30. Crypto Winners, Losers, Learnings and Projections for 2023

2023 predictions. Burgers. I've got a couple. One, I think there's gonna be a big focus back on defi and decentralized protocols, you know, focusing on trusting code, not people. I think there's going to be a big focus on that. Welcome back to another episode of the Ben and Berg Show. I'm your co host Ben and alongside me with us is Bergs. And today we are looking at our biggest learnings in crypto of 2022. What was our biggest surprises, what was the best innovation, who is the biggest loser and the biggest winner and what our predictions are for 2023. If you haven't listened to it already, we go deep dive with the Ape and Bird show on a deeper reflection with them from NFTs in crypto. But today Berg's not going to give our sort of thoughts on what our individual learnings were this year and a few other things. Bergs has been a wild year. It's been probably down only since the start of this, you know, start of 2022, but a few learnings I think we've both taken out of this year that we can roll into next year.

Definitely mate, we've got more than a few learnings here. Let's kick off with what was our biggest learning in crypto this year? And for me it was to use crypto as it is meant to be used.

And really what that means is crypto was this thing that was made to be peer to peer cash essentially on the Internet and it can't be confiscated, you don't need an intermediary and people are using it through exchanges, holding their money on exchanges and we've seen a lot of those exchanges blow up and really nothing is fundamentally changed in crypto. The innovation keeps like hurtling along at a rate of knots and really we just need to get back to basics and understand what this technology is and how to use it. So that was a big, big learning for me. And also things like the Tornado Cash event. So what happened there was if you put your money through Tornado Cash, it's essentially put your crypto rather through Tornado Cash. It's a mixer. Things get mixed up and it's just harder to track on a blockchain the money that goes in and reconcile it with the money that goes out. So it goes into a mixer, goes around and then outputs somewhere else. And what happened was in the states there was regulation against people that had used Tornado Cash because people were using it for money laundering and nefarious reasons. There are legitimate reasons to use this as well. But all the accounts that and addresses that were in tornado cash companies started to ban those addresses so you could actually get blocked. And the big lesson here is using being an intermediary. Let's say you're a crypto company and you're domiciled in the United States and all of a sudden they've said you need to outlaw these addresses, otherwise you're helping fund terrorism or some really nefarious act, you're going to obey that. So this is another thing with intermediaries. Whereas if you're self sovereign, you're holding that crypto, no one can tell you what to do. You don't need to use those services. You can use defi services and you'll be fine. That was a huge learning for me and I think there's going to be a lot more regulation next year which, which is great as long as we know the landscape. But for me just keeping my mind what crypto is and how it was meant to be used. Yeah, what were your learnings for this year, mate?

Yeah, and I totally agree with all those and that's going to be a little bit more in my 2023 predictions about decentralization. But for me my biggest learning this year was just a more awareness of being at the top of a bull market. And I've been through a couple of crazy bull markets before. I think this year was a little bit different for me personally just because I was so busy with work and the business that I didn't have that chance to really step back and see what's going on. And I think we can all be swept up in the middle of a bull market not being self aware and seeing what's really going on. You know, and hindsight's a wonderful thing, but three things have really stood out for me is like peak bull market craziness. One was Mark Zuckerberg's sister came out with the most cringiest wag me crypto song in March. I think it was literally at the height of a bull market. And I'm watching that back now, watch it before the episode and oh my God, I was like my skin crawled. The other one was Pixelmon, the NFT that minted 6:70. That yeah, it came out, raised $70 million in one hour and then was just a complete basic rug pool was like just a complete joke. It was just a picture and it was just, just dreadful. And the other one was the Matt Damon FTX super bowl ad literally coming out and causing even more FOMO at the peak of A bull market alongside like FTX buying sports stadiums, crypto.com buying sports stadiums, like you know, know just absolutely bananas. So that was, that was the biggest learnings for me. Take a step back, realize where we are in the market and don't get swept up in the, in the height of, of craziness. So it's going to be my biggest learning when we go into the next bull market.

I think that's going to be a learning for me that I will need to relearn every year because when you get swept up in it and you're trading, you're making a bit of money. Even those like we talked about on the Ape and Bird show, those Ghazali everydays, have you seen those? It's basically a guy sitting in a chair that took a photo every single day for however many years since he was 17 till he was 20 and he was selling those and they're going for 1, 2, 3, 8 each.

Yeah.

And when people are buying that and just because number goes up and people making money and people are buying it, you need to step back and go where are we at? The market cycle. And it's so hard to do because you get swept up in it, but you need to be one of the first ones to start pulling back and start selling off parts of your portfolio to realize those profits. And this is for all markets, not just crypto. But it is the hardest thing to do, mate. It is so, so difficult.

Very divorce market.

Right.

What was your biggest surprise?

My surprise was that the merge went off without a hiccup. I was very, very surprised at this. So we, you and I have been in crypto for about six years or so and really all the earth guys have been talking about the merge for years and years. It's going to happen, it's going to happen. We're planning, it never happens. Then all of a sudden it's leading up to the merge. I'm like, holy crap, it's like going to happen in August or September, like it's really going to happen. And then you get people like Checkmate coming on and being like, what's the issuance? What's going to happen here? What's going to happen there? All these questions are unanswered. No one can answer my questions. And he got everyone shook and we're like, God damn. Everyone's just dumping their f bags, going back to bitcoin, going this isn't real. You know, we're not doing this, you know, proof of work. That's the main point of Difference and honestly man, it went off without a hiccup. Yeah, there was, there was nothing happened. If you went to sleep for a month and came back, everything is exactly the same. They have changed their consensus mechanism going from proof of work to proof of stake so it is less decentralized but the blockchain is working perfectly as it was intended. Yeah and really this kind of hit home for me where how fast the F blockchain is like I had to self custody some stuff so I moved it around and it was, I was doing proof of keys because you know I'm non conformist, I'm not going to wait for the proof of keys day to do it, then I'll do it when I want to do it just to make sure it all works. So I was doing that and then on the bitcoin blockchain you move your funds, it takes like 10 to 15 minutes, you get one confirmation and on and on it goes. The, the reality is that both of these blockchains are great. Bitcoin functions the way it's supposed to function and then ETH functions the way it's supposed to function as well. And this is the whole thing with blockchains. You can choose your own adventure for what you want. But the big biggest surprise here was definitely that. Could you imagine there's literally billions of dollars locked up in this. It might have even been trillions at the time if you consider all the stable coins, all the smart contracts, everything that's on there within the ETH network and, and this thing just went off without a hitch. Like hats off to the devs and everyone that worked on this.

Yeah, massive feat and never been done before. And it was what everyone was talking about middle of this year when it was happening and then it just was smooth.

Mate, could you imagine if you're one of the devs how you be shitting yourself like you would literally because you know they had, they had this on test nets and they did a small test on it as well. But mate, this thing going full scale and not knowing what will happen at full scale and potentially like people have, you know they'll lose billions of dollars like that is just frightening. So I'm glad that they went really slow, they took their time and things turned out really well.

Agree my biggest surprise was FTX nft. I mean bur you and I spoke about this pre show that probably wasn't a surprise that a exchange or someone committed fraud in this space. That's probably what's not was a, you know, not a surprise. But just the sheer size of FTX that who they had backing them, I mean, they raised $2 billion of VC capital. They had.

They had Tom Brady as their, you know, go to head. They had stadiums, stadiums built. They had Stephen Curry on ads, they had their CASPF on the COVID of Forbes. I mean, this is like massive, massive, massive. So for me, that was probably the biggest surprise. Looking back, it's like, yeah, well, you know, probably the, you know, the writing was on the wall, but at the time, they probably didn't expect that, you know. So, yeah, one of the biggest surprises, I think.

Exactly. And everyone's like, oh, it's a black swan event. It's not, it's a white swan event. So we've seen this. Black swans are things that are completely unexpected that you wouldn't even prepare for beyond a risk registry. This has happened many times before. Lots of exchanges have gone bust. There's been a lot of fraud. People have rugged other people. And I agree with you where the surprise was that first of all, would you pick. It would be ftx, you know, it'd be someone, but you probably wouldn't pick them from everything that was in the media. Yeah, but then the sheer depth of what has been reported. Yeah, how they didn't have an accountant. They used QuickBooks and Teams. My red flags all over the place. Yeah, exactly. And just how, how much of a house of cards everything was and such a backyard operation, like even high school kids would run this place better. Yeah, it was from what has been reported, allegedly being reported. So, you know, it is. That was a tremendous surprise, mate. What, what an incredible thing to happen.

What was the best innovation of 2022 in crypto?

So I've got two that I really, really like, and there's a lot of like, level two really nerdy things that happened which, which I do like. But for me, the two biggest ones were user experience improvements. So first of all, the Reddit NFTs. Reddit onboarded millions of people to get NFTs, and it was just seamless. You go to your Reddit account, you click a couple of buttons and you're done, you've got an NFT. And the beauty in this was they never mentioned NFTs, didn't call them NFTs. And they were just little avatars that you could get that you could use on Reddit. And millions of people, their user adoption is through the roof. They've done multiple series of these. Just that innovation was absolutely incredible to see.

And on Polygon, like, that was huge. Like that Was, you know, millions minted, low fees, no one even knew it was on the blockchain. Yeah, top stuff.

That's exactly right. And you see all these other companies, the big brands that get caught up in this. We're having an NFT launch. You need to learn about blockchains. You need to do this. No, no one cares about the technology in the background. Click a couple of buttons, get a thing, use the thing. Brilliant. That's all you need to do. So that was a huge UX innovation for me and the other user experience one was Stripe. So this was huge for me. Where you can now go to Stripe and you can connect all your different accounts or use your credit card and you can purchase crypto and it'll go directly to one of your addresses. Now the beauty of this is not only can you do it with Stripe itself, but it's got embeddable features where you can just chuck it on your website, you can integrate it with your store, you can integrate on anything that you want. And you're not having to sign up to an exchange, using Exchange, move your money across, then buy stuff, then move it off the exchange. It's literally just a one off transaction and you do have some security there for using a credit card. You know, you can cancel transactions, you can have chargebacks, all those kind of nice features. So that's a huge innovation for me and I think we're going to start seeing this everywhere because it is so easy to implement. You literally just snatch a bit of code.

Yep, agree. The thing that I'm most excited about, the best innovation this year was the ledger stacks. Now they're not out yet, it's going to come out in March. But I mean just the way they've, you know, basically made the Ledger experience like into a mobile phone.

A whole.

Like Apple experience like if you go to the ledger stacks landing page, it literally feels like Apple, like they've tried to replicate an Apple product, made this really premium, you know, offering. This is probably been the best thing I've seen just in terms of how bad and how hard to use like Legend Nanos are for the everyday person. And I still think that they're using the 12 and 24 seed phrase to, to get in and out. But I mean having like a palm size like touch, basically a, you know, a touchscreen phone where you can really see what's going on. It's like you know, press and swipe, you know, cross tick those things rather than it's like two button tapping and like holding and like all this.

Oh, my God.

Real ancient stuff. They want to look back at these old USB ledges. I got one here. And just go, how the hell were people using these things, you know, like.

Ancient, Looking at them. And you just get a little bit of text and you have to verify the address that's on there. And then you got to. You got to click one button. No, you got to press. Press it twice or press the button next to it. None of it makes it. It's plugged into your computer at the time. You have to bloody go under the desk. And it's like. Oh, mate. It's like you're doing secret spy stuff. The UX is just terrible in crypto, so it's amazing to see some decent innovation and using the technology that we expect.

100% right, mate? The biggest loser. Who was the biggest loser in 2022?

I think it was you.

Whack. Nah, mate, you're a winner. You're a winner. Okay, so the biggest. The biggest loser for me, I've got a few of them. Retail investors. You are big losers. So if you invested in crypto in 2022, tail end of 21, you'll be down. You'll be a loser.

Do you be down bad?

Yeah, down bad. Rugged Solana was a big loser, mate. So that price has just gone from like 250 bucks to like 10 bucks, all the way down. And as of a couple of days ago, I looked and it's 98 down on TVL so total value locked away. That is incredible. So this really shows that people have lost faith in that blockchain and they're pulling their funds from it, and that's reflected in price as well. So Solana, down bad. And finally Facebook with their Metaverse play, they. I can't think of a worse company, company that has done worse. Like, all of the tech companies have been hit hard. They probably got hit the worst where they've overspent on Oculus. All of the shareholders revolting against Zucks because he's basically got this huge war chest that he's just burnt through, and they are a huge loser. I think long term, they'll do very well. But as of this year, they haven't really released too many products. They don't have a lot of revenue coming in. They've spent a lot. The pace of innovation is very slow. Down bad.

Yeah, a lot of this.

By the way, listeners, there's this list under the biggest loser is long, so we're just shortening it.

So I had anyone that was in ftx Anyone that was in Celsius, anyone that was in blockfi, are down bad. And unfortunately a lot of those people that had money in Celsius or blockfi, you know, they call themselves these crypto banks were like retail investors. I've met people that had money just parked in there, earning their yield. Anyone that had money in ust, anyone had money in Luna? A lot of retail investors got porked in there, you know, chasing yields. Anyone that's chasing yields this year feels those down bad. That was, yeah, really tougher. Those people that had money caught up in any of those businesses that went under because, yeah, that sucks. It's really like low, low likelihood of getting money back.

Really, really big losers, unfortunately.

Yeah, that sucks.

Yeah.

Biggest winners, mate. Who did you have for your biggest winners in crypto?

Couple of big winners, mate. One of them was a 16Z, the venture fund that raised $4 billion literally at the peak of the market and has only deployed half of that. Well played. Sitting on $2 billion worth of powder heading into a really deep bear market, they're going to just acquire that many juicy assets at like ridiculously low prices.

Distressed assets.

Love a stressed asset.

Two sexiest words on the planet.

And the other one was like, anyone that raised massive amounts of them? NFT mints. So I had Moonbirds and V Friends for me that just raised a huge amount. I think moonbirds raised like 70 million in eth. Just extraordinary amount. Oh, maybe it wasn't 70. I think it was 70 million including their mint and their venture rounds that they had. So well played. Moon Birds v Friends as well. Raised a bucket load. Well played.

Yeah, they raised heaps and hats off to these people, especially if they put it into USD or a stablecoin.

Yeah.

So that would have locked in that value when eth was still, what, like 4k? Something like that.

Yeah.

Well done to them.

How about you, mate?

Biggest winners I think are Binance and Coinbase. So although the share price is down for Coinbase, I think the way they're going about their business.

The companies that they are funding, how they're fighting regulation and they're not fighting it in the sense that we don't want regulation, they want representation on what crypto is and can be. I think that that is a business that will do that is good for the crypto space long term and Binance as well. So my Czech strategy king basically shining the light on ftx, doing a little thing going, oh, I'll just pull my, my FTT token, but I'll do it over like, you know, a year, so I won't affect the price. And everyone's like, hang on, why are you doing that, lad? Bang. House of cards comes down. So the way he structured his company, where they're domiciled, how he's actually doing his, his reviews, his audits as well, very interesting. But I think he has a spotlight will come on Binance. But I think the Binance and Coinbase, one and number one and two exchanges, I think they'll scoop up the FTX customers. They're positioned quite well and they're on either end of the spectrum. One's highly regulated, listed company, one's trusted, but a bit more loose and private. And I think those two will do very well in crypto next year.

Yeah, man, they've got a big share in the market.

Yeah, well played.

Yeah, scoop up those customers.

Right, 2023 predictions. Burgers.

I've got a couple.

One. I think there's going to be a big fight like you touched on back in the Sunday biggest learnings. I think there's going to be a big focus back on defi and decentralized protocols, you know, focusing on trusting code, not people. I think there's going to be a big focus on that. So expect to see a few winners in the D5 space next year. Potentially some actual games with crypto native tokens being played. So Alluvium is one we've covered. Australian, that's got a pretty decent game. There's been so much money poured into GameFi over the past 12 months. I expect hopefully some good games to come out of that next year and a bigger focus on Bitcoin and Ethereum. I think as we've seen, everything is being basically built on Ethereum. I think there's gonna be a big focus back on Bitcoin as well, like just sharpening of everyone's investing thesis, not chasing random old coins and just bringing it back to basics and, and stacking stats. That's, that's certainly what I'm doing.

That's amazing, man. All right, so my 2023 predictions. So I think for next year we're definitely heading into a recession. I think the general consensus around all the macro guys, all the banking guys, is this is going to happen. And the reason this is happening is we've printed so much money, things are kind of running away and to ameliorate all of that cash, you need heavy handed action. Because we know what heavy handed action does and we know the levers we have and what we can fix in the economy. If we let that run out of control, then we don't have the levers to fix that. So you have people like, you know, Jay Powell always just consistently raising interest rates. And although it hurts so much, that's what we need to do. And the reality of this is we're heading to a recession, most people are calling it. It's going to be similar to the gfc which was six quarters of recession, and they're thinking that this is going to be the same. So all of next year plus half of 2024 based on that. I think the prediction I have is that in the crypto space we're going to see a lot of innovation. And I don't even know what that innovation is going to be, but a lot of people are going to experiment and I think a lot of people next year are going to become solopreneurs. This is a huge trend, especially off the back of AI. With all of the tech and tools that we've seen, people are going to start experimenting, having side hustles, quitting their jobs and building front ends for AI. But I also think AI and crypto actually go really well together because if you start to create things and then you want payments, you want bots talking to bots, I think that's a huge area and I think we're going to see a lot of innovation there. And then the other prediction for next year is we're going to see heavy regulation and the two drivers of that are going to be things like tornado cash and what happened there with mixes and tumblers, but also ftx. So the FTX trial is going to play out. These kids are going to get absolutely smashed. They're going to be made an example of and they're going to use this FTX example where people have lost millions and or billions of dollars, millions personally and probably billions collectively. They're going to make an example of these kids and regulation is going to be very heavy handed in this space. There you go, mate.

Totally Great predictions, great 2022 wrap up at 2023. Predictions, Bergs, it's been a cracker year. Looking forward to another massive year next year. Thank you everyone for listening to our crypto winners, losers, learnings and projections. If you like these episodes or you think someone else should listen to it, please share this with a friend and give us a little review on Spotify and podcasts or wherever you get your podcasting apps. And if you have any feedback for us, we'd love to hear from you at BenSimpsonAU and Twitter. Twitter and at baby back Berg on Twitter and we'll see you next time, Bergs.

See you folks. Thanks for listening.