For all the right reasons, public sentiment towards crypto is spiraling. Scammers, ponzi schemes and the like are being exposed daily, and unfortunately it’s coming at a real monetary cost to unassuming ecosystem participants. Alas, it is easy to be a critic when things are so painfully awry. I am by no means a crypto-absolutist, nor am I an outspoken skeptic. I think the most prevalent use case for crypto today is speculation in the form of a global casino that operates 24/7. There are a few other use cases and projects that cross the chasm and provide real value to network participants like Helium, but they’re the exception, not the rule. But I still want crypto to succeed and remain long-term bullish and optimistic.
Crypto is a potentially very important innovation within the technological revolution that is the information age. It’s important because it has the potential to deliver a rather utopian end state to the proliferation of software as it continues to eat the world and infiltrate our daily existence. I want it to succeed because I would like to see the following ideals exist and believe that crypto is well-suited to support them:
- A structurally sound alternative to incumbent control: Azeem Azhar does a good job illustrating the problem in his book The Exponential Age (read my review here). The gist is that a handful of executives at tech companies control a majority of our data that’s lodged in silos and influence our daily lives significantly more than most of us would like to acknowledge. Crypto is a logical and viable way to decentralize that consolidated power. If the history of business is the bundling and unbundling of services, crypto can be a force for unbundling (or disaggregating). Here’s a good Albert Wenger article on why this is important.
- Users are owners: Today’s incumbents have created some of the most impressive businesses in history on the back’s of their users (who received and continue to receive impressive value from them). One of the things I love most about crypto is the notion that network participants can become owners of the networks they help build through token incentives. To date these token incentives have had a rather perverse impact on most projects (i.e. participants game projects early on to earn tokens in the hopes of selling them off without really caring much for the longevity of the service itself), but the idea is powerful and wonderful. Here’s a nice piece by Fred Wilson about token business model innovation.
- Democratized governance as a coordination experiment: In addition to being user owned, most crypto projects have a stated end goal of being governed by their users. This is a fundamental premise of DAOs, and some projects have done a nice job handing off the reigns to their users. There’s something fascinating about this. There are a lot of obvious downsides, but the notion of democratic governance for the most important internet protocols and services is a fascinating experiment. If you want to dive deeper here’s a great podcast featuring Joel Monegro.
- Transparency and composability can accelerate the pace of innovation: Crypto is open source by design, and it’s composable so I can mix and mash existing applications however I’d like. Imagine if you could take the pieces of Google, Twitter, etc. that you love most, combine them and then build something new that you’d like to use on top of them. Being able to assemble internet applications like legos is a powerful tool for rapidly building and testing new applications. Here’s a deeper dive by Linda Xie.
There are other aspects of crypto that I like (namely that it’s fun and that DeFi can create a more inclusive global financial ecosystem), but these are the ideals that I value most and would like to see flourish in the real world. Crypto is the most viable foundation for them. I don’t know if it will happen. For all the capital and time that has been deployed in the space by brilliant builders and investors, it certainly has not fulfilled its promise. But the future is still there for the taking, and I remain optimistic.
**Sometimes I like to revisit these articles that helped me understand how important crypto can be: