A Few Things: What I (Re-)Learnt This Year, Sequoia on Web3, NFTS & ENS, Crypto Predictions for 2022
December 26, 2021
Good morning.
How are you and how was your Christmas?
I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.
Thank you for reading and I look forward to seeing you in 2022.
“The path into the light seems dark, the path forward seems to go back, the direct path seems long, true power seems weak, true purity seems tarnished, true steadfastness seems changeable, true clarity seems obscure, the greatest art seems unsophisticated, the greatest love seems indifferent, the greatest wisdom seems childish.”
- Lao Tzu
“Do not spoil what you have by desiring what you have not; remember that what you have was once among the things only hoped for.”
- Epicurus
"To attain knowledge, add things every day. To attain wisdom, remove things every day."
- Lao Tzu
A. What I (Re-)Learnt This Year
As another year comes to a close and I try to reflect back on what I’ve learnt, firstly I have to look back and smile at just how stupid I was last year.
Secondly, it was definitely the hard times where the learning and growth happened and the last few years had its fair share of them.
Summarising the year in to Three Points:
1) Hedonic Adaptation is Real: nothing is as big a deal as you think it is at the time. Angry or sad emotions from life traumas will fade remarkably quickly, but so will the positive surprises from one-time life upgrades. What’s left is just you.
Remember: This Too Shall Pass. Be happy with who and what you have today. The present is all there is.
2) Habits Are The Only Things That Matter: most of your day & life is comprised of repeating the same set of behaviours over and over. The way you get up, your thoughts. Your job. The way you interact with other people. The way you eat and exercise.
Unless you give all of this a lot of mindful attention and work to adjust it, it stays the same, which means your life barely changes, which means your level of happiness barely changes.
3) To Change Your Life, Change Your Habits: The easiest and best way to have a happier and more satisfying life is to figure out what ingredients go into a perfect day, and start adding those things while subtracting the things that create bad days.
For me the perfect day includes: positive social interactions where I learn something new, helping people, outdoor physical activity, making something (however small), problem solving, and some good old-fashioned hard work thrown in for good measure ;-).
This reminded me of James Clear’s quote on:
Real Wealth Isn’t Money
Real wealth is:
-not having to go to meetings
-not having to spend time with jerks
-not being locked into status games
-not feeling like you have to say “yes”
-not worrying about others claiming your time and energy
Real wealth is about freedom. Money can help achieve these things, but there are plenty of people who make lots of money yet aren't free.
This brings me to Prof. Clayton Christensen’s book: How Will You Measure Your Life?
The book was a great discussion on finding fulfilment using lessons from some of the world’s greatest businesses.
The three best pieces of life advice I picked up and carry with me are:
“In your life, there are going to be constant demands for your time and attention. How are you going to decide which of those demands gets resources? The trap many people fall into is to allocate their time to whoever screams loudest, and their talent to whatever offers them the fastest reward. That’s a dangerous way to build a strategy.”
“I had thought the destination was what was important, but it turned out it was the journey.”
“This may sound counterintuitive, but I deeply believe that the path to happiness in a relationship is not just about finding someone who you think is going to make you happy. Rather, the reverse is equally true: the path to happiness is about finding someone who you want to make happy, someone whose happiness is worth devoting yourself to.”
That ties in well with Scott Galloway’s Algebra of Happiness:
Just don’t follow his stock market advice…..
B. What Do I Expect From 2022?
As Neils Bohr said:
Prediction is very difficult, especially about the future.
Nevertheless, I will try to make some personal predictions about 2022:
1. Oil will cross $100/barrel and stay there, as bottlenecks persist and years of low capex in the energy industry lead to low supply growth. COVID variants will persist, but no further lockdowns will occur, and energy demand will rise substantially as we build out supply chains, onshore production and de-carbonise the economy.
2. Inflation will average closer to 3% for the year, coming down from the 6-7% it’s been headlining at, economic growth will slow again. The FED will only hike rates twice. The USD will weaken as other central banks also tighten rates. There will be much more dispersion in the equity markets, not dissimilar to 2021.
3. Cryptocurrencies will become much more embedded into our daily lives, and many more of you will open a crypto account / wallet. Commodities and cryptocurrencies will be the highest performing asset class of 2022.
This is NOT RESEARCH (certainly not “substantive”) or any kind of INVESTMENT RECOMMENDATION. Just my personal views for fellow financial professionals.
C. A Few Things Worth Checking Out:
1. An interesting piece on COVID, markets and politics. Thank you David G for sharing.
Key quotes:
At the heart of our predicament lies an insurmountable structural impasse. Debt-leveraged financialization is contemporary capitalism’s only line of flight, the inevitable forward-escape route for a reproductive model that has reached its historical limit. Capitals head for financial markets because the labour-based economy is increasingly unprofitable. How did we get to this?
The bottom line is that all this cash cannot be allowed to flood the real economy, for the latter would overheat and trigger hyperinflation. And this is where Virus continues to come in handy. If it initially served to “insulate the real economy” (to quote again from the BIS paper), it now oversees its tentative reopening, characterized by submission to the vaccination dogma and chromatic methods of mass regimentation, which may soon include climate lockdowns. Remember how we were told that only vaccines would give us back our ‘freedom’? All too predictably, we now discover that the road to freedom is littered with ‘variants’, that is to say, iterations of Virus. Their purpose is to increase the ‘case count’ and therefore prolong those states of emergency that justify central banks’ production of virtual money aimed at monetizing debt and financing deficits. Rather than returning to normal interest rates, the elites opt to normalize the health emergency by feeding the contagion ghost. The much-publicised ‘tapering’ (reduction of monetary stimulus) can therefore wait – just like Pandexit.
D. The Tech and Crypto Section:
1. Great piece from VC firm Sequoia on “Why Web3 is happening and why it matters”. Thanks to Jack Edmondson for sharing.
Key snippets below:
Money is about trust. Many people on our planet enjoy trust in their money and financial systems. We trust our central banks not to devalue our currency overnight. We trust our governments to avoid hyperinflation so our money retains purchasing power. We trust banks to secure our money and not loan it recklessly, and private companies to help us safely use our money for commerce and other financial services. We pay for the privilege of this trust in taxes and fees to financial services companies (a multi-trillion dollar industry). This foundation of trust has been an essential bedrock of our economic progress over the last few centuries.
Crypto will transform value on the Internet, and in doing so, the Internet itself. Blockchains will rewrite the way we own, sell, buy, trade, exchange and reward. As software saturates our world, crypto (software money) will saturate money—and everything we do with it. Blockchain’s inherent properties—instant value transfer, verifiable scarcity, and user‐ownership—could restructure trillions of market cap across payments, finance, gaming, content, social networks and more.
It can be helpful to organise crypto along two dimensions: space and time.
Space: Below is a map of the crypto ecosystem. It’s organized like a typical stack from hardware at the bottom to applications at the top, with the infrastructure to build and access it on the right. Before you get out your pitchforks, we know this is imperfect. Crypto doesn’t fit neatly into little boxes. Many of these categories overlap and crypto is constantly changing. But, it’s not a terrible starting point. We welcome input from the community.
Time: Here is a framework for when certain areas of opportunity may mature, inspired by a typical new technology adoption S-curve. This is again imperfect—building is happening simultaneously, phases are overlapping and interact in feedback loops. This is also not a replay of every local maxima and minima over the past decade. Instead, this is an attempt to zoom way out and imagine how we might move from millions to billions of crypto users.
2. If you are wondering into NFTs, it’s worthwhile listening to “A Primer on NFTs” - you will learn the basics of what an NFT is, what new creative paradigms they might unlock, and where we are in the hype cycle.
3. One of the things I bought recently is my ENS domain - ahmedhusain.eth. All of us know about websites and DNS (domain name service) that allow for the connection of web addresses to their associated IP addresses. ENS does this but integrated onto the Ethereum blockchain, providing you both an identity and a crypto payment destination, as a start.
The latest Web3 breakdown from Join Colossus is a great place to understand it.
4. Did you check out the Messari Crypto Report yet? This is a good tweet storm summary:
5. Good twitter summary on what to expect from the Crypto market by a Partner at a Crypto VC & HF:
6. Fascinating Bloomberg Odd Lots podcast on the “Booming Movement to Abolish Work”.
See you in 2022.
Christensen’s equation can be further reduced to a simpler metric for average wellbeing for a city: average hourly productivity, divided by cost of living or spending power.
Reasoning:
1. The more one overworks, the less productive they are
2. The more one works effectively, the more productive they are
3. fruits of productivity is always relative to the costs of living