A THREAD on most thought provoking insights on crypto by @balajis:
1/
Crypto is just another asset class = the internet is just another TV channel.
It’s more than an asset class because it transforms the custody, trading, issuance, governance, and programmability...
1/
Crypto is just another asset class = the internet is just another TV channel.
It’s more than an asset class because it transforms the custody, trading, issuance, governance, and programmability...
...of anything scarce. It’s a new financial system.
2/
Fiat company
- paper incorporation
- paper contracts
- paper payments
- paper accounting
Crypto company
- on-chain incorporation
- on-chain smart contracts
- on-chain payments
- on-chain accounting
Fiat company
- paper incorporation
- paper contracts
- paper payments
- paper accounting
Crypto company
- on-chain incorporation
- on-chain smart contracts
- on-chain payments
- on-chain accounting
3/
It feels like a generational shift from internet to crypto, just like the desktop to internet shift happened ~20 years ago.
A fundamental backend and cultural change to how software is developed, funded, monetized, and used.
On disk, online, on-chain.
It feels like a generational shift from internet to crypto, just like the desktop to internet shift happened ~20 years ago.
A fundamental backend and cultural change to how software is developed, funded, monetized, and used.
On disk, online, on-chain.
4/
It’ll take a while, but the entire tech industry will ultimately be rebuilt on public blockchains.
Incorporation, funding, payments, employee equity, user incentives, encrypted messaging, identity, accounting, M&A, governance, all can be automated with crypto.
It’ll take a while, but the entire tech industry will ultimately be rebuilt on public blockchains.
Incorporation, funding, payments, employee equity, user incentives, encrypted messaging, identity, accounting, M&A, governance, all can be automated with crypto.
5/
Just like the internet turned every form of information (news, books, music, movies) into packets online, the blockchain turns every form of scarcity (gold, stocks, bonds, loans) into transactions on-chain.
That is, genuinely, an innovation on par with the internet itself.
Just like the internet turned every form of information (news, books, music, movies) into packets online, the blockchain turns every form of scarcity (gold, stocks, bonds, loans) into transactions on-chain.
That is, genuinely, an innovation on par with the internet itself.
6/
We can't just shoehorn new technology into century-old policy frameworks.
We need to think from first principles, or else every livestreamer in the world would have needed a television broadcast license.
We can't just shoehorn new technology into century-old policy frameworks.
We need to think from first principles, or else every livestreamer in the world would have needed a television broadcast license.
7/
Once payments go on-chain, all higher order data structures derived from payments go on-chain.
Contracts of course, but also financial statements, companies themselves, conglomerates, and M&A.
It's not just about digital currency, but digital corporations.
Once payments go on-chain, all higher order data structures derived from payments go on-chain.
Contracts of course, but also financial statements, companies themselves, conglomerates, and M&A.
It's not just about digital currency, but digital corporations.
8/
Farming was the 1800s.
Manufacturing was the 1900s.
Counterintuitively, could investing become the most common "job" of the 2000s?
Reason: crypto and fintech are turning everyone into an investor, just like the internet turned everyone into publishers...
Farming was the 1800s.
Manufacturing was the 1900s.
Counterintuitively, could investing become the most common "job" of the 2000s?
Reason: crypto and fintech are turning everyone into an investor, just like the internet turned everyone into publishers...
...It doesn't mean they'll all be *good* investors.
But it does mean everyone will be in the game, in some way.
But it does mean everyone will be in the game, in some way.
9/
Silicon Valley is the new Redmond, and Crypto is the new Silicon Valley.
If a company is still doing pure-cloud-no-crypto by 2025, that will be like doing desktop-only software late into the 2000s.
Silicon Valley is the new Redmond, and Crypto is the new Silicon Valley.
If a company is still doing pure-cloud-no-crypto by 2025, that will be like doing desktop-only software late into the 2000s.
10/
An Indian can use defi protocols without a Bloomberg Terminal.
A Nigerian can create defi contracts without paying for American lawyers & a Filipino can computationally verify that defi code is fair without trusting American politicians.
An Indian can use defi protocols without a Bloomberg Terminal.
A Nigerian can create defi contracts without paying for American lawyers & a Filipino can computationally verify that defi code is fair without trusting American politicians.
11/
Many government services can be put on-chain eventually, things like property registries and birth/death/marriage certificates.
Citycoins (and their associated DAOs) may eventually become the way jurisdictions of the future allocate funds and manage governance.
Many government services can be put on-chain eventually, things like property registries and birth/death/marriage certificates.
Citycoins (and their associated DAOs) may eventually become the way jurisdictions of the future allocate funds and manage governance.
12/
If web1 led to new technologies (Linux, open source), and web2 led to new markets (Airbnb, Uber), web3 leads to new polities (crypto tribes, DAOs).
If web1 led to new technologies (Linux, open source), and web2 led to new markets (Airbnb, Uber), web3 leads to new polities (crypto tribes, DAOs).
13/
The primary risk in web3 is political risk.
As such, you need to remain abreast of politics, economics, and foreign affairs.
The primary risk in web3 is political risk.
As such, you need to remain abreast of politics, economics, and foreign affairs.
14/
Crypto regulation is not consumer protection.
It is bank protection, it is incumbent protection.
Crypto regulation is not consumer protection.
It is bank protection, it is incumbent protection.
15/
The core competency of banks is regulatory compliance, not technological innovation.
They have a license to print money.
Opening them up to crypto is like subjecting the USSR’s state owned enterprises to the free market.
Most won’t make it long term.
The core competency of banks is regulatory compliance, not technological innovation.
They have a license to print money.
Opening them up to crypto is like subjecting the USSR’s state owned enterprises to the free market.
Most won’t make it long term.
16/
IMF pretends to make countries independent.
BTC actually makes countries independent.
IMF pretends to make countries independent.
BTC actually makes countries independent.
17/
I'm in favor of crypto-civilization, not crypto-anarchy.
Crypto as a tool to reform the system, not to raze all systems.
I'm in favor of crypto-civilization, not crypto-anarchy.
Crypto as a tool to reform the system, not to raze all systems.
18/
Decentralization restores the consent of the governed.
Decentralization restores the consent of the governed.
19/
If you care about free speech and privacy, if you care about free trade and rule-of-law, if you care about provable fairness and economic stability, then you should care about cryptocurrency.
If you care about free speech and privacy, if you care about free trade and rule-of-law, if you care about provable fairness and economic stability, then you should care about cryptocurrency.
20/
Exit enables alternatives. Alternatives enable reform. Satoshi didn't run the ball up the middle. He didn't join the state to fix it, nor did he hold up an ineffectual placard. He built a better alternative that anyone could choose. And millions who chose it enabled reform.
Exit enables alternatives. Alternatives enable reform. Satoshi didn't run the ball up the middle. He didn't join the state to fix it, nor did he hold up an ineffectual placard. He built a better alternative that anyone could choose. And millions who chose it enabled reform.
21/
Blockchains are hubs for digital communities that give contract enforcement, digital rule-of-law, identity, encrypted messaging, property rights, birth/marriage certificates, historical archives, a constitution, etc.
Blockchains are hubs for digital communities that give contract enforcement, digital rule-of-law, identity, encrypted messaging, property rights, birth/marriage certificates, historical archives, a constitution, etc.
22/
Apart from the new digital gold standard, the SWIFT replacement with 17 second clearing times, the 10X improvement in crowdfunding, and the creation of the first internet-wide system for property rights and contract law — what has the blockchain ever done for us?
Apart from the new digital gold standard, the SWIFT replacement with 17 second clearing times, the 10X improvement in crowdfunding, and the creation of the first internet-wide system for property rights and contract law — what has the blockchain ever done for us?
23/
Technology is already international, decentralized, capitalist.
Crypto just turns these pre-existing values into code.
Technology is already international, decentralized, capitalist.
Crypto just turns these pre-existing values into code.
24/
It might take 10-20 years, but as blockchains scale every centralized service can become a monetizable decentralized protocol.
It might take 10-20 years, but as blockchains scale every centralized service can become a monetizable decentralized protocol.
25/
A decade of disruption followed by a decade of decentralization.
A decade of disruption followed by a decade of decentralization.
26/
Crypto, while still in its infancy, is the basis for digital laws for virtual realities.
Every single moment we spend looking at a screen will be partially or wholly governed by a network of blockchain-like systems on the backend.
Crypto, while still in its infancy, is the basis for digital laws for virtual realities.
Every single moment we spend looking at a screen will be partially or wholly governed by a network of blockchain-like systems on the backend.
27/
Crypto is internet-native, transnational, voluntary law.
It’s money, but it’s also decentralized financial services (defi), identity (ENS), property rights (private keys), art (NFTs), writing and hosting (decentralized media), and more.
Crypto is internet-native, transnational, voluntary law.
It’s money, but it’s also decentralized financial services (defi), identity (ENS), property rights (private keys), art (NFTs), writing and hosting (decentralized media), and more.
28/
The arc of technology is long, but it bends towards decentralization.
The arc of technology is long, but it bends towards decentralization.
29/
Decentralization: P2P, internet, domain names, startups
Counter-Decentralization: MVC, tech giants, usernames, state regulation & censorship, getting cancelled
Redecentralization: CBC, blockchain, crypto domains, remote work & digital nomadism, going pseudonymous
Decentralization: P2P, internet, domain names, startups
Counter-Decentralization: MVC, tech giants, usernames, state regulation & censorship, getting cancelled
Redecentralization: CBC, blockchain, crypto domains, remote work & digital nomadism, going pseudonymous
30/
The ongoing Counter-Decentralization will be harsh — but because it won't fully snuff out liberty worldwide, its net effect will be to increase the global demand for Decentralization.
The ongoing Counter-Decentralization will be harsh — but because it won't fully snuff out liberty worldwide, its net effect will be to increase the global demand for Decentralization.
31/
In the pseudonymous economy, you can reboot under a new name if your status is unfairly set to zero by discrimination or cancellation.
This seems like part of the long-term solution to the single global panopticon that is today's social media.
In the pseudonymous economy, you can reboot under a new name if your status is unfairly set to zero by discrimination or cancellation.
This seems like part of the long-term solution to the single global panopticon that is today's social media.
32/
Decentralized media provides the all-important new feature of digital property rights.
And has the additional features of token upside, censorship-resistance, pseudonymity, etc.
After fintech and VC, social media is the next major area for crypto to disrupt.
Decentralized media provides the all-important new feature of digital property rights.
And has the additional features of token upside, censorship-resistance, pseudonymity, etc.
After fintech and VC, social media is the next major area for crypto to disrupt.
33/
Internetification is like electrification.
We're still digesting it.
The digital native era is just beginning.
Internetification is like electrification.
We're still digesting it.
The digital native era is just beginning.
34/
Crypto is the financial internet.
It’s not a small thing.
Crypto is the financial internet.
It’s not a small thing.
35/
Right now we don't really think of digital realities as competitive with the physical world.
But add up all the time you spend online.
Now imagine virtual realities with social networks, smart contracts, embedded commerce — & telepresent actuators for the physical world.
Right now we don't really think of digital realities as competitive with the physical world.
But add up all the time you spend online.
Now imagine virtual realities with social networks, smart contracts, embedded commerce — & telepresent actuators for the physical world.
36/
Once payments go on-chain & become cryptographically verifiable, all higher-order things derived from payments do too.
For ex: you get trustworthy financial statements for small companies in distant countries. That allows global investors to put money into poorer places.
Once payments go on-chain & become cryptographically verifiable, all higher-order things derived from payments do too.
For ex: you get trustworthy financial statements for small companies in distant countries. That allows global investors to put money into poorer places.
37/
A non-obvious aspect of crypto is that it enables automated accounting, & therefore much more complex models for economic alignment. It's the better information from public on-chain data that permits economic alignment. Symmetric information, as opposed to asymmetric info.
A non-obvious aspect of crypto is that it enables automated accounting, & therefore much more complex models for economic alignment. It's the better information from public on-chain data that permits economic alignment. Symmetric information, as opposed to asymmetric info.
38/
Stripe is the fiat Ethereum.
That is a compliment to both Ethereum and Stripe.
And USDC starts bridging the two.
Every function of Stripe is in theory doable with a USDC backend on Ethereum (or another chain).
Stripe is the fiat Ethereum.
That is a compliment to both Ethereum and Stripe.
And USDC starts bridging the two.
Every function of Stripe is in theory doable with a USDC backend on Ethereum (or another chain).
39/
Block explorers are dark horse disruptors of search engines, just like decentralized media is gradually disrupting social networks.
Block explorers are dark horse disruptors of search engines, just like decentralized media is gradually disrupting social networks.
40/
To see what I mean by "blockchains are hardened by constant economic attack", go to rekt.news.
So many post-mortems!
Crypto devs operate in a live fire environment.
No security = project dies.
Those that survive are hardened infosec vets.
To see what I mean by "blockchains are hardened by constant economic attack", go to rekt.news.
So many post-mortems!
Crypto devs operate in a live fire environment.
No security = project dies.
Those that survive are hardened infosec vets.
41/
Buy five minutes of advertising time as an NFT.
Use it now, or hold it for later if you think the show will get more popular.
Buy five minutes of advertising time as an NFT.
Use it now, or hold it for later if you think the show will get more popular.
42/
One of the many great things about crypto is that anyone can now do empirical, large scale, opt-in experiments in macroeconomics.
Bitcoin proved that a deflationary reserve currency is viable.
Many other experiments are being run today, & everyone involved has opted in...
One of the many great things about crypto is that anyone can now do empirical, large scale, opt-in experiments in macroeconomics.
Bitcoin proved that a deflationary reserve currency is viable.
Many other experiments are being run today, & everyone involved has opted in...
...It used to be that testing out macroeconomic theories required winning a war, a revolution, or an election.
Now a college dropout can start a new economy from a laptop for free, if they can find users.
The reduction in upfront cost is so immense that it’s a true 0-to-1 leap.
Now a college dropout can start a new economy from a laptop for free, if they can find users.
The reduction in upfront cost is so immense that it’s a true 0-to-1 leap.
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