Investing in smart contracts platforms, and believing in blockchain

Brian is joined by a special co-host, Nick “Pizpie” Cote (@mBTCPizpie) to talk about smart contracts, how he got into bitcoin, and believing in blockchain.

Welcome to Ledger Cast, hosted by me, Brian Krogsgard (@ledgerstatus on twitter), and in this episode I’m joined by a special co-host, Nick “Pizpie” Cote (@mBTCPizpie). Ledger Cast is a cryptocurrency trading and blockchain ecosystem podcast.

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The information in this podcast should not be construed as investment advice, it is purely educational material and you should always do your own research before buying.

In this episode of Ledger Cast, Nick and i talk about smart contracts from a fundamental and investment perspective. We also discuss his story of getting into crypto in 2012, and why he believes in the future of the cryptocurrency space.

At times in this episode, we zoom out on the macro-economic scale.

News of the week

Rootstock launched their smart contract platform on a main net on January 5th, after running a test net for months. Here’s a good overview of what Rootstock is as well.

Nick’s origin story

Nick learned about Bitcoin in 2011 and bought his first bitcoin in 2012 near the top of the cycle that year, when he became interested in additional uses for blockchain through smart contracts — though smart contracts were hardly a concept at the time.

He bought some in part to get, “skin in the game,” which forced him to increase his interest and curiosity about the technology, and he advises the same for others looking to learn about bitcoin and blockchain.

Nick got involved early, and as much as possible tried to not spend earnings he made in crypto, and instead attempted to live as cheaply as possible and re-invest all gains back into the ecosystem. He’s been full time almost six years, having quit his job soon after he got involved.

The ecosystem has changed a great deal since then, especially in terms of global market cap, growth trends, and liquidity improvements. Nick noted how traditional economists have ignored network effects when trying to analyze possible value of the ecosystem.

Things we discussed and links

  • Bitcoin as store of value versus currency
  • The youthful nature of the technology, compared to the web
  • How blockchain can be used in supply chain and other non-financial systems
  • The malleability of blockchain
  • S-curve adoption
  • Price versus adoption and big money versus small money
  • Nick referenced Andreas Antonopoulos several times. Andreas has an extensive YouTube channel that includes many of his talks
  • Effects of a global financial crisis
  • Media narrative
  • Website analyzing whether the stock market is going to crash
  • Canadian Stress test for debt
  • Auto loan debt reaching levels like mortgages did
  • Exchange growth and halting new registrations
  • Market cap increases
  • When do we get bearish on Bitcoin?
  • Technological revolution vs idealogical revolution
  • Trace Mayer and network effects of bitcoin
  • Equity distribution with smart contracts
  • Industries we think can be early movers with smart contracts — and the bureaucracy that makes it harder
  • Behavioral economics (Freakonomics and Planet Money podcasts)
  • Risk aversion in society
  • Birth of the 401k
  • The inventor of the shopping mall and his regret
  • Understanding media cycles for investing
  • Chris Berniske on valuing an asset, on Unchained
  • Lopp’s Bitcoin resources
  • Audio book (free on Youtube) on psychology of trading.

Smart contracts

Smart contracts bring a whole new world to bitcoin and the blockchain. There are many ideas and platforms that promise a bright future for putting many things on a blockchain — but the idea and the reality can be quite different.

Nick and I talked about what smart contracts are, how they will look in the next five years, and where we are now with them — a very early beta and proof of concept.

When you talk about smart contracts, most people think first of Ethereum, with good reason. And there are dozens or even hundreds of alt coins attempting to improve or replace Ethereum. They are attempting to do something different in terms of base language, scalability, governance, centralization, or other matters.

Nick thinks we’ll eventually see network effects that bring users to a single standard that is clearly superior — making the vast majority of other options less valuable. His strategy for trading these is two fold: short term and long term.

In terms of long term bets, his strategy is to, “pepper everything,” and plan that one will moonshot and pay for all the ones that didn’t do well. And when he talks about long term, it is probably different than most people are thinking — looking at multi-week moves at least. The speed of the market also makes it a big time saver to bet long term rather than short term — because to bet short term you’re going to have to spend a lot of time and energy and may still lose.

Nick says that the buy and hold strategy for coins with good fundamentals is typically a better strategy — but it does depend on having quality teams and entries that relatively early.

Nick’s tests for an investment:

  • Is there a working product?
  • Is there a good team that’s easy to access? He gives bonus points if they are not anonymous.
  • Coin supply and distribution, lock-up periods, and other governance mechanisms.
  • Does the idea need a blockchain, or is it being squeezed in?

Listener Questions

Ask us a question

Every episode, we’ll try to answer one or two audience questions. If you ever have one, just tweet at us or fill out the contact form.

Investment tips

Nick: Nick gave a slew of tips:

  • Don’t chase price. Even if it breaks out, it usually retests and throws back.
  • Don’t lump orders into one place; scale them across a range.
  • “Price will respect resistance and support more than it will break it.”
  • Have a trade plan and stick to it.

Brian: My tip was to check out yearly pivots, which are brand new since the year just started. It’s a standard Trading View indicator, and just change the setting to yearly. For older assets like bitcoin, it can be really interesting to see horizontal resistance and support.

Find Nick and Brian elsewhere

Interested in sponsoring?

We’d love to talk to interested parties about sponsorship opportunities. We are open to suggestions, but are not seeking deals that include promos for ICOs, etc. But if you do something interesting in the space and want to chat, contact us.

Music: “Oh, the chains” by Joel Madison Blount