Category: Cryptoes

Collection of recent crypto learnings: “Crypto is the machine’s body. And AI is the brain that enters into it.”

Below are some thoughtful and entertaining crypto-related content

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Redphonecrypto’s 69 Theses for 2023

Great presentation on crypto’s “big picture”, a bit quasi-religious and grandiose but it’s good crypto hopium if you’re into that sorta thing. Source: https://redphone.substack.com/p/69-dreams-and-delusions

Crypto, you see, is a stepping stone on the journey to AGI. It is a prerequisite, a necessary appendage that allows artificial consciousness to “escape the box” and manipulate its environs.

Crypto is the machine’s body.
And AI is the brain that enters into it.

Bull markets are not mere monetary phenomena. They are collective, psychological, soul-bound events powered by our dreams.

Fundamental analysis always skips the most important metric in crypto: attention.
Nothing matters more (see memecoins or NFTs for evidence).

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Variant Fund’s A Tale of Two Cryptos: Speculation vs Decentralization

Our thesis at Variant is that the next generation of internet networks will turn users into owners—specifically asset owners. The internet enabled everyone to become a publisher, and similarly, crypto enables everyone to become an asset owner, and therefore, an investor. You don’t need capital to invest, you can invest your time or work by producing art, running machines, or doing physical work.

The prospect of participating in economic growth is what has drawn in so many entrepreneurs and users—and it’s important because some portion of those users learn from those experiences, to think, and act, like investors. It often starts with things that look like toys (or dogs) but drives towards a serious shift in psychology, where money, effort, or skill are honed to contribute more seriously to the space

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Quinn Thompson – Lekker’s 5 key themes for 2024

Beginning in Q2 and into Q3 ahead of the November election, the Fed and incumbent administration will declare victory in the war against inflation. Ironically, these proclamations reach a fever pitch just as inflation is bottoming around September 2024, approximately 27 months after the June 2022 peak. As a result, stocks and risk assets post record breaking numbers in Q2 and Q3. The narrative will be something along the lines of “no matter who wins the election, red or blue, both candidates will spend egregiously”. The reality is this continued heavy spending combined with lower interest rates will be the spark that reignites another bout of inflation and will ultimately be bad for long duration and risk assets.

Crypto is in a secular bull market, while also making its first steps into a new cyclical bull market. These two together create big outcomes.

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Balaji’s Thoughts on Tokens

The most important takehome is that tokens are not equity, but are more similar to paid API keys. Nevertheless, they may represent a >1000X improvement in the time-to-liquidity and a >100X improvement in the size of the buyer base relative to traditional means for US technology financing — like a Kickstarter on steroids

For example, when you buy an API key from Amazon Web Services for dollars, you can redeem that API key for time on Amazon’s cloud. The purchase of a token like ether is similar, in that you can redeem ETH for compute time on the decentralized Ethereum compute network.

After the early kinks are worked out, the token launch model will provide a technically feasible way for tech companies (and open source projects in general) to spread the wealth and align their userbase behind their success. This is a better-than-free business model, where users make money for being early adopters

Some recent Ethereum learnings (and I’m still very bullish)

I’ve written before about my interest in Ethereum, and though it’s largely underperforming in the early stage of this current bull market, I believe the Ethereum token, network, and ecosystem will have its day / year / time in the attention sun. For me, part of the spirit and purpose of investing is to channel what capital and energy you have towards the world you WISH to see, and not just purely to maximize return. And Ethereum’s focus on decentralization, openness, pluralism, and a sort of positive idealism (reflected in Vitalik, largely) is something I aspire to. But investing is hard, crypto is always humbling, this is not investing advice, blah blah.

Below are just a few recent tweets / writings / learnings about Ethereum that I wanted to share:

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Ethereum has a yield in excess of its inflation rate. This is the definition of “real yield”, and is unique to Ethereum in the crypto world.
Institutions love yield. Especially real yield. It’s not hard to imagine a world where a bit of crypto risk-appetite in general comes back, and some institutional money managers realize that Ethereum can be viewed as both a tech-growth risk-on play, AND a real-yield play

But Ethereum has durable and unreplicable advantages right now. It is simultaneously
-The most Lindy smart contract chain
–The only smart contract chain that crossed the regulatory chasm
-The only chain with which Coinbase is aligned
-The only chain that has a “yield”

One enormous medium term advantage Ethereum has in the institutional world is that the CME lists an ETH futures contract. BTC is the only other cryptoasset that’s listed on CME. Now with almost 3 years of history, this contract has given regulators, notably the SEC, some level of comfort with trading around ETH that just doesn’t exist for SOL.

Source: https://medium.com/alliancedao/ethereum-is-the-only-institution-friendly-smart-contract-chain-b6a0ac199b6f

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One thing I ♥️ about Ethereum is the ability to easily verify the contract and look at the source code, whereas on Solana, one would need to compile the source code and generate a bytecode file before comparing against what is deployed on the blockchain

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And of course Vitalik’s recent essay on cypherpunk values including:

  • Open global participation
  • Decentralization
  • Censorship resistance
  • Auditability
  • Credible neutrality
  • Building tools, not empires
  • Cooperative mindset

Source: https://vitalik.eth.limo/general/2023/12/28/cypherpunk.html

Chamath from 2013 talking about bitcoin — are you tired of it yet?? :P

To me this was the most interesting part:

Suffice it to say that the geopolitical ramifications of a robust Bitcoin economy are mind-boggling, beginning with a completely peer-to-peer banking system that works by and between people and ending with a world that no longer relies on the U.S. dollar as the reserve currency of all assets

Link: https://www.bloomberg.com/view/articles/2013-05-30/bitcoin-the-perfect-schmuck-insurance

Their All-In podcast is a weekly must listen, not because I agree with everything or everyone on it, but where else do you get to listen to 4 guys worth 9-figures plus who are good friends shoot the shit?

Diversify into what?

David wrote this essay in early 2021, at the height of Bitcoin’s last bull market, and I think the insights are even more valuable now as we enter the early innings of Bitcoin’s current bull market:

The second unfortunate realization I have come to is that Bitcoin is (or soon will be) just about the only investable asset on the planet for the foreseeable future. This may sound like a preposterous statement, but it isn’t. Believe me, I have looked high and low for viable alternatives in order to diversify my portfolio and there simply aren’t any at the moment

And he shares this chart:

Screenshot 2023 12 04 At 09.22.24

Fiat currencies — pretty clear that global inflation will continue to be a problem for the next 5-10 years (and I can’t help you if you believe the mind-virus that is “2% inflation is good for the economy”)

Of the above, other than Bitcoin, I tend to think stocks will do ok, and probably real estate because civilization would collapse if peoples’ home values fell in half. People start marching and burning things when that happens. So that, and bank collapses, are what governments will do anything to prevent (witness China now, and US after 2008).

Bitcoin will see 2 mini bull runs, and BTC > $100K may become the new normal

My starting assumption as we enter this bitcoin bull market is that we’ll see 2 mini bull runs.

The first one started a few months ago, driven by the improving global liquidity conditions and the optimism over a US Bitcoin spot ETF. This run-up will probably grind steadily upward until the ETF is approved (likely by January 2024). It’s possible that the approval itself won’t be “sell the news” and, as up to $1B of newly injected buying pressure enters, will send Bitcoin even higher. Temporarily. This run-up alone could see Bitcoin pass its $69K previous all-time high (made in November 2021).

Then there will be a sell-off, a pressure release valve, driven in part by underwhelming ETF demand (which will come, only more steadily and incrementally than people think), and by excess leverage justified by the unsustainable excitement. Bitcoin will fall below the $69K mark, say to $50K or so.

By mid-2024, as the ETF inflows steadily build, as macro liquidity conditions steadily improve, as halving supply shock starts to actually affect the market by May, June, and beyond — that’s when the second and “real” bull-run happens, and BTC soars past $100K and could touch $200K or more. This is where the real institutional and maybe even nation-state fomo begins to kick in.

Cycles are inevitable and at some point, the bear will be back. But I think BTC > $100K could become the new normal.

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I could be very wrong about the above. Bitcoin could see 1 massive quick bull run followed by a multi-year slow grind down. What Bob Loukas calls a left translated cycle. But I think there’s too many positive shoes to drop for this to be the more likely outcome. Whereas most of the negative shoes have dropped (driven in part by political and institutional pressure to clear the bad actors out of the system before the big tradfi money men step in, they don’t wanna get their shoes dirty after all).