Venture, crypto, and the better returns trap

Everyone on the planet seems to be spending their free time chasing better returns right now. I know because, thanks to the financial hygiene practices my parents taught me growing up, I tend to be one of the people my friends turn to for financial advice.

There’s only one thing friends want advice on right now: whether I think the hot new investment vehicle that just hit their inbox is crazy or worth their consideration.

It’s not hard to understand why everyone is obsessed with returns:

The Venture Capital cult has somehow convinced nearly everyone I know that so-called linear businesses, the ones that generate solid profits year after year and have powered steady 10% average stock market returns for the last century, are somehow worthless. As they watch their friends exit companies with multi-million dollar payouts and hear rumors of overnight crypto millionaires, they start to believe that they need to have access to those types returns, or risk falling behind.

Here’s my answer: just like Venture Capital’s pursuit of 10x returns, that way of thinking is a destructive trap. Money is fundamentally incompatible with mindfulness, because it is, by definition, a store of future value. Anytime you’re thinking about finances, you’re not living in the present. If you are lucky and privileged enough to afford not to think about money, you should be willing to pay for the privilege.

For me, the bright-line has always been that I don’t want managing my money to become a job in and of itself. I already have a full-time job that pays me well enough not to have to think much about money, and I’m more than willing to sacrifice some better returns for the ability to take some breaks from capitalism.

Cryptocurrencies and blockchains may be the ultimate example of the returns trap, both at the institutional and individual level. Not only are many of them literal scams disguised as replacements for systems — currency, contracts — that aren’t broken, but they are designed to distribute the work of keeping money functioning from a few trusted actors to everyone.

Here’s a post from a crypto enthusiast earnestly arguing that to scale properly, “it's crucially important for regular users to be able to run a node, and to have a culture where running nodes is a common activity.” In other words, the price of achieving the promised, but rarely achieved, returns of crypto is to do the work not just of an investor, already labor workers didn’t need to perform in the days of pensions, but of a bank. Thanks, but I’ll keep my day job and my 10% returns.1