They say that the bond which soldiers create when going through war together is unlike any other. That risk of you or your friend dying at any moment is so intense that it creates an inseparable link, an undying connection.
Riding the highs and lows of cryptocurrency mania and depression may not come with a risk of death but knowing someone else wen through them with you is powerful.
Having been a crypto researcher, investor and writer since May 2017, I feel an undeniable sense of connection, understanding, camaraderie and support when I hear the stories of those who have gone through the recent highs and lows of this rollercoaster ride with me too.
That’s what I felt when I watched the Anthony “Pomp” Pompliano interview with Dan Held.Both have a long standing reputation in the crypto sphere dating back to as far as 2012. Pompliano is the Co-founder and Partner at Morgan Creek Digital and one of the crypto Twitter heavyweights with 333.6k followers. His daily newsletter in which he analyzes finance, the economy and crypto for institutional investors boasts over 45,000 subscribers.
Dan Held has an impressive resume in the blockchain industry including being the Co-founder of Zero Block which was acquired by Blockchain.com and more recently as the Director of Business Development at Kraken. His knowledge is further demonstrated by his blog in which he elaborates on some of the points discussed in his interview with Pomp.
I reckon that people who regularly consume fleetingly relevant crypto news would do better to spend more time listening to the likes of these two delving deep into important overarching issues prevalent in our space.
Now vs Then, What Has Changed?
According to Pompliano, the 2017 cryptocurrency frenzy created an important shift involving more liquidity, sophisticated players, mainstream press as well as rigorous analysis of the field. Pomp asked Dan if he had concerns over the financialization of bitcoin leading to a dampening of upside potential.Somewhat controversially, Held views this financialization as not only inevitable but also beneficial for the space.
"Futures, options, lending and borrowing enhance price discovery and liquidity. They allow different operators in the crypto space to hedge the risk. Options have the ability to dampen the downside risk for miners which is a good thing."
He goes on to appease concerns over the increased lending and borrowing in the space, explaining how these long-standing and important opportunities enable businesses to grow and provide value.He even partially defends fractional reserve lending by saying that this is the price we pay for receiving loans and interest on our deposited money. He emphasises that it is the extent to which excess fractional reserve lending gets out of control which causes problems, not the practice itself.
But What About Market Manipulation?
When Pompliano asks Held for his thoughts on manipulation, he again appeases the listeners by saying that the ability for whales to manipulate prices has diminished.
"We now have more market participants and greater liquidity, e.g. the bid/ask spread and the depth of the order book in volume."
He elaborates, saying that every market has large participants and we cannot control who owns large percentages of bitcoin.
Balls of Crypto Steel
When asked about the allocation of cryptocurrency in his portfolio, Held reveals his deeply ingrained belief in bitcoin, prefacing his comments by saying that he does not recommend others to follow his investment advice.It is not without a hint of pride that he remarks,
"Over 90% of my net worth is in Bitcoin."
He explains that the risk you take depends on your life situation,
"I’m younger, I don’t have a wife or kids, I don’t have a mortgage."
Nonetheless he believes that bitcoin is a “necessity for any portfolio” and that “a 1 % allocation is a really easy allocation”.
"When you add it to your portfolio it improves your Sharpe ratio so it improves your return per unit of risk."
He then recounts how he sold his company ZeroBlock for bitcoin in 2013 when bitcoin was peaked at 1200 USD, only to see it crash down to 160 USD within the following year.
"You really have to believe in bitcoin to make it through these cycles."
How to Survive Bull Markets
It is after this that the pair discuss the often overlooked issue of surviving bull markets. Held explains that bull markets have their own set of narratives which can lead you to selling your bitcoin in order to buy other cryptocurrencies. He wrote an article on this subject of quantum narratives on his blog.Pomp mentions that pretty much all of the gains in 2017 came on 9 individual days and that there were plenty of people who lost money during that wild bull run.
What Would Make You Sell Your Bitcoin?
Pomp then asks Held an important question which all crypto investors should ask themselves, namely at what point would you stop believing in or sell your bitcoin?While the bitcoin cypherpunk community may not be thrilled to hear his opinion on the matter, it is hard to deny that his answer has some element of truth to it:
"Bitcoin's price represents the aggregate share of the belief in bitcoin. That's the only real way to kill bitcoin. You have to kill the belief of bitcoin in every one of our minds."
Dan Held goes on to explain that the price action until now is building momentum for bitcoin, due to a theory known as the Lindy Effect. According to Wikipedia,
"The Lindy effect is a theory that the future life expectancy of some non-perishable things like a technology or an idea is proportional to their current age, so that every additional period of survival implies a longer remaining life expectancy. Where the Lindy effect applies, mortality rate decreases with time."
He explains that if bitcoin were to go down to "crush depth", e.g. down to below $3000, it would destroy the Lindy effect. He emphasizes that bitcoin would not die if this were to happen but that it may then take decades to rebuild trust and belief in it.
Will we go Back to The Gold Standard?
Pomp then redirects the discussion to the issue of governments printing trillions of fiat and asks Held how he thinks this will play out for gold or bitcoin.Held thinks it's unlikely that governments would want to peg their money to gold as it would prevent them from being able to continually print money. He counters this by saying that governments may choose to go back to the gold standard if we see bitcoin reach a market cap of $8-10 trillion, effectively making it a "Gold 2.0". More importantly, Held reveals, is the issue of trust. Both gold and fiat require trust to be transacted with and if citizens distrust of the government, they will be unlikely to even accept fiat which is pegged to gold, partly because Fort Knox has not been audited in a long time.
"Greed is Built Into The Protocol"
Held next elaborates on what he means by his statement that "greed is built into the protocol".He starts his explanation by demonstrating how smart Satoshi is.
"He understood that human greed was inevitable, that it was human nature to accumulate resources by speculating on investments which would create returns."
To that effect he reckons that Satoshi foresaw the current "fomo viral loop" in which speculators buy bitcoin in order to increase their resources.He then goes on to describe how beautifully the Bitcoin system has been constructed, saying that not many people understand it,"If bitcoin's value rises, the block reward becomes greater which incentivizes the miners to behave properly which will then protect the network which is now protecting more and more money."
What Other Uses Are There For Blockchain Technology?
His opinion on the use cases for blockchain technology is an extreme one. He thinks there are simply too many sacrifices which are made with this technology, stating that,"Blockchain technology is very bad at doing almost everything.""You basically sacrifice everything to have a sound money, to have a Gold 2.0."Held further attempts to justify his argument by alluding to the "10,000 dead crypto projects" which provide empirical evidence for the failure of blockchain to succeed with other use cases. According to a site which tracks dead crypto projects back to the year 2014, it appears there are only 1565 dead crypto projects. Dan tweeted the following to me when I reached out to him for comment:Held goes on to lament that there is a strong lack of growth oriented people in the crypto space, i.e. in building a product and monetizing a project. This led to many projects going to market with a "shiny tech idea" without the skills or mindset required to grow their idea into something many people would use or benefit from.
What Can You Tell us About Kraken?
Held expresses respect for founder of Kraken, Jesse Powell, for having genuine skin in the game by putting "10s of thousands of his own bitcoin into Kraken". He goes on to praise Kraken for the resiliency it has acquired by enduring the 2015-2016 bear market, saying it is one of the older cryptocurrency companies out there.When talking about the exchange itself, he admits,"We could be a little bit better on user experience. That is something that we're cognizant of and going to be working on in 2020" He also points out that Kraken are one of the cheapest exchanges in the space and has some of the most "real volume" as measured by Bitwise.He goes on to talk about what Kraken offers beyond its spot exchange, e.g. margin trading, a futures platform and an alternative to Coinmarketcap, namely Cryptowatch.
What Are You Most Excited About in Terms of Bitcoin Technology?
Pomp turns the tables at the end of the interview, giving Dan an opportunity to ask him a question instead. Pomp's answer can be summed up in one word: time."I think that time is the most important thing and it is something that bitcoin has on its side."Pompliano elaborates by saying how most venture capital tech companies have to get things done within a certain timeline if they want to secure funding, whereas bitcoin is not limited by that artificial constraint. He implores enthusiasts and investors to have patience by saying, "This isn't just a technology. Money is a belief system. It takes time to build that belief and trust. It takes time for developers to develop products, for liquidity to build up and for people to get educated."He continues this line of thought with a more optimistic tone saying that it's incredible how much bitcoin has accomplished in just 11 years and that we can only guess how much more it can accomplish within another 11 years.
Below are links to all the questions from the interview:
- 3:06 What was the vision of the early crypto contributors?
- 4:20 What was the first boom cycle like?
- 9:08 Back then, was there an understanding of the impact crypto was going to have?
- 11:30 What were the biggest differences between then and now?
- 13:28 Is it halving or halvening?
- 15:00 What is your opinion on the financialization of bitcoin? Will it lead to a dampening of the upside potential?
- 19:00 How do you think about the manipulation of the markets?
- 21:14 What does your portfolio look like, what % is in bitcoin? How do you think about portfolio construction?
- 24:30 What is it like to have 90% of your portfolio in bitcoin?
- 25:45 Discussing how to survive the bull market.
- 28:45 What would change your mind about bitcoin?
- 34:50 What do you think is the future of fiat? Might we return to the gold standard?
- 37:40 Can you elaborate on what you mean by greed being built into the protocol
- 39:30 Held discusses how bitcoin protects itself.
- 41:30 Who do you think Satoshi is?
- 45:58 What other use cases are there for blockchain technology?
- 52:55 Talk about Kraken as a platform and what you’re doing on a day to day basis.
- 57:35 What was your biggest obstacle in life and how did you get through it?
- 58:00 Do you believe in aliens?
- 1:06:00 Held asks Dan, “What are you most excited about in Bitcoin?”
I want to personally thank Dan and Anthony for doing this interview which I've greatly benefited from. I've spent hours listening and relistening to it for the purpose of this post in the hopes that newbies and veterans alike can benefit from it. Please share it with your friends and followers! HODLERS UNITE!
---
Want to connect? Follow me at 
on Twitter!
Want to hear and see me talk crypto? Subscribe to my YouTube channel!
Want more of my content here? Follow me on Hive !
Want to support me elsewhere? Follow me on Publish0x.
---
Note that this article contains a referral link and that I may earn a small commission at no cost to you, for my effort in spreading the word about crypto.