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You may have noticed that we’ve been doing a lot of stuff with crypto lately. First and foremost, of course, we launched a platform for Canadians to buy and sell cryptocurrencies — Wealthsimple Crypto — about a year ago. And since then we’ve been steadily adding new features, launching new coins and tokens, giving clients access to invest in what they think is interesting. Just this month we launched wallet functionality on Wealthsimple Crypto — which means that instead of only being able to buy, sell, and hold crypto as an investment, clients will be able to move it in and out of Wealthsimple if they want to, say, buy an NFT. And meanwhile we’ve doubled down on education about crypto, too. We’ve published an ongoing glossary of crypto terms, explainers and articles about crypto gaming, and podcast episodes about finding out the true identity of mysterious crypto artists (we found them but we didn’t out them).
A fair question is: why are we doing all this? And some think the fair answer would be: oh crypto is trendy it’s basically this year’s meme stocks and they want to make a bunch of money. And sure, we’re a business that makes money when people use our platforms. But the reason we’ve gone big on crypto is that we think it’s incredibly promising.
We’re really excited about crypto.
Why? Well, first of all, we’re a technology company. That’s a popular thing to say — if a toilet paper brand launched tomorrow their pitch to investors would be about how they’re not really a sanitary paper firm, they’re a technology company. But we mean it in a different way. We spend a lot of time working on tech projects, thinking about technology in general, and we’re in large part run by engineers. And from the evidence that’s accumulated in the last decade or so, we think crypto has the potential to be the most exciting technology in the next generation.
The venture capitalist Chris Dixon has a well known theory about computing cycles. His idea is that every ten- to 15 years a transformational technology comes along and changes everything. The PC did that in 1981, the internet in 1994, in 2007 we entered the smartphone era. Those technologies were interesting because they did something new, but more than that, they changed the landscape and created entire new businesses and downstream technologies that transformed our society. It’s hard to predict what comes next in that computing cycle. But we think there’s a good chance we’re already at the beginning of the crypto era.
A lot of people who don’t follow the space think crypto is simply cryptocurrencies. But it’s a lot more than that. It has the potential to form a whole new kind of internet, what people call web3. Which promises to be a web that’s decentralized, transparent, that gives artists more ownership of their art and people more ownership over their information and will make entire new types of businesses possible. And part of the reason we’re generally bullish on the space is that it’s not just theoretical. There are already businesses and use-cases, and their growth is only accelerating. Examples include DeFi (decentralized finance), decentralized gaming, NFTs, and others. In the future, trading currencies and tokens may not even necessarily be the primary way we interact with crypto ourselves — it’s possible that everything Wealthsimple does could one day happen on so-called crypto rails.
But none of this means that crypto is a sure thing, a lock to be the most profound change in technology since the smartphone. There’s risk involved. A question we get often is: why give people the ability to invest in all these coins and tokens if you know they’re speculative? And to answer that, we’d first say: yes, they really are speculative. But this isn’t just random speculation. These coins are often underpinned by innovative work and very worthwhile projects. The people who invest in coins minted by crypto projects are actually, because of the way crypto works, investing in those projects. And while it’s true that a lot of them could end up being worthless, some of these projects have a chance to form the technology backbone of the next decade or more. They have the potential to create tremendous value and upside for people who believe in and invest in them. Especially younger investors who have the benefit of time, so they can wait for the crypto space to mature and grow in value. Providing access to these investments for everyone, not just the people who have historically had access to innovative investments — as well as educating people to the very real downside risks — is essential. And besides the chance for financial gain, investing in crypto allows people the chance to participate in forming the future.
Crypto poses an interesting prospect for the future, especially for us. The first thing crypto is likely to disrupt is something that’s well overdue for an upgrade: the technology of money. The way it moves, how interest is earned, etc. is as archaic and anachronistic as the computer language that the entire financial system runs on. The whole reason we started Wealthsimple is to help bring about that change. And we’re excited to be part of what comes next.
Danish Ajmeri is the Head of Crypto at Wealthsimple.