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  • ⚠️ The biggest risk to crypto

⚠️ The biggest risk to crypto

PLUS: the Ether bull run

GM everyone. This is 2036.

You may have heard of Balaji Srinivasan.


  • a former CTO of Coinbase and general partner at Andreessen Horowitz

  • co-founder of a genomics company that sold for $375 million

  • a true crypto OG

On a 2021 podcast with Tim Ferriss, Balaji described the two biggest risks to crypto:

1/ The centralization of Bitcoin miners ⛏️

If a group of miners controls 51% of all bitcoin mining in the world, they could reverse transactions, double-spend coins, etc., and nullify most of the benefits of owning Bitcoin.

This used to be a much bigger risk than it is today.

Before China banned bitcoin mining, many mining facilities were located in China. And China is the only state in the world with enough resources and the will to launch an attack on the Bitcoin network.

Since bitcoin miners moved out of China, however, bitcoin mining has decentralized much further. This means this first risk is largely mitigated.

But that still leaves another major risk to Bitcoin: a regulatory attack.

2/ A regulatory attack that would ban an individual’s ability to own crypto 🏛️

Up until last week, US politicians mostly fell into two camps:

  • Anti-crypto democrats

  • Pro-crypto republicans

Despite the approval of the Bitcoin ETF, there was a risk that the SEC (which falls firmly in the anti-crypto camp) would label every other crypto asset a security.

This would have limited ownership and innovation of crypto in the US.

But now, both parties (and the SEC) are embracing crypto.

That means the current biggest risk to bitcoin - a future ban on people’s ability to own it - is essentially off the table.

Crypto went from being a political issue to having bipartisan support.

This is big news.

Sure - many investors (including myself) have their eyes on the price of ETH in the next weeks and months.

But the elimination of the ultimate downside isn’t fully appreciated by investors yet.

That doesn’t mean crypto will moon tomorrow. But it changes how we evaluate the downside risk of major crypto assets.

Ether ETFs will not start trading for another few weeks (and individual crypto investors can buy the Canadian Ether ETFs in the meantime).

But ETH is interesting because:

  • It’s been largely overlooked in favor of Bitcoin ETFs and SOL

  • It’s underperformed Bitcoin since the peak of the previous bull market in November 2021.

However, going forward, it’s hard to see Ethereum underperforming Bitcoin for long.

And there could be positive second-order impacts on the ETH ecosystem.

Memes on ETH are already starting to run hard, and they’ve stolen a lot of mindshare away from NFTs.

But there’s still a chance that ETH NFTs go through another major bull market.

If not, Ethereum ecosystem tokens like AAVE or UNI could catch a bid.

I’ll be monitoring these and update you if there’s anything worth digging into.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.