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24 tweets,
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1/ What are the implicit and explicit strategies that crypto projects are taking? What can we see about 2019 to 2021?
2/ First we have to see the fundamentals view of money, the layers of crypto, publication vs validation, verticals, and the relationship between different chains.
3/ The beginning was Bitcoin as peer to peer cash. Private key = value (bearer shares), security as a competition. The implicit assumption was exchanging, but in fact it became the lead "collectible."
4/ The "medium of exchange" started with competing for "services and goods" economy with Litecoin, Bitcoin Cash, Dash. The implicit strategy is that they are trying to bootstrap the supply and then the demand will come.
5/ These have minimal upper layers and compete on traditional currency measures: fungibility, scarcity, durability, and transferability. You see this with announcements and conversations about the tech.
6/ Privacy leads to fungibility, # of coins leads to scarcity, and people compete over "fees" which is transferability. All privacy like ring signatures, bulletproofs, and zk-snarks is in context of these currencies.
7/ The problem with these currencies is that they are cloud currencies that focus on debit use cases. If you see the early use cases of credit card companies including Bank of America Card, Diner Club. They provide ease of use, billing consolidation for consumers as well.
8/ The early use cases of credit take into account both sides of the market places, provide an easy user experience physical cards and manually bootstrapped these accounts with marketing and sales. Will a decentralized currency simply bootstrap distribution?
9/ Most of these currencies state that they are competing against money, but in reality they are competing against "Credit." What most people think of money these days is simply Credit.
10/ The competition got more interesting as the smart contract platforms got underway with consensus, op codes (VM), programming languages, smart contract security.
11/ There is a strategy of "enveloping" and "embracing and extending" Substrate/Parity and Cosmos assume that everything will be a proof of authority and that security will be solved, and therefore their VM and opcodes will commoditize the base layer the consensus layer.
12/ Consensus engines assume upper layers are more commodity. Hashgraph and others are simply adopting EVM and making dapps portable over.
13/ Many are "embracing and extending" Webassembly to extend the opcodes to their use cases taking advantage of the broader open source.
14/ EOS is taking an end to end approach having apps pay for centralized services and having user readable names and user experiences that people are used to. This basically says that decentralization doesn't matter that much, and parity to current usage is more important.
15/ Then there is an implicit strategy of "economic abstraction" which allows BTC to access to decentralized finance infrastructure of Maker Dao and compound finance. This is a double edge sword.
16/ The "economic abstraction" on one hand adds to the liquidity of Eth. On the other hand you could argue that you don't need to hold Eth to gain access to the network. Just hold BTC.
17/ The other approach is a bridge to the existing world which is Ripple and Stellars approach. This takes existing economic entities which can settle, and issues IOU notes on chain.
18/ This ledgerless approach sacrifices global queryability and composability for lower fees, and onboarding real life institutions with assets tied to physical locations (country currencies) enabling counter party risk to be assessed with institutions.
19/ All of these view the world very differently, but problem with currencies is to "bribe" the consumer as the credit cards did. The problem with the smart contract platforms is "is security a given with Proof of Authority and Proof of Stake" and what layers is a commodity?
20/ The history of tech has been to commoditize the complement and to bootstrap one side of the network.
21/ What will be the result? Does “security” matter, does “decentralization” matter, does father coin matter? Do merchants and “services and goods” economy matter or financial economy matter more?
22/ some of this will be sacrilege but the projects are better that the 99% will care more concretely about benefits than principles.
23/ what do you think about the strategies and commodization strategies? Any to add?
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