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Austonia talked to crypto investors about steps they recommend for people who want to get involved. (Pexels)
Cryptocurrency was once an obscure way of handling money that seemed almost like a ponzi scheme or something bound to crash. Now, it’s everywhere. The digital money based on blockchain technology passed 100 million worldwide users in February and has seen growing interest in Austin and across Texas.
Austonia talked to investors Sam Feldman, who started Austin’s crypto billboards, and Jon Gregis of crypto community ATX DAO, about how they got into crypto and steps they recommend for people who want to get involved.
Both say they understand that people feel intimidated, but that the best way to get it is by diving right in.
“If someone has like 100 bucks to invest in Bitcoin, or if they’re comfortable with more, I think it’s very hard to learn about this in a way that’s just conceptual,” Feldman said.
If you’re crypto-curious, here are a few tips to get started:
Decide what you want to get out of it
Crypto can seem elusive, and there are some basic concepts you’ll need to understand. One is blockchain technology. A blockchain is a digital ledger that’s used to record information such as transactions and NFT ownership. You’ve likely heard of some blockchains like Ethereum. This network is the second-largest by market cap, behind Bitcoin. This tech is decentralized, meaning there are no intermediaries like a bank.
With that, the next thing you should know is that there isn’t a one size fits all approach to getting started in crypto.
So, pick something that interests you. Do you want to be a day trader? Or perhaps you’d like it for transactional purposes, which Bitcoin is fit for. Maybe you’d be suited for building applications or becoming a blockchain developer through Ethereum.
But any route you go, you’ll have to be patient with becoming truly authoritative on it. Still, Feldman is excited to see what Austinites getting involved will bring.
“Crypto is something where it does take a few years, I would say, to be really comfortable with it,” Feldman said. “The earlier we start, the more well equipped this city is going to be for this next tech revolution.”
Learning sources
Feldman says the resource he uses the most is Twitter. Even his website, marketcap.guide, has a dedicated spot for top tweets, with posts from crypto leaders like a partner at VC firm Placeholder and Web3 accelerator DeFi Alliance.
Gregis is wary of relying too much on social media, however.
“There’s just so much information out there that for someone to use only YouTube or only Twitter… you’re only probably getting one side of the story,” Gregis said.
He suggests finding Telegram group chats or joining meetup groups like Ethereum Austin if you’d like to get in the developer space or smart contracts. The group hosts regular events on topics like game theory and NFTs for social impact.
What to invest in
When Gregis started out around 2013, he was writing cashier's checks to buy Bitcoin. Those days are gone, and you can now easily get started by making an account on a crypto exchange like Coinbase or Binance. Once you're on these platforms, you'll be able to exchange U.S. dollars or other currency for digital assets.
Now that you have the tools to buy and sell crypto, you can go for the most mainstream ones like Bitcoin or Ethereum. But you may have an interest in meme crypto, like Dogecoin. When it comes to these types, experts say they could do well, but it may not work in your favor in the long term.
Then there's more advanced crypto, such as IOTA. Part of the process is signing up for Coinbase and buying Bitcoin. And then you can sign up for another service that will then allow you to convert your Bitcoin to IOTA.
Now, whether IOTA and others like it are a good investment, you'll find mixed opinions, and it's likely you'll need to do your homework to see what is best for you.
Security
A safety step Gregis has taken is keeping everything in “cold storage,” which is a space that isn’t connected to the internet.
“It’s far too easy to get your funds stolen, or if you keep your money on an exchange or even if you keep your money on your computer,” Gregis said. “I’ve heard so many horror stories of people getting their crypto stolen because they don’t do it securely.”
Gregis’ cold storage is a ledger in the form of a USB drive. This way, nothing can come out of the wallet and no transactions can take place without the password-protected ledger. And if you’d like to go a step further to protect your funds, Gregis suggests associating the USB with a mnemonic passphrase. That way, even if somebody steals the USB or it’s misplaced, you can use the passphrase to buy another ledger and keep your money.
“It’s not like a traditional bank where they’re holding it for you. There’s no custodian,” Gregis said. “You are the one that’s controlling your money or your crypto so learn all the problems that could occur if you don’t.”
Think long game
A common mistake people make when starting out is following hype or feeling like crypto is fraudulent because they lost money, Gregis says.
It’s also easy to lose sight of the potential. One day, around the time Bitcoin started hitting close to the $1,000 mark, Gregis asked his friend, who first told him about crypto, what had happened with his money. The friend responded that he had sold about 15,000 Bitcoin for a coffee maker, a move he regretted.
Gregis mentioned that In early December the market had been going through a recent dip, leading some people to switch out. It’s important to keep in mind that you might lose money right away, he says. And yet, you could still make money in the long term.
“If you’re going to get into crypto, really get into it. Don’t be a fair-weather fan,” he said. “If you believe in something, stay there long term because there are too many people that put blind speculation and think they’re going to make these insane returns.”
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Popular
A Web3 meetup was held this week at Cosmic Coffee + Beer Garden. (Andrea Guzman/Austonia)
It’s hard to know what Web3 is without first understanding the original versions. The first web is the 90s Internet where people had their own random websites that didn’t link together, making it decentralized. In Web2, we saw the rise of Google, Facebook and other major players who configured standard ways for people to share and receive information.
Ethereum co-founder Gavin Wood and other blockchain developers say a decentralized version of the Internet, Web3, is on the way. Web3 can be thought of as synonymous with cryptocurrency, meaning it is based on the blockchain. Platforms and apps built on Web3 won’t be owned by a central gatekeeper, but rather by users. Those in the Austin crypto community believe to see a growing presence of Web3 in Austin.
Pujaa Rajan, an engineer at financial software company Stripe and adviser for startups, describes herself as a “digital nomad.” She has traveled all over from Hawaii to New York and San Francisco, looking for the crypto community in each place.
Having been in Austin for the past month, Rajan organized a Web3 meetup this week at Cosmic Coffee + Beer Garden in South Austin open to folks working in crypto or the crypto-curious. About 30 people showed up. "Compared to a lot of other cities that I went to, it is a lot more open and community-oriented here, which is what Web3 is all about,” she said.
Pujaa Rajan, an engineer at financial software company Stripe, organized a Web3 meetup in Austin during a visit. (Andrea Guzman/Austonia)
ATX DAO member Roberto Talamas, who stopped by the event, talked about the crypto group’s expansion. Web3, in Talamas’ view, expands on the previous versions which allowed people to read, then read and write. Now, he says, people can read, write and own. To Talamas, blockchain technology has powered that ownership aspect, and it can be utilized through groups like a DAO, a group that pools together capital and goes on to make investments or take on blockchain-based projects.
“The ecosystem of work with (Web3) companies here in Austin is still relatively small,” Talamas said. “And that’s one of those things that we’re trying to deal with at ATX DAO is to do all the advocacy work needed to make Austin the best Web3 city.”
Part of that community, however, has gotten a bad rep for being “crypto bros.” Rajan acknowledged that Web3 involves both finance and technology, which are fields women have historically been excluded from. But, she says the decentralization aspect creates a clean slate and a new means to form groups. “I feel like we can kind of take back the power or create a world for ourselves,” Rajan said.
The meetup at Cosmic brought together crypto users to talk about the prospects of Web3. (Andrea Guzmán/Austonia)
Meetup attendee Jonathan Hillis also talked about the idea that Web3 creates an opportunity to start over and how this could be something that grows in Austin. Born and raised in the capital city, Hills has left his Bay Area Web2 Instacart job behind to live in a cabin outside Dripping Springs last year. He and his wife, along with a group of internet friends formed a DAO called Cabin, and he's now writing on the Web3 version of Medium, known as Mirror.
When it comes to the state of Web3, four cities stand out. “The dam broke in Covid,” Hillis said. “Everybody no longer had to live in the Bay Area for tech.”
San Francisco is still rooted in Web2 traits with Big Tech and software as a service venture. New York is financial technology. Miami is another major player. But with Austin, Hillis sees a lot of potential.
“Austin is great at being a place for independent online creators of many types—musicians, but also artists,” Hillis said. “What excites me about Web3 is the opportunities for putting creators at more of the center of the value capture.”
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(Philip Taylor/Flickr)
For Carson Stanch, who moved to Austin from Brooklyn, New York, to be near family, Austin's lower cost of living was just an added bonus. According to the latest data from the U.S. Bureau of Economic Analysis, a $100 bill is worth $98.20 in Austin when compared to the national average in 2020, while it's worth just $84.53 in New York.
Houston native Carson Stanch moved from Brooklyn, New York to Austin just before the pandemic. (Carson Stanch)
Stanch soon realized she was a trendsetter—or perhaps a fortune teller—as the pandemic hit a few months after her move. No longer willing to spend extra money on their more expensive apartments, Stanch said many of her friends and other New Yorkers left the city amid COVID lockdowns.
"It's so expensive to live there (and) all of the reasons why you live in New York, you couldn't really do anymore," Stanch said.
Garrett Watson, a senior policy analyst with the Tax Foundation who wrote a 2018 report on the value of $100 in U.S. metros, told Austonia the report factors in the costs of goods and services with residents' incomes and compares them to the national average. The result is price parity, a number that varies drastically across the country—for instance, a $100 bill won't get you near as far in Austin as it would in more rural parts of the Hill Country.
While a Ben Franklin note was worth $4 more in New York in 2020 when compared to 2018, a $100 bill decreased by $1.60 in value in Austin. Austin's cost of living also saw the 12th-highest increase among U.S. metros from the 2010 to 2020 census.
And as the pandemic's nationwide housing boom gained extra momentum in Austin, peaking at a median home price of $575,000 in June 2021, Watson said the value of $100 could have dropped even further.
"There's just been a chronic hunger for building houses on the coasts and in certain cities in the heartland," Watson said. "Especially this year, we're seeing more and more discussion about that in Austin, and so that is a big, big factor."
Price parity bleeds into other factors as well—in San Francisco, where the value of $100 sits at $82.63, residents are nearly 18% poorer than their higher incomes suggest. But with higher incomes than the U.S. average, they may find themselves more flush with cash when moving to a cheaper city like Austin.
Many out-of-towners have used that extra change to make housing offers much higher than the asking price, Redfin chief economist Daryl Fairweather told Fox7 Austin.
"All those migrants are bringing with them high-paying jobs who are used to much more expensive housing and they’re willing to pull out all the stops to win these homes and move to Austin," Fairweather said.
But Austin is catching up to those traditional hotspots: the area was predicted to be the most expensive metro outside of the Golden State by the end of 2021.
In just two years, Stanch said she's seen some signs.
"I feel like I look around certain areas of Austin (and) they do feel more similar to downtown Brooklyn," Stanch said. "Some businesses I see might tend to cater to folks who have a little more income."
So why not move to, say, Florence, Alabama, where money is almost 20% more valuable?
Watson said the difference comes down to the value of amenities—something the study can't track.
"Part of the value in New York City is all the amenities that you're near, the value of Broadway, the value of being able to get food delivered to your door," Watson said. "So that may be reflected in people's willingness to pay higher prices... there's a lot of really great reasons why people may want to be in Austin from an identity perspective that you can't get in other parts of Texas."
In Austin, tech salaries rose 5% from 2020-2021 as big-name corporations like Oracle and Tesla—alongside Tesla's billionaire owner Elon Musk—flocked to the nation's new "boomtown." With an ever-increasing job market, eclectic culture and reputation as one of the world's best cities for move-ins, Austin's appeal might still offset its price.
But for Stanch and many others, there may still come a time when price wins over location.
"If I was to the point where homebuying was more important than being near friends and family, then I would move to get the home," Stanch said. "I think that's kind of part of my plan."
