The opening day of this year’s London Blockchain Conference began with a keynote from successful entrepreneur and marketing professor Scott Galloway.
Having worked as an analyst for Morgan Stanley before founding the digital intelligence firm L2, Galloway knows more than most about the diversifying world of venture capitalism and the evolving nature of a plethora of sectors.
Exploring some of his predictions for the state of play of funding for 2024, Galloway was quizzed by an attendee on his thoughts on blockchain and cryptocurrency, likening it as a reaction from the younger generation who have been left in the cold from the shortcomings of their predecessors.
He said: “Everyone has two stages in their life. From 0 to 23 you are harvesting other people’s wealth, from 23 to 65 you’re investing. You are trying really hard to invest, to save money and build an army of capital that will fight for you and your family.
“When you are investing, you want the markets to crash. You want housing and stock to be as cheap as possible. The reason I am economically secure is because in 2008 the market crashed, we bailed out banks but we didn’t bailout the entire economy.”
Galloway revealed that due to his knowledge of the market during the 2008 crisis, he began to buy shares in Amazon, Apple and Netflix stock for eight, 10 and 12 dollars a share, respectively.
While seeming like a masterstroke of a stock market move, he realised that there is nothing that comes close to an opportunity like this for younger people today. That’s how, in his opinion, crypto came to the forefront.
“Where does a young person find value in disruption, because we have decided to flood the market with so much stimulus using young people’s credit cards to keep asset prices artificially high so that the incumbents stay rich,” said Galloway.
“This leads to massive dissatisfaction and rage amongst young people to the point where they think ‘I need to invent my own asset class’.”
This youth movement was evident during the GameStop short squeeze where hundreds of thousands of people rallied together on Reddit to drive the price of the gaming stores price to upwards of $500 a share – causing hedge funds and venture capitalists to become significantly concerned.
Crypto has also seen its fair share of short squeezes in the past, albeit to a lesser extent. Galloway reveals that young people aged 30 and under are, for the first time in the US and Europe’s history, not doing as well as their parents at the same age.
So to acquire personal wealth and create capital for themselves, they have created class assets that will not only provide them with some short-term financial gain, it also boots the older generation for their mistakes of the past.
Galloway stated: “They’ve created a mob squeeze of beat stocks. ‘Let’s stick it to the boomers and all get together to find stocks that are overshorted and with a little bit of momentum we can skyrocket.”
But what are Galloway’s views on blockchain and crypto as a valuable class asset? Whilst acknowledging a lane that the younger generation have made for themselves, he sees it more as a social movement as opposed to technical and technological innovation.
He revealed: “I think to a certain extent, blockchain seems like a slow moving database, I don’t understand the innovation there. What I see is a social movement, where people say ‘we are going to bet on our own asset classes, and while you boomers will get upset about it, we need our own way out and bet on our own prosperity’.
“So I see this as a social movement rather than a technical innovation. I have been a big bear on crypto. I understand probably more than 99% of people, but I still don’t understand it. But I think that part of its magic is that people can’t explain it.
“I think that it is an empty vessel with no underlying fundamentals, so it can triple and everyone will be able to say ‘look it’s tripled’.
Despite not being a big proponent for the rise of the Web3 components, Galloway does maintain that if the likes of BlackRock, Grayscale and Vanguard are investing in Bitcoin through ETFs, then there must be some semblance of stability.
It’s no secret that the crypto market has almost been its own worst enemy over the last two years. Through bad actors like Sam Bankman-Fried defrauding billions upon billions of dollars from FTX investors, or Changpeng Zhao’s Binance non-compliance charges in the US, investor confidence has been shaken and deniers have been taking a lap of honour.
But Galloway asserts that a fundamental component of the crypto and blockchain movement has been endurance. The crypto market has now endured several market crashes and still stands today, with Bitcoin performing at all-time highs.
If the market leaders believe in the endurance of Bitcoin and potentially the rest of crypto endurance, Galloway can’t deny its standing, even if he still remains a sceptic of the technology.
He finalised: “There are certain cryptocurrencies that do seem to hold some form of enduring store value, and who decides if something has store value; the market buyers and sellers.
“The best performing asset class here today is blockchain, and that is after the two leads in the field of crypto are going to prison. Which says to me that people have decided that it is going to be a stable and enduring asset class, and now we have Vanguard placing it into ETFs.
“So it seems to be that a fundamental component of this industry has been enduring.”
