Dallas Mavericks owner: Crypto assets have value storage significance, and the value storage generation is "kicking Wall Street's butt."

This article was published on blogmaverick by Mark Cuban, translated by Lu Jiangfei.

What has value? Buildings, pens, stocks, cryptocurrencies, gold, intellectual property, or other assets? Sometimes when we evaluate certain things, we seem to place more emphasis on artistry while neglecting scientificity.

When I was a child, I loved collecting stamps. Why? Because my mother also loved collecting stamps when she was young, and she introduced me to the world of philately. Then, when I was about 15, I started attending stamp exhibitions, hoping to further enrich my stamp collection, but I quickly realized that the market operated very inefficiently; even the same stamp could be sold at different prices at the same exhibition. So, I discovered that I could buy stamps from one person and quickly sell them to another, thus making a profit from the price difference.

For example, I bought a stamp from a dealer for 50 cents and sold it to another dealer for $25 an hour later. As a result, I quickly transformed from a stamp collector into a stamp "investor," trying to make money by exploiting the inefficiencies of the stamp market to pay for my college tuition.

Now, seeing what is happening on Wall Street reminds me of those days when I bought and sold stamps as a child. There is no denying that every market has some deep-rooted issues, such as inefficiency and infiltration by those in power, to the extent that the powerful believe they are the "market rules." Under this authority, even if not all market participants—most of them are forced to comply—until they can no longer tolerate these practices.

This "rebellion" often starts on a small scale, like a child finding some discarded items, cleaning them up, and then selling them on eBay, gradually turning it into a business; or someone acquiring low-priced trading cards from somewhere, then checking price differences online and selling them, which also gradually transforms into a business. It is always uplifting to see people being so resourceful.

So how can we discover inefficiencies in the market? In fact, we need to follow an interesting method. I started with pure simulation when I was young; you had to own something, and then you could go somewhere to sell it face-to-face (of course, you could sell it by mail), or you could use a broker and then sell physical goods through the internet and websites like eBay.

Now, we see the market continuously evolving; what will the next step look like? What will happen when everything is digital? Literally, what changes will occur in the market when any digital technology can play the role of value storage? Will stocks be affected?

What is value storage? I believe that some people assign value to something and are willing to pay a sum of money and hold onto it, hoping that this will increase the value of "that thing," such as gold, which is one of the most historically significant and visible stores of value.

Gold investment "old-timers" will tell you that gold is the true store of value because it has historically served as the basis of currency, is a practical monetary anchor, and is a hedge against inflation. Gold has intrinsic value because it is widely used in manufacturing and the jewelry industry—this is essentially the narrative of gold. Although there are many other "precious metals" in the market that meet the same criteria, gold has more buyers. When the number of buyers increases, the price goes up, and vice versa. In fact, gold has no unique or special qualities other than having enough people believe in its narrative.

Trading cards, artworks, cars, stamps, and many other "collectibles" can also be seen as stores of value. One reason people want to "store value" is that they need to have material as evidence of physical existence and scarcity confirmation. For creating a certain number of collectibles, people always think of the most reasonable ways; physical goods actually exist to confirm that "value storage" genuinely exists (in most cases, there are indeed counterfeits, and fraud is also a tricky issue), but in most cases, we believe that Picasso is Picasso, Luka Dončić's rookie card is Luka Dončić's rookie card, and LeBron James's rookie card is LeBron James's rookie card. (Note: Luka Dončić and LeBron James are NBA stars.)

Of course, those who treat "physical items" as investments and collectibles hope that the value of "physical items" will rise, and they often can ascertain that these assets have a high likelihood of increasing in value before investing, owning and later selling can bring sufficient profit. In the simulated world—before the advent of blockchain—"physical" investments seemed to be the only means of value storage for people.

However, things have changed somewhat in the past three years (crypto enthusiasts have told a different story, which has actually been happening since 2009). Blockchain has the capability to support smart contracts and can uniquely identify digital goods and their related transactions.

So, what are sellable digital goods? Literally, any digitized item can be considered a digital good. If it can be generated and saved in a file format, it can be defined as part of a smart contract, which can play a powerful role through a multitude of "if this then that" rules, thereby exerting a certain degree of control over the digital good, including:

• Defining the availability or scarcity of the digital good;
• Defining what should happen when the digital good is sold;
• Defining whether ownership is granted.

I love the concept of digital goods and even think it could be the ultimate game-changer, regardless of whether future sales of digital goods will pay a certain percentage of the sales amount to the individuals/companies that originally minted the digital goods.

Due to the intelligent management of distribution, storage, and maintenance of digital goods through blockchain, no party is responsible for transactions, while miners compete to confirm transactions, thus, today, blockchain-driven assets have legitimately become stores of value.

In fact, this digital value storage is not limited to digital goods but has long been included in cryptocurrencies like Bitcoin and Ethereum (perhaps they should be called crypto assets, as they are rarely truly considered a currency), as well as tokens created to support decentralized finance and other derivative crypto assets that create value—these are all stores of value, with Bitcoin being the largest by market capitalization, having a long history of trading and wealth creation since its inception over a decade ago.

However, for many people, viewing crypto assets as a store of value may still seem like a crazy idea— to them, crypto assets have no intrinsic value; to them, crypto assets are merely hollow "digital representations"; to them, those who invest in crypto assets are too crazy and will pay a high price for it. But that is not the case.

Traditional investors always say that you need to have something "tangible" for it to have value; otherwise, it is difficult to deal with fraud. If we can touch, see, or hear these "tangible things," they are real and valuable. But the new generation growing up in the digital world knows that the greatest value for them is digital, just like music, which used to be recorded on CDs but can now be listened to online.

This generation knows that, compared to traditional, visible, tangible, or feelable (STFU) physical items, smart contracts and their reflected digital goods or crypto assets are better investments.

I spent a lot of money and time collecting stamps and baseball cards, so I feel very strongly about this; I also believe that digital goods or crypto assets are better investments.

When you collect stamps or cards, you take great care to preserve these physical items; you must store them and maintain their current physical condition, and you also need to protect them and keep them safe. When you want to sell a stamp or card, you need to deliver the physical item to the buyer, and there is considerable risk during transportation. In many industries, many operations are person-to-person, so there are various other risks and costs in these traditional systems. All of this is expensive, time-consuming, and increases risk, which is quite annoying.

I use NBA Top Shot as a comparison for digital trading; on NBA Top Shot, you can have a lot of fun without the aforementioned risks, and the trading value is still determined by similar laws of supply and demand.

I am happy to know that I own a classic dunk moment of NBA star Maxi Kleber, and I know the serial number. Some might think it’s a bit boring to watch the same video online anytime and anywhere. Well, in fact, I could get the same image from any traditional physical card on the internet and print it out, but doing so would not change the inherent value of the basketball card.

When I want to sell this basketball card, NBA Top Shot provides a trading market, and through the website created on the Flow Blockchain, I can view every available Maxi Kleber basketball card, serial number, price, and other information. On this trading platform, it is consumer-friendly and efficient, but I must add that I don’t understand why anyone would sell a Maxi Kleber basketball card, considering he is one of the top ten defenders in the NBA!

With digital goods, I can still have the same sense of ownership as with physical goods, and the value is still determined by supply and demand; aside from remembering passwords and downloading wallets, I have no trouble. In fact, remembering passwords and downloading wallets are becoming increasingly easier. Interestingly, if you are a traditional sports goods owner, what do you do when you want to share what you own with others? You take digital photos of the goods and send or link them…

Moreover, digital goods have many other benefits; you can even "mint" digital goods yourself and place them on the market for trading. For example, on websites like Mintable and Rarible, I can easily mint digital goods and sell them directly, and I can also sell digital art and other products on the market, all of which can be openly hosted. Nowadays, platforms like OpenSea, NiftyGateway, SuperRare, NBA Top Shot, and Bitcoin Origins allow you to create and mint your own exclusive or licensed content—these platforms' biggest advantage is transparency; I can clearly see the transaction history of each buyer and bidder, see what goods they own and what prices they have paid. For each digital good, I can easily see the market situation of similar goods. For example, CryptoSlam is a great digital goods platform where transactions can be completed in minutes or less; when I want to trade a digital good, I can complete the transaction by simply purchasing it. Additionally, I need to add that, basically, there is no barrier to entry in the digital goods market, at least far lower than in traditional art and collectible trading markets, thus opening an incredible door to attract new users!

Today, the market is flooded with many different crypto assets. The same problem arises with wallets; yes, the variety of digital wallets can be confusing, but this issue is not severe, and I believe everyone can figure out digital wallets. Just as you can clearly distinguish between gold, silver, currency, stamps, and trading cards, the value of these goods is determined by supply and demand. (For crypto users, the supply of the crypto asset market is determined by algorithmic settings.)

Of course, I am not saying that the digital goods and crypto asset market is perfect; the reality is otherwise, such as:

• The transaction costs of digital goods and crypto assets can be high;
• The digital goods and crypto asset market can still be driven by some large participants (whales);
• The digital goods and crypto asset market, like the stock and physical goods markets, may be influenced by narratives, which can be correct or incorrect.

But most importantly, more and more investors and traders believe that the digital goods and crypto asset market is better than traditional physical markets and stock markets, and most investors and traders are young; they enjoy the feeling of being uncontrollable. Without centralized power, young investors and traders can earn returns through their own efforts without the support of government agencies or large corporations.

On the other hand, young investors and traders have also been observing their peers around them gaining wealth through cryptocurrencies and digital assets; those who entered the crypto and digital asset market early did not have much startup capital but ultimately gained substantial wealth. Not only that, young investors and traders dislike old-school investors and traders interfering in the crypto and digital asset market; they know that using digital assets and acting in unison can bring wealth, and that is power; they know and are learning how to use cryptocurrencies and digital assets.

So, what does this have to do with Wall Street Bets (WSB) and GameStop (GME), and the other stocks they are trading?

Well, it is clear that WSB traders are applying the same investment principles from the world of cryptocurrencies and digital assets to the stock market, which is why old-school investors and traders hate them.

While Wall Street has been passed down through generations, fundamentally, not much has changed. Of course, Wall Street has achieved digitization in many ways, but the game rules have not changed. Wall Street is 100% controlled and regulated from the top down; do you know what the second-ranked stock in the S&P 500 is? Which stock will be removed from the S&P 500? No one knows. In contrast, cryptocurrencies and digital assets are enlightening and can change the fate of investors. Did you know that the U.S. Securities and Exchange Commission even has its own internal administrative judges, preventing defendants from enjoying their constitutional right to a jury trial? Yes, once you become a defendant of the SEC, you are powerless to fight them; they are really too domineering! Large brokerages will make crazy calls to millions of clients, then have them buy stocks at target prices, hoping retail investors can cause market fluctuations, but is it wrong for retail investors on Reddit to trade GameStop stocks? Yes, before 1982, stock buybacks were considered illegal by the SEC. However, after that, a brokerage CEO took over the SEC, resulting in the 2000 establishment of the 10b5-1 rule, which states that pre-approved, unchangeable automatic trading buybacks will not be considered insider trading. Just think about it, what changes have occurred in the compensation of publicly traded company CEOs since then?

Wall Street and its regulatory body, the SEC, are becoming increasingly large and complacent, a trend that will slow down the learning of old-school investors and traders, making it difficult for them to adapt to market changes and keep up with the times. Clearly, they do not realize that everything around them has changed dramatically!

So what’s the result? Old-school investors and traders have missed many opportunities, but they are even unwilling to believe that what will happen or is about to happen in the future. But first, they seem to have an obsession that whether it is a corporation or a small trader, as long as they purchase digital assets, their value will decline. In fact, old-school investors and traders have also studied stocks of companies like GME, AMC, and BBBY; they know what happens when short-term short squeezes occur. Indeed, poorly performing companies will see their stock prices fall because that is the most effective pricing method in the stock market and makes sense. For bankrupt companies, stocks are either redistributed to debt holders or completely canceled (of course, there are other options, but these two measures are sufficient). Undoubtedly, if companies supported by WSB and other investors go bankrupt, their stocks will also be worthless. But what old-school investors and traders do not understand is that new investors like WSB fully understand this and accept this risk. In other words, old-school investors and traders think they are smarter, but they are not.

Now, the "Value Storage Generation" is kicking the asses of old-school investors and traders.

The new generation of young people does not care about the understanding and views of old-school investors and traders on market valuation; they do not care about price-to-earnings ratios, future cash flows, net present values, or the earnings data provided by analysts every quarter; they completely do not care. The new generation of investors and traders has learned a lot from the ups and downs of Wall Street, and now they want to change the game rules: not to let a few people make more money, but to let more people make money.

Choosing stocks of companies like GME, AMC, and BBBY is merely a means for the new generation of investors and traders; what they really want to do is change the game rules and kick the asses of old-school investors and traders; they want to have all the rights and should have the rights.

Stocks are just another form of digital storage of value, just like other forms of value storage that have appeared throughout history, the latter generation of value storage always surpasses the previous generation. The more decentralized the power, the greater the power generated by collective cooperation.

Of course, whether it’s GME, AMC, Bitcoin, or AAVE, everyone knows they can profit from trading, but they will also face losses. Of course, some may fall into unfortunate situations, taking risks that could lead to losses greater than what they should earn. However, the more collective cooperation there is, the smaller Wall Street's power will be. The new generation of investors and traders knows that the massive Wall Street has become slow, outdated, and is starting to struggle; it is easier than ever to fight against Wall Street.

As a whole, the new generation of investors and traders can target any hedge fund or stock at any time for any reason and change the game rules, which is no different from the significant investment decisions made by Wall Street analysts in the past. In the past, retail investors could only follow whales to shift stocks, but now WSB and its followers can do the same using collective power, with even greater market influence.

The targets chosen by the new generation of investors and traders are not always negative; they can completely be some positive, promising companies, such as:

• Supporting stocks of companies with a strong social mission;
• Driving up stocks of companies that provide equity to employees at the lowest levels so they can enter the market and gain wealth;
• Or, taking important positions in companies to better safeguard investor rights.

Of course, the new generation of investors and traders may not be able to collaborate with 100 companies at once, at least not in the short term. But in fact, they do not need to do so—because being able to have an immediate impact on things of significant importance is both astonishing and great for this country.

However, Wall Street will hate them and will fight against them because Wall Street's power has been taken away. The "Value Storage Generation" does not wish to violate the law; they just want to break the old systems that challenge value storage, "take out" those who ignore them, and let those who truly understand them create a better future. Every generation has its unique power, and the "Value Storage Generation" has found a special cohesion in the financial field; if we understand them, respect them, and learn from them, this country will become better.

Well, if you think my views are incorrect, feel free to reach out.