I am fundamentally certain that the blockchain revolution is here to stay and that we are currently seeing a homologue to the 1995 era beginnings of the internet.
Yes we are in a bubble, yes there is lots of speculation, yes 99% of current cryptoassets will crash and burn, leaving investors in the dust. Bitcoin may or may not be around in 10 years. Maybe one of its competitors (Dash, Ripple, Litcoin, bcash*, Decred, Stellar) will supersede it. Maybe something we've never heard of will come along. Ethereum, NEM, NEO, Cardano? Which will win the fight for the smart contract space? Will it be winner takes all, will any of them survive to 2019? Anyone who says they know is lying or deluded.
What we can know though, is that blockchain as a technology and a concept is here to stay. The bull case for the magical future of a blockchain based cryptopia is made far better elsewhere so I won't make it here. I simply want to remind you that the mainstream media and seasoned experts can be and often are wrong.
I see vast numbers of New York Times and FT opinion pieces slating blockchains for having no use cases (fundamentally untrue: see basic attention token, walton chain, agrello delta, digixdao, filecoin, storj, folding coin, golem and countless others), or how it's all one huge bubble which will crash and leave those silly youngsters hurting and the old boys laughing. The old boys might just be wrong.
Warren Buffet, whilst not often wrong and arguably has the best investing judgement of all humanity, admits he missed out on amazon & google. The 'expert' commentators were wrong on the internet, wrong on AI, and they are wrong on bitcoin and blockchains now. Societal progress goes in waves, whereby each generation brings forth new knowledge, technology and societal norms to be improved upon by successive generations.
If you believe in something, don't let a past-it banker or journalist who has a sparkling reputation tell you your own opinions, research and facts are invalid. They might well be wrong.
Mass media internet commentary from the early 90s is laughable and truly shocking regarding the internet:
'[some] argue that the internet is only a placeholder for a future commercial information network to be built by cable and telephone companies' New York Times 1994
'Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic. Baloney.' Clifford Stoll in Newsweek, 1995
Marc Andreesen, the subject of the criticism in the first quote created the first internet browser: Mosaic. He's now worth billions and has changed the face of the world; all because he didn't listen to the 'experts' when he was 23.
Trust yourself and your intuitions.
And for what it's worth, Marc is betting on bitcoin bigtime.
*Take that Roger Ver
We like money because we can do things with it. It's worthless otherwise.
It's all too common to think about what we can do with the money we have. But that's the wrong way round, the valuable thing isn't money, it's what we get from it. We need to turn this on its head and think about what we really want in life and how much money it would take to get us there. If we don't do this, all too often, our expenditure simply grows with our pay packet and what would have seemed like an endless amount of money when you were 20, is now easily used up on 'essentials'.
So take a step back, add up everything you would like to spend in an ideal life and see how much you need.
600 for daily coffees in cafes
2000 eating out 2x a week
1000 on clothes
1000 on cycling equipment
1000 ski holiday
2000 for other holidays
200 on protein (or other dietary supplements)
360 on gym & pool membership
2500 on groceries
1000 on travel (commute - I always aim for my daily commute to be by bike)
300 for a takeaway each week
2000 for drinks out 2x a week (20 each night)
1500 on tech appliances (e.g. new laptop or phone)
100 on newspaper/magazine subscriptions
100 on phone bills
1500 on random purchases
1500 on car maintenance and insurance
This is clearly liberal as I've put down every possible luxury I could give myself and in reality it wouldn't be this much, but this is my ultimate luxury lifestyle.
That's less than I expected. I could live the rest of my life with that post tax and be really happy and live a very luxurious lifestyle (see NB below for how having children affects the equation).
Let's add tax in. Here's what it looks like, as you can see, I'd have to be earning £43k a year to have a post-tax take home pay of £30,500
The UK average earnings for those in their 30s is 30420. If you look at the average for professionals with a degree e.g. lawyers, doctors, marketing/PR specialists, managers, senior police officers, IT directors, the average jumps to £41,000, and that's for all ages. So with the starting salaries for these jobs rarely breaching £30k, it's not unreasonable to assume that the salary you need to live your best possible lifestyle might be reached in your early thirties.
So that’s all well and good, but what we really want is to be able to do whatever we want in life i.e. retire. And I don't mean do nothing, I mean do what actually motivates you in life whether it be art, literature, music, or the job you were doing anyway, but less hours and more time to socialise.
A widely accepted rule of thumb of investing is to be able to draw off annual interest of 6% (FTSE100 index tracker returns 5.5% annual average over the last few decades, and FTSE250 11.5%). So a lump sum of 716k would enable you to draw off 43k a year (if it's in stocks, you'd need even less, because of the disparity between capital gains tax and income tax).
How soon could one reasonably acquire that amount?
To make it simple and widely applicable let's take private tuition at a £30/hour rate (which is fairly standard for a graduate) as our sample job. 23,867 hours gives you your 716k. Or 596 40 hour weeks, or 12.4 years with 4 weeks holiday. Obviously for those years you also want to be living your ideal lifestyle. 9 years of 30k is 270,000. So that's another 3.5 years.
So in total, 16 years of working 48 weeks a year, 40 hour weeks, earning 30GBP/hour gets you to the point where you could invest a lump sum and retire and do what you like.
So if you went straight into that, at 22, you're only 38 and you are living the dream life.
It's not that I envisage doing nothing with my time from this moment on, I'd almost certainly still work. It's just that from this moment on, you have the freedom to do what you want in life and you don't have to do work you don't want to do. You can holiday if you like, you can spend a month reading if you like, it's up to you.
In fact, here's a blog post I prepared earlier on the exact problem of what we should spend our time doing to live a meaningful life…
For those of you wondering where children fit into all of this, right here is the answer. I'd want to add on perhaps 50 per week for petrol, groceries and general purchases, plus 4000 a year for each child to cover holidays, the higher rental costs (although my 1000 per month is already pretty generous unless I'm living in London), hobbies, school trips etc. So maybe 6500 per child per year. That’s another 108k on the lumpsum, so just another 3 years of work or so.
In all of this, I'm making the assumption that inflation and capital gains on investments cancel each other out more or less (in reality I would expect capital gains to actually be higher)
Amazon's new HQ2
We all know the tech behemoths (Amazon, Google, Facebook etc) pay basically nothing to contribute to the infrastructure and society they rely on so much.
What's often ignored is that governments love to help them do so.
Amazon is building a second 'HQ2' away from its current Seattle home, and US cities are throwing their citizen's hard earned money at its feet in attempt to entice it to build in their home town. It's like some sort of desperate, pathetic marriage proposal the most popular kid in school from literally everyone else. Except the popular kid isn't popular, and he already nicks everyone's lunch money and he not a kid but one of the most powerful corporations in the world.
Amazon pays just 0.0077% tax on its European revenues currently. It has UK sales totalling 4bn, and yet when queried by the UK public accounts committee, claimed that it didn't actually have any sales in the UK. I don't know about you, but I'm now confused about where all that stuff I order from amazon comes from if it's not amazon? It certainly looks like it has the amazon logo on. Certainly smells like amazon. Hmm...
Amazon received 238 offers from different cities ranging from $1.3bn in tax cuts in Chicago, to a strange scheme in Fresno, California that would give over control of spending the pathetic amount of tax Amazon pays to…well, amazon itself. Not really a tax then is it.
Boston have even offered to provide a 'city taskforce' of city employees who would work to protect amazon's interests in the city.
That's all very lovely, it's not like a 'city taskforce' could be doing other things in Massachusetts, it's not like there are 17,500 homeless people across the state, a doubling from 1990 and 2/3 of them in families with children. Yeah, it makes sense really, wouldn't want old Bezos to lose out on another few billion. Much more important.
More than 1/10 of amazon's employees in Ohio are on food stamps despite having jobs at Amazon. Looks like the nine figure sums of incentives you've given Amazon so far have really paid off Ohio?
This is all especially humorous when you note that Jeff Bezos (head of amazon and recent richest man in the world) loves to talk about a new 'golden era' of technology with plenty for all.
We really need to get our priorities straight, either we want these tech giants to be a positive social force or not. I love tech, and I love private enterprise, but it does need a helping hand to keep it's morals straight. Amazon, apple, google, they all need the stuff taxes are for, they use the roads so they can provide essential services like previous day delivery, they need the state provided health insurance (oh wait, sorry) to pick people up when they are broken from working inhumane shifts for inhumane pay, they need government education systems to teach their employees how to innovate and do more clever things that make the CEOs richer.
The federal system has broken down; all states are just competing in a race to the bottom to lick the shoes of massive corporations. We need collaboration to beat the big boys and secure a fair deal for all. Not only does this need to work at a federal level, it needs to work at an international level. If everyone agrees on a fair set of rules then the likes of Starbucks, google etc have nowhere to hide.
Oh look, Apple is building a second HQ, look forward to seeing where they choose!
Disclaimer: I do really love tech and I think the innovations we see are the most exciting things on the planet, I don't think large corporations are inherently bad, it makes sense they would try to pay less tax as they are profit maximising machines. I think the fault is really with the weakness of a international and federal collaboration, and weak-kneed politicians.