Currency, the Darwinian competition of money, and Bitcoin were just some of the topics Poly alumnus and guest speaker Jesse Myers '06 recently covered in both a PolyConnect lunch and an Upper School senior Economics class.
Jesse runs a cryptocurrency investment fund, studied Neuroscience at USC, and received a Master's of Accounting at the University of Texas-Austin and later an MBA from Stanford.
“Since 1971, the dollar is no longer backed by gold, even though 30 percent of Americans still believe it is. So for 50 years, our currency can be infinitely printed, and that ability has led to our escalating national debt,” said Jesse.
Jesse walked the class through a brief history of how money and new forms of money emerge, explaining “New money is created when a group of individuals finds value in something as a collectible.”
Jesse described early forms of money included shells or glass beads, but the history of money shows that the harder it is to make more of something, the better it is at serving as money. Shells were more convenient and accessible to collect, whereas beads took longer to make and were an early “upgrade” in money. Gold is very rare and difficult to make more of through mining, and as a result, it emerged from the Darwinian competition of money over the course of human history as the triumphant and dominant form of currency.
“We are in the midst of the Digital Revolution—the Internet digitized information, but the digitization of value is just beginning,” said Jesse as he segued into the widely controversial Bitcoin discussion.
“Bitcoin is ledger money, made possible by cryptography. Essentially, it is just a spreadsheet of which account owns how much Bitcoin that is shared across every computer on the Bitcoin network,” said Jesse, while students on Zoom seemed to be fully engaged and tuned in. “Bitcoin is the invention of digital scarcity. You can’t create more Bitcoin, there is a finite amount that will ever exist.”
Jesse shared that since Bitcoin is a protocol, owning some Bitcoin means owning a stake in the entire ecosystem—like owning a slice of the Internet itself, as opposed to only being able to take an ownership stake in companies like Google or Netflix built on top of the Internet. Finally, he highlighted how the amount of Bitcoin released each day gets cut in half every four years, until eventually, all 21 million Bitcoin are in circulation. In his view, the “halving” event last year is why Bitcoin has been a hot topic this year.
Jesse shared his insights on the impacts COVID-19 has had on the financial sector, stock market, and currency and how that has sparked a growing interest in Bitcoin investments, including from billionaire Elon Musk.
“Maybe Bitcoin will fail and the next iteration of digital value will succeed, but in the history of ‘technology investing’ for the last few decades, the winning strategy has been to find a digital network effect that reaches $100B of scale and invest in that because that network effect is pretty instrumental,” said Jesse. “MySpace only ever reached $1B of value, and Facebook has become a trillion-dollar company. Once it crosses that threshold, there’s no stopping it.”Watch the full talk on YouTube