Tag: cdixon

Collection of recent crypto learnings 3: “…one can argue that currencies themselves are intrinsically platforms, and that coexisting multiple currencies should be analyzed as platform competition.”

Past updates 1 and 2

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The ENS approach is even more vulnerable, where a group of multisig key holders, no matter how reputable, will control the governance and upgrade of the backbone infrastructure of the decentralized web.

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I believe, in reality, a significant portion of the cryptocurrency space operates on meme culture,” Zhu said during the AMA. “We all tend to invest in bitcoin because it represents something everyone believes in, transforming it from a meme into a tangible reality

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out of the three core layers of internet stack – naming (DNS), transportation (TCP/IP) and application (HTTP), naming is at the very start of the stack

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Good breakdown / categorization of AI+crypto projects


(But missing generative media like images, videos)

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the core definition of a blockchain is all the data used is generated within that blockchain and therefore verifiable by any participant in the blockchain. Towards that same end, smart contracts can only talk to smart contracts

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Furthering the idea that the US has much to gain from the adoption and co-option of Bitcoin is the tangible stash of coins distributed within its borders; MicroStrategy’s 189,150 bitcoin, the 215,000 bitcoin seized by the Department of Justice, Block.one’s 164,000, Grayscale’s 487,000 in GBTC, and now the new US spot ETF offerings hold a combined 170,174 bitcoin as of 1/31

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in a 2011 interview with Bloomberg, Fink went so far as to say “Markets don’t like uncertainty. Markets like, actually, totalitarian governments… Democracies are very messy.”

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Bitcoin is punk rock. You don’t get it? Fuck you we don’t care. We’re having a party — Peter McCormack

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CDixon (paraphrased): “Computer” is a collection of both nouns and verbs. A ledger is just a noun. So it undersells the power of verbs like earn, transfer, spend, save, stake, lend, etc

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From an app’s perspective, blockchains offer three key features: consensus, composability, and availability 🧵
1. consensus – solve contentious race conditions
2. composability – access other liquidity and apps
3. availability – data is readily accessible
// what about governance (consensus?), tokenomics (new biz model)

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The Ethereum blockchain core developers did briefly consider including an ALARM opcode to enable smart contracts to schedule operations in future blocks, but it was ultimately discarded as unworkable [https://vitalik.ca/general/2022/03/29/road.html]. The Cosmos SDK used for development of application specific blockchains [https://v1.cosmos.network/sdk] has some support to execute code – with significant limitations – at the beginning and end of each block.

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Blockchains invert the hardware-software power relationship, like the internet before them. With blockchains, the software governs a network of hardware devices. The software—in all its expressive glory—is in charge.

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one can argue that currencies themselves are intrinsically platforms, and that coexisting multiple currencies should be analyzed as platform competition.

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That said, when a token goes straight down, you can’t call this a screaming success. There is a good reason why IPOs generally go up. And there is a good reason for why BNB, ETH, and BTC are 3 of the most successful protocols today. When you price an asset low, and let early investors participate in the financial upside of your success, it tends to have long-lasting positive effects. Your users become power users and evangelists. But when something prices high and goes straight down, you alienate those who were true believers. And it’s hard to come back from that

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AI+blockchains point to a dystopia of impersonal and faceless interchangeable-parts humanity that’s more industrial than the industrial age.

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Why not put $500 into a memecoin that could 50x, knowing that you could likely lose most or all of it? It’s not like the $500 is enough to make any difference anyways. Neither is $1k or $5k. That mindset, which is becoming pervasive in America, is financial nihilism. This is the zeitgeist for young Americans, you’re naïve to think otherwise. And it’s a huge driver of shitcoining

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For Web 3 to succeed it needs to do two things:
Enable cool functionality unable through traditional Web 2,
and make the user largely unaware that they’re even on the blockchain

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Programmable, composable data structures (ie, tokens) are the “new computing primitive” that will usher in the next phase of the internet

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We need an alternative. Crypto is the perfect marriage for AI since the transparent global human coordination that underpins the movement is something that can harness AI for good at global scale. Crowdfunding (with cash or with your GPU) the creation and fine tuning of open source models which anyone can audit in real time for biases or issues is the safest path forward in the accelerating world of AI.

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The idea of Bitcoin, like the idea of Index funds is a clean “world view” that markets itself. It’s not the only crypto that does so. Once you do accept Bitcoin into your brain, part of your brain opens up to other cryptos: Eth, Solana, NFTs, Ordinals … maybe some combination of Crypto and AI like Tao.

My sense is that this new idea: Bitcoin, and this new demographic: Millenials are in for an epic bull run.
The BTC ETF will be the gateway drug for this. It will get the Boomers and GenXs so that they CAN participate in the transition. Most won’t. But enough will.
It’s an idea that will take over the next 20 years.

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USDT on the Ethereum network shows an average transfer size of $35,000, indicating its involvement in substantial financial activities within the DeFi ecosystem, likely influenced by Ethereum’s higher transaction fees. Conversely, USDT on the Tron network presents a distinct scenario. With Tron’s minimal transaction fees, the average transfer size for USDT is around $7,000, facilitating more frequent, lower-value transactions

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He defines crypto as a meeting of “generative tech” (the creation of new things, users and markets) and “participatory capital formation” (individuals pooling money in new ways to create new types of businesses).

Collection of recent crypto learnings 2: “Ethereum hit $10 billion in revenue faster than any other major software company besides Google”

Below are some thoughtful and entertaining crypto-related content since the last update

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Ethereum hit $10 billion in revenue faster than any other major software company besides Google

Ethereum Revenue

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Programmable, composable data structures (ie, tokens) are the “new computing primitive” that will usher in the next phase of the internet

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We need an alternative. Crypto is the perfect marriage for AI since the transparent global human coordination that underpins the movement is something that can harness AI for good at global scale. Crowdfunding (with cash or with your GPU) the creation and fine tuning of open source models which anyone can audit in real time for biases or issues is the safest path forward in the accelerating world of AI.

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Chris takes the same journey but he calls these phases Read, Write, and Own. The initial phase of the web, when the web browser arrived, was mostly a reading experience. Then in the early 2000s, the web became two-way and we could Read and Write. What Blockchain Networks have unlocked is the ability to own things on the web

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The “big, long macro trend” is what’s important, not the “technology” of “passive investing” or “indexing”. American Boomers of the last 30 years think they are “smart” to Index, but their real smartness was to jump on board a trend fueled by US money printing combined with quantitative easing and globalism

The idea of Bitcoin, like the idea of Index funds is a clean “world view” that markets itself. It’s not the only crypto that does so. Once you do accept Bitcoin into your brain, part of your brain opens up to other cryptos: Eth, Solana, NFTs, Ordinals … maybe some combination of Crypto and AI like Tao.

My sense is that this new idea: Bitcoin, and this new demographic: Millenials are in for an epic bull run.
The BTC ETF will be the gateway drug for this. It will get the Boomers and GenXs so that they CAN participate in the transition. Most won’t. But enough will.
It’s an idea that will take over the next 20 years.

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Friend.tech does ~$7M in annualized revenue from only ~500 DAUs. But you need to have an extremely high CLV for the economics to work.

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He defines crypto as a meeting of “generative tech” (the creation of new things, users and markets) and “participatory capital formation” (individuals pooling money in new ways to create new types of businesses).

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Cdixon on investing (he leads a16z’s Crypto Fund):

I used to think venture investing is 80% an intellectual test, 20% emotional test. Now I’d say it’s the reverse.
I’d say the same about my experiences as a startup founder. Probably true of many other long-term activities.

Giving up too early, being overly influenced by external sentiment, acting hastily, losing sight of fundamentals, getting too optimistic, getting too pessimistic, being overeager to do something when sometimes you just have to wait, other times waiting too long…. Etc etc :)

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Every bull market in crypto has been kicked off by a new method of token distribution. Examples include:
* PoW chain proliferation—2013/2014
* ICOs—2017
* IEOs—2019
* Liquidity mining—2020
* NFT minting—2021
*

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Some view this regression phenomenon as the foundational policy of the crypto space: “whatever is permitted by the protocol’s code and market structure is legitimate.” This viewpoint, while rarely expressed in such direct terms, is remarkably common among crypto users

Regression to the code erodes social norms, and this consequence accounts in large part for what repulses people from crypto. Even as protocols fulfill important social functions like affordable remittances and escape from inflationary regimes, “the space” appears to outsiders as greedy and riddled with scams. It is for this reason that crypto seems to stand apart from all prior human institutions

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Token buyers will be to investors what bloggers/tweeters are to journalists:
Tokens will break down the barrier between professional investors and token buyers in the same way that the internet brought down the barrier between professional journalists and tweeters and bloggers.

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Multi-chain developers have 10x-ed since 2015 and accelerated after 2018.
30% of devs have been working on 2+ chains for 3 years.
Most chains share deployers with Ethereum. Ethereum, @0xPolygonLabs, & @BNBChain cross-polinate the most frequently.
Large ecosystems have emerged for @0xPolygonLabs, @Optimism, @Solana, @NEARprotocol, @Cosmos, @Arbitrum, @BNBChain, and @avax

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Treasuries are just staked US dollars (!)

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In these cycles, bitcoin consistently outperformed altcoins in phase 1 of the upswing. In phase 2, altcoins substantially outperformed bitcoin. What’s interesting is that the magnitude of outperformance is so large that altcoins have outperformed bitcoin across the full length of both cycles

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If attention is the core pricing factor, then what crypto enables is an infinite canvas to issue and trade assets that track attention. The broader pattern of “financializing attention” requires two of crypto’s most important properties to reach its natural end state: permissionlessness and composability.

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The reason is that the transition from a gold-backed to fiat-backed system was comparable to a soft communist revolution, as the *visible* seizure of gold laid the groundwork for the *invisible* seizure of wealth via money printing.
And the classically trained judges at that time fully understood this. Justice McReynolds’ then-famous dissent denounced the ruling in the harshest terms, noting that the “Constitution is gone” and the “dollar…may be 30c tomorrow, 10c the next day, and 1c the day following”.

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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

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Crypto is the modern version of the long emerging markets trade. As an industry, it will see the most relative capital inflows, budding innovation and has an innately global footprint. It provides a fiat currency debasement hedge (Bitcoin), new application networks akin to the internet (smart contract blockchains like Ethereum and Solana) and the fastest growing population. You can compare it to any individual sovereign, country or financial market and nothing beats it.

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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.

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Ethereum is just a super useful thing – Ippolito

Podcast notes – pmarca and cdixon on Bankless talking web3 and crypto

Guests: Marc Andreessen, Chris Dixon

A16z – new $4.5B fund, largest crypto fund ever – venture investing, mostly early stage, 10+ year time horizon, open source, contribute to broader crypto community, doing a lot in policy, invest a lot in content and media, 72 people team and growing

cdixon = “Kendrick Lamar of mental models”

Internet’s original sin – it was illegal to have money on internet, do business online – US government was paying for it then, was a fed funded research project w/ taxpayer money
Ethos as non-commercial, open source, free software movement
Impossible to imagine Netscape, making money on internet
Internet built as zero-trust, lack of economic incentives created many problems such as spam, reliance on advertising

Netscape created javascript, cookies, SSL – core internet primitives
SSL was controversial, classified as munitions, government thought only terrorists would use encryption
Narrative battle then – information superhighway (eg, AOL, Disney) vs decentralized (eg, Netscape)

Encryption was used in warfare, but not in daily life
Invented SSL protocol to enable encryption
Govt still tries to ban encryption periodically, same fights

Many early actors do have bad intentions – but stopping them means you also stop the positive uses and limit the potential; it will create jobs; importance of privacy for sensitive data (health, finance)
If these technologies exist, you want them in your country so you can better regulate and observe them

Bull case for open systems:
Bill Joy, cofounder of Sun – “Joy’s law” – no matter how many smart people work for your company, there are more smart people who don’t
“Permissionless innovation” – internet was like this, PC, iPhone, crypto is like this
Generational component to this – kids see this as their opportunity; older people have status quo bias, their power is at risk
Doomed to fight these things over and over again

Cathedral vs Bazaar
Cathedral = Microsoft (hierarchical, centralized)
Bazaar = early PCs (open systems)
Encarta vs Wikipedia

Crypto picked up baton of open source software, open systems
Disadvantages is 2 step process – recruit developers first to build the software, which attracts the users

Early protocols were not human readable – binary code
Internet protocols (eg, SMTP, HTTP) – text based protocols, human read & write, easier to build on it, write your own protocols
Was meaningfully slower this way
Did this to drive demand for broadband and innovation on top

First laptops were 43 pounds and early reviews were scathing – the critics were right but didn’t see the future
When there’s a movement and attracting world’s smartest people – the critics’ list of problems becomes the precise opportunities

Internet – right answer is always to LIBERATE – ethos of freedom of speech, John Barlow’s declaration of independence of cyberspace
Web3 bringing trust to an untrusted network
Can imagine entire global economy running on blockchain

Net neutrality – Twitter originally described itself as free speech wing of free speech party
Lot of those advocates are now advocates for censorship – 180 turn
Ethos shift – all these companies are under intense pressure to censor and block

Crime wave in 1920s, 30s – car plus tommy guns – new thieves with new tech – created mass panic and lots of bank robberies, but then banks and police adapted. Society adapts
Full anarchy isn’t a good idea either – question of judgment by leaders and community

Mental model for software – as flexible and plastic as writing fiction – massive design space
Questions of whether capital can have too much influence over governance – it’s a problem that can be solved with more innovation and better design
Becomes question of political philosophy – Machiavelli said 3 forms of government, rule by one, rule by few, rule by many
Lots of direct democracy experiments fail – California propositions, Florentine direct democracy so catastrophic it led to anarchy
Historically most democracies have some level of representation / delegation
Full democracy may be unrealistic expectation
But different communities can make different tradeoffs

On internet as things are increasingly adopted, more embedding adds more friction points to governance process
Speed running history of finance, and now speed running history of governance

Blockchains are core tech – new kinds of computers, “computers that can make commitments”
Two other movements – money / defi, web3 (reinventing internet services owned by communities)

Web1 = democratized information – “read”
Web2 = democratized publishing – but controlled by small sets of companies – “read write”
Web3 = democratizing ownership – “read write own”

Networks’ hardest problem is cold start – tokens are powerful solution to this

Lot of people are uncomfortable with money – intellectuals in particular see ideas as superior to money
Another view – money as a tool, crystallized human effort – incentivize and measure value between people
We tried societies without money – Soviet Union is an example and it didn’t go well
Money is fundamental tool to build civilization

Key turning point for modern civilization is “clear title to land” – once you have that, you have motivation to improve it, build on it – then you can borrow against it, which is what makes R&D, business, modern economy possible – unlocking capital

Web 1.0 – closest to ownership is domain names – and was linchpin for how web stayed somewhat decentralized
Domain name isn’t a consumer product, which limited its potential
RSS didn’t succeed but there’s alternate future where RSS + crypto (value ownership) could have avoided lots of web2 problems of centralization and censorship

NFTs – way to connect culture and art to internet – history of art has always been a big deal, value is tied to provenance (is it real, did artist actually make it, who owned it before)
World has fraction of art we should have – funding art has always been a tough problem
Allowing artists to access global market of patrons
Bullish on global explosion of creativity

Jack Dorsey’s critique of web3 – “you don’t actually own web3, know what you’re getting into”
Jack believes in decentralization, differ on details (believes BlueSky can do it on Bitcoin instead of other blockchains)
Norm of a16z portfolio ownership is sub 5% – which is less than web2
Moxie critiques – new things re-centralizing like OpenSea – but OS doesn’t own those NFTs, they’re all on blockchains, more pressure on take rates and more competition

Processes of tech adoption
1. Ignore
2. Refute – list of criticisms
3. Name calling – people getting mad, realize it’s gonna be a thing, represents re-ordering of power and status; we’re entering this phase now

How many web3 critiques are just critiques of capitalism

Western culture has 800 year history of freedom of speech and expression – important to keep these

Early Bitcoin had a libertarian culture which skews right, which also gets confused in the debate with broader crypto and what crypto is like today

In long run, the truth wins
Internet is winning – fundamentally a good thing
People use it, buy into it, get value from it

Advice to young people
-look for place you can make contribution (don’t believe in follow your passion)
-focus on satisfaction over happiness (deep and enduring over temporary and fleeting)
-all of this stuff is about people, great teams – people who share a lot in common, sublimate themselves, work together
-hard work (work life balance isn’t as important when you’re young, there’s no substitute for hard work, great things require intense effort over long time)

New tech there’s a magical window
For mobile it was 2009-2011 (Snap, Instagram, Uber, Venmo, huge influx of builders, funding)
With web3 we’re in it now, magical few years, hence the massive fund to go all-in

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notes are unedited, any mis-reps are mine