"The Sovereign Individual" Investment Thesis - Phil Bonello

Phil Bonello believes information technology shifts the power dynamics in society in favor of the individual. Leveraging the ideas popularized by the book The Sovereign Individual, Bonello thinks this macro-trend will manifest itself in three key ways:

1. The internet equalizes access to information and resources, which will spur global entrepreneurship and contract income inequality between jurisdictions.
2. Digital currency, specifically Bitcoin, will reign in a new era of global financial services as uses cases shift from speculation to “solutions that facilitate trust minimized on-boarding, custody, and commerce.”
3. Encryption creates safer and more censorship-resistant software systems, transferring the power welded by data mining companies back to the user — though the incentives required to spark user demand in encryption-related services and technology are lacking.

Each thesis represents a “massive opportunity” for the individual and the forward-thinking investor. Like the internet before, crypto-enable technology is breaking down global barriers to offer widespread access to digital services. More importantly, government and incumbent resistance towards this movement are futile as the dissemination of available information and resources is inevitable.

Why it matters:

• The actions taken by governments and incumbents may accelerate the shift towards a more sovereign future. Ray Dalio echoes this sentiment in hisrecentposts. The paradigm we are in is unsustainable and people will eventually turn to emerging technologies that offer refuge from the impending fallout.
• Bonello highlights that the dominant use case for digital money is speculation. Investors interested in crypto-related assets are following suit, shoveling funds in the direction of companies that facilitate speculation, such as exchanges or crypto funds. This is no longer contrarian thinking. As a result, more investments could start flowing into services aiming to facilitate trust minimized financial services like self-sovereign custody, decentralized exchanges (DEX), and robust fiat-to-crypto onramps.

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