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Crypto Visions (1997–2022)

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People don’t pay for technology, but they pay for the stories that carry the technology and the innovation. The key to Crypto’s boom is not the novelty of the technology. Still, the wave of thoughts behind it revolutionized tradition, overthrew the centralized order, and the movement of rethinking politics, economics, and art.

In this article, we will revisit the critical “stories” in the history of Crypto in chronological order. This article explores about 40 pieces, with a total of about 10,000 words and a recommended reading time of about 50 minutes.

1997: Before The Beginning

The Sovereign Individual — — James Dale Davidson / William Rees-Mogg

If Snow Crash inspired the metaverse concept, then Sovereign Individuals inspired Bitcoin.

It’s a book that sees the future of the world. It speaks of a future of disorder, where digital technology will make the world more competitive, more unequal, more unstable, more socially fragmented, and more governmental.

The book outlines the underlying logic of the structure of human society, pointing out that as digital technology develops, the monopoly of violence, knowledge, and wealth held by traditional organizations will disintegrate. Decentralized and sovereign individuals will rise.

The book makes precise predictions about Crypto, electronic warfare, and smartphones. They envision a cryptographic digital currency that is unique, anonymous, and verifiable and that can be traded on a borderless global marketplace. This probably inspired Satoshi Nakamoto’s Bitcoin. In this bear market, this is recommended reading.

1997 was a year of chaos and disorder, a state of nothingness before the big bang of the Crypto universe, but the idea of Crypto had begun to take hold.

2008: Bitcoin Birth

Bitcoin: A Peer-to-Peer Electronic Cash System — — Satoshi Nakamoto (creator of Bitcoin)

There’s not much I can say about this whitepaper, but everyone should review and read the Bitcoin whitepaper thoroughly from time to time.

The mysterious man named Satoshi Nakamoto created a peer-to-peer electronic cash system, giving birth to the blockchain in 2008. Bitcoin sparked a “paradigm shift that now underpins a multi-trillion dollar industry” and showed the world the relationship between sovereignty, finance, and freedom, sparking thousands of changes and innovations. Even though it’s been over 13 years, we can still learn from its concise language, accessible concepts, and brilliant design.

The 2008 Bitcoin white paper is arguably the Crypto “bible,” and Bitcoin has been brought back from the dead countless times as if it were a “religion.”

No one could say who Satoshi Nakamoto was, just like we couldn’t understand the “DAO.” Then, Bitcoin was born, and Bitcoin is the “one,” the initial state of Crypto, which seems simple but combines the best of cryptography in one. Then it continues to “two (yin and yang) gives birth to three, three gives birth to everything,” creating all things and finding harmony.

2008 was the origin of Crypto, the year of enlightenment, the year Bitcoin and Crypto were born.

2011: What is Bitcoin?

Bitcoin — — Fred Wilson (Union Square Ventures co-founder)

In this article, Fred Wilson discusses his confidence in the concept of Bitcoin, saying that the idea of Bitcoin as a currency based on trust in algorithms and networks is a good one.

He says that in his and his colleagues’ view at USV, a fair and transparent alternative currency network is an idea on the horizon. He believes that Bitcoin is worth watching but that a proper decoupling of the currency from the government would have significant implications, so be cautious, but it’s still an exciting investment opportunity.

In terms of the price of bitcoin at the time, he commented that it could be argued that bitcoin failed (it went from $29 to $13), or it could be argued that we’ve just gone through a period of inflated expectations and the price has returned to the actual value of bitcoin. Interestingly, the current price of bitcoin is above $30,000.

The comments section of this article is also fascinating, as we can see what people were thinking, questioning, and debating about Bitcoin in 2011.

2011 was a year of Crypto exploration by visionaries, and Bitcoin began to attract the attention of pioneers who believed that Crypto’s primary role would be as an alternative currency to central banks.

2013: Interesting Bitcoin

Coinbase — — Chris Dixon (a16z crypto founder)

In this article, Chris Dixon reveals the contrast between the media’s understanding of bitcoin and the techies’ understanding of bitcoin. While the media mostly sees bitcoin as a scam, in Silicon Valley, geeks see bitcoin as a significant technological breakthrough.

He pointed out that the Internet provided space for the Crypto but did not complete the transmission of electronic cash. Bitcoin solves the problem of expensive transaction fees and rampant fraud in electronic cash services. At the same time, Bitcoin is a platform for developing new technologies. He predicts potential applications, such as micropayments for subscriptions and advertising, peer-to-peer transactions (which sound exactly like smart contracts), and financial services for all (which sound exactly like DeFi).

At the end of the article, he argues that Bitcoin needs a killer app to increase its spread and announces a16z’s lead investment in Coinbase. He believes Coinbase could significantly accelerate the proliferation of Bitcoin while allowing the Internet to enter a new phase of invention and opportunity.

Why I‘m interested in Bitcoin — — Chris Dixon

Ten days after his last post, Chris Dixon is back with reasons he is interested in Bitcoin. While some argue that Bitcoin is spread well simply because of libertarian support, Chris Dixon agrees that many of Bitcoin’s early supporters were libertarians. Many essential movements in technology were supported because of ideology.

He does not believe that the ultimate goal of Bitcoin is to replace the Federal Reserve. He feels that if you want to use technology to change finance, you don’t just have to build new services on top of the existing ones, but you have to reconstruct a new system and a new order completely.

He initially thought of bitcoin as a speculative bubble and internet gold. But he suddenly realized that Bitcoin was rebuilding the entire payments industry. He is very bullish on the use of micropayments.

He concluded by emphasizing that technology can only improve finance by rebuilding a new service that doesn’t rely on other existing facilities. Bitcoin is an effective way to improve and is an experiment worth running.

2013 was a year of early infrastructure and thought building for Crypto, and it was the year Coinbase received an investment from a16z. As public interest in Bitcoin increased, two opposing voices began to emerge. Some firmly believed that Crypto was a scam, and visionaries started to think about the future of Crypto as their perception of Bitcoin became better.

2014: Important Bitcoin

Why Bitcoin Matters — — Marc Andreessen (a16z co-founder)

“A mysterious new technology emerged, seemingly out of nowhere, but the result is coming from twenty years of intense research and development by almost anonymous researchers. Political idealists projected visions of liberation and revolution onto it; the establishment elite projected contempt and disdain for it. On the other hand, the technicians, the nerds, were stunned by it. They saw its enormous potential and spent nights and weekends tinkering with it. Eventually, mainstream products, companies, and industries emerged to commercialize it; its impact became far-reaching, and later, many wondered why its powerful promise wasn’t so apparent from the start. “ What technology was Marc Andreessen talking about?

The personal computer in 1975, the Internet in 1993, and, he believes, Bitcoin in 2014.

Marc Andreessen, a man who knows the Web (in addition to founding a16z, he wrote Mosaic and founded Netscape), saw the disruptive, decentralized, network effects of Bitcoin technology and the reshaping of the existing order.

2014 continues to be a year of increased awareness of Bitcoin. The “creator” of the modern internet, Marc Andreessen, laid the groundwork for later understandings of bitcoin. The subsequent knowledge of bitcoin has been almost identical to the future he envisioned.

2016: Here comes Ethereum

Ethereum is the Forefront of Digital Currency — — Fred Ehrsam (Paradigm and Coinbase co-founder)

Fred Ehrsam has shifted the focus from Bitcoin to Ethereum. Bitcoin is so well-designed that any change would be like a bad adding to it, and truly complete applications beyond wallets and exchanges could not be created on Bitcoin. Ethereum provides a full computing environment that supports a myriad of applications on the blockchain. Fred mentions the DAO organization that was created on Ethereum, the same one that was attacked a month after the article was published and caused the fork of Ethereum.

Bitcoin, the pioneer of Crypto, gave birth to Ethereum. Ethereum’s smart contracts are simpler to use, easier to develop, and have a more thriving community than Bitcoin’s “smart contracts.” Fred also points out that the core developer system of Ethereum is healthier than Bitcoin, with a more humble community mentality and a more consistent direction.

In addition to these advantages, Fred also mentions some potential risks of Ethereum:

  • TVL is not as high as on Bitcoin.
  • It has not yet experienced a governance crisis (it did a month after the article was published).
  • It is more risky because of its more complex features.
  • It may change its consensus to PoS (although it still hasn’t after five years).
  • It is challenging to upgrade the network (this problem has been solved by various Layer2s).

Fred doesn’t conclude that Ethereum and Bitcoin are competitive or complementary. He sees a lot of potential in Ethereum. He has no “loyalty” to any particular blockchain, only to whatever brings the most benefit to the world.

Fred concluded by saying that the pace of change at Crypto is accelerating. Crypto’s vision is vast, to create a better economy network for the entire world. Like the Internet itself, Crypto is not a company that sells products but a series of protocols that will one day connect everyone. And, like the Internet, it will take longer to develop, but the impact will be huge.

Then there was the article he wrote a year later in 2017 focused on the topic, which is: Blockchain is the foundational layer of the metaverse.

Fat Protocols — — Joel Monegro (Placeholder VC partner)

In Fat Protocols, Joel Monegro explores the idea that the Web2 structure, where protocol-based applications are of great value and protocols are of little value, is reversed in blockchains.

The protocol layer in a blockchain is much more valuable, giving a massive boost to openness, data sharing, and interoperability between protocols. The value of protocols like Bitcoin and Ethereum (and Uniswap and AAVE launched a year or two later) is greater than the value of on-chain applications. The applications are more successful, so people feel that the protocol’s potential is still to be explored. The token economy plays a very positive role in this. Investor speculation on the protocol will allow the application ecosystem on the protocol to flourish.

In 2016, with the slow rise of Ethereum, people are more bullish on the whole blockchain “network.” The construction of blockchain no longer stops at infrastructures such as wallets or exchanges but starts to think about what kind of protocols can be built based on a complete environment. This is when the DAO becomes the spirit of crypto, one becomes the project creator, two is the community, and three is the ecosystem participant.

2017: Crypto and Token

Bonus: Uniswap in 2017

Value of the Token Model — — Fred Ehrsam

In this article, Fred Ehrsam discusses the value of the token model.

He argues that the value of tokens is mainly in governance, monetary policy, and aligning incentives.

He also points out that, as with early Internet startups, some tokens are meaningless. For every 1 big success, there are 3 small successes and 100 failures.

The fundamentals of the token model are valuable and powerful, allowing communities to manage the community themselves and the economic system and unite the community in a powerful way that helps open systems to flourish.

Thoughts on Tokens — — Balaji Srinivasan (Coinbase CTO, a16z GP)

Balaji Srinivasan starts the article by saying that tokens are not equity but are similar to paid API keys. Compared to traditional financing methods, tokens represent higher liquidity, a larger audience, and open up space for new types of financing projects.

He then goes on to explain why the token will be increasingly successful starting in 2017:

  • Four years of infrastructure building has laid a solid foundation
  • Tokens are more versatile and flexible than the native currency of the blockchain
  • Token purchasers are buying private keys (more privacy and security than traditional methods)
  • Tokens are similar to paid APIs (represent access to a service)
  • Tokens are a funding model for all new technologies (open source organizations, small projects, DAOs), not just for startups
  • Tokens are not dilutable compared to traditional finance
  • All Americans can buy tokens
  • Anyone on the web can buy tokens
  • Tokens are highly liquid
  • Tokens will decentralize financing
  • The token model is a better business model than free, allowing early adopters to gain revenue
  • Token buyers are investors, just like bloggers on the web are new-age journalists
  • Tokens keep technology ahead of business
  • The holders themselves directly regulate tokens
  • Tokens can be used for paid or VIP services

He concludes that the token space is still very early and is likely to fluctuate dramatically in weeks. The world is changing, and tokens represent a 1000x increase in value for the future.

Crypto Tokens: A Breakthrough in Open Network Design — — Chris Dixon

In this article, Chris Dixon discusses the role of tokens in terms of Bitcoin and Ethereum tokens: tokens can manage and fund open services, align incentives among network participants, and the network effect of tokens creates a positive cycle throughout the system.

Crypto tokens are currently a niche market and highly controversial. If current trends continue, tokens will soon be recognized as a necessary design for open networks, combining the social benefits of open-source protocols with closed networks’ financial and architectural uses. Tokens are a promising thing for those looking to gain access to entrepreneurs, developers, and independent creators.

Analyzing Token Sale Models — — Vitalik Buterin

In his article, Vitalik Buterin analyzes the token models of several projects. Using Maidsafe, Ethereum (analyze itself), BAT, and Gnosis as examples, Vitalik summarizes some good token sales models: 1. certainty of valuation. 2. certainty of participation. 3. Limiting the amount raised. 4. no central bank. 5. efficiency of the sale. However, 1 and 2 cannot be satisfied together, and 3, 4, and 5 may not be satisfied at the same time.

Vitalik suggests three other innovative approaches to token sales, 1. reverse Dutch auction and use unsold tokens as airdrops or donations; 2. keep the rest of the tokens to solve the “central bank” problem in an automated form, such as an LP pool; and 3. have a capped sale, Vitalik also recommends that projects have multiple rounds of token sales to give users more time to see which teams and projects are worth investing in.

Cryptocurrency’s Netscape Moment — — Elad Gil (Solo Capitalist)

In the article Netscape’s Moment in Cryptocurrency, Elad Gil compares the 2017 ICO boom to Netscape’s IPO, the true beginning of the Internet age and the crypto era.

Crypto stepped into the Netscape moment in 2017. In his opinion, Bitcoin has really become digital gold, and the Ethereum ecosystem has expanded the entire crypto market, ICOs have raised a lot of money to support projects, there is no good startup market other than Crypto and machine learning, countless stories of riches, and capital is pouring in.

Permissionless — — Alok Vasudev

This post by Alok Vasudev is concise. His main point is that the Permissionless nature of blockchain and Crypto is what he finds most exciting about them.

Linux is Permissionless, Web is Permissionless, and PC is Permissionless. Conversely, mobile applications require Permission from Apple and Google, VR requires Permission from Facebook, HTC and Sony, AI is Permissionless at the algorithmic level, but monopolies control the training data.

Blockchain is an entirely open source and public database, an uncensored and unmonopolized production tool. This article implies a shift from Web2 technology to Web3 paradigm.

The Slow Death of the Firm — — Nick Tomaino (1confirmation founder)

In this article, Nick Tomaino points out that some of the projects led by Bitcoin have actually introduced the concept of open-source, decentralized organizations (such as DAO and open source development organizations). In addition to disrupting the financial system, Satoshi Nakamoto’s creation of Bitcoin will also disrupt the corporate form.

Economists generally agree that firms exist for two main reasons: to minimize transaction costs and aggregate capital and people. Firms have been the preferred form of collaboration for decades. Still, Bitcoin thrives without a firm, with no firm behind it and no central organization to support it, but rather with code (organizational rules) and incentives (tokens) that bring together participants, including miners, developers, and users, to create value together.

Bitcoin is the first example of an organizational structure with the benefits of a corporation (minimizing transaction costs, aggregating and sharing capital, and providing job security for contributors), combined with decentralized ownership, uncontrolled data, and checked and balanced decision-making power. Bitcoin offers people the opportunity to make money globally and creates clear incentives, creating a new decentralized product (a digital currency that cannot be censored) that companies cannot achieve.

However, the drawbacks of this decentralized organizational structure are apparent: decentralized decision-making is difficult and slow, it is difficult to measure the actual contribution of participants, and decentralization leads to many abuses…

Nick Tomaino concluded that 2017 is in the early days of decentralized organizations. In the future, this form of collaboration will be popular in the mainstream, with more and more new decentralized organizations being created and traditional companies slowly transitioning to Crypto-based decentralized organizations in the future.

Big Banks And Blockchain — — Elad Gil

Elad Gil reveals a lot of issues in this short article. Since Crypto came to the industry’s attention in 2013, this is how big banks have approached blockchain (and as far as I know, many Chinese banks and financial firms will still be doing so by 2021):

  1. set up a blockchain team.
  2. let the blockchain team make a private chain and always be in the demo stage.
  3. let the CEO be able to brag about the blockchain team, saying, “we have that blockchain thing, and we have a team dedicated to it.”

Elad also said that big banks are using Crypto to develop products such as ETFs, token escrow, hedge funds, and derivatives exchanges to meet their customers’ needs. He concluded that banks and other intermediaries would adopt Crypto at an increasing rate.

Elad ended his remarks with a jab at the big institutions, saying that the board meetings of these global banks always end with a martini, that the New York martinis are much better than the San Francisco ones, and that the Boston ones are outstanding. He also said that the board members all wear suits and monocles, like playing Monopoly. He concluded that blockchain and smart contracts would change the financial system outside of Crypto, but it would take longer.

The Meaning of Decentralization — — Vitalik Buterin

Vitalik discusses the meaning of decentralization. When talking about the meaning of decentralized software, we can consider it in terms of architecture, management, and logic. The architecture refers to the physical distribution of servers, the politics refers to how many people control these servers, and the logic refers to whether the endpoints and data structure makes sense.

Essentially, the critical requirements for decentralization are fault tolerance, attack resistance, and collusion prevention.

Regarding fault tolerance, blockchain systems need to be decentralized in several ways to achieve it truly. We need multiple client implementations, democratized technical discussion forums, development and research staff with as little interest as possible, mining algorithms that must reduce the risk of centralization, and get rid of the risk of hardware concentration (with PoS).

For attack resistance, an intuitive example is that if you put a gun on one person and ask him to pay, he may not want to die rather than pay; but if you decentralize, you have to put a gun on ten people, and the threat cost is ten times higher. The more decentralized you are, the higher the ratio of the cost of the attack to the cost of defense. So PoS is more resistant to attack than PoW because the hardware is easy to detect and attack, while the tokens are easier to hide.

The last and most complex one is anti-collusion. A simple example of collusion prevention is antitrust law. An example of collusion in the blockchain is that big miners may get together and use a lot of computing power to push something against the network. But one of the advantages of blockchain is that the developers don’t work in the same company, in the same room, so they don’t get to change the rules as much as they want to, as traditional software companies do.

Vitalik concludes with a question. The Ethereum community can hard fork the network on the fly with decentralization, but how can this good coordination be facilitated and improved?

A beginner’s guide to Ethereum — — Linda Xie

Linda Xie teaches you to get started with Ether. Linda talks about the similarities and differences between bitcoin and ethereum, identity and storage on ethereum, social media, permissions management, company management and fundraising applications. I’m sure you already know a lot about it, so I won’t go over it here

2017 was the year of ERC-20, the coin prices of ethereum and bitcoin soared, the ecosystem started to boom, more and more DApps started their ICOs, more and more DAO groups started to be established. We are once again in a chaotic and disorderly atmosphere, with all sorts of problems emerging. Some people who were convinced about blockchain and Crypto started to rethink the merits of Crypto and the original starting point.

2018: Bubble?

Why decentralization matters — — Chris Dixon

In this article, although titled about the importance of decentralization, Chris Dixon talks about the concept of Web3 in 2018.

Web1, 1980–2000, services built on open protocols established by the Internet community.

Web2, from the beginning of the 21st century to the present, is about companies building software and services that far exceeded open protocols. With the explosion of mobile applications, users have completely migrated from open services to these more complex and centralized services. The technology of these centralized services is great, but it stifles innovation, makes the Internet less exciting and dynamic, and creates more social tensions through data theft and algorithmic bias.

“Web3”, through a perfect set of incentives that intersect technical creativity and incentive design, could reshape and replace the existing Web2 landscape in the coming decades. The Crypto Network combines the best of Web1 and Web2, providing a decentralized network of community governance and a more robust service than centralized services. The Crypto Network uses blockchain consensus to update and maintain state, using Crypto to incentivize participants, developers, and application users. The Crypto network uses open source code and community governance to grow and decentralize. When participants exit, they can sell all tokens directly or go to a forked protocol. The Crypto network unites network participants to expand the network and increase the value of Tokens. However, the performance of the Crypto network is still a bottleneck (although L2'22 can already solve this problem).

Saying that decentralized networks should win and will win are two different things. The real reason Chris says they will win is that Web3 developers are building truly innovative applications. Crypto networks will win the hearts and minds of entrepreneurs and developers (i.e., there will be, literally, a community and people who are motivated by love for the tech). As the protocol attracts new contributors, the ecosystem and maturity of the protocol will grow exponentially. The multiple positive cycles in the Crypto network motivate all players in the network, accelerating the community’s growth. When the Crypto network eventually becomes more attractive to developers and enterprises than the big Web2 companies, it can mobilize more resources (the total number of Web3 developers in 22 years is far less than the number of Amazon employees) and even outpace the development of the big companies.

Chris also acknowledges that the decentralized web is not a panacea for all problems but offers a better solution than centralized systems.

And What Has the Blockchain Ever Done for Us? — — Balaji Srinivasan

Balaji Srinivasan points out that while blockchain has solved countless problems and created a multi-billion dollar market at the time, some very smart people still go on to claim that blockchain is bad, or it doesn’t work, or it’s baddidn’t work, arguing that blockchain is a bubble that will fizzle out.

Balaji believes that highly valuable technologies often experience relentless negativity on their way to the top. High growth is accompanied by high volatility and higher expectations, leading to hypecycles and a period of apparent overestimation, until eventually the technology became ubiquitous worldwide. Then, the new criticism was no longer about fads or lack of utility, but about the inevitable monopoly, until the next disruption appeared on the horizon and the cycle began anew.

Blockchain at the time had already provided 10x improvements in at least three multi-billion dollar sectors, in digital gold, international wire transfers and crowdfunding.

Balaji concluded that just because the blockchain has done so much innovation, he wants it to do more.

Stablecoins: designing a price-stable cryptocurrency — — Haseeb Qureshi (Dragonfly Capital GP)

Haseeb Qureshi says that a useful currency should be a medium of exchange, a unit of account, and a store of value. Cryptocurrencies are bad at being a store of value or a unit of account. So we need stable coins that are pegged to stable assets like the US dollar.

Stable currencies cannot be stable all the time, but they can be stable within a certain range of market behavior. The critical question for each mechanism is how much volatility can it support? Bubbles and altcoins will always collapse, after all we are all dead in the long run, so if a stablecoin only lasts for 20 years, it can still be considered stable. Stable coins depend on four main aspects: How much volatility can they withstand? How much trouble is it to maintain the system? Is it easy to analyze the range of volatility? How easily can traders observe market conditions? The last two points are critical and determine whether they lead to a death spiral. The ideal stablecoin should be able to withstand large market fluctuations, be extremely expensive to maintain, be easy to analyze stability parameters and be transparent to traders and arbitrageurs.

How do you design a stablecoin? Stablecoins are classified into three main categories: fiat-collateralized coins, Token-collateralized coins, and non-collateralized coins.

  • Fiat-collateralized coins: 100% stable, most straightforward, no attacks on the blockchain, but centralized, cumbersome to liquidate, highly regulated, and require regular audits to maintain transparency.
  • Token collateral: more decentralized, cheap to liquidate, very transparent, can be leveraged, but will automatically liquidate in case of a crash, not the most stable price, highly correlated with Token, inefficient capital, the most complex.
  • Non-collateralized coins: No collateral required, mostly decentralized and unrelated to other assets, but need to grow continuously, vulnerable to macro effects, difficult to analyze stability, some complexity.

Hasseb believes that the ideal stablecoin should look like this: There is no perfect stablecoin. Rather than picking winners early, we should encourage more stablecoin experiments. Crypto has taught us that the future is hard to predict.

In 2018, a bear market came and went, and suddenly there were fewer ideas and stories this year. While the bearish felt they were too wise to see through the bubble, the holdouts continued to plow deeper into the Crypto space, building infrastructure, continuing to grow awareness, and preparing for the subsequent explosion, as they continued to explore the merits and nature of Crypto. They are still exploring the values and nature of Crypto.

2019: Crypto Winter

Yes, You May Need a Blockchain — — Balaji Srinivasan

Balaji explains the importance of blockchain from a database perspective. Some developers say that blockchains are just bad databases, so why not use the better and mature PostgreSQL? Skeptics think blockchain is a slow, dumb and expensive database.

Balaji counters that public blockchains are massive multi-client databases and that every user is a root user. Such a database helps store shared states between users, especially when that data is valuable, for example, money.

At the same time, the data in the public chain is open and accessible, so anyone can read all the data in the public chain to create a block browser, and anyone can write to the public chain using their wallet. Any user with an Internet connection can read it. Anyone with some BTC can write transactions. Anyone with enough computing power can mine bitcoin blocks. The public blockchain is all about: every user is a root user.

The future of decentralized finance — — Linda Xie

Linda Xie talks about the future of DeFi. DeFi aims to rebuild many existing financial systems (e.g., lending, loans, derivatives) in a way that is often automated and removes the middleman. The article covers some of the directions DeFi is going and some possibilities that could emerge.

  • Collateral: One of the main complaints about DeFi is that it requires excessive collateral to get a loan. Who would want to lock up so much capital? This is an extremely inefficient use of capital, and many people don’t have the extra money, to begin with. However, there is already $500 million locked up in DeFi (if you click on the link today, you can see it is $75 billion), which shows the need to use it. The primary purpose for everyone was to leverage. Linda believes that in the early days of DeFi, there was no DID and reputation system in place. Once a better identity and reputation system was in place, the collateral requirements would go down (Lens Protocol?).
  • Composability: One of the unique aspects of DeFi is its composability. It is all about the ability to plug into each other like Lego pieces and create entirely new content.
  • Assets: Linda likes the idea of bringing tokenized versions of assets like Bitcoin to DeFi. She imagines that traditional investors will tokenize different assets and perform DeFi operations.
  • Risks: Linda sees a lot of risk in DeFi, after all the complexity involved with the combinability of contracts and the various new protocols. There is also the risk of collateral price drops and the risk of future regulation. She believes that some of the risks can be hedged with decentralized insurance programs.

Finally, Linda concluded that it was still early for DeFi, but the potential was huge. DeFi made financial products available to many people excluded from traditional finance, and created many new financial products. Many of the complaints about DeFi were just because it was so early, and the mutual attraction between developers and users made her optimistic about the future of DeFi.

The Pseudonymous Economy — — Balaji Srinivasan

In this talk, Balaji talks about the pseudonym economy (not the anonymity economy). A pseudonym is like your identity on Discord and Reddit.

He discusses the importance of a pseudonym for a real person in the real world. While a bank account stores assets, your real identity stores credit and reputation, and while only you can change a bank account, the reputation of your identity is determined by everyone but you.

Balaji believes that a person’s assets, words, and identity should be kept separate. Using Twitter as an example, he shows that it is possible to transfer a person’s reputation (followers, etc.) to a pseudonymous identity with zero proof of knowledge, just as easily as transferring assets. This allows for a balance between privacy and reputation, successfully separating identity from reputation.

2019, it’s still a Crypto winter. Most people will think that Crypto has no room to grow, and that’s the way it should be valued. The prolonged lull has left most practitioners disillusioned. However, some are still thinking independently in the valley of despair and in the darkness before dawn, are still spreading ideas, exploring different areas, and thinking about the future.

2020: Crypto is Ready

Credible Neutrality As A Guiding Principle — — Vitalik Buterin

Vitalik Buterin discusses the importance of credible neutrality. People feel uneasy about government arrangements, the distribution of project tokens, and censorship and ideology. This is actually a sense of insecurity caused by the lack of credible neutrality. We need a new mechanism (algorithms plus incentives) to ensure credible neutrality.

Neutrality can simply be understood as fairness, but neutrality and fairness are never complete. Credible neutrality must, of course, be credible, meaning that the mechanism is designed to be convincing to most ordinary people and transparent and durable.

A credible construction of neutrality needs to satisfy the following characteristics:

  1. do not write specific people or specific results into the mechanism (the input should be more participant input, not hard-coded rules)
  2. be open source and publicly verifiable (zero-knowledge proofs work very well to get this as well as privacy)
  3. keep it simple (it’s the most complex)
  4. don’t change it too often

The effectiveness of trust neutrality is also important. Anything we create needs to be valid, not just made for credible neutrality. Our stuffs needs to work and solve problems.

Vitalik concluded that it is increasingly important to ensure that the system does not end up empowering a few people. We can create trustworthy rules systems, and then we need to ensure credible neutrality, validity, and decentralization.

A Beginner’s Guide to Decentralized Finance (DeFi) — — Sid Coelho-Prabhu

This article is a very detailed and clear introduction to some of the basics of DeFi, as well as an introductory manual. I won’t go into much detail here.

The Ownership Economy — — Jesse Walden (Variant Fund founder)

Jesse Walden talks about the ownership economy in this article. Variant Fund’s investment logic is also focused on the ownership economy. He sees the ownership economy as the next frontier for Crypto and consumer software.

Most platforms today are not owned by their users. As the role of the individual in value creation becomes more prevalent, the next evolution of the Internet will shift to software that is not only created, operated, and funded by users but also owned by them.

Ownership is a powerful incentive for users to contribute to products more profoundly, helping to ensure that products better align with users over time, thereby allowing platforms to grow and sustain creativity and build network effects.

From IP, HTTP, HTML, to RSS, BitTorrent (innovation in data distribution) protocols are full of disruptive innovations. Consumers want it, so disruptive protocols emerge. Crypto is also a disruptive protocol innovation, allowing us to distribute value and ownership in the same way that BitTorrent distributes data.

The core of Bitcoin and Ethereum’s success is user ownership. Miners, users, and developers can own the platform and earn value. The financial incentive of tokens has allowed the protocol to grow at a rapid pace. The ownership economy is also typified by Celo, Binance, Compound, Uniswap, Reddit, etc.

Software is eating up the world, and the ownership economy narrative is eating up software.

Bitcoin for the Open-Minded Skeptic — — Matt Huang

Matt Huang explains some of the challenges to Bitcoin. It’s important to think dialectically about something rather than focusing and repeating on a single point and not seeing the other side of it. Although Bitcoin has been around for over a decade and has made investors a lot of money, it is still controversial.

Why do we need bitcoin in this day and age? Because we need a new financial system. The concept of money is one of the greatest inventions of the human mind (the other being writing). The primary function of money is to store value, which allows purchasing power to transcend time and geography. Gold has always been considered a medium for storing value. The dominance of paper money and the U.S. dollar largely depends on government trust.

As a decentralized asset, Bitcoin combines the scarcity, monetary nature, and digital transferability of gold with the potential for a huge store of value. It is scarce, portable, fungible, divisible, durable, and widely accepted (not that this has come to the fore). In addition, bitcoin is digital, programmable, and censorship-resistant.

Bitcoin, as a financial bubble, also makes sense. A bubble asset is an intrinsically overvalued asset, so all monetary assets are bubble assets, and so is gold. Fiat currency can be thought of as a bubble that never bursts, and the value of fiat, gold, or bitcoin depends on collective beliefs.

There are four bubbles in Bitcoin’s 11-year history in dollar value:

  • 2011: 1 → 31 → 2
  • 2013: 13 → 266 → 65
  • 2013–2015: 65 → 1242 → 200
  • 2017–2018: 1000 → 19,500 → 3500

The bursting of each bubble led to a broader belief, expanding Bitcoin’s potential as a future store of value. However, Bitcoin carries many risks: widespread acceptance, volatility, regulation, technical risk, competitive risk, and uncertainty.

By understanding the advantages and risks of Bitcoin, we can better evaluate the risks and rewards and better understand Bitcoin.

Creators, Communities, and Crypto — — Fred Ehrsam

Fred Ehrsam, Blake Robbins, Jesse Walden discussed Crypto, creators, and communities.

Some of the great points they made were:

  • People now are guessing at ideas, not delivering actual products.
  • Fan social activity and financial incentives are an essential part of the next generation of the Internet.
  • Bitcoin is inherently financial but is first and foremost a social community.
  • The financialization of the creator economy is well worth exploring.
  • Fame is a self-reinforcing phenomenon, especially in the algorithmic world.
  • Creators are likely to start with distribution rather than crowdfunding.
  • An imperfect prototype is a spiritual crutch that helps people adapt to a new paradigm.
  • Communities will be formed just like digital nations.

What explains the rise of AMMs? — — Haseeb Qureshi

Uniswap is essentially, a simple x * y = k market making robot. But it is already the world’s largest DEX.

The principle of Uniswap is that if the rate deviates slightly from the actual rate, then the arbitrageur will bring the rate back to normal. Another bad thing about Uniswap is the impermanent loss, where the pool makes money through fees, but loses money through impermanent loss, which means that demand works for you but price changes work against you.

Uniswap brought DeFi with a simple 300 lines of code, using a no-license approach, serving anyone, without any oracle services. Uniswap has been followed by a number of distinctive forked projects , each with its own features.

Uniswap cannot distinguish between retail or arbitrage, and in any market conditions, it follows x * y = k. The simplest CFMMs like Uniswap, for example, win in the stablecoin direction because there is absolutely no operational, integration, or human cost. By deploying the contract, it runs automatically, and the user pays the computational costs and gas fees (much more impressive than Jump Trading). In this case, it is enough to be 80% as good as Jump Trading.

Haseeb believes that Uniswap beats the order book for four reasons: simplicity, less regulation, ease of providing liquidity, and ease of creating incentives. Nonetheless, he believes that Uniswap’s success will not last forever and that AMM and CFMM may only be a technical transition, a temporary stepping stone.

Ethereum is a Dark Forest — — Dan Robinson and Georgios Konstantopoulos

Ether is a scary dark forest with predators. These predators use arbitrage bots to profit, hence coined the term MEV.

Someone accidentally sent Uniswap liquidity to a contract address. Since these top predators were eyeing the transactions in the memory pool, getting the liquidity out of the contract was not a simple task. The authors and some contract engineers devised a plan, wrote a smart contract, and still, the rescue failed.

The lesson they learned was that the monster in the Dark Forest is real, the chain cannot afford to fail, it cannot rely on standard infrastructure, and the future of Ethereum is even scarier. But this future can be improved by VDF and a reworked MEV.

A lot of things happened in the year 2020, a global epidemic broke out, the central banks were flooding the economy, a lot of money flowed into the Crypto space, and at the end of the year, the bull market came. A lot of new blood, money and talented people with enthusiasm flowed into the Crypto. The blockchain infrastructure for NFT and DeFi is now complete, so fasten your seatbelts and take off for the moon.

2021: Believe in Crypto

Surviving Crypto Cycles — — Fred Ehrsam

Fred Ehrsam teaches you how to survive bull and bear transitions. We need to focus on the mission by example, do the main thing, stress test, consider fundraising, be cautious about team expansion, confirm the news through multiple sources, and prepare for the marathon.

After each cycle, the entire market gets stronger, and in a bear market, it’s all about being prepared and taking advantage of opportunities.

The Value Chain of the Open Metaverse — — Packy McCormick (Not Boring founder)

Packy McCormick talks about the value chain of the open metaverse from Web3.

Web3 is the following form of the Internet, using Crypto for consensus, community governance to build decentralized interoperable networks, and giving users a self-sovereign identity.

The metaverse now looks more like the closed Web2 model, which is closed. The most important aspect of the open metaverse is digitalization and the portability and interoperability of personal data, just as the value of NFT is not mediated by a centralized platform but by the user.

The value chain of the open metaverse will be straightforward R&D, retail, and marketing, eliminating many intermediaries. This open metaverse movement is capitalistic and idealistic.

MEV and Me — — Charlie Noyes

Charlie Noyes discusses the concept of MEV in detail. MEV stands for Miner Extractable Value, which is a measure of the profit a miner can make by collating trades within a block, such as copying an arbitrageur’s trade to make a profit for themselves, which could lead to other bots launching bids as well.

MEV is harmful to Ethereum and ordinary users. The chart below shows the realized MEV gains, but MEV behavior is higher in reality.

Currently, MEV is mainly an arbitrage of Uniswap through miners and theft of funds from some smart contracts. In the future, MEV may become more and more dangerous, with miners venturing more into the danger zone, leading to different kinds of MEV and collusion operations. This is an invisible tax on users, a pernicious operation, and an inherently destabilizing behavior to the consensus.

The creation of MEV is a common problem caused by the complexity and statefulness of the blockchain. An ideal solution is to mitigate MEV by better design at the application level or increasing security incentives (EIP-1559). MEV is a path well worth exploring.

NFTs make the internet ownable — — Jesse Walden

Jesse Walden believes that an easy way to think of NFT is an unreplicable file on the blockchain.

NFT makes it possible to own digital media assets, just as it can own digital currency assets such as Bitcoin. NFT will allow creators, audiences, and developers to make more money in the marketplace of digital ownership.

A common criticism of NFT is that NFT works can be copied. But the more files are copied and viewed, the greater the cultural value.

The value of NFT is the same as Bitcoin. The more believers, the higher the value. DeFi is financial Lego, NFT is media Lego in the long run. The development of NFT is just beginning.

NFTs and A Thousand True Fans — — Chris Dixon

Chris Dixon cites the example of 1,000 real fans to demonstrate the enormous potential of NFT. NFT can accelerate the trend of creators earning directly from their fans, providing better economics for creators, removing the intermediary, and allowing users to own NFT truly.

A beginner’s guide to DAOs — — Linda Xie

Linda Xie’s introductory tutorials are very well written, and this time she introduces the concepts, applications, tools, future, and potential problems of DAO.

The Most Important Scarce Resource is Legitimacy — — Vitalik Buterin

Vitalik Buterin discusses the relationship between blockchain and legitimacy and how to leverage it.

The spending model of the Bitcoin and Ethereum networks is a serious misallocation of resources. The revenue to miners far exceeds the cost of research and development. While the bitcoin and Ethereum ecosystems have raised billions of dollars, the use of the funds is very strange and incomprehensible.

In many cases, the tokens are not ultimately owned by the private key but by some social contract (e.g., VC). These social contracts are legitimacy, which governs the game of social status. The idea is that the public accepts an outcome and expects others to do so. Legitimacy can result from power, continuity, fairness, process, performance, or participation.

We can use the concept of acceptability to support the funding of public facilities and public goods. A good example is NFT, an excellent boon for artists, or organizations.

The Great Online Game — — Packy McCormick

Packy McCormick discusses games on the blockchain in this article. Crypto is a fun game, one that billions of people play online. Social media is a clear manifestation of this game.

Designing a successful video game requires frequent feedback loops, variable results, a sense of control, and a connection to the meta-game (most important). The Internet is an infinite game, playing yourself on Twitter, YouTube, Discord, work, and accumulating identities. Musk, for example, is a great player.

Crypto is the money within the Internet game. The more you care about your identity, the more possibilities will open up, and the more you will be attracted to NFT.

With this game, you don’t have to take it too seriously. You don’t have to wait for the perfect time to jump in. You have to take your time to learn and build up.

India & Crypto series — — Balaji Srinivasan

In this series of three articles, Balaji Srinivasan focuses on India’s relationship with Crypto and the huge Crypto potential that lies ahead for India.

Own the Internet — by Packy McCormick

Not Boring provides an in-depth analysis of the value of Ethereum.

Ethereum is a decentralized world computer, the backbone of Web3, the Internet currency, the ownership of the Ethereum network, the currency commonly used in the fantastic online game Crypto, Yield-generating, the store of value, the betting on Web3.

Ethereum is very similar to Excel, which feeds a multi-trillion-dollar ecosystem. At the inflection point of ETH2.0, Packy believes that Web3 will continue to grow, the upgrade of Ethereum will go smoothly, and Ethereum will remain the primary L1 of Web3.

Why web3 matters — — Chris Dixon

Chris Dixon defines Web3 in its entirety. Web3 is an Internet that can be owned by developers and users in the form of tokens.

Why is Web3 important? Because decentralization matters (go back and read his article from 2018). In Web3, ownership and control are decentralized, and people can own services (NFT and FT) by owning tokens.

Web3 is a fusion of the benefits of the previous Web. We are very early adopters.

Composability is Innovation — — Linda Xie

Linda Xie discusses the most significant innovation of all: composability.

The DeFi example demonstrates the combinability of the currency Lego. Through smart contracts, tokens can be used across various applications, from loans to derivatives. For developers, composability allows them to build products on top of other projects, such as adding DeFi components to games and games to DeFi. The financialization of NFT also offers unlimited combinability and capital utilization. The collaboration between Mirror and Zora gives each other’s ecosystem its own advantages.

Composability, like the Internet, has fundamentally changed the industry, opening up a whole new world of possibilities. The rest is left to the creativity.

The Strongest Crypto Gaming Thesis — — gubsheep

Crypto is not an incremental innovation but opens the door to a completely new world. Gaming is a leading indicator of emerging technologies, a relatively low-risk area to explore the future, allowing faster iterative cycles.

An actual Crypto-native game would use the blockchain as storage, smart contracts to implement the game logic, and be developed according to open ecosystem principles, includes digital assets.

Endgame — — Vitalik Buterin

Vitalik explains the endgame of Ethereum scaling.

For blockchains like BSC, Solana, more Rollups are needed. For TPS and better user experience, these blockchains have to be less decentralized in terms of generating blocks, so when we have more Rollup solutions, we can decentralize the verification (running light nodes, etc.) of the blockchain. We can determine whether the centralized nodes are trustworthy.

For Ethereum, Rollup is an inevitable trend, but it will also become centralized slowly. One possibility is that one Rollup will dominate the Layer2 ecosystem, which is the same as the case of blockchains like BSC. The other possibility is that various Rollup solutions, all competing and cooperating, will lead to miners doing multiple Rollups for MEV. The better nodes will slowly monopolize the task as Rollup nodes.

These routes all lead to the same result: block generation will be centralized, but verification is trustless, decentralized, and censorship-proof.

Trading the metagame — — Cobie

Cobie makes a similar point to Packy: the bull Crypto investment is similar to playing video games.

Crypto’s investment game consists of two fun metagames: the Ethereum Killer game and the NFT game. These are the two significant investment trends in 2021. The biggest winners are the people who understand these two meta-games and their principles.

The metagame of 2020 was DeFi Summer, which became BTC at the end of the year, and then became the revival of DeFi, Shit Coin, Alt L1, and retro NFT. When players don’t identify the right metagame, they lose. A metagame starts with a long-term investment, becomes popular, and ends with a proliferation of imitators.

It is also essential to understand the principles behind metagames. For example, if there was a time in LOL when Nocturne was powerful, you can keep using that hero until he is no longer good. It’s essential to understand the difference between Avax and Sol’s DeFi. Sol is not that different from Avax, but Avax’s ecosystem is more community-oriented, which is why the holders reap the benefits.

Learning from the successful ones is an essential part of winning the game. Also, watch the community. And some tips from outside the Crypto space: Newly launched assets have a high probability of going up, on-chain analysis, Whale Wallet Watch……

Cobie also recommends a few tips for winning games:

  • Identify metagames early, and increase holdings over time.
  • After a temporary failure, take a break and shift your spirit to something new.
  • Traders can use the metagame to exit or rebalance long-term positions.
  • The metagame can help determine which assets are suitable for trading with derivatives.
  • We need to think independently and identify biases in our thinking, which can take a long time.
  • By the time the metagame is the consensus of all participants, it is too late.

The Mirrortable — — Balaji Srinivasan

The concept of Mirrortable is mainly a Crypto-ized Cap Table.

Angel investment involves a lot of Web2 tools (Docusign, etc.), and Web3 has more mature and stronger tools. Current PDFs, emails, forms are very outdated and confusing, very costly for individuals to maintain. Web3’s ideal investment process can open up the chain of investments, integrating both on-chain and off-chain components.

This will be a huge track (EthSign recently raised $12M).

2021 was an exciting year, with the cryptocurrency price going up and down many times and people losing their sensitivity after so many times of edging. But it was the year Crypto became widely available to the general public. Bitcoin vending machines were everywhere on the streets, big exchanges sponsored sports teams with all kinds of money, and countless bans and regulations were thrown at Crypto’s head. The “Web3” narrative set the stage for Crypto, with everyone feeling like they were the righteous ambassadors against the “Web2” oligarchy (but admittedly, most were just in it for the quick buck), and countless grand narratives that convinced investors in cryptocurrencies. The cryptocurrency investors were convinced, and each ecosystem (not just Bitcoin and Ethereum) had its believers.

2022: Unpredicted World

2021 NFT Year in Review — — 1confirmation

I won’t go into detail in this article. But this review of NFT in 2021 is a 32-pages report. It is a proof of how hot NFT is in 2021.

Soulbound — — Vitalik Buterin

As a long-time World of Warcraft player, Vitalik discusses decentralized authentication through the concept of soul binding.

If the concept of soul binding is applied to NFTs, NFTs are not transferable. (In fact, for some people, some NFTs are already soul-bound to them, such as richerd.eth, who says he would never sell CryptoPunk #6046 anyway, it’s already part of his identity, see this thread for more details)

Vitalik discussed POAP, CityDAO, and Adidas’ NFT. He said a common criticism of today’s Crypto is that everything is money-oriented, limiting the appeal and sustainability of the culture around objects. Implementing a scheme designed around non-transferability in the Crypto community would solve this problem. However, making money is a significant factor in attracting people to the Crypto community, so non-transferability (meaning no hype) is somewhat at odds with the appeal and now the general design.

Hyperstructures — — Jacob Horne (Zora founder)

Jacob Horne has introduced a new concept, Hyperstructure, Crypto’s new mental model.

The blockchain created the architecture of Hyperstructure, and protocols on the blockchain are Hyperstructure. They cannot be shut down, are free to use (gas does not count), have value accumulation, are incentivized, do not require licensing, are profitable to multiple parties, and are trustworthy and neutral.

Hyperstructure serves millions of interfaces, feeds value into the ecosystem, is protocol-first in construction, is of high liquidity, gives ownership and governance to participants, and has a long construction cycle.

Jacob likens Hyperstructure to the infrastructure of society and sees it as a beautiful foundation for future generations to be created in the Internet age. We are entering a new frontier, embracing this uncharted change.

Sufficient Decentralization for Social Networks — — Varun Srinivasan

Varun explores the next generation of social networks with complete decentralization, decentralized name registration, and effective incentives for early project members.

2022 is just getting started, but my exploding Twitter follow list makes me feel that it’s all moving too fast. Some shit projects are raising millions of dollars in a bear market atmosphere. Different new topics are emerging, zk, NFT, infrastructure, Alt-EVM, DeFi, regulation…… Politics, Economic situation, Humanities…… It’s all so crazy, but I’m sure it’s only going to get crazier from here.

Conclusion

By looking at the views of the winners of the Crypto game, we see that there are actually countless opportunities for wealth in this long-term Foresight. Two or three years after their articles and tweets were published, it dawned on us: “Oh, that’s it. I get it.” The brilliant ideas we come up with have been proposed and discussed a lot 3 or 4 years ago.

But it doesn’t really matter. All we have to do is learn and think. The more you learn, the more you earn; the more you know, the more you grow. It is just that some people acquired knowledge earlier while others did later.

Thanks to Dan Romero for creating the Crypto Readings List. The content of this article is based on the reading list.

Links:

https://book.douban.com/review/13489362/

https://bitcoinmagazine.com/culture/bitcoin-and-the-sovereign-individual-thesis

2008:

https://cointelegraphcn.com/news/bitcoin-white-paper-turns-13-years-old-the-journey-so-far

https://www.sohu.com/a/457337744_120340030

2021:

https://www.sohu.com/a/507780263_121118710

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