- Richard Li is a crypto investor and the CEO of 4k.com, an NFT-powered peer-to-peer marketplace.
- Li, who made many early bets on altcoins, breaks down his investment thesis around 8 tokens.
- He also shares why the rise of meme coins is ‘a symptom of the macroeconomic disparity.’
Like many crypto enthusiasts, Richard Li was a self-proclaimed “huge nerd” growing up.
He joined the Internet Relay Chat — the ”
for the super nerds from the late 90s” — at the age of nine. Out of pure interest and curiosity, he started signing up for mailing lists and stumbled upon the original Cypherpunks mailing list, which likely inspired the creation of bitcoin by list subscriber Satoshi Nakamoto.
But it was not until college that Li started diving deep into the crypto space by mining bitcoin, first with a central processing unit and then a graphics processing unit.
“I was in college and super broke so I would turn it on and mine that for a bit,” he recalled in an interview. “There’s nothing you could buy or do with it, so it was just an interesting new thing that I could be part of.”
Since learning about blockchain technology, Li has always had the idea of bringing physical assets on-chain, but the technology was not mature and investors were hard to come by after the 2017 initial coin offering mania.
However, with the rise of non-fungible tokens this year, Li’s idea has materialized as reality. In July, his startup
, a peer-to-peer marketplace that issues NFTs for luxury goods and collectibles held in storage, raised $3 million in a seed round led by Electric Capital, Crosscut Ventures, Collab+Currency, ConsenSys, and IDEO CoLab Ventures.
Customers can trade these NFTs, collateralize and get a loan against them, fractionalize them using other protocols, and even bring these digitized valuable items, whether they be Rolex watches, rare sneakers, or Birkin bags, into the metaverse or video games, according to Li.
“This bridge between physical and digital is so critical because it opens up an entirely new asset class that’s going to be otherwise what I call unproductive unleveraged assets,” he said. “When you have a luxury item sitting on your shelf, it’s unleveraged and unproductive, it’s a terrible use of an asset.”
Breaking down his investment thesis around 8 altcoins
Li’s NFT startup journey may have just begun, but the 34-year-old has been heavily investing in crypto for years.
He tries to not fixate on which altcoins to own but invest based on his theses around themes and trends. For example, one of his investment theses is the Web3 stack. Web3 broadly refers to decentralized internet services that allow users to control their own data and identity.
Because the Web2 stack is comprised of systems including domain names, cloud computing, storage, database, and applications, investing in the Web3 stack means betting on the next iteration of these systems that are going to occur on Web3, Li explained.
One of the Web3 upstarts in Li’s portfolio is the decentralized open naming platform Handshake (HNS), which aims to create an alternative to the existing certificate authority and naming systems. The HNS token, which was trading at $0.349195 as of Wednesday, has shot up 282.5% in the past year, according to Coin Gecko.
Similarly, Akash Network (AKT), which claims to be “the world’s first open-source cloud,” is a decentralized cloud computing marketplace that aims to take on centralized cloud giant AWS. The AKT token, which was trading at $2.93, has surged 635.2% in the past year, Coin Gecko pricing shows.
Arweave (AR) and Filecoin (FIL) represent the decentralized versions of centralized data storage firms today. The AR token, which was trading at $75.14, gained a whopping 3,627.7% in the past year. Meanwhile, the FIL token was changing hands at $62.55 and increased 110.5% over the past year.
Another core investment thesis is what Li calls “anonymized
Meme coins are ‘a symptom of the macroeconomic disparity’
Li cannot formulate an investment thesis around meme coins such as Shiba Inu (SHIB), which has skyrocketed 91,635,745.7% in the past year, but he thinks that it makes sense why retail investors would buy these things.
The answer, in his view, lies in the macroeconomic problem of wage disparity and wealth disparity.
“Wages have not kept up with costs as we experience probably double-digit inflation,” he said. “If you are a millennial or you are just coming out of college today, homeownership is pretty much non-existent unless you live in an area with a low cost of living.”
Similarly, meme coin traders, much like the Reddit traders who drove up shares of GameStop and AMC, are trying to gamble because the quick gains would be life-changing money and the only way they can put a down payment on a home or achieve some level of financial freedom, in Li’s view.
To be sure, meme coins such as the “Squid Game” inspired SQUID token surged to a high of over $2,860 before plunging to near zero, wiping out the life savings of one Shanghai-based investor, according to CNBC.
Li adds that investors should not “yolo” money that they cannot afford to lose into these coins, but he does not see the meme trading phenomenon going away anytime soon if economic disparity continues to widen.
“As the wealth disparity gap continues to widen, there are going to be significantly more people drawn to these opportunities, whether it be in crypto or outside of crypto, that generates extremely high returns with extremely high risk,” he said, “just because it’s a symptom of the macroeconomic disparity.”