Building on the down cycle
Hey. Been a while :)
My last note to you was about a year ago. Since then, I’ve started a company at the intersection of fintech and crypto. You can check out Ratio here.
I wrote this note the other night. I’m not really sure who it was for. Probably for me more than anyone.
I re-read it this morning and thought you might enjoy it.
We onboarded our first customers this week and I wanted to take a moment to share why we’re building Ratio and what it feels like to be building a company during a recession.
The crypto industry is barely a decade old.
There is little precedent for anything in this industry, let alone how the crypto will react to external forces at its newfound scale, equal to about 1% of the total market cap of global equities. We don’t know where crypto goes next, but we know that it’s not going away.
During this past up cycle, crypto became inevitable. And not just for the 30 million people who have signed a transaction using their own keys, or the 400 million people who have owned crypto as an asset.
Media, governments, and likely your employer are talking and acting as if crypto is inevitable. And it is.
There is much to love about crypto, and where we meet curiosity, skepticism, or discomfort, we need to find ways to swing the door open wider. A bear market or recession is not going to help that, but crypto being inevitable, we can focus on some simple truths.
Crypto is web native money is a natural evolution for the web
Crypto enables business model innovation
Financialization and financial services are evolving at a rapid pace. There are very real problems, like the cost of global remittances, which crypto can solve
At Ratio, we focus on making crypto easier to use by making it easier to get dollars into crypto wallets. We are an interface between traditional banking and crypto wallets.
Most of our early customers will have some experience buying and using crypto. However, even during this first week of onboarding customers, when you would expect only very early adopters to try our product, we helped a number of customers set up their first crypto wallet on the call. Shout out to Phantom for being such a great experience for new crypto users.
Back to the current market conditions.
It’s going to be more difficult to attract customers and grow our business in 2022, than it would have been last year. Trading volume at Coinbase was down 10% year over year in Q1-2022. And we’re hearing volumes in other venues are down 4x this May as compared to the top of the crypto market in May 2021.
There is no doubt that interest in crypto, and therefore dollars flowing into crypto, will be down significantly from last year.
For us, the impact will only be in the short term. Our mission is to increase the number of crypto users and increase the amount of money they hold in wallets. More money in wallets equals more economic activity in Web3. It means more creators experimenting with their business model, more small businesses accepting payments with zero fees, and more opportunity for individuals to coordinate resources in more human ways but still with internet scale.