A fairly large % of people at the top of most fields (politics, finance, tech, crypto) are literal sociopaths. They’re often surprisingly successful with what seem like absurdly bad strategies. If you’re not aware of the patterns, you’re likely to be among the victims. /1 2/ A common pattern is the sociopath will engage in behavior that seems to have no credible explanation other than the “good faith” one. For example, consider a politician or CEO making concrete claims that will inevitably be debunked if they’re lying. We see that behavior and rationally assume they’re telling the truth since lying seems “stupid” and self-defeating.

The crypto industry is bifurcating into two (gradually, but being transformed from 2022-2024.) Consider the pharmaceutical industry, both Pfizer and the corner street pusher offer the same drugs (sometimes from the same factory), but they’re mostly separate markets. /1 2/ most ‘mature’ industries function in this way. You have a big regulated bureaucratic “white market” and a smaller outright illegal “black market” and then a small “gray market” connecting the two. Until 2022, crypto was one giant “gray market”, an unsustainable equilibrium.

At the RWA conference in Brooklyn today. Quality and “seriousness” is outstanding. Lots of hard problems to solve over the next 5-10 years, but feeling optimistic we’ve got a solid base of the right builders to take us there. Huge evolution from 2 or 5 years ago. /1 2/ we’re ideating around a lot of basic problems. We mostly have similar visions around what the world will look like in 20 years, but lots of “path dependencies” to get there. Similar challenges to bootstrapping electric cars. What do you build first? Better batteries, charging stations, low or high end cars?

I have no special insight on the timing (or substance) of action against Binance. In terms of market impact, my mental model for this is basically the same as for Bitmex (in 2020), tether, or any other 'giant' pool of crypto capital. What's the market impact of failure? /1 2/ it depends entirely on the type of failure. As we saw with Bitmex, in the case of an enforcement action that didn't freeze/confiscate customer assets, a relatively small market effect. Even when it means an industry leader is decimated, other platforms fill the gap quickly.

I view a lot of these ideas as near dead ends, going to shred a few, but first this caveat: @brian_armstrong has contributed more to crypto and accomplished more than I can dream of, offering healthy discussion.

https://twitter.com/brian_armstrong/status/1696923807855042601

2/ 1. flatcoins - somewhat agree, still blue ocean for more advanced 'flatcoin' models, but for entrepreneurs...we've had a lot of these; bring an idea for something 10x better. 2. On-chain reputation - dead-end for at least 5 years, going to lose a lot of people money.

I've spent 40+ hours over last 2 weeks doing primary research into cybersecurity. No easy answers (including from top cybersecurity specialists). Here's my intermediate conclusions. Please add/improve/disagree: /1 2/ Phone numbers - AT&T best of the big 3, make sure to have sim swap lock and passcode set up with account. Niche providers that sit on top like Efani may be an upgrade.

Here's the basic crypto market manipulation model that produces the $10b+ valuations for start-ups: grant founders and investors the cap table, locked. Airdrop a tiny % of float to retail. Then give mm'ers a multiple of that and incentivize them to set a price floor w/ options,

https://twitter.com/MattyIceCO/status/1683513758965014534

2/ the result is that retail traders see a price and liquidity on exchange, but that price reflects <5%, often <1% of the tokens! Media breathlessly reports the "success", VCs mark their books up and get to raise new funds on the basis of the fake marks. Then 3-18 months later,

What are reasonable, sensible core values in life? I’ll share my own logic and journey on this, to share not preach. First, I’m not religious, so I don’t find answers in an old text nor from personal revelation. /1 2/ I’ve found common “local” answers unsatisfying. Money, power, fame, friendship, physical pleasures, competition, independence, freedom, security…all are either A. Memetic social status climbing, B. Simple hedonism, or C. “a means to an end.”

The kerfuffle around Ledger has been interesting. My biggest learning is how many misconceptions there are around hardware wallets and how its impossible to be simultaneously concise and fully accurate when discussing security and trust assumptions. /1 2/ some people feel misled that Ledger claimed firmware updates couldn’t produce key extraction in the past. I think that was an innocent minor miscommunication that’s half-right, half-wrong.

The core business model is stealing data from the poorest people globally and monetizing it in violation of copious laws. VC’s often invest in “disruptive” regulation defying tech, but in this case, it’s backing criminals hurting the most vulnerable. /1

https://twitter.com/cointelegraph/status/1657950213083136000

2/ I asserted the above somewhat blindly as soon as I learned about worldcoin. Altman and team denied, said they wouldn’t retain any data, wouldn’t commit fraud in acquiring the data…yea…they were lying and it’s all been publicly exposed by various media.

Simplest mental model for understanding macro today: we built the modern fiat system with ever increasing leverage over ~40 years culminating in 2008. Then we further levered up and shifted liabilities upstream to larger cos and governments. /1 2/ the everything bubble collapsed over last year, now the question is: if we don’t get a massive political response: headed towards global deflationary depression (over next 5 years.) Or…we again kick the can down the road, but this time it’s in open ponzi state.

While technically legal (I think), this does raise questions over property rights. What is bank equity when that ownership can be arbitrarily seized by gov and converted without due process? Similar to eminent domain, equity holder doesn’t get market or “fair” treatment. /1

https://twitter.com/0xfoobar/status/1636203586852999171

2/ an ever growing portion of global markets are becoming a direct bet on government action and little else. Not just gov action in terms of stuff like defense contracts and regulatory tweaks, but now central banks the dominant market player in many assets, and also

The US facing a decision now whether to continue the process of bank socialization. This was semi-formalized with the ~2011 definitions of systemically important financial institutions (SIFIs.) We have a weird hybrid spectrum now. /1 2/ all banks in the US are already very heavily regulated in their activities across the board, from what they can lend to, yields they can offer on deposits, fees they can charge for services, etc. Need politicized bureaucrat approval just to get a license.

Summary of crypto market at high level - the rally up from ~$19.6k in BTC has had hardly any liquidations and Open Interest (adjusted for market rally) roughly flat. That continues to be possibly supportive. IMO - single biggest dynamic is interest rates. This is a "repricing." 2/ obviously a lot of other stuff going. We got 'rugged' by a bunch of banks and stablecoins, then those situations may have been happily resolved. But we're already trading higher than before the acute distress.

SVB's failure: customer deposits put into assets that were relatively safe in terms of credit risk, but which took heavy losses as interest rates rose. That by itself rendered SVB technically insolvent, but that's not itself a problem. The closure caused by bank run. /1 2/ the insolvency is usually survivable by banks because if the assets they hold are only selling off due to interest rates, than all deposits can eventually get their money out. I.e. customers deposit $10b, $10b put into treasury bonds. Those bonds sell off 10% due to rates.

At least so far, this analogy still looks reasonably useful to me (analogies like this are never "right", question is if they're useful.) Similar to internet post-2000, we've got a lot of money/people and some overbuilt infrastructure in spots, and a quest for users. /1

https://twitter.com/AriDavidPaul/status/1536764452040843267

2/ the 'later' crypto use cases like defi seem roughly analogous to me to internet stocks ~2001. I.e. probably a choppy and painful road transitioning to mainstream sustainable products over next 3-7 years.

We’re really living through it. Imo, AI likely to cause more global disruption (in every way, economic, cultural, political, etc) over next 10 years than internet and personal computer revolutions had over the 20 year parabolas for each. Fear might be silly largely because /1 2/ little individuals can productively do with that fear. I don’t know if governments can do much either. Everything else pales relative to the effects of this though. Talking about social equity or climate change or crypto regs almost feels silly relative to the good/bad coming

Going out on a limb: I think BTC > $110k by end of 2024. (current price $23k). Feels like relatively aggressive prediction if we only consider current cycle, but zoom out to 2017, feels quite reasonable. We've kind of got 5 years of price compression now. /1 2/ as always: nothing is guaranteed, no one knows the future, I can only offer educated guesses. I like @davthewave's general framing here as a possibility:

https://twitter.com/davthewave/status/1619227962129403905?s=20&t=sWeT50J6OxVEmPlDhbXbcQ

.

Watching “super pumped” and the framing by fictionalized Bill Gurley that all VC investable founders are David Koresh-like malicious cult leaders, and that’s who you have to bet on…interesting. /1 2/ I have a strong innate aversion to those personality types and to the idea that you have to bet on bad people to win as an investor. But…I want to be realistic and intellectually honest first, and save the moral decisions for after I’m clear on the facts. So, facts?

Something worth keeping in mind for these price moves in cryptocurrencies and crypto related equities (like GBTC) - the real volumes are tiny. GBTC and ETHE for example, their discounts to NAV fell by ~10% (moving about $1b in market cap) on <$20m of actual money flows in. /1 2/ we're seeing midcaps with $500m+ market cap moving 25%+ on <$10m of real money flows. Some $20m+ market small caps move 100% on <200k of real volume. The moves are "real", in most cases this isn't manipulation, but it can also be very misleading to market participants.

I've never been more ambitious about what I (and anyone building long-term) can accomplish in the crypto industry. The biggest learning from 2022 was how little real competition exists. The "smartest traders"? Most blew up (or were never even really profitable). Same for most 2/ dev work, business strategy, financial product creation, etc. Basically A. we're not competing against much 'A' caliber talent in any area, and B. Some of the sharpest people aren't our competition because they're optimizing very short-term, playing a tangential game.