everyone thinks the world is going to end, that’s a great time to go long. Either you get a good entry (we recover) or the world ends (we all die) so you might as well get busy building and taking advantage of some deals.
3 — Will Ethereum 2.0 change the game? How?
If successful, Ethereum 2.0 is a game changer. You’re taking the smart contracting platform with the most developers and real use cases built on top of it, and giving it new features and capabilities that will allow devs to create even more immersive, imaginative and next-gen uses cases we’ve never seen before.
If developers are able to create automated liquidity pools, decentralized exchanges and synthetic asset platforms on ETH 1.0, then ETH 2.0 opens the door to another world of opportunities.
Now, ETH 2.0 is also an opportunity for any new layer-1 (holding a gun now) to attract Ethereum’s developers to its own chain, as the shift to ETH 2.0 is a multi-year journey that is fraught with delays (everything in crypto is delayed though).
It all comes down to trust and expectations: if the goal line for ETH 2.0 continues to move, developers will switch to a different field (chain) and if enough move, users will funnel in to play with the novel creations made by these developers.
Let me qualify the above though. Better tech doesn’t drive a community, but a community can drive better tech. ETH 1.0 does not have the best tech for a smart contracting blockchain, but it does have the best community who will likely figure out the tech.
People are caring less and less about layer 1 competition and more and more on vertical competition. Vertical competition is where the magic happens, you get novel creations like Uniswap and Synthetix, applications people can be wowed by and that they will share with their friends.
Layer 1 is just becoming an exhausted argument – people don’t want to compare consensus mechanisms across different chains, they want to use killer applications like Synthetix and others.
I’m not saying a new viral layer-1 can’t emerge, but what I can say is that every day a new one doesn’t, is another solidification day for the incumbents. If we reach a day where two layer 1’s are on par with each other with respect to devs, then it comes down to crypto economics, or which layer 1 accrues the most value.
There are a plethora of experiments here – for example Blockstack (STX) holders will earn Bitcoin for basically staking and Nervos’ native token CKB represents ownership of scarce layer 1 state space.
Not that this is financial advice, but wise investors are being picky. If the layer 1 they like is successful but the token doesn’t accrue as much value, they look instead to the tokens or equities built on top that may accrue more value on an adjusted basis.
4 — Who makes sense to you, and who makes no sense whatsoever…?
The idea that we are inside a simulation takes me for a wild ride. On one hand, its a non-zero chance. On the other hand, how big would the computer have to be to simulate “everything”, all the time. I probably spend way too much time watching Sci-Fi but if you liked Black Mirror, check out Love Death & Robots on Netflix and Tales From The Loop on Amazon Prime.
Two other things that make no sense to me are XRP and EOS. Relics of a past time, that somehow squirmed through the crazy whirlwind growth phase a few years ago. Price is what you pay, no value is what you get for them. Buffett, please don’t get mad I remixed that one.
5 — What are the best and worst aspects of the shelter-in-place orders for you personally?
The worst is how work and personal time become melded and days just blur together. The other day I was up until 4-5am working on something and slept until 2pm the next day.
The best part is that we will see a decrease of other diseases and we may emerge from this actually healthier than ever. Everyone is home, not catching and spreading other illnesses.
Post coronavirus parties keep me up at night though. People are going to do so much damage once they’re able to meet, that the potential for reinfection (not sure if this is real) and the amount of partying people will do will certainly cause some damage. At this point, I’m kind of looking forward to a few parties!
6 — What will happen to Bitcoin over the next ten years?
We all talk about scarcity and block space in the crypto world. Bitcoin will continue to take up the mind space of more and more people.
Bitcoin will grow in the minds of macro strategists looking for yield, in the minds of people in people who live in countries with unfair monetary policies or regimes who are looking to safeguard their wealth, inside the minds of tech visionaries who use it to create new applications and use cases, and within the people who are tired of the inefficiencies of the legacy banking system.
More broadly, Bitcoin will grow inside the minds of every regulator and world leader. Bitcoin is the invisible, immovable devil or angel on every shoulder whispering that if you eff up your country’s economy or devalue your currency, Bitcoin is always there as an alternative for everyone.
Tom substituted questions 3 and 4 with two new ones for our next buidler…
Star Trek or Star Wars – and why?
Which media personality or influencer do you enjoy most in this space? (Enjoy, not necessarily agree with!)
