Blockchain and Contrarians...


Lately I've been investing some time to understand Blockchain — what it is and what it isn't; how it works and what does it mean for the future; should I get involved with it or stay a million miles away. As part of my process I wanted to blog about it for a number of reasons: 

  1. Help galvanize my thinking and understanding of Blockchain.
  2. Work on my language so I could clearly articulate my thinking about Blockchain.
  3. Stimulate discussion and feedback on the topic to help with my thinking.

And for my efforts my friend Phil Friedman posted a blog entitled, "Some important truths about cryptocurrencies". To my surprise (and great appreciation) Phil dedicated his post to me.

This piece was inspired by Graham Edwards, who may or may not agree with what I've said here, but who is always, as I see it, an authentic contrarian and more than willing to explore concepts and ideas openly and honestly. Thank you, Grahamfor being a good sport.

I suppose this blog is a bait and switch because I don't really want to discuss Blockchain technology but re-enforce something much more important — the value of the Contrarian. Phil's dedication wasn't just a great compliment but an important reminder about what is needed to drive better understanding (as well as better decision-making).

con·trar·i·an [kənˈtre(ə)rēən] NOUN — a person who opposes or rejects popular opinion  ADJECTIVE — opposing or rejecting popular opinion; going against current practice or thinking:

There is a Truism that says if you want to make a good decision you really have to understand the situation. And to really understand a situation you have to look at it from as many perspectives as possible — and ask questions you probably haven't even thought of. As Phil says, "...explore concepts and ideas openly and honestly." 

I view the contrarian as a facilitator —

  • They help prevent groupthink.
  • They push back to ensure there is a discussion.
  • They ask the questions that may not get asked (for many reasons)
  • They offer a different perspective
  • They ask the question, "Why is that person running in the opposite direction? What does she know that we don't"
  • They know it's easier to agree — although they also know it doesn't really serve the discussion.

Contrarians are crucial for developing better understanding and better answers — and yes, maybe we can be a pain in the ass sometimes (but it's for your own good).

I suppose since Phil was nice enough to dedicate his blog to me I should use it to help with my continued understanding of Blockchain and it's partner in crime, cryptocurrency. In his blog, Phil had identified five cryptocurrency truths —

Truth #1: Crypto-currencies do not have any intrinsic value. Whatever value they have to an owner depends entirely on someone else wanting to buy them. Therefore, investing in such currencies amounts to nothing other than gambling on rising demand, whether that demand is rational or irrational.

I totally agree. As an intrinsic value investor myself I would never invest in any currency for that matter. If you can't calculate it's intrinsic value you simply can't determine if you are buying too high or too low. It's why Warren Buffet has very little interest in cryptocurrency (and my portfolio manager for that matter).

Truth #2: No single crypto-currency held by an investor will ever appreciate in "value" as long as the issuer of that currency continues to sell the currency at the same price or lower than that paid by the investor in question.

I also agree... in theory. In reality many markets are inefficient and allow for arbitrage opportunities. I was shocked when someone said they make $7,000 per month with retail arbitrage — they buy product on Craig's list and then turn around and sell it on eBay for a higher price.  

Truth #3: You cannot rely on the advice about investing in crypto-currencies from anyone who has already invested in them.

I agree. For me it's like the person who enthusiastically offers a "stock tip. I do believe they can offer insight as to how the "crypto-currency" ecosystem works, but I'm not taking investment advice from them.

Truth #4: Decentralized blockchain-based data-keeping was originally associated with Bitcoin crypto-currency as a means for imbuing the system with perceived credibility. 

This is where I think Phil and I look at Blockchain differently and maybe it's my issue over the term "perceived credibility". My understanding is because of blockchain the "double spend dilemma" was eliminated. And because of this, internet currency could be created without the concern of it being copied 1,000,000,000,000 times. Blockchain has created a "credible internet currency" — now what that currency value is, well that's another discussion. And although I agree crypto-currency doesn't have any intrinsic value, I do believe it can have associated value with whatever ecosystem it is part of. Much like paper money. 

And this is what excites me — something of value can now be created for our efforts in Internet ecosystems. 

Truth #5: Investing and trading in crypto-currencies is a zero-sum game.

All I can say is there will be many people that make money and there will be many people who lose money. What I can also say is cryptocurrency isn't going away anytime soon.

Again thanks to Phil for dedicating his blog post to me; thanks even more for your thoughts, perspectives, and way of thinking. It's the only way for me to better understand.

So is the way of the Contrarian. 


Sometimes "solutions" can be just as "problematic"...

The following is the original and the rewrite can be found by clicking here.

If you want to evoke a response just mention a "problem"... "I'm glad it's not my problem". "I wouldn't want to be you". "Oh, that's a tough situation". "That's really unfortunate, I hope you can work through it". The bigger the problem, the more exclamation marks you will find involved.

Whereas, if you happen to mention you have a "solution", you will elicit a far more upbeat response... "Way to go". "You saved the day". "You are a goddess and have saved the company". The bigger the solution, the more exclamation marks you will find involved.

Intuitively, leaning towards the "solution" side of the equation makes for a better day; although having said this, the Contrarian off in the back corner just looked up and wants to offer a thought or two. He has no debate with the fact that "solutions" are better than "problems" and he also wants to scream out, "You are a goddess and have saved the company!!!" He does however suggest that you shouldn't be so quick to perceive a solution as all rainbows and unicorns, as they can be problematic unto themselves (no pun intended; well maybe a little).

Solutions are defined by the problems they "solve for", so as a quick litmus test you need to ask your self:

  • "Do I have a solution for a recognized problem?"
  • "Do I have a solution looking for a problem?"
  • "Do I have something really cool, but not sure what to do with it?"

Other questions may come to mind, but the point is a solution needs to have a problem to solve for - Anything else is problematic as it becomes distracting, wastes time, and detracts from finding a real solution. And even with an aligned problem and solution, it doesn't mean you are free and clear to receive all of those accolades because there is still that whole matter of "line of sight".

Now that you have a problem that has found a solution, the question becomes how are you going to get there. People will want to understand how you are going to actually get to the solution - Do you have "line of sight" to how you will make your solution a real one... what is your pathway to success?

The concept of "line of sight" is beneficial in three regards:

  1. "Line of sight" forces the development of the plan making the solution a reality; it forces the execution steps for success to be developed.
  2. "Line of sight" reminds you to develop tight and concise language to articulate the problem, solution, and the pathway to success. More often than not, you will need leaders, partners or investors to "see what you see" to get support.
  3. "Line of sight" will help you determine if the solution is workable in the first place.

It looks like the Contrarian is finished and has gone back to whatever he was doing... although he did mention something about "you saving the company".