We're Still Early - The Daily Gwei #257
Don't lose sight of what matters just because of day to day happenings.
I’m often asked by newer crypto people if they are “too late” to the party when it comes to learning about or investing in crypto. When answering this, I try to frame it in the context of other technological revolutions so I ask people if they would’ve considered themselves too late to the internet in the late 90’s/early 2000’s - after all, many of the world’s largest internet/tech companies were only started in the mid-late 2000’s (Twitter, Facebook, Tesla etc). So if we look at crypto from this lens I believe it shows us that the party is just getting started.
It may seem like the crypto ecosystem is really big right now as the total crypto market cap is $1.6 trillion and millions of people have been pouring into this ecosystem over the last few months. Though I think the key thing to do here is to separate the centralized exchange activity from the users of the actual apps. For example, if we look at actual users of Ethereum-based DeFi, we can quickly see that there’s around 2.5 million Ethereum addresses that have interacted with a DeFi app. Now, of course, many people have multiple addresses so this metric is greatly overstated - I would wager that maybe only 1 million people have interacted with DeFi at this point. For context, that’s around 0.013% of the world’s current total population.
Another thing we can look at is how integrated crypto is into people’s every day lives. Are they using DeFi for day to day financial services? Is Ethereum serving as payment rails for commerce? Are local communities turning themselves into DAOs? None of this is happening at global scale yet - not even close - which just makes it all the more bullish because it means this ecosystem can still grow 1000x across all metrics without breaking a sweat. Though it also means that we have a lot more work to do if we want Ethereum to become the backbone of a new financial system/web.
I often say that I think Ethereum’s total addressable market (TAM) is every human on Earth because of things like DeFi - everyone needs financial services and I believe that DeFi will become the best financial system on the planet. But right now, DeFi is still very young, very early and very hard to use for the every day person. Once these barriers come down, that’s when we will see the coveted “mass adoption” begin to take shape in an exponential way. But even after that there will still be plenty of opportunities in the crypto ecosystem for people wanting to work and invest within it even though it may not be “early” anymore.
On top of all of the above, I think that many in this ecosystem just need to have patience when it comes to growing this industry. I often see people wanting crypto to be a sprint when in actuality it’s a marathon (I believe this is due to many people wanting quick crypto gains). The reality is that most (if not all) of the successful investors I know in this space are long-term orientated and have a time horizon of decades - they understand that it takes time for a brand new technology to be broadly adopted - but once it is broadly adopted, it becomes an unstoppable force.
Have a great weekend everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.