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First of all, let me start by saying that I do own some of the big-cap cryptocurrencies, I am not as this article puts it, a degenerate or what others playfully call a “degen.” However, I have spoken to some of them and found how they operate within the playing field of investments. There is a sense that more degens are Gen Z than Boomers and Millennials.
Like stock day traders, there are some who do this part time, and if they are successful enough, do it full time. One thing common among degens is that they have bought into the argument that crypto and blockchains will eventually (sooner rather than later) replace traditional finance. By replacing “tradfi” with decentralized finance, they mean that software and networks will eventually replace the people who work in banks, broker/dealer houses, remittance firms, and the like.
Degens like to speak of Satoshi Nakamoto, the pseudonymous father of Bitcoin, in almost god-like terms — or at least they have drunk the Kool-Aid. Nakamoto’s 2008 white paper on Bitcoin talks about doing financial transactions peer-to-peer, without the risk of counterparties like banks, brokers, and remittance centers.
What exactly does that mean? When you are buying coffee or something in a store or grocery where the cashier is in front of you, you pay that person the amount and you are given the item/s (or service) immediately. There is no other party to your transaction, just the buyer and the seller. Degens refer to this as peer-to-peer. There is no one else involved in the transaction.
However, when you are buying or sending money thousands of miles away, it has traditionally involved a third party, like a bank, a remittance service, or a shopping website like Amazon.com. Dealing with the other person directly, unless that person is a close friend or a family member, can be risky. You can send the item or the money, and then receive nothing in return.
Yet if you use these banks or shopping sites, if these are not legit, degens say you can suffer from counterparty risk. That’s just a fancy way of saying that these trusted third parties cannot be trusted after all. Nakamoto wanted to find a way for people to transact peer to peer, like in the coffee shop, but not when they are physically near.
The “too long, didn’t read” (TLDR) of how this works is that a group of community network operators from around the world are incentivized to keep the network running properly with no shenanigans because they are earning money (through crypto) from operating the network. They sell these tokens to degens, who hope that because eventually everyone buys into the vision and adopts crypto and blockchains, these tokens will be worth more in the future than they are now.
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They have their own lingo, a lot of it intentionally misspelled. “HODL” is a misspelling of the word hold, but it began when a foreign non-English speaking crypto trader one night said HODL. “WAGMI,” or “We’re All Going to Make It,” is another term being thrown around. Some of the terms like “GM” (Good Morning) and “OG” (Organizational Gangsta) came from gaming. Their favorite means of communication are Discord and Telegram, but they generally air their thoughts on Twitter/X.
Surprisingly, some of these degens may hold real jobs in Wall Street and other places, but online they often always go with an alias like @FatCat123 or something that does not document their identity or “dox” them.
Granted there is still excess speculation in this space, so in reality, it’s a mix of a cash grab and a real desire to see a better world. It is a casino, but maybe with the entry of big institutions into the space starting with the Bitcoin ETFs, the price volatility will dampen a bit.
Degens, however, do not just trade on the big centralized exchanges like Coinbase, Gemini, Kraken, or Binance. They also trade on extremely risky early-stage sites like dextools.io where newly born tokens can be found, likely for cents (or microcents) on the dollar. Sort of like Michael Milliken buying junk bonds, as a close-enough analogy.
Crypto advocates, or degens, believe that a good solution to many of the world’s problems in finance, elections, infrastructure, politics, art, and the like lie in blockchains. They want to get rich too. You cannot really say it is a purist one or the other view. Most degens will be a mix of the two in varying degrees.
So right now, these degens trade jpegs as NFTs, and tokens, in order to change the world and make it a better place.
But they want to “make bank” as quickly as possible, before the whole house of cards crashes.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
