1/ Everyone wants to know the future. Market narratives explain what’s happening and inform our actions. At the moment, a # of narratives are competing to explain crypto’s immediate next next. Below is the TL;DR and bibliography of a piece I wrote on these narratives:
2/ The point was to ask which market narrative is likely to drive the next bull market? I wanted to play out the market mental models that might shape how different people look at crypto: Fat Monies; Tokenized Securities; Protocol Wars; Dapps, and Whales. tokendaily.co/blog/which-nar…
3/ After publishing, I put the question out to Twitter to see what they thought. Bitcoin/Fat Monies came out ahead, with a breakout App beating out Tokenized Securities for #2.
4/ The poll leader (and the one I most think will shape the narrative) is Fat Monies, which is the idea that whatever becomes digital money is going to capture the lion’s share of the value. One of the first articulations was in this piece by @arjunblj tokendaily.co/blog/the-best-…
5/ In the context of Fat Monies, @MustStopMurad articulated the argument for why it will be an SoV first coin that wins, rather than a MoE that has a lot of devs building on it.
6/ @BMBernstein wrote this seminal piece trying to create a crisp divide between investments in equity and investments in currency that helps explain why so much energy would be concentrated on Bitcoin (or a small basket of realistic SOV competitors). tokeneconomy.co/cryptocurrenci…
7/ For my part, I think Fat Monies is a narrative whose time has come. I anticipate instruments like ETFs will make it easier for institutionals to invest at the top of the asset class. Moreover, the continued durability of Bitcoin relative to in-the-tank ICOs is being noticed.
8/ The second possible narrative is around tokenized securities. For the essential background - check out this piece by one the most thoughtful and outspoken boosters of the potential impact of tokenized securities @APompliano medium.com/@apompliano/th…
9/ One reason that security tokens might drive the narrative is how understandable they are to institutional investors who represent the new $ most likely to get involved. Many of the early use cases of tokenized securities will focus on adding liquidity to existing assets.
10/ That said, the interesting thing may not be those early use cases, but “allocating capital on-chain to cash flows." Read @lwsnbaker Q&A on @tokendaily for more of this future-thinking with regard to tokenized securities. tokendaily.co/p/q-a-with-law…
11/ One question around tokenized securities has to do with just how much more frictionless they really will be, given identity and regulatory concerns.
12/ An interesting counterpoint to the idea that tokenized securities will drive a bull market that has subsequently come up is the notion that they are a distinct asset class and not likely to drive new money to native crypto assets
13/ Another great resource for further exploring the players who are shaping the tokenized security conversation is this “Crunchbase-in-a-post” by @tatianakoffman medium.com/@tatianakoffma…
14/ A 3rd narrative that could shape the market is the Protocol Wars. The importance of smart contract protocols has been near gospel since @jmonegro wrote 'Fat Protocols’ usv.com/blog/fat-proto…. Read it, then listen to Joel on @laurashin’s Unchained unchainedpodcast.co/placeholders-j…
15/ It's clear this narrative has a role to play. This year has been a nonstop string of protocols raising huge sums to fix scalability, governance and more. For a very thoughtful example, again from Joel and @cburniske read their Decred investment thesis. placeholder.vc/blog/2018/5/12…
16/ For a more general check in on all the big players in the smart contract and overall crypto space, it’s also worth a catch up with this piece by @Adam_Tache A hackernoon.com/state-of-crypt…
17/ Regarding the Protocol Wars narrative, my gut is that it is going to continue to matter to long hold investors, but that we’re going to see other narratives rise alongside a growing chorus of questions. Case in point, this smart piece by @csheffield3 tokeneconomy.co/ether-as-a-sto…
18/ The 4th market narrative possibility is a breakout Dapps. Among all the narratives, this would be the least marketing and the most based on fundamentals. Still, designing consumer apps is incredibly hard and unpredictable - they just have a ways to go. medium.com/public-market/…
19/ That said, it’s not like there’s no possibility. We’re seeing some nutty activity like PoWH3D/Fomo3D. Lots of good writing out there about whether these are interesting incentive/game design case studies, massive greed machines or both, but start here:
20/ If I had to bet on a app sector most likely to beat out expectations and build something that captures serious consumer attention, it’s NFTs. Rather than posting one of the numerous great primers, I just suggest you follow @Flynnjamm @toddg777 @mattdlockyer @mattgcondon
21/ Finally, there is a possibility that we’re just Whale food, buying the scraps after the big players get their massive private sale discounts. Learn about the Shitcoin Waterfall with @_jillruth and @Melt_Dem on another Unchained episode unchainedpodcast.co/episode-74
22/ I think the opportunism of some whales to take advantage of the aspirational “stock market of coins” retail investors is inevitably part of any bull movement, but I hope that the more sophisticated we get as an industry, the less power they will have to drive behavior.
23/ Since publishing, probably the most interesting missing narrative category was the possibility that a major world event precipitates a sooner-than-anticipated fiat-to-Bitcoin switch, and what the ramifications of that would be. See:
24/ To read more and start thinking about this whole global political dimension, a really good place to start is @alegw’s feed and Petronomicon by @_jillruth medium.com/@jillcarlson/p…
25/ Contemplating market narratives isn’t to predict the future, but to parse out the massively diverse set of perspectives that make up this emergent sector. Some may know more than others, but my bet is that, more or less, none of us really know *shit* about what happens next.
26/ In that spirit, what did I miss? What narratives do you think will dominate the next bull market?
