Original link:If You Want To Get Rich, Hold Bitcoin

Original translation: CryptoLeo（@LeoAndCrypto）

Editor's note: As the cryptocurrency industry plunges once again into a trough, with many early OGs choosing to exit, Dragonfly Capital partner Haseeb Qureshi recently discussed the current state of crypto and his phased understanding of it during an interview. From talent movement, Silicon Valley culture, and the industry's present bias, to the growth narratives of ETH and SOL, and even the explosive potential of Hyperliquid, Haseeb explains the significance of remaining a "Settler" in an AI-driven era while still delivering a confidence-boosting article. Given the frequent dialogues between the two, this piece adopts a first-person narrative style. Odaily Planet Daily records and translates the interview content as follows:

Some crypto OGs are exiting, which is normal; I still insist on being a Settler!

I feel very tired, very exhausted. A lot has happened recently, with market downturns and internal company issues.

Not long ago, I was chatting with friends, and they all believed that VC is a very respectable job, VCs mostly choose good investments and then just wait, having leisurely time, but that's not the case; at least we're not like that at Dragonfly, we work harder than they do.

Someone just told me that compared to other VCs, my responses are very quick. I often communicate about work matters over the phone, constantly working; that's how we operate at Dragonfly. That's why we profit from many investments—because we work harder than others. Not everyone can do this, especially after many years.

Now a lot of people are exiting, like Kyle Samani leaving Multicoin, and many OGs are leaving the crypto space.

But don’t exaggerate this; there will always be people exiting crypto. This week, I've already experienced 4 or 5 different people telling me their feelings; they believe the current market sentiment is worse than after the FTX crash. I think this is completely a recent bias; now that the downturn is happening, it feels worse. (Odaily Note: Recent bias refers to the cognitive bias where individuals place too much weight on recent information while neglecting long-term data or historical patterns during decision-making or impression formation.)

Why do I say this? After the FTX crash, more people left crypto; they lost a lot, and the metaverse, chain games, and other pursuits were also not realized, so they left crypto.

The idea of leaving crypto seems unique, as people tend to exit whenever the price drops. Another point is that there is a normal tenure in a person's career. For example, if someone has been in a field for 10 years, their choice to leave is also quite normal. Especially for people like Kyle, who is a very successful venture capitalist; God knows how much he has made. For him, money is no longer important; what matters is proving his worth. Multicoin was one of the largest investors in FTX, and when FTX crashed and SOL plummeted from over $200 to $8, everyone thought Multicoin was wrong; they endured and proved themselves to be one of the best investors in the field, which is essentially the pinnacle of their career achievement. Kyle's exit does not mean he is completely disappointed with cryptocurrency.

Another point is that there is a significant difference between pioneers and settlers; this is a natural aspect of human nature. Those who strive westward to seek California and explore new worlds are not the ones who will ultimately build the towns. Similarly, in a startup, the psychological state of the top 10 employees is completely different from that of the 50th, 100th, or 1000th employee, just like those who joined Google first and built from scratch are not the same as those who later managed Google Shopping or Google Drive; they are completely different types of builders.

Returning to the recent bias mentioned earlier, as an investor, the most underlying bias is status quo bias; people tend to think that the status quo will continue because if it wasn't strong enough, it wouldn't be the status quo. But now the tech industry is full of changes, especially AI makes everyone feel, “Oh my, anything can change.”

A few years ago, people were discussing the "great stagnation." Peter Thiel published a very famous article talking about the digital/software world having a lot of innovation while the physical/real world was stalling. And now, we are seeing advancements in lifespan, CRISPR-Cas9 gene editing technology, AI, drones, quantum technology, and nuclear reactors, suddenly providing a forward momentum that is very beneficial for society.

For investors, the most common failure mode still remains the disbelief that the status quo will experience significant changes.

The Silicon Valley model is unique, enabling trust and transmission across companies

When talking about what I learned in Silicon Valley, it’s hard to describe; it’s more of an operational approach, a unique way of thinking in Silicon Valley. Many cities around the world say, “We want to be the next Silicon Valley,” and every time I hear that, I want to laugh.

I believe the Silicon Valley model may have only been replicated in two places: one is China, and the other is Israel. Very few other places have figured out how to build this model.

The most important aspect of the Silicon Valley model is celebrating failure. In Silicon Valley, failure is normal; it doesn’t cause people to lose face. Failure provides an opportunity for a comeback, which is nearly impossible elsewhere. Other places may superficially say, “Failure is okay,” but in reality, they treat you like a loser. If you leave a big company to start a business and fail, people will ask you why you left Deutsche Bank or SK Telecom, giving up a good job to start up, and if you fail, those will become lifelong stains on you, which is a wrong mindset.

Another key aspect of Silicon Valley is the extremely high level of trust. This is also rare elsewhere; although the U.S. loves to litigate, it is rare for Silicon Valley companies to sue one another. Silicon Valley is an ultimate melting pot of ideas, where it is inevitable that people will borrow ideas from others, but everyone is more willing to act quickly and share with one another. Even if ideas are occasionally borrowed, it’s okay; everyone should work towards the same direction, focusing on building the whole rather than getting stuck on trivial details. If you have an idea, you need to act quickly and you must trust others, believe in the right direction, and trust that those around you won’t harm you.

Inside Silicon Valley, there is a strong kinship that people often overlook. In California, non-compete agreements are unenforceable, allowing talent to flow freely. Other places are the opposite; non-compete clauses lock people firmly to companies. Many companies do not want business secrets to leak, fearing that employees will transfer information from here to there. Silicon Valley looks at the overall perspective: “This is good for all companies; even if it’s possible that someone steals knowledge from my company and transfers it elsewhere, harming my interests. High efficiency in information transmission is also good for society.”

Because of this, knowledge flows extremely fast in Silicon Valley. Almost all AI Labs are in Silicon Valley, where everyone is “leaking information” and exchanging ideas, resulting in all top AI Labs being very close in level, with most models being free. This is impossible in other places; this is the real power of Silicon Valley, which is sharing rather than sealing.

Crypto is technology; we need to learn “long-term greed” from the flow of money

Cryptocurrency is fundamentally technology; Bitcoin is software that people can run on a computer; everything we build is software.

Its operational methods are not necessarily the same as software companies; there are obviously differences between Microsoft, Bitcoin, Ethereum, or Aave. But we can learn a lot of lessons from the tech industry, understanding the characteristics of efficient teams, how technology is adopted, and what growth curves and retention curves need to look like to ensure sustainability; these directly apply to the cryptocurrency field.

However, cryptocurrency is also related to money; it concerns society and governance. To truly understand cryptocurrency comprehensively, people need to learn a lot from these other fields.

This is not just a technical issue. We have gone through the internet bubble and its burst, both of which were related to excessive expectations, and they also involved finance, touching on the flow of funds and capital. We also know that cryptocurrency is closely related to funds and capital. If you do not understand the financial elements, you cannot see the bigger picture.

The technology provides extremely rich information, but not all cryptocurrency practitioners have this perspective, especially those pure traders who may lack this view.

David Hoffman, co-founder of Bankless, once mentioned a profound remark in an article: “The meaning of cryptocurrency is not to make you rich; it is to grant you freedom.”

It’s not wrong to want to make money; everyone wants to make money, and I also want to make money. Freedom and liberation certainly also includes the freedom to earn money, the freedom to do what aligns with one’s interests. No industry or market has ever required people to act against their own interests.

People often say it’s because someone became greedy when they see problems arise in the crypto space. Binance became greedy, Wintermute became greedy, entrepreneurs became greedy, and VCs became greedy; greed is the reason for falling prices. This view is too superficial; no market asks people not to be greedy. As long as you are creating value, building the right things, and doing it in a sustainable way, it is fine.

Gus Levy, a former partner at Goldman Sachs, has a famous saying: “We’re greedy, but we’re long-term greedy.” Compared to that, short-term greed is actually very foolish, like the foolishness of King Darius in the story. For example, drug dealing is a short-term greedy approach, but it is not sustainable in the long term; pure traders are not wrong, and long-term holders are not wrong; let’s see who lasts till the end.

The exponential growth of cryptocurrency ultimately led me to choose and persist in the crypto industry

I entered the crypto industry full-time in 2017, during the peak of the ICO era. At the beginning of 2018, I began working in venture capital, just as the ICO bubble started to burst.

When I started investing, everything was bleak. The year 2018 was perhaps the worst year for sentiment in the cryptocurrency field that I have ever seen, worse than the FTX crash, because when FTX collapsed, at least people could feel there was cause and effect; SBF deceived everyone, leading to the industry's decline. But in 2018, there was nothing to blame; the price of Bitcoin dropped from $19,000 to $4,000. Ethereum’s price had plummeted to below $100. At that time, we all had a very strong feeling: we were fooling ourselves; everything about crypto was a collective illusion.

But a strong belief in my heart made me choose and persist in the cryptocurrency industry, becoming a VC in the field.

Between 2018 and the period before the COVID-19 outbreak in 2020, everything was very calm. The crypto industry showed no recovery and was in darkness. But during that time, we could see DeFi starting to take shape, seeing Maker DAO, Compound beginning to scale. Their momentum was not large but was slowly influencing the industry.

At that time, I believed in the exponential growth of crypto; I believed that greater, more significant things would happen in the future than what we then saw. The technology would impact much more than just 100,000 people (the number of people using blockchain at that time was less than 100,000).

You must believe that the scale of the industry will grow exponentially. If I told others at that time that I believed the U.S. government would purchase Bitcoin, it would have seemed absurd. After the FTX incident, we really worried whether the U.S. would ban cryptocurrencies.

So, after all these events, I experienced one dark moment after another in this industry, and I often examined my heart, asking myself why I would believe in this industry. I used to be a poker player; one of the most important things I learned in poker is strategy. Playing cards doesn’t guarantee winning every time, but we need a correct strategy to ensure my strategy can outperform my opponents. In my opinion, my strategy is to believe in the exponential growth of crypto and to build for 10 years down the line when the scale of cryptocurrency will far exceed today. Just as the scale of cryptocurrency 10 years ago far exceeded the scale when Bitcoin was first born in 2008.

This is why I think it’s important to believe in the power of exponential growth and to view current events from a broader perspective rather than limiting oneself to the superficial aspects of any specific moment.

Bitcoin is still an intergenerational wealth, and this is one of the reasons I believe in Bitcoin

Moreover, I still strongly support crypto and Bitcoin because of the entry of institutions and governments; in reality, very few institutions really hold cryptocurrencies. We manage a huge amount of assets, mainly from institutional partners who gain exposure to crypto through us, but these only account for less than 1% of their portfolios. The acceptance of cryptocurrencies in the institutional and asset management spheres is still in its early stages—Morgan Stanley only recently started allowing recommendations for digital assets to high-net-worth clients. Vanguard Group only recently approved Bitcoin ETFs.

Another thing to understand is that cryptocurrencies largely have an intergenerational nature. Remember the FIT21 Act? It was the predecessor of the Clarity Act, which had initially passed the House. If you trace back to when Trump was elected for a second term, and observe the U.S. Congress, you will find that the strongest predictive factor for voting in favor of this bill is age.

The older generation does not know what cryptocurrencies are; they have only heard of them in the news. Their children, however, are the ones using cryptocurrencies, which is a form of intergenerational inheritance. The Baby Boomers are gradually aging, and they will pass on BTC to the next generation.

When I was in college, the concept of Bitcoin was still quite novel. Now, those entering college do not remember the time before Bitcoin existed; it has already been 18 years since Bitcoin was born.

Changing people's first impressions of things is very difficult, especially when they refuse to try themselves. You can see one clear point in the U.S. Congress; these legislators do not understand what these cryptocurrencies really are. They have heard about it, read related reports, and their children have also told them something. That is the entirety of the exposure that crypto has in Congress.

In the future, the total amount of gold may still increase, but Bitcoin will forever remain independent and irreplaceable

Speaking of Bitcoin and gold, people really have a deep attachment to gold. “Gold has thousands of years of history; it can never be replaced; it has such a Lindy effect,” thinking of my mom and grandmother, their love for gold remains unwavering. But for young people, the things they value have long been digitized; why would a stone carefully mined from some distant place on Earth be more valuable than something digital?

Speaking of mining, take for example SpaceX explicitly stating that one of the ways they intend to profit is by mining rare minerals from asteroids; after the IPO, the timeline for asteroid mining became closer. If you could obtain an asteroid containing gold, the supply of gold on Earth could potentially double. There is not that much gold in the world; the total gold in the world wouldn’t even fill a cube smaller than a football field. If gold can really be discovered on an asteroid, it would completely change the dynamics of the global gold market, and this impact would be permanent.

And you won’t find Bitcoin on an asteroid; Bitcoin is software. I believe that for a software civilization, our currency should also be based on software; it makes sense.

Personally, I have indeed made some investments at various times, but most of my assets are held by myself. Occasionally, for tax or other reasons, I need to sell some assets to cash out, but most of the time, my personal finances are very simple. I have invested a lot into all our funds; as a general partner, I must put my own money into all our future funds. Then, personally, I also hold some cryptocurrencies and ETFs, that’s about it.

For me personally, while I hold Bitcoin, I will not invest in Bitcoin because it is not a risk asset. I believe that the core of Bitcoin lies in decentralization. It relies entirely on consensus, and this consensus is not in the sense of PoW but rather that society needs to reach a consensus that Bitcoin will become the way we measure non-sovereign wealth in the future, which may be inevitable.

Due to Bitcoin's varying performance, people complain about its decline, but the reality is that Bitcoin and cryptocurrencies are usually very volatile; they will change their form and associate with different assets at different times : sometimes it is associated with gold, sometimes with the Nasdaq, and sometimes with no assets at all. It simply operates in its own way, switching between these different states.

If you look back at Bitcoin’s history, it becomes very clear that its performance has not always been consistent. Therefore, there are two competing viewpoints:

One view believes that its performance should mimic gold; when gold rises, Bitcoin should also rise.

The other view is that Bitcoin is an asset that is not correlated with any asset.

If Bitcoin performs like gold, then why buy Bitcoin? Wouldn’t it be better to hold gold directly?

The reality is, if you only compare Bitcoin with gold/Nasdaq and others, you will find their charts are very similar. Before 1011, their correlation was very high. After 1011, the correlation disappeared; if you look back at history, you will find Bitcoin’s performance differs from any other asset. At certain periods, its performance resembles other assets, but in most cases, it clearly stands alone. Bitcoin is an independent asset with its own cycles and periods.

I believe that in the next 10 years, people may continuously discuss and complain, questioning, “Why hasn’t Bitcoin risen that much?” This situation will not stop until the adoption curve of Bitcoin truly reaches saturation, which will take a long time.

I know many people who, like me, entered the crypto space at the same time, but they have not made money; how could you enter this industry when Bitcoin and cryptocurrencies are at a low point and still not make money? The answer is simple; you merely did not stay in the market. As long as you persist in the market, you can make money.

In a sense, this is also one of the advantages of venture capital; it forces you to hold on, to persist. You can’t sell venture capital. For many of our partners, they invested in us, and even if they feel “cryptocurrency is really trash,” they still have to continue holding; the only thing that prevents them from making mistakes is the fact that they are locked up.

The beauty of venture capital lies in its ability to overcome many of humanity's worst instincts; the significant advantage you gain in this market is that you will never be forced to sell. I think this is why, compared to directly investing in cryptocurrencies, venture capital is such a straightforward and simple way for investors to gain access to cryptocurrencies.

I still have confidence in ETH and SOL; the market is pricing them with a “growth narrative”

Many people have lost some confidence in ETH and SOL; they say on social media that these are just memes with no cash flow; why would you value these things?

This is exactly what I really want to refute; their view is that these assets have value because some fools are continually buying in, and maybe some retail investors or perhaps Tom Lee; these people are not genuinely thinking about what they are purchasing tokens for. But the market conveys a deeper wisdom to you: the market indeed believes these things have value, and they also believe the value of these things will far exceed their current levels.

They don't generate much cash flow; currently, these protocols haven't brought in much revenue. Why would the market assess the value of a cash non-generating asset? But just look at OpenAI; OpenAI burns money, and compared to all the costs they incur, their revenue is minuscule; however, their valuation is as high as hundreds of billions of dollars. Of course, just this alone does not prove the value of cryptocurrencies.

The market has two states: one is cash-flow oriented (show me real profits), and the other is growth-oriented (I don’t care about current cash flow; I only care about future growth potential). I believe this is the distinction between Silicon Valley thinking and Wall Street thinking; both will switch between these two models. Just like Tesla, although the price-to-earnings ratio is absurdly high, the market gives it a high valuation because it believes in the tremendous growth story of its autonomous vehicle fleet and the Optimus robot, rather than its current cash flow.

Currently, Ethereum is viewed by the market as a growth asset; Ethereum is almost unresponsive to cash flow indicators like fee increases and burn amounts but is highly sensitive to the story of “future scales will greatly surpass today." If this growth narrative is broken, Ethereum will suffer a significant blow.

Growth narratives can also go wrong, like Peloton, Roblox, the metaverse, WeWork, and the early years of green energy. But what is unique about cryptocurrencies is that it has gone through multiple boom-bust cycles yet has rebounded each time. This is extremely rare among other assets, indicating that there are deeper, more resilient changes happening behind it.

This strong speculative nature reminds me of the internet bubble years. The only example I can think of is E-Trade during the internet bubble; E-Trade was an online platform for stock trading, where previously everyone bought stocks through traditional brokers (via phone or in person). E-Trade allowed people to trade stocks directly online; it was very convenient. So what happened? Many people bought various ".com" stocks heavily through the E-Trade platform, further inflating the crazy valuations of the internet stocks and fueling the entire internet bubble's expansion.

The market is pricing them with a “growth narrative," and this pricing logic has historical precedents, but caution is advised.

Hyperliquid combines growth narrative and cash flow

Hyperliquid is so successful because it possesses both, a rare asset with decent cash flow and a growth narrative; its market share has grown substantially, and it has also expanded into on-chain contract markets. Additionally, through HIP 3, it has extended to other verticals, such as stocks, precious metals, oil, indexes, and other derivatives.

Currently, just the RWA (XYZ) trading alone, Hyperliquid's market size exceeds that of the sixth and seventh largest perpetual bond markets combined. Of course, they also buy back and burn HYPE, and their massive cash flow combined with growth potential makes HYPE/Hyperliquid such an explosive asset; however, this situation is rare.

In the AI gold rush era, if you cannot bring value to cryptocurrency, maybe you should leave

AI is undoubtedly the most important technology of the 21st century; the flow of talent and capital towards AI is correct; it is a normal redistribution of capital and talent and is part of capitalism.

The cryptocurrency industry has already passed the earliest “wild west” phase. It is now transitioning from “wild west” to the “building and expanding” phase. This is very normal and healthy. Those early pioneers—who were attracted by extreme risks and unknown possibilities—if they now feel this place no longer suits them, I completely understand; they can choose to leave.

Just like social media back in the day: by around 2010, the major innovative ideas (like Facebook, LinkedIn, etc.) had basically all been born; what remained was large-scale execution and expansion. Although there are not as many outlandish innovations anymore, the industry still achieved explosive growth and birthed the most powerful companies globally.

Today's cryptocurrency is similar. We have clearly understood the direction and potential of this technology; what remains is to solidly build, execute, and scale. If you are someone who needs to continually seek the “wild west” and enjoys extreme uncertainty and crazy opportunities, then this may no longer be the most suitable place for you—perhaps fields still in early exploration like AI will attract you more.

But for me, this does not mean the end of the industry; rather, it is a proof that we are moving in the right direction, and those who participated early and persisted are reaping a sense of achievement and rewards that lead this industry towards maturity. The industry continues to evolve; it’s just that the way of playing has changed.

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