Is This a Big Buy Sign for Cryptocurrencies?

In what might be a sign of enduring strength in the crypto industry, executives from established tech giants are quitting their companies and joining cryptocurrency start-ups. 

In this video from "The Virtual Opportunities Show," recorded on Dec. 21, Fool contributors Asit Sharma and Demitri Kalogeropoulos discuss the trend, and why it might convince more investors to buy into the digital asset world. 

Demitri Kalogeropoulos: Yesterday, The New York Times had an interesting article about cryptocurrencies. The headline is "The New Get-Rich-Faster Job in Silicon Valley: Crypto Start-Ups." The little blurb here is about tech. Tech executives and engineers are quitting [Alphabet's] Google; Meta [Platforms], which was Facebook; Amazon, and other large companies for what they say is a once-in-a-generation opportunity with crypto. Now, I went into this article -- crypto hasn't really captured my interest so much.

There's a lot of reasons that I stay away from it. It's hard to understand. It's definitely in that too-hard pile for me. It doesn't have a big history. A lot of these cryptocurrencies in terms of what their value is, it's all about the potential, so a very speculative approach. It's a lot of things that I don't tend to do, jump into with investing. The main thing is that the fact that it's got this fatty, hypy energy around it. You might say, it's like whenever anyone I know in the real world learns I write for The Motley Fool or write about stocks. Their first question is always, "What cryptocurrencies should I buy or --- ?"

Asit Sharma: -- It's unfair, Demitri. They expect you to be an expert.

Demitri Kalogeropoulos: Exactly, which I'm certainly not. But this article piqued my interest a bit in terms of twisting that idea. Basically, it outlines a whole bunch of different major executives at a bunch of these companies. We know, I guess the one big example lately was Square [now Block] CEO stepping aside to do more in crypto, get involved in more crypto. No, sorry. Yes, Twitter. Jack Dorsey stepping down as CEO to do more time in cryptocurrency, and Web3efforts and things like that. There's big examples of high executives in a lot of these areas doing that, too. But what this article talks about, it's how it's not yet, it does seem to be a payday.

There is an element there in terms of a lot of money, follow-the-money situation because some of these executives can get paid very quickly in these start-ups that have to do with crypto because they're getting a big portion of their compensation packages coming in these cryptocurrencies that can be liquidated really quickly. Whereas if you go into a start-up in the early days of Amazon, you had to work those grueling 80 hours a week or whatever for how many years before your stocks vested and everything like that.

There's definitely that financial element. But the article also talks about just the genuine excitement that a lot of these executives, and a lot of whom I respect their opinions it's clear that while money is a helpful reason for this exodus, it seems like a bigger portion of it is that these people that are very experienced and have a lot of understanding in the tech world are genuinely excited about building something with these technologies, and they are super excited about what's going to happen over the next five years. And they really want to be at the ground floor of that. That helped me warm up a little bit to the whole cryptocurrency idea. I still need to learn a whole lot about it, but there's clearly some excitement. And it's not just in retail investors, understanding there's a lot of excitement of very innovative people.

Asit Sharma: It's interesting. I mean, Demitri, both you and I have spent years in the consumer goods sector. We cut our teeth on companies that grow very slowly. We learned to be skeptical of get-rich-quick schemes in the investment market. Over the years, we've both warmed to tech stocks and lighter capital models. We follow a number of those companies, and I think it's two marks of a seasoned investor in what you just said. One is a quick skepticism when there's a lot of hype around technology, but then also willingness -- willingness when you see some signs to really start to consider it and then open up to the concept, which I really like about what you just walked us through.

Because I think this is, for many people, one of the hesitancies to export digital assets is that their biggest expression out there in the real world is crypto currencies. The biggest expression, at least, the mindshare of cryptocurrencies, is often the big hyped meme coin of the day. When you've got that as the biggest amplification of the technology's potential, many of us just want to run in the other direction. For a long time, I was the same way. I had dabbled in purchasing cryptocurrencies in 2017, came back a little bit in 2019, bought a little more in 2020, and then gradually tried to learn about this. But I do also look for some grounded signals that the technology itself that underlies a lot of the hype has utility in the real world.

I think this is one of those expressions where you see people who are pretty seasoned in the financial world or working in that intersection of tech and finance -- so software engineers --start to move en masse to new technology. We should say these are not simpletons. These are very sophisticated people. If you think about it, you lure a software engineer away from a place like Google, who knows that software engineer's potential compensation in cash plus stock over years in the hundreds of thousands of bucks.

There has to be, in many cases, a persuasive technology for that person who has much better technology than you or me to say, "OK, yeah, I'll come with you guys and I'll agree to be paid in part in your cryptocurrency." Some very smart people are vetting this and seeing the potential there.