Edit (10/13/2021): The latest version of this post is here at ElrondNFT.io
"Time for some dubious speculation." - Benjamin Cowen
"History rarely looks kindly on such dubious speculation as this, but the future has never been dreamed without it." - Me
"Your dream does not take you away from the present; on the contrary, your dream becomes reality in the present moment.” - Thich Nhat Hanh
When did Capitalism die? September 2019.
American corporations were born in the 1790s and since then the Supreme Court has discovered that they are, actually, people. People were invented long before then, and we are still trying to figure out if they are, indeed, human, as many suspect.
And because humans aren't always humane, and corporations aren't always nice, since 1978 the Business Roundtable has regularly issued Principles of Corporate Governance. Cue Jamie Dimon, CEO of JP Morgan, who also reigns as Chairman of the Business Roundtable.
For Jamie, the tension had been building for years, at least since the 2008 crisis, if not before. First, the people had even come to Occupy Wall Street. But in the end, no heads would roll after the banks oopsied, America is not France. And no one went to jail, this is Wall Street not The Wire, but the people still weren’t shutting up. They were, for one reason or another, mad at the unfairness of it all. And when the peasants complained, it was a king’s duty to listen.
In 2019, nothing made the peons more angry than climate change. For decades companies had been growing growing growing. Oil built the American empire. But fossil fuels had come with a catch, although neither the companies nor the consumers who were using it had to pay, and that catch is called carbon. When two actors in a marketplace don’t have to pay a cost, but the public does, that is called a negative externality. It’s not so negative for CEOs and shareholders, but dire for baby seals and unborn humans. As extreme weather like droughts, fires, freezes and hurricanes became more common, a younger generation woke up to the tragic bill Boomers would be passing on to them. The climate problem could no longer be ignored, and so stepped in the Business Roundtable, to make the people felt heard.
In September of 2019 capitalism died. Jamie Dimon, chairman and president and CEO, regally committed his fellow CEOs, the elite of the elite, to look beyond profit and to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.
What an admission of guilt! They're blatantly admitting that the economy doesn't serve all Americans. Corporations benefit only the interests of their shareholders, those lucky enough and privileged enough to be born in the right country to the right parents with the right skin and enough money.
Despite the headlines, Jamie and the Business Roundtable didn’t do anything to change the system. To be fair to them, they couldn’t. There is no other design for a company than a company. There is no pay more aligned than stocks.
So there was no change in incentives for JP Morgan or anyone else. Jamie Dimon is still paid in millions in stock every year. The shareholders still owned the company. The executives still make all the decisions. Nothing changed, and people were pissed about it.
Jamie Dimon can see all this happening in real time. The climate is changing; it is hotter than ever before at his Hamptons estate. He and companies all over the world are adding carbon, and they don’t have a real reason to stop. In fact, the entire design of a corporation is to be profit-maximizing. So the only thing he can do is to ask them to stop - to, please, please think of the starving children.
No change meant everyone was left to trust in the benevolence of their reigning CEO. In effect, to trust executives to act against their own economic interests because they can’t account for the true cost of climate change on their balance sheets. What Jamie is really doing is admitting to the failure of the system of incentives itself, the system we call capitalism.
What Jamie is really saying is capitalism is broken and you’re just going to have to trust us.
But capitalism, as originally defined, meant that you don’t have to trust people to do the right thing; the right thing is supposed to be the profitable thing, the better thing for everyone. Capitalism trusts in the competitive nature of humanity and the survival instinct. It trusts that Gordon Gecko was right after all, greed is good.
In a free market, real capitalism, the weak will die, the strong will survive, and we will all be better off than before. Economist John Maynard Keynes famously predicted a society so prosperous that people would hardly have to work.
Darwin observed this natural law and called it the Theory of Evolution. Adam Smith observed this Invisible Hand at work and called it Creative Destruction.
And Jamie Dimon was saying that it’s dead.
The Corporate Monopoly: Economic Feudalism and the Tyranny of Centralization
In the late 1700s, religious refugees confiscated enough land in America to wipe the slate clean (of Indigenous peoples) and begin a grand experiment in decentralization. Our founding fathers loved decentralization so much that they declared independence from centralization and enshrined decentralization in a protocol we call the Constitution. The protocol was simple by design: one (white, rich) person one vote. They spent years, treasure and more than a few lives so that they could use this new protocol. It was radical.
And the Old World was sure it was doomed. Monarchies from the Pharaohs to the Khans to the artist formerly known as Prince Harry had been the sure way, the only way to keep from absolute anarchy for hundreds of years. Sure, there had been some hiccups. In the 1200s the people hailed The Magna Carta, which basically said that kings couldn’t screw you over. Unsurprisingly, the rulers didn’t keep their word, because, well, they didn't have to. They had a monopoly on governance. If you were mad at your local King, where could you go? Next door lived a King just as bad and he played squash with your guy at St. Barts.
The American Revolution, and George Washington’s incredible decision to decline being King-for-life, set up an experiment in a decentralized form of governance we call democracy. And when the collective energy and insight of democracy competes against the centralized power of monarchies, democracy wins. Today, there mainly exist monarchies in name only. Monarchs are typically good for a nice wedding, a long funeral and, when things get testy, an interview with Oprah.
In the last few hundred years we've learned a couple things. Democracy good. Decentralization good.
There’s a reason that the game of Monopoly ends when someone has a monopoly. It’s not fun to play anymore. When your dad owns Park Place, Boardwalk, all the Railroads, 95% of the money and insists on being the banker too, that’s what’s called regulatory capture. Regulatory capture is being “too big to fail”.
Once capture occurs, the only real option is to clear the board, preferably with your dad’s head still on his shoulders, and to restart the game.
The problem with restarting, changing forms of governance, is that, well, it’s usually messy. Khans roll you up in a carpet and stomp on you when you try to take their power. Pharaohs are simpler, they bury you with them. And Monarchs would gladly keep you alive...and colonized.
In today’s world, people have more trust in businesses than they do their own governments. Corporations are our kingdoms, and CEOs our kings.
Mark Zuckerberg put the former Commander in Bleach in Facebook-jail. Jack Dorsey actually injected the Big Orange Twitter account with bleach. They unilaterally decided on a digital death sentence. You tell me, who is in charge here?
All hail the age of Economic Feudalism. All hail Kingdom Capitalism.
Competition, however, is coming. Crypto Capitalism, and creative destruction, is eyeing the top-down corporation and it’s consumer-driven business model for disruption. Kingdoms, like corporations, have all the value and decisions flow up to the top. We the people know that democracy will win out.
Down with the King!
The Currency Monopoly: the US Dollar and the Inevitable Debasement
Monopoly, or its cousin Oligopoly, is bad. It’s the end-game of bad capitalism and against the nature of free competition. In fact, as your dad knows, monopolies are not fun for you, but they are profitable for him.
Governments don't only enforce a monopoly of corporate design on us, but of currency as well. Wherever you happen to be born determines the currency you are allowed to use. They’ll put your body in jail otherwise. And no one has figured out yet how to leave their bodies...and come back, at least not yet. That might be changing though.
Immigration is people opting out of one system and adopting another. People vote with their feet on how they are governed and which currencies they’d like to use. This usually entails climbing into an old rickety boat with dangerous strangers if you’re lucky, and swimming alone if you’re not.
Some people come to vote, other people come to make bread and still some others to avoid inconvenient murdering. But people all over the world are discovering that they don’t have to learn to swim to use a new currency. No, opting out is now just a click away. A migration to digital currency and digital assets is already underway. The digital New World is manifesting right now.
Why would you even want to use a digital currency anyway? Well, one word, debasement. Debasement has been going on since money has been around.
Romans used gold coins as currency. When the government ran out of money they took the gold from the people's coins and made more for themselves. This is debasement.
Mongols used paper as money, paper that represented gold. When the government ran out of paper money they just printed more paper money. This is also debasement.
As you've probably noticed, neither the Romans nor Mongols are around to argue for debasement. It worked, until it didn't. (For reference, the Romans lasted roughly 1400 years and the Mongols 162. America is currently in year 244.)
Americans use fiat currency, fiat because it's not tied to the value of anything but our confidence in the government itself. It has value by government fiat. When the government ran out of fiat they just lower interest rates and the banks "print" more on a computer. The government calls it quantitative easing, your bank account might call it taxation by inflation. This is also, you guessed it, debasement.
Inflation is your money not buying as much stuff over time. And taxation by inflation is the government buying stuff with that value. You can feel it when you see stocks reach all time highs in the middle of a pandemic that has completely shut down most jobs. Suddenly, you can't make any more money, and the money you do have buys 50% less stocks. How does that make sense?
Millennials are working more hours than ever before, but none of them expect to have more than their parents. There are more billionaires and millionaires now than ever before, but the average American can't afford a $500 expense. The markets and the economy have decoupled. That's what printing infinite money does. First it greases the wheels, and soon enough it's just all grease.
Taxation by inflation is the sneaky way the American empire taxes its subjects. Here's the SparkNotes on Empire Building: dominate a World War and at the end establish your dollar as the reserve currency of the world. Then print a lot of those dollars and give it to US banks. So now it’s not only American citizens feeding the empire, but the Mexicans and Canadians and Japanese and every country we saved or bombed since World War II.
Taxation by inflation is a transfer of wealth from poor countries and poor people to strong countries and wealthy people. Almost every country on earth uses the US dollar as reserve, and all that strength goes back to the US. Which, in turn, prints more dollars and gives it to US banks. The cycle continues. If you don't have access to the discount window (you don't), then you're losing.
The US government can do this because they have a monopoly on currency. Caesar and Kublai would be proud, if they weren't so dead.
Not to worry, the digital New World is only one-click away.
The New New World is Digital.
In 2008, Satoshi Nakomoto slithered into the online New World called the internet, quietly wrote The Digital Magna Carta and stamped it Bitcoin.
This new technology, the blockchain, allows for the creation of decentralized organizations that will be funded by a new form of capitalism. Basically, it’s democratizing money and the power that goes with it. And like democracy, this model is better, faster, stronger, creates more value, is more reliable, more transparent, more scalable and shifts power and value to the people, the users. Like any revolution, it's not going to solve all of our problems, but it is certainly better than what we were doing before.
Now, every stakeholder can be a shareholder. Every employee, supplier, consumer and partner can also be an owner, and may even be compelled to be. His vision now come true, Jamie Dimon would be proud, if he weren’t so scared.
A New Money for the New World.
Money is as old as dirt. Or as old as the price of dirt certainly. The Sumerians, who people like to describe as ancient, but who would never describe themselves that way, invented the first words to describe....money. It was a ledger. From seashells to stones, silver to gold, paper to digits, money is literally as old as recorded history and the technology has been constantly evolving since then too.
The latest innovation in money is Bitcoin. For my own sanity, I will use Bitcoin as a generic interchangeable term for cryptocurrency and blockchain-based coins and tokens. It is a bit misleading sometimes, but I am in need of simplicity somewhere. As you will see, all of these words fail at the basic job given to a word, which is to accurately describe the specific object in question. Less jargon, although less accurate, will, I hope, increase the focus on the benefits and application instead. Let’s focus on the forest, the trees will sort themselves.
So what is Bitcoin? Is it a store of value, like gold? Is it a medium of exchange, like the dollar? Is it an asset, like a stock? Is it a network, like the internet? The short answer is yes.
There are 21 million Bitcoins and there never will be any more. Never. That's what makes it the hardest, toughest, meanest money ever to exist. Compare that to gold, the next toughest money, and gold is mined at 2% more per year with no assurances that number won't go up. Some prospector is trying to make that 2% into 3% right now. The US dollar you say, well, that’s inflated at whatever rate the Fed needs to so that the stock market goes whee!
Typically that's 3%, if you trust their measurements, but a multiple of that if you look at real asset prices. That 3% looks tiny, but it is no small thing! At 3% inflation the value of your dollar or bar of gold is cut in half in only 20 years. In 50 years it'll be worth only 20%.
But if you own one Bitcoin, you have stored the value of your money into something that will never, ever see debasement. There's no probability or trust needed, no hanging onto the exact adjectives some central banker uses or the dumb luck of some prospector in the Outback, the code itself sets a hard cap. It's the hardest of the hard caps, we're talking rock hard, we're talking eggplant emoji hard. That’s why Bitcoin is a store of value.
So Bitcoin is a store of value, but is it a currency? A Bitcoin can be divided into 100 millionths. These are very small units called a Satoshi. You can spend your Satoshis as official currency in El Salvador. And from lambos to pizza, you can spend Bitcoin to buy things all over the world. That’s why Bitcoin is a currency.
Alright, so I can buy things with Bitcoin, that much was obvious, but how is it an asset? Well if you own Bitcoin, you also own a representative share of the Bitcoin network. That value increases with use and adoption. Transaction fees and rewards create more Bitcoin so miners will process your transactions and you can mine Bitcoin if you want to too. The more people use the technology, the more value it has and the more it appreciates. That’s why Bitcoin is an asset.
More Than an Investment, it's also a Disruptive Technology.
What I didn’t understand until lately is that Bitcoin is not just an investment in a combo store of value-currency-asset. It is also a technology. It is a technology that has the potential to transform the economy by creating a new user-centered business model. By solving the problem of trust with technology, blockchains can cut out middlemen of all types and give that value back to the users and producers directly.
OK sure, but what does that look like? Well, it could mean a greener future where a decentralized transportation network will replace Uber.
Let's build a decentralized Uber competitor together. We can call it CARS. First, the biggest difference is that CARS will not be owned or controlled by one corporation. The ownership of the platform will ebb and flow with the ownership of its coins. The folks that own CARS coin could include network suppliers (car owners) and customers (riders) as well as the developers (CARS Inc. initially, but anyone over time) and investors (anyone with access to a crypto exchange). Importantly, CARS Inc. won't hold the majority of CARS coins, and the network will be run by a bunch of strangers with computers. Decisions will be made by all the CARS coin holders together.
How does it work? Investors can buy CARS coin to contribute to the purchase of vehicles to get the network started. Then, in order to use the service, riders will need to purchase CARS coins to pay for rides. People who own cars may need to purchase CARS coins as collateral for their car to be included in the fleet, thereby earning them ride fees paid in, you guessed it, CARS coins. If their car gets in an accident or otherwise can't complete a ride, their collateral will be taken.
Everyone who purchases CARS coin also has a share of the CARS network, so everyone is aligned.
When a ride is given it will be paid for in CARS coin and a portion of the transaction fees will return to the network to incentivize security and other useful things like marketing and referrals. When the network expands with either more money for more cars or new riders and routes for more fees, all shareholders benefit. Because nearly all stakeholders are compelled to become shareholders, more stakeholders are benefitting than ever before.
So, when you buy $10 of CARS coin for rides, you’re also buying $10 of the CARS network with all the benefits, voting rights and potential rewards that come with it. It’s a more inclusive corporation that creates more value for everyone involved; blockchain has removed the giant squid sucking the value between car owners and the riders and replaced it with a protocol that sucks less.
In fact, it has made owners and riders one and the same. You own the network and you get rides. Without a greedy company concerned about its quarterly numbers, rides with CARS will be cheaper while everyone can have a slice of the profit and also have a say in its decisions.
CARS Inc. gave up direct control of the CARS network. In return the company has cheap access to capital and also gained the power of incentivizing all of its stakeholders to grow the network together. That's the viralest of marketing.
This system of incentives creates an entirely new way to create, run, own, make and monetize networks and markets.
The Blockchain Business Model is Going to Win.
Some of the best, most lasting disruptions have come from similar changes in business models. It's not always clear how it will play out though. Online shopping led to drone deliveries, free digital photos led to an insurrection, and streaming led to the death of the "burned" CD. Bummer, dude.
The new Blockchain Business Model isn't going to win because it's better for the people, though that's a nice side effect. It's going to win because it's more competitive. It will deliver services cheaper, be adopted faster and it will out innovate it's centralized competition.
It's Cheaper to Use and Attracts More Users Too.
Things get really cheap really fast when you can use stuff that's sitting around doing nothing, like parked cars or charging cell phones. We call that underutilized capacity. Who has a lot of underutilized capacity? We do.
A trustless protocol means a reduction in cost to securing a contract, meaning the average human can now contract directly with some other average human to rent out driving time in their car or sell some extra processing power. Every car is an Uber and every cell phone is an Amazon Web Services in its own right, just waiting to spit money at its owner.
And when users have the choice of using a network they have no ownership of and can't make any money from, and one which they do, the choice will be obvious. You go where you're paid, and the Blockchain Business Model pays for users with all the extra cash it isn't paying to corporate executives.
The blockchain unlocks two new ideas: decentralized control and trustless protocols. Decentralized control because the user has a vote. And trustless protocols because there's no middleman.
There’s a reason America has to build a very huge, very erect wall on our southern border. Democracy and decentralization attracts the most users, because users want a say in how things are run.
With Bitcoin people vote with their feet too. If Bitcoin developers propose an upgrade and not enough users implement it, then the proposal fails. Other blockchains have similar but differing strategies that get to the end result; it is the community that decides. Why is this important? It is important because people want to have a say. They will move heaven and earth for a say in what's going on around them. Just look at the border.
Facebook can try to build its own cryptocurrency, but it can’t hire any blockchain developers or attract any users. Why take some petty cash and tiny stock in Facebook when a developer can have a slice of the revenue directly? What users would want to go with Facebook's cryptocurrency when they get none of the benefits or the control? (OK maybe they’ll use it because it is easier right now, but don’t do it!)
It's Evolving Faster Than Its Competition and It Won't Stop.
Decentralization also pushes innovation to the edges, creating more of it. In this way, Bitcoin is like the internet. When someone finds a cool new use for the internet it's copied easily and distributed widely.
And because every user is an owner, everyone has the incentive to make the blockchain they are using better, to upgrade the network. A great idea on the outskirts can be easily deployed for the better of the entire network. Even when the network gets big, it still pays to make it better for any individual actor, because they own it and use it too.
That’s in stark contrast to networks today that are controlled by a central authority. Once Facebook establishes dominance on social media or Google becomes the only search engine, they aren’t incentivized to continue to innovate.
What they do is they turn their monopoly into regulatory capture and use their money to buy anywhere else you might go. Why does Facebook own Instagram and Whatsapp? They're doing the very hard work of squeezing every ounce of margin they can from their users, because, well, their users have nowhere else to go. More ads, more data, more targeted content, more revenue and nowhere to go.
Remove Evil Middlemen and Make Money Doing It.
I devoted a few paragraphs to tech mumbo jumbo here, but I realized that you probably don’t really care to hear ledger this, smart contract that, block rewards yada yada.
Simply put, blockchain will remove middlemen by using code instead. Removing middlemen and replacing them with a protocol while still having trust is no small thing. That's the magic of blockchain. You see, protocols are really efficient because they’re not humans, they don't need anything. And as protocols replace platforms, we're all going to win.
Jeff Bezos, who built a shopping platform, and Elon Musk, who built a hype platform, might both have the unstoppable urge to build gigantic, competing penises to send to space, but a software protocol doesn't feel the need to do that. At least I hope not.
It is hard to invent such a protocol, but it generates a LOT of value. In turn, that value can be passed back to the users. There's already the first evidence this might work. Here's a small sampling of things you could potentially get paid for, how much they pay and the crypto network doing the paying:
- Browse the internet (up to $7/month) - BAT
- Play video games (up to $5000/month) - AXIE
- Connect a router (up to $600/month) - HNT
- Own a computer (up to $150/month) - CUDOS
- Store US dollars (12% APR+) - USDC
- Secure a network (up to 5-100% APR+) - any PoS Blockchain
And this is just the start. Middlemen are so onerous, that we had to pay to do the same things we will be paid for. Read that again. We paid for stuff when it should've been paying us.
Instead of paying for Internet Explorer, it pays you. That's Brave Browser and it exists today! This is happening all over the internet. Suddenly cost centers turn into revenue generators. A new computer is no longer an expense, but an investment that comes with a stable income. A new phone is no longer only for the gram, but a lifeline to float above poverty.
The old business model, peer to corporation to peer, is broken, and a new one emerges, the peer to protocol to peer, giving the value back to the users and the network that they own.
And as blockchain evolves there will be even more opportunities to get utilization and value out of your time and capital, transforming the activities we do and don’t value and who gets to do it.
Yesterday it cost money to play video games, today you can get paid if you're good enough and tomorrow anyone can get paid to play. Our kids will be thinking wow, our parents got screwed as they sell the Nathrian Crusader’s Bastard Sword that just dropped for actual money they can spend anywhere on the internet.
Cell phones were once a huge expense for the world’s poor, but tomorrow they could transform the lives of a billion of the most needy; when you’re living on $2 even a few cents per day makes a huge difference, and some estimate that phones could provide up to $10 worth of compute per month.
With digital currencies you could give underprivileged folks money directly (which is new), or better yet you could give them the capital to invest in a Golden Goose cell phone.
If we don’t ruin it first, we could help a lot of people.
Crypto Capitalism and the User Basic Income Will Save Capitalism.
Andrew Yang ran unsuccessfully for president. It was mainly unsuccessful because he didn’t win. And, like most things, he was told by the media what his definition of winning is and whether he did or did not do it.
Andrew’s presidential campaign wasn’t groundbreaking because Andrew was Asian, he was much too Asian to be a minority, but his campaign was successful and groundbreaking, everyone agreed, because he talked a lot about something called the Freedom Dividend. The Freedom Dividend was also known as not letting others starve and also known as eliminating poverty and also known as UBI. In an age where the average American couldn't afford an unexpected $500 expense, when a living wage was unreachable for many, just giving money to the poor was seen as a radical idea.
It was so radical, in fact, that Martin Luther King Jr. got shot and died trying to get the poor a guaranteed income. Andrew Yang only died inside a little when he tried to.
UBI stands for Universal Basic Income. Universal because it means everyone. It’s happening in far away places like Alaska and other places with lots of oil and few concerns about the climate. But it’s probably not going to happen for everyone, no matter how hard Andrew Yang campaigns.
This is for two reasons, one, half the country thinks that it’s communism (it’s not) and, two, more importantly, because America won’t have to. Soon, every American, every human, can opt-in to the digital New World and receive a User Basic Income. User Basic Income will save capitalism. Maybe.
Human Capitalism vs Crypto Capitalism
Andrew Yang coined the term Human Capitalism, and defined it has having three main values:
- Humanity is more important than money
- The unit of an economy is each person, not each dollar
- Markets exist to serve our common goals and values
His main point is that we need to measure something other than money to fix the system. I disagree. We're not measuring the wrong thing. We're using the wrong money.
We're not measuring the wrong thing. We're using the wrong money.
Instead, I'd propose the following values for Crypto Capitalism:
- Humanity has the right to their choice of money
- The unit of an economy is each user, not each dollar
- The users should own the networks
Crypto Capitalism means users go from being exploited to being incentivized.
For too long we've been using money that's soft as tissues, and watched as the government took it from us directly via taxes and, most insidiously, indirectly via inflation. With harder internet money humanity can finally communicate to each other what they really value, without greedy governments and oppressive monopolies manipulating the prices.
The difference between a human and user is that a human opts-in to the living world and a user opts-in to the digital world. Over time, those things will overlap more and more. But, importantly, you will be paid for your presence in the digital world. Your online presence is your digital vote and it also happens to be the fuel for the entire system. Getting paid to use the system, not getting used by the system, that's User Basic Income. But, you have to login.
Socialists want to make sure the workers own the means of production. They're right, kind of. Kingdom Capitalism has been trying to separate the workers from their capital for hundreds of years, and pretty successfully too. That's why we have the highest level of income inequality today than ever before. Socialism has been losing for a long time.
But balancing Kingdom Capitalism shouldn’t be Socialism, we've been trying to do that for generations, but instead a new kind of capitalism, Crypto Capitalism. Even if we got Socialism, it's already broken. Remember, Socialism is ensuring the workers own the means of production. You have to work to be a worker. In Socialism you're not counted if you don't work. And the other part of Socialism, the means of production, is worthless in the digital realm. Copy and paste is very easy. Copy and paste is very easy. See, I just did it. Production by itself is not valuable.
With Crypto Capitalism the users should own the networks. You don't need to work, you just need to login. You're not valuable because you work. You're valuable because you engage. Because you are a user. And what we care about, what we need to own, are the networks themselves. That's where the value is. Making custom dog bowls is cool, but owning Etsy is better.
We will see a huge wave of immigrants to the digital New World soon. As soon as they realize that the centralized real-world is currently debasing and inflating away from them, there will be no other logical choice. Where else can you find hard money, real returns and digital rights? Venezuelans already know that Bitcoin is the answer.
Crypto Capitalism means that the appropriately named FAANG companies can no longer suck my data for blood money. No, it means that I can opt-out of their system and into our network. I can vote through my usage and get value from it too. It means I have rights. It means I own my digital self and the networks I invest my time in. It means no false choice between which monopoly gets to exploit my data, whether its the Apple vampire or the Google leech. It means a new definition of company, to become the company that we, collectively, keep: a digital co-op, scaled to the distant masses. And it also means access to basic services and income for billions of unbanked, unconnected and underserved.
Only I get to suck my own data, damnit!
Lots of Risk, Asymmetric Rewards.
Let’s talk about risks, there are quite a few.
Beware the Many Crypto Scams.
I’ll begin with scams. They’ve been around for a while.
One of the first books in mass production was the bible, and the church used these prints to justify a 10% tithe on income in return for services rendered in the afterlife. That's right, the idea is that you pay now and you will benefit after you die. That sounds like a sc...nevermind. In 1907 Alexander Graham Bell called San Francisco from New York for the first time ever. The next call he received was from someone asking for his Social Security number. It’s rumored, but never proven, that a certain Nigerian prince, not Al Gore, invented email.
Scams are everywhere. In fact, scams are so ubiquitous, and have been going on for so long, that they’ve permeated and been elevated by our culture, to the point where someone who commits a scam is a scam artist. So will people get scammed using crypto? Yes.
But have you stopped going to church, talking on the phone, checking your email or texting your friends because of scams? No, you haven’t. The value outweighs the risks, and with enough diligence you can avoid the obvious. I mean, I couldn’t, but you could.
The majority of use is and will be legit, like every technology before it. The rest is fear-mongering.
A Return to Corporate Tyranny is Possible.
America originally won its freedom and almost gave it away just as quickly.
Even after they fought a revolution over whether or not they could use their newly invented “voting” protocol, the habit energy of trusting, maybe even needing, central authority was too hard to shake. We won the war, but George, will you please be king forever? Despite the sacrifice, they were prepared to give it all back! Back then we were one narcissist away from a return to centralization. And we still are today.
All because you get democracy, doesn’t mean you get to keep democracy. All because you get decentralization, doesn’t mean you get to keep decentralization. That much is clear from the January 6th insurrection.
And crypto isn’t immune to this; if the DOGE army had its way, Elon would be king of crypto, cars and the power of the sun. He might still be.
But the thing is, decentralization makes it much harder for would-be tyrants, especially because the status quo we currently have is already de facto tyranny. The company as a kingdom is already here, you just refuse to see it that way.
Democracy makes it harder, but not impossible, for fascists to rule over us. And crypto will make it harder, but not impossible, for monopolistic titans to squeeze us.
In the future you'll have your choice of decentralization. Some cryptos will be one user, one vote. Others will be one dollar, one vote. A lot will be in between. Arguably, after Citizen's United, we're already living in a world where it's one dollar, one vote. It's a pretty crappy voting protocol.
Soon, if there isn't already, there will be a lot of debate and experiments to see how all this decentralization should work. When America first began our Founding Fathers dueled each other, shot each other, murdered each other, over such debate. It's going to be messy, but probably not that messy.
The forces of nationalism might still prevail, there is no telling if some people would rather just descend into fascism than experience a relative loss. They can just take their ball and go home if they really want. For every graceful winner there’s a sore loser, and some lose louder than others. As light as it is today, the Dark Ages are never too far away. All because that would be a lose-lose situation, doesn’t mean it can’t happen, it just probably won’t.
The Kings of Capitalism aren’t going silently into the night. There is a non-zero chance that we face a North Korea-like digital crackdown or a China-like Great Firewall. Or something new we haven't experienced yet.
Regulation, Malevolent or Simply Misguided, It Doesn't Matter.
But even in the worst case, even if Crypto Prohibition passes, there is no killing crypto. Prohibition didn’t work for alcohol or weed and it won’t work for crypto too.
In fact, Bitcoin is even harder to stop than drugs. There’s no physical thing to stop. To ban crypto you would need to ban electricity. Crypto can get around without internet access.
Sure, some governments can try to ban crypto, but then most digital citizens can just move to a part of the internet that isn’t regulated or that they can VPN across. China has already banned crypto five times.
The US Supreme Court has already declared money to mean speech. And they are right, money is expression. A Crypto Prohibition would be in gross violation of our First Amendment rights. Doesn't mean it won't happen though.
Criminals use Crypto, but They'll Use Cash More.
Look, the Klan used the telephone to organize lynchings. Moonshine runners used cars to transport liquor. El Chapo buried billions of US dollar bills in the ground. 4can, then 8chan and, in the future, 16chan exists. Just like the scam artist, the criminal has been around for a very long time; they are bad actors. But we don't stop the tools they use, we stop the actors.
Criminals live in a high-risk world. From their perspective, there's tons of downside, like going to jail or being murdered, but there's also a lot of upside, otherwise they wouldn't be in the game. That means they're often the first adopters of new technology. It pays big to be the first kingpin with an airplane. While the law and their competitors are behind the curve, they will see a massive lift.
But the arc of history, and the long arm of the law, bends toward justice. As time goes on more criminals use the new technology, and with more criminals comes more law enforcement.
There are also a lot more people who follow the law than those who break it. Non-criminals, however, don't have the same incentives as the crooks. Life is not so risky, so they don't need to change unless it is obvious. They typically don't like change.
So law-followers will use new technology when things are easier, regulated and an obvious benefit to them. Since non-criminals outnumber criminals by a lot, soon, when mass adoption comes, the relative percentage of criminal use is dwarfed by the commercial use.
In fact, the blockchain is hyper-transparent; everything is recorded for eternity and visible to all. So it might make more sense for criminals to decrease use of crypto and increase use of cash, the original privacy currency. That, coupled with the decline in general use over the long run, may see the relative share of criminal activity in cash go up significantly in comparison.
Finally, the end. It felt like an eternity to get here. I'm tired of writing, but I'll soldier on because I bet you're more tired of reading than I am of writing. And, really, I'd like nothing more than for you to continue to suffer.
One of my favorite books is Factfulness by Hans Rosling. To sum it up, humanity has seen less violence, less death, more life right now than ever before. And despite how a toxic and abusive media preying on our fears might make it seem, things are actually getting better all the time. So if we’re not trending toward the Dark Ages, where are we going?
The Exponential Age, says Raoul Pal at Real Vision. The greatest value redistribution in the history of mankind he says. And he might not be wrong.
But I think it will also, probably, be the greatest value creation in the history of mankind.
We'll go from corporate feudalism to decentralized networks. From currency by geography to an unimaginable choice of digital moneys wherever you are. Globally accessible devices, currencies, markets, investment opportunities, services, passive income and asset-types...All the things only the lucky, the first-world, the privileged and the wealthy had before, now everyone will have.
Already what was once the exclusive realm of venture capitalists has been open to the common woman. Just buy a coin, and you're invested in your favorite start-up.
The S&P 500 will look like a farmer’s market in comparison to the crypto exchanges of tomorrow. Sure, specialized top-down and centralized organizations make sense, but only in specific situations. The NASDAQ of tomorrow, global and relevant, can be found in the decentralized crypto exchanges of today. The next Amazon and Apple are being built today, using a business model that will crush their centralized peers. And we all have access to use and invest in them right now.
One day, blockchain networks will push themselves onto us...and we’ll love it. We’ll be faced with a deal that is too good to pass up. It'll be a deal we can't refuse. A free phone that makes money, a video game that pays me, web browsing that pays, a savings account that actually produces real returns. We can say no, but we won’t, and that’s the beauty of capitalism on the comeback, riding the blockchain.
So what is this? It’s Bitcoin. And It's Happening.
Michael Saylor calls Bitcoin digital iron. Iron is a commodity we use in every single building since it was invented. And that's his point, the market for iron crushed the market for bricks. It wasn’t close. Saylor says iron is the best material to build with, and Bitcoin is the best money to build with, there's no other choice. I love it, digital iron conveys Bitcoin's hardness, utility and ubiquity but the analogy is limited to the constraints of physics. Iron is not easily replicable, hard to work with, never evolves and slow to move.
Raoul Pal calls it the Exponential Age, an accurate but vague description.
Andreas Antonopoulos calls Bitcoin the Internet of Money. A similar Cambrian explosion is happening similar to the internet 90s, but money is not the only frontier. Blockchain is not only questioning what money we should use. It is also asking uncomfortable questions about the largest most important and powerful organizational structures in our society, the centralized corporation.
Like most disruptive, transformative things, we don’t have the words to describe it today. We just don't know enough yet.
Analogies only go so far in describing a forward looking future because they are fundamentally, tragically, based on our backward looking understanding. We're like two cavemen trying to describe credit cards to each other. Even if you get it right, you're probably still wrong. Grunting only gets you so far.
If you said Blockchain is the Exponential Internet of Iron-Money, you might get close. Ug, Ug, Ug. Or, save yourself the grunting, and you can just call it Bitcoin.
We’re moving from digitizing assets to assets that are digital. From gold to digital gold. From centralized physical organizations to decentralized cyber co-ops. From paying to use to being paid to use.
When the invisible hand creatively destroys the currency and corporate monopolies, it won't feel invisible for long.
Capitalism is Dead. Long Live Crypto Capitalism.
Disclaimer: I am (obviously) not a financial advisor and none of this should be construed as financial advice.
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