2021 Messari Mainnet: Two Key Themes and Takeaways

Despite two market downturns, Messari’s Mainnet event earlier this week in NYC was way more important for the industry.

Theme #1: The Future of Crypto is Multi-Chain

This past week, several thousand crypto enthusiasts descended on NYC to attend Messari’s Mainnet event & discuss the future of crypto.

One crucial takeaway from the event was that “the future of crypto is multi-chain.”

What does this mean?

It means that there will be many different cryptoassets running on a lot of different blockchain networks.

OK, probably good to define some of those terms…

1. Blockchain: the technology that powers cryptocurrency.
2. Cryptocurrency / Cryptoasset: a medium of exchange (like dollars), store of value (like gold), or ownership in a network (like stocks) operating on blockchain technology.
3. Bitcoin: a type of cryptocurrency built on a specific blockchain. Example: If you’ve heard of Dogecoin (DOGE), that’s a cryptocurrency built on a different blockchain than Bitcoin. There are many different cryptocurrencies & cryptoassets.

So, when Messari says the “the future of crypto is multi-chain,” this means there won’t be just Bitcoin, Ethereum, and a few other cryptocurrencies in the future.

Instead, many different cryptoassets on many different blockchain networks will shape the future of a lot of different industries. These blockchain networks will all co-exist and interact with each other.

Takeaway #1: Crypto moves fast, be prepared for many blockchains.

No one really knows which blockchain technology and related cryptocurrency is going to get mass adoption. But, you can bet that there won’t be just one or even a few.

We are NOT blindly investing in the top ten cryptoassets (we think Dogecoin, Cardano, & BNB are all speculative risks not worth taking, for example).

But we are cautiously investing accordingly & refraining from reliance upon any single cryptocurrency.

PS - If you want a deeper understanding of the differences between blockchains, crypto, and bitcoin then read this and this.

Theme #2: The Multi-Chain Future Will Be Regulated

The second takeaway from Mainnet is that regulation on the crypto industry is coming.

While not all regulators have been critics of crypto and blockchain technology, SEC Chairman Gary Gensler has been a bit of a boogeyman. From a livestream on September 21 that overlapped with Mainnet 2021, Gensler said that cryptocurrencies fit the definition of securities and “We have robust authority at the SEC and will use it.”

Yikes.

Takeaway #2: crypto is new but be prepared for regulations coming soon.

Crypto’s $2 trillion market cap means it’s not dismissed anymore. Large, institutional incumbents with the most to lose will lobby hard against the crypto industry.

We believe that regulation is probably going to be the catalyst for the next multi-year bear market. If the SEC classifies most tokens as securities in the US, this would deal a major blow.

We think this is coming.

However, we do believe that Bitcoin is likely to remain categorized as a commodity/property based on comments from Gensler, the SEC, and other experts. We also think that the definition of securities might change and that older, decentralized projects like Ethereum may remain outside of a securities classification

Thus, we are currently considering some portfolio rebalancing that will better prepare for us a SEC crackdown. To us, this means maybe:

1. reducing exposure to early projects that are most likely to be categorized as securities (like Secret Network, Thorchain, & Axie Infinity)
2. taking some money out of crypto
3. trying to understand if a SEC crackdown is bullish or bearish for int’l, decentralized stablecoin project Terra Money
4. shifting our portfolio weight more toward Bitcoin, a la Ryan Selkis

You can view the full summary of Mainnet 2021 here.