Thread by @coinfund_al

Here are some more thoughts on crypto and the future of digital investing. <thread>

What is happening? We are transitioning from competition (every company for itself) to a "coopetition" model. The "coopetition" model is characterized by a few features. Here they are:

Feature 1: Open source, lack of IP protection. Why: because it delivers faster progress. Problem: no protection, no mote, you give up your right of the first mover, because others can capitalize on your success.

Feature 2: Open ecosystems, companies give up the right to control what they build and how it is used. Why: because you create more trust with your customers. Problem: when you don't control what you build, others can capitalize on your success.

Feature 3: Digital association replaces legal association. Why: cheaper, faster, easier. Cooperation is not limited by legalese. Problem: such systems are easily coopted by bad actors.

So, what's happening here? The world of coopetition offers faster progress across the board. It also makes capital deployment more complicated, because capital deployment requires legal guarantees, seeks maximization of returns through closed systems and explicit control.

Consequently, the problem one needs to solve is to establish an investment structure where capital can feel protected, respected, and recognized, while allowing business models with essentially no traditional protections.

We are in the early stages of figuring this out. We tried token economics, with some very mixed success. Well, the ideas were promising, but very very naive.

Problems: bad actors, speculation, regulation (unfriendly), bad designs, complexity, horrible user experience (token is a barrier not an enabler). Also, tokens tend to start competing with each other (by proxy of their respective community).

So in some sense we are back to square one. We would love to have unbridled progress, DAOs ruling everything, open source everywhere. But these things can hardly get funded these days. (Actually, some get funded just fine, by the investors will get burned oh so bad there, yikes)

So what's the solution? My a-ha moment in the last few months was to realize that the saving grace of this space is the need for a whole new degree of reliability of these systems, a.k.a. "security" (but that's a misnomer)

If you recall, the first token (Bitcoin) was used as a tool to establish "security" of its chain. The relationship between economic value and security is, actually, more fundamental than we realize.

For example, there is a world of difference between open source code, and secure open source code. Here is the difference: former can be forked and modified any which way you want, latter can not, because willy-nilly modifications break the chain of trust.

To me, exploration of the open source economic value in the context of reliability/"security" is the paramount next step.

I know, this is not an answer anyone expected. Oh well. <the end>