One of the greatest "moments" of my life was 1996 to 2000 and why it reminds me of now... 1/
I lived in London over that period and it was SPECIAL.
We were at the center of a global cultural revolution.
It was ALL about the UK, and London in particular.
Music was the big culture carrier. Blur, Oasis, Suede, Pulp, etc ruled the world. Every bar in every country I went to sang Oasis songs at the top of their lungs every time it came on the stereo. Oasis filled 2 nights at Knebworth (and could have sold 10 nights!)...
Ibizan house music mainly came from the UK with Fatboy Slim ruling the clubs with Paul Oakenfold, Carl Cox, Faithless, Underworld, etc.
Trainspotting, Lock Stock and Two Smoking Barrels, Notting Hill, Four Weddings, and a Funeral were the culture carrier films of that time.
Harry Potter and His Dark Materials series ruled the book world.
Damian Hirst and Tracy Emin ruled art.
London was the epicenter of the world.... even the finance world.
Magic, special times...generally booze and drug-laden. UK topped those charts too...
It was probably booked-ended with Oasis at Knebworth in 1996 and finished as the God of British cultural icons - Bowie - headlined Glastonbury in 2000.
It died when the Twin Towers went down and the innocence and hedonism felt misplaced and wrong.
And that special cultural moment feels like it is just starting in Web 3...
Everyone is excited, one degree of separation from each other, all pioneering, having fun, breaking boundaries - from art to music, to business and finance.
At #LedgerOp3n in Paris, there were artists, fashion people, music people, technologists, and financiers, all together, bonded by one cultural moment in time.
All of Web 3, especially in NFT's is like this right now. Everyone knows everyone...
Everyone is collaborating, having fun, pushing boundaries, and trying new things - just when many others look away scornfully.
It is a truly unique moment in time. Everyone knows everyone and most are good friends, sharing this magic moment.
These times never last...
Mass commercialization takes over, as does business pressure, fame, failure, and mass participation, and the magic fades into the grind and realities of life.
Moments like this rarely happen in your life and being this early to be with the early adopters and pioneers is v rare.
It will change and the magic will dissipate.
Seize it while it's here.
Revel in it
Celebrate it
Cherish it.
It is not about money or number go up but something bigger and purer, for now. It has only just started but this moment might last 1 or 2 more years.
In the end, the world will have changed and you were part of it.
And you'll be like me, telling stories of the past glory of times of a cultural renaissance.
You might not even understand it but spend time around it all and it's infectious.
Maybe even say "gm" and smile.
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There is some magic happening here in Paris at the @Ledger#LedgerOp3n event. Firstly, the incredible event itself, which felt more like a fashion show or an art experience than a product launch. The new Ledger Stax is a game changer… /1
All designed by the killer dream team of @iancr Ian Rogers (Apple music, LVMH) and @tfadell Tony Fadell who designed the Apple IPod. Ledger Connect and Ledger Vault are to come too… all vital and groundbreaking.
But the real piece of magic is the people here who never would ordinarily get to meet from technologists, developers, product designers, fashion designers, musicians, brands, NFT artists, finance people - all deep into web 3 culture together.
Several of you asked for my Metcalfe's Law mode for ETH. ETH trades at a premium to its raw network value. I need to adjust for burning which makes up the difference but haven't yet done the work... 1/
The number of users is very steady, barring a couple of peaks... adoption in ETH remains robust.
But value of transactions have fallen (mainly driven by lower NFT values)
Just an update to my Metcalfe's Law model for BTC. The model is the total $ value exchanged monthly x number of active users and has a correlation of 97% to total market cap. 1/
Network activity peaked in 2020 and again in 2021 and has been drifting lower. The slow trajectory in decline in network activity is why this liquidity cycle correction in magnitude has so far been less than previous examples thus far.
It also prices the network correctly in value versus 2018.
For the network value to rise from here, we need to see the total value transacted increase or the number of active users increase.
The number of active users is pretty flat on average (Chart from @MessariCrypto )
The Crypto Cycle & Leverage and where we are now...
Crypto is cyclical. Always has been. Its value is derived from a simple formula:
Value of the underlying technology
+
Global Liquidity
This is why I often say it trades like a call option on the future. 1/
The global liquidity cycle leads to large boom and busts in the space. Each time we have a boom, everyone not in the space yells "Bubble!" and truly enough, eventually prices collapse and we get to the "It's all a scam! It's a Ponzi! It's never coming back!" phase of the cycle.
But prices never return to the previous low... more on that in a bit.
If its any consolation, myself and many others went through something very similar to FTX back in 2011.
MF Global, one of the largest futures brokerages in the world, run by "superstar" ex-Goldman CEO, Jon Corzine collapsed in a very similar manner to FTX.. 1/
Brokerages MUST segregate customer and "house" funds.
Corzine decided to take a $6.5bn debt of EU gov bonds which went wrong.
The issue was that he did it with customer money! (hmm...familiar?)
Losses were estimated at near $2bn.
All customer positions were frozen.
It took about 7 years for us all to get 93% of our money back. If I remember rightly we got the first 50% back pretty fast, which I was grateful for!
It was my entire trading account.
Many hedge funds and asset management firms got trapped too. It was a total disaster.
The lesson being learned in crypto (again) is that even with rapid adoption of the technology, it is hard to build businesses on top of a 85 vol asset class and its impossible and foolish to build a business with leverage on it. 1/
But the Austrian/Darwinian nature of the space means that bad actors get taken out in each cycle and only those with conservative business models, that over time benefit from the adoption, survive and thrive.
No government bail outs. No central banks. Just the market.
Crypto is essentially a
Technological adoption bet
+
Global liquidity
It has always been thus... the global M2 cycle as a proxy for liquidity drives the cycles, and adoption drives the secular trend.
You need to know your time horizon and your risk tolerance...