Random facts – things I learned (Feb 7 2024) – Bryan Johnson: “If you don’t have haters, you want to dial it up”

Prior editions:

Random facts:

Bryan Johnson: “If you don’t have haters, you want to dial it up”

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

There is an ongoing assault on slow thinking and your attention

Eugene Wei’s famed Status as a Service outlines three dimensions to evaluate social product strength — social capital, entertainment, and utility. The essay focuses mostly on status and how it’s valued and accrued by creators across the different kinds of social networks that have scaled.

#18 Applied art enters an accessible era
Technology tailwinds are making it easier for anyone to mix art and utility, which historically required niche technical skills. We’ve seen how fine art can advance (e.g. painting, sculpture), but I expect applied art (e.g. industrial, graphic, fashion, and interior design) to leap forward next and capture greater cultural capital

“[Larry’s] material was uncompromisingly to his own taste, filled with wild tirades about apparent trivialities,” James Caplan writes in the New Yorker profile.
Larry was called a “comic’s comic” for his approach. Entering his 40s and unwilling to change, he accepted the reality that he would likely only ever have a cult following

This is one of the most important things I can impart: in any troubled company the people at lower levels know what ought to be done in terms of day-to-day operations

Ed Norton + Rick Rubin
-After exhausting your wave of creative work, you have two choices: either repeat that work, or you can stop, refill yourself with life, and be willing to start an entirely new adventure
-Most films don’t work at all until the sound mix is done
—“I always think of the work as solving a puzzle.” – Rick Rubin

Good writers don’t walk around all day with 100,000 words of eloquent wisdom in their heads. No one can do that. They take some vague feeling they’ve been thinking about, dig into a bunch, write down what they’ve discovered, realize half of it doesn’t make sense, delete most of it, write some more, realize the new stuff contradicts itself, panic when they realize they don’t understand the topic as well as they thought they did, talk to other smart people about why that is, learn something new that reminds them of this other thing that might tie into the second paragraph, discover that this thing they believed before they started writing isn’t actually true, realize that if that thing isn’t true then this other thing is probably really important, and so on endlessly. Grinding through this process reveals bits of context that are hopefully new discoveries to the reader. More importantly, they were likely new discoveries to the writer before they set out writing.

my first paper as a PhD student laying out a set of explanations for why the IT age was not showing up in the productivity statistics. The first was that digital technologies often create a lot of benefits in ways that are not well captured in the data. In particular, digital products often have zero price. Gross domestic product measures all the things that are bought and sold, with a few exceptions, if something has zero price, it is not captured

Unfortunately, the AI companies have nearly universally broken fundamental issues of fairness: they are making money on your writing without asking for your consent, nor are they offering you compensation and credit. There’s a lot more one could ask for, but these “3 Cs” are the minimum.

“The most important thing a man has to tell you is what he’s not telling you,” he said. “The most important thing he has to say is what he’s trying not to say.” — LBJ

For these reasons, I opt first for whole food forms of these nutrients. Whole foods provide us with everything, including the things we don’t yet understand and the things that we only now think we understand, even if mistakenly.  And this is why I regularly test my micronutrient status to verify that I’m not over- or under-doing the things we do currently know about

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

First neural networks paper was published in 1943!
Warren McCulloch and Walter Pitts – modeled a neural network with electrical circuits

many young people use YouTube a lot — about 60% of teens use it almost constantly or several times a day

Doesn’t matter if it’s an illusion. It works so long as it’s interesting. If people are bored it’s game over. – Miyazaki

In a hunter-gatherer group, despite men’s physical strength peaking in their twenties, their skill at hunting did not peak until in their mid-forties. “The implication is that for men, experience and wits are more important than raw strength.” https://a.co/d/32hHhkt

It turns out writing code is one of the things that these models are absolutely best at. Probably 60-70 percent of my usage of these tools is around writing code. I have a hunch that programmers, software engineers, are the group best served by this technology right now. We get the most benefit from it

I feel like as adults, we are actually more scared of things than when we were children. We are scared of real life, failure, being abandoned, being rejected from jobs to relationships, having no money, having no safety net, being alone…I can go on, but I would give anything to be afraid of the imaginary monster under my bed again rather than what I’m scared of now. Anything

Which brings me to the real scarce insight Jeff gave Jason and I early on: What entrepreneurs need most is confidence, not advice. He’d always preface any advice with “you know your business better than I do” and “just keep doing what you know is right”.

For those unfamiliar, the Green Bay Packers are the only team with a public ownership structure in the National Football League. The Packers are owned by 537,460 stockholders with no shareholder allowed to own more than 4% of the shares outstanding (how’s that for decentralized!). While called A “stock”, owners have no equity interest, no dividend rights, no protections or regulations under securities law, and cannot trade their “stock” with a 3rd party

Intensive meditation, even after only one day, can also affect gene regulation in your brain through similar mechanisms. Attending a monthlong meditation retreat reduces the expression of genes that affect inflammation, and experienced meditators can reduce inflammatory genes after just one day of intensive meditation.

@simonsarris
One of the biggest misconceptions for most of my life was that I had to understand something in order to do it.

Agathon tells us, This alone is denied to God: the power to undo the past

But the artist cannot look to others to validate his efforts or his calling. If you don’t believe me, ask Van Gogh, who produced masterpiece after masterpiece and never found a buyer in his whole life.

The professional learns to recognize envy-driven criticism and to take it for what it is: the supreme compliment. The critic hates most that which he would have done himself if he had had the guts.

Lastly, what is really fascinating is this – all you need for a new religion or god is pretty much a new symbol, backed by the corresponding community and narratives

The idea of your birthplace as the society to which you must bear allegiance, and even sacrifice your life for, is relentlessly hammered into you from a young age.

Just as C++ is an abstraction layer on top of binary, AI is an abstraction layer over lower level thinking. In other words, with AI you don’t have to be as specific as programming or as precise as an excel formula. Instead, you can give a somewhat generic prompt and still get a useful output. You can be a bad manager and still get the results you need from your robot employee

Getting things to run smoothly, working to achieve a lack of resistance, this is the antithesis of art’s essence, it is the antithesis of wisdom, which is based on restricting or being restricted.

Goodhart’s Law: when a measure becomes a target (for performance, incentives, etc), it ceases to be a good measure

In fact today China imports in value more chips than it does crude oil and iron ore (to make steel) combined!

Joy and happiness are born of concentration. When you are having a cup of tea, the value of that experience depends on your concentration. You have to drink the tea with 100 percent of your being. The true pleasure is experienced in the concentration. When you walk and you are 100 percent concentrated, the joy you get from the steps you are taking is much greater than the joy you would get without concentration. You have to invest 100 percent of your body and mind in teh act of walking. Then you will experience that being alive and taking steps on this planet are miraculous things.

The War of Art highlights
-Now consider the amateur: the aspiring painter, the wannabe playwright. How does he pursue his calling? One, he doesn’t show up every day. Two, he doesn’t show up no matter what. Three, he doesn’t stay on the job all day. He is not committed over the long haul; the stakes for him are illusory and fake. He does not get money. And he overidentifies with his art.
-She understands that all creative endeavor is holy, but she doesn’t dwell on it. She knows if she thinks about that too much, it will paralyze her. So she concentrates on technique. The professional masters how, and leaves what and why to the gods.
-The professional dedicates himself to mastering technique not because he believes technique is a substitute for inspiration but because he wants to be in possession of the full arsenal of skills when inspiration does come.

“People are more adept [at] working against [things] than oftentimes we give them credit for. We often think of people working for things, but they often work against things. They work against poverty. They work against their upbringing. They work against some of these things just as much as they’re working for them. Some people are very fear-driven. We talk about fear as being very negative, but it also can be very positive.” — Dr. Julie Gurner

The workshop leaders, however, had a different point of view. They argued that if you see yourself as part of something bigger—a team, an organization, a community, or a mission—it takes the toxicity out of striving. When your primary goal is to contribute to this “something bigger,” you still work just as hard, but the motivation driving you is different. Rather than just trying to prove that you are good enough or better than others, you view your efforts as serving a purpose greater than yourself.

One of the first things they found is that when people are connected to bigger-than-self goals, they feel better: more hopeful, curious, caring, grateful, inspired, and excited. In contrast, when people are operating from self-focused goals, they are more likely to feel confused, anxious, angry, envious, and lonely.

The genius of Hinduism, then, was that it left room for everyone. It was a profoundly tolerant religion. It denied no other faiths. It set out no single path. It prescribed no one canon of worship and belief. It embraced everything and everyone.

Every person is a creature of the age in which they live, and few are able to raise themselves above the ideas of the time. — Voltaire (1694 – 1778)

Status limbo is a place with more freedoms than other states. It’s not freer in a tangible sense, but removing the usual status-preserving hangups lets you act more freely. It somewhat like being on the moon. There’s less societal and institutional gravity.

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 – Fred Wilson

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.

My body is like a prized racehorse, or a cherished high-end performance vehicle,” he explains. “I will only ever get this one, so just like any valued possession, I will invest heavily in its appearance, performance, fuel, care & maintenance.
“I only wish I knew & applied everything I know now, decades ago!”


James Cameron

I like difficult. I’m attracted by difficult.

Difficult is a fucking magnet for me.

I go straight to difficult.

And I think it probably goes back to this idea that there are lots of smart, really gifted, really talented filmmakers out there that just can’t do the difficult stuff.

So that gives me a tactical edge to do something nobody else has ever seen, because the really gifted people don’t fucking want to do it.

At the heart of this strategy lies the drone—not just as an airborne device but as a potent software platform. Imagine drones that never miss, drones that never operate in isolation, drones with unbreakable communication lines, and drones that, in swarms, always prevail. All possible with software, and all changeable—all the time.

Life advice from an old guy on Twitter:
-I leave my waitress a big tip. The extra money might bring a smile to her face. She is toiling much harder for a living than I am.
-I have learned not to correct people even when I know they are wrong. The onus of making everyone perfect is not on me. Peace is more precious than perfection.
-I give compliments freely & generously. Compliments are a mood enhancer not only for the recipient, but also for me. And a small tip for the recipient of a compliment, never, NEVER turn it down, just say “Thank You.”

And in that flow, you find yourself doing things not purely for status, but because there’s something in them that’s more meaningful to you. As I’ve written before: “To become truly great at something, you need to be at least a little obsessed with that thing — enough to get lost in the joy of doing it, not the allure of what it could get you.”

Elon Musk said the following on an investor call this week: Chinese car companies are the most competitive car companies in the world. If there are not trade barriers established, they will pretty much demolish all other car companies in the world. They’re extremely good

Om: Hindu meditation practices have long understood the benefits of sound, especially through the chanting of “Om.” This sound, central to many Hindu traditions, is more than a symbol; it’s a powerful tool that engages the vagus nerve, known for its role in regulating stress and relaxation responses. The act of humming, inherently part of chanting Om, creates a gentle, soothing vibration. This process not only brings a physical dimension to meditation but also enhances the spiritual experience, as the sound of Om is said to represent the universe’s primal sound.

Fourth, ChatGPT and related systems have a kind of truthiness problem; some of what they say is true, and some is not; it is very difficult for the end user to anticipate what will or not be true. They have been known to make up biographical details, and even whole court cases; they have defamed people, and even occasionally botched basic math questions. Whatever they say sounds authoritative, but it is not always true; as they say in the military, “frequently wrong, never in doubt”.

Those who have ambition and entrepreneurial energy are going to Singapore. Those who have money and means are going to Japan. And those who have none of these things — the slackers, the free spirits, kids who want to chill — are hanging out in Thailand.

Civilization thus kicked off with development of the original Large Language Model: formal writing systems

And, by the way, the appetite for more things is insatiable. Each new invention placed in the economy creates the opportunity and desire for two more. While plain old telephone service is headed toward the free, I now have three phone lines just for my machines and will someday have a data “line” for every object in my house. More important, managing these lines, the data they transmit, the messages to me, the storage thereof, the need for mobility, all enlarge what I think of as a phone and what I will pay a premium for

the great Stoic philosopher Marcus Aurelius describes a happy, virtuous individual in similar terms:
[H]e loves and welcomes whatever happens to him and whatever his fate may bring.

The three great Roman Stoics — Seneca, Epictetus, and Marcus Aurelius — did not have easy lives:
* Seneca (4 BCE – 65 CE) was adviser to the Roman Emperor Nero, and was eventually exiled and forced to take his own life.
* Epictetus (50 CE – 135 CE) was a slave who gained his freedom.
* Marcus Aurelius (121 CE – 180 CE) was Emperor of Rome during a time of constant crisis, be it war or plague, and most of his children died before he did.

The Rashomon effect is a storytelling and writing method in cinema in which an event is given contradictory interpretations or descriptions by the individuals involved, thereby providing different perspectives and points of view of the same

In the UK, filming in public is legal and does not require permission, nor does it require release agreements from any of the people that might end up on camera. 

GPS was a novelty luxury only a few years ago. It was expensive. As its technical standards spread into mapping services and hand helds, it becomes essential, and the basic service (where am I?) will become a commodity and free. But as it drops toward the free, hundreds of additional advance GPS functions will be added to the fixed function so that more people will pay ever more for location services than anyone pays now. Where-am-I information will be free and ubiquitous, but new services will be expensive at first.

More War of Art:
-Sometimes Resistance takes the form of sex, or an obsessive preoccupation with sex. Why sex? Because sex provides immediate and powerful gratification.
It goes without saying that this principle applies to drugs, shopping, masturbation, TV, gossip, alcohol, and the consumption of all products containing fat, sugar, salt, or chocolate
-The paradox seems to be, as Socrates demonstrated long ago, that the truly free individual is free only to the extent of his own self-mastery. While those who will not govern themselves are condemned to find masters to govern over them.
-The more scared we are of a work or calling, the more sure we can be that we have to do it. Resistance is experienced as fear; the degree of fear equates to the strength of Resistance
-It will pledge anything to get a deal, then double-cross you as soon as your back is turned. If you take Resistance at its word, you deserve everything you get. Resistance is always lying and always full of shit.

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).

Copies flow so freely we could think of the internet as a superconductor, where once a copy is introduced it will continue to flow through the network forever, much like electricity in a superconductive wire.

You’ll probably trust your AI lawyer more than your lawyer in a few years just as you’ll trust self-driving cars over getting into a random Uber with a stranger driving.

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

Black Holes are also the most computationally dense possible objects, because they represent the limit on how much information you can pack into a finite volume.

To get status, you have to give up status. You have to sacrifice some existing status to make it back and more. This is especially true in creative fields and high-upside opportunities. Writers, musicians, actors, directors, entrepreneurs must all do their time in status limbo. And you don’t know how long that time will be. How well you tolerate this state can be the ‘winning’ difference between you and someone just as talented and hard-working as you.

pmarca: Most people should move a lot faster, and also say yes a lot more.

Even material industries are finding that the costs of duplication near zero, so they too will behave like digital copies. Maps just crossed that threshold. Genetics is about to. Gadgets and small appliances (like cell phones) are sliding that way. Pharmaceuticals are already there, but they don’t want anyone to know. It costs nothing to make a pill

TIL of the 3 sacred gifts of Japan, they are: a sword, a mirror and a jade Jewel. They are believed to have been given over 5,000 years ago to the imperial family from the Shinto goddess, Amaterasu.
only the current emperor, Naruhito, and other high-Shinto priests can see it.
(apparently the sword is a replica, real one lost at sea centuries ago)

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:

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

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

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

The crypto bull is back: What are the unexpected catalysts waiting for us?

Most people who follow crypto would probably agree that we are either entering or already in the early innings of the next crypto bull cycle. Just as prior cycles took prices to all time highs over the span of 1-2 years — though with plenty of volatility — I expect much the same behavior this cycle, too.

Like prior cycles, this one seems to sync with Bitcoin’s 4-year halving. Like prior cycles, it also comes after a prolonged and painful bear market full of implosions, bankruptcies, scammers, government regs, and plenty of Twitter fights.

If you’re on Twitter, the dominant explanation for why the worm has turned is the anticipated approval of America’s first Bitcoin spot ETF, specifically Blackrock’s application.

There are other catalysts too such as:

-the anticipated Bitcoin halving cutting new bitcoin issuance from 6.25 per block to 3.125 per block in April next year

-A pause and potential reversal of the Fed’s rate hiking cycle (and stealth QE or as Michael Howell puts it, “quantitative support” 🙄)

-The conclusion of SBF’s (first) criminal trial and the steady forgetting of the FTX debacle (and the Luna debacle and the Celsius debacle and on)

-High and sustained global inflation causing fiat currency holders around the world to look for alternative stores of value

-The crash of US Treasury prices and the prospect of “higher for longer” interest rates causing fixed income investors to seek alternatives

I consider the above as “immediate” catalysts in the sense that if any of them were to occur in a sustained and significant way, it would probably lead to a significant and broad pump in crypto prices. Some of the above are already “priced in” to varying degrees. But not completely, and not to the degree that I anticipate they will materialize in 2024 and 2025.

In addition to the imminent catalysts, I find it interesting to speculate about potential knock on effects, the “unexpected catalysts” per the title, the second order effects that follow on from the first wave.

Just as the rise of Uber (initial catalyst) led to the downstream effects of (a) the decline of the regulated yellow cab industry, (b) the crash in NYC taxi medallion prices, and (c) the rise of on-demand apps for everything from scooters to house cleaners.

These unexpected catalyst and downstream effects are far less likely to happen, but when they do, they can generate enormous volatility in outcomes because they are almost by definition SURPRISES and thus NOT PRICED IN.

I believe the immediate catalysts — and more that I missed — will by themselves propel Bitcoin past its former all time high ($69K USD). You can expect the rest of crypto to catch up as well (just not your shitcoin).

But it’s those unexpected catalysts / un-priced-in effects that could push cryptocurrencies to significant new highs in 2024 and 2025. Though I don’t put much stock in price predictions, my starting assumption for price peak in this fast approaching cycle is $150K Bitcoin and $10K Ethereum, with Ethereum flippening Bitcoin (as I wrote about before) briefly, and that itself also being a second order effect.

So below are some very speculative potentially surprising ideas that could catalyze the late and crazy parts of the bull market:

Microstrategy causes corporations and corporate titans to fomo in
As Microstrategy’s Bitcoin bags explode in value (even at $36K Bitcoin, MSTR is already $1B in profit), leading to record corporate profits, a soaring stock price, and new levels of media notoriety for Michael Saylor, other small and medium tier companies — particularly those in adjacent industries from energy to tech to finance — will adopt a crypto reserve strategy. You could see billionaire tech titans like Masayoshi Son fomo in. Bitcoin will benefit most. Ethereum may surprise too

El Salvador causes nation states to fomo in
The same effect could happen to El Salvador, which becomes celebrated as a new beacon of financial sovereignty and emerging market wealth. President Bukele is feted by innovative politicians (I hope this is not an oxymoron) and small sovereign states, particularly in the Global South, and a race begins for nation states and central banks to buy Bitcoin and other blue chip cryptos. Investing heavily in bitcoin mining is also an indirect approach (eg, Oman, UAE, Bhutan). It’s possible G7 / developed states could also FOMO in, but I think this more likely in the next cycle (circa 2027-2028)

Bitcoin ETF’s success leads to a laundry list of other token ETFs
The Bitcoin spot ETF, after a slow launch, will steadily become Wall Street’s new darling, causing financial advisors and institutions to fomo in, leading to a slew of applications for other crypto ETFs starting with Ethereum. Though most applications could be rejected or at least delayed, this solidifies crypto’s position within tradfi, and tradfi is coming with their big accounts and clever financialization.

Ethereum becomes known as the deflationary currency and the Internet bond
As crypto usage rises (always correlated with bull markets), Ethereum becomes significantly deflationary (it already is, just more so), and along with its anticipated spot ETF approval, this is the cycle where Ethereum will birth its new reputation as (1) the “Internet bond” (first bearer digital asset with meaningful yield) and (2) the first deflationary asset to go alongside Bitcoin’s positioning as the first fixed-supply asset

Bitcoin beating gold becomes the next Schelling point
As Bitcoin easily passes $100K, everyone will turn their attention to what’s next, and what’s next is beating gold. Depending on the estimate you use, that easily puts Bitcoin around $400-500K, which I don’t expect to happen in this cycle… but it could. And it’s what people will talk about in the late bull. People need rallying points and gold has always been a big bullseye

Ethereum will flippen Bitcoin — just briefly
Just as Bitcoin’s main competitor is gold, Ethereum’s main competitor is Bitcoin. I support both and believe a rising tide lifts all boats. In the last bull, Ethereum peaked around 50% of Bitcoin’s value (market cap), and I expect that 50% will be far surpassed this cycle. As this happens, everyone will begin talking about Ethereum “flippening” Bitcoin, and the possibility is not priced in. Though I expect any market cap flippening to be short lived this cycle, but possibly a permanent fixture by the next. I wrote more about that prospect here.

Memecoin mania will return with a vengeance, and MSM will go crazy
I expect memecoin mania to return, despite less global liquidity and a high rates environment. And it will be larger and more degenerate, and no one will expect it. The first $100B memecoin. Maybe even a memecoin billionaire. The mainstream media’s shock and disgust will ironically pour fuel on flame. Elon’s never one to miss a press party, and he will finally launch his own token, somehow justifying the move by claiming synergy with Twitter/X and Grok AI.

That’s it for now. It’s a very incomplete list, but if even a couple of the above surprises were to happen, we could be in for a wild(er) ride. I’ll add more as I think of them or you can yell at me on Twitter.

You could argue there will be plenty of negative surprises and unforeseen headwinds, too, but that’s the thing about bull markets — no one really cares, and everyone just wants to greed while greeding is good. The bad news and the corruption and the new wave of scams will accumulate and build and then push us into the next bear in 2025-2026 :)

Why Ethereum will eventually flippen Bitcoin

tldr: Ethereum’s market cap will surpass Bitcoin’s by 2030

I think that over the next 2 halving cycles, Ethereum’s market cap will overtake Bitcoin’s. I own both assets and probably will for a very long time.

Below are the reasons why I think this will happen. This is a very draft-y article, but I wanted to publish it before laziness or doubt got the better of me.

1. Ethereum is “cheaper” than Bitcoin. Unit bias is real

Investors like lower prices. Lower prices look cheap. Lower prices mean you can own more units. Even if this isn’t logically correct, it’s psychologically true, and this pattern has proven itself in human investing behavior time and again. Why do publicly traded companies do stock splits? Why do meme coins like doge and pepe have such crazy low prices? Similar reasons.

Because Ethereum has ~5x more units than Bitcoin, even if Ethereum market cap equalled Bitcoin’s today, the BTC price per unit would still be more than 5x higher than ETH.

2. Ethereum has unlimited narrative upside. Bitcoin doesn’t

Mainstream media — and the average crypto noob — believes bitcoin to be the new “digital gold”. And beating gold is itself a lofty goal, a good 10-20x higher target than Bitcoin’s current price. I believe Bitcoin will reach that narrative promised land. But where does Bitcoin go after it surpasses gold’s market cap, when it’s worth $500K a coin?

Proponents believe Bitcoin will slowly absorb value from other markets like offshore banking and failing fiat currencies. USD is another $35T. Perhaps Bitcoin could even become the global reserve currency. But that path is primarily political, not technological, and is thus even harder to forecast.

Whereas Ethereum’s sticky metaphors are “digital native computer” and “the decentralized internet” and the “future of finance”. How much is the collective computer industry worth? What about the internet? What about all of finance? And how much will these industries be worth in 10-20 years? Hard to estimate, but the internet itself still has billions more people to onboard. Arguably the upside for Ethereum’s metaphors is unlimited.

*Addendum: In the early days, the common metaphors were Bitcoin = gold and Ethereum = oil. Which one is more critical to societal development and human flourishing? Today it’s clearly oil, but perhaps gold had its moments in previous eras. I’m not sure.

3. ETH pays yield. BTC doesn’t

You may notice by now that many of my points boil down to just focusing on the obvious and not overthinking it.

Ethereum is positioning itself as the Internet’s bond. An internet-native credit asset that pays a consistent and meaningful yield, and investors like yield. Currently it’s sitting at 3% per year.

Further, the global bond market is worth more than $100T, or a nice 400x over today’s Ethereum market cap. Yet another Ethereum comp that is measurably larger than Bitcoin’s digital gold comp.

4. ETH has more use cases than BTC

You can send and receive bitcoin. Those are the two main verbs you can enjoy if you hold bitcoin.

Ethereum has more: You can stake ETH for yield. You can lend, collateralize, and borrow ETH. You can spend it on NFTs and art. You can transfer it between chains and layers.

I’m sure I’m missing other verbs. The pace at which ETH is adding verbs far outpaces BTC’s efforts.

In part, this is because Bitcoin has to some extent sacrificed the potential of its “Bitcoin network” in the interests of preserving the value of its “bitcoin currency”. While Ethereum has tried to balance the needs of both its network and its native currency ETH. Rollups + L2 = needs of network. 1559 and staking = needs of currency.

5. BTC is moving to ETH, but not vice-versa

In some ways, Bitcoin is a financial black hole, sucking the traditional finance world’s monetary energy onto its blockchain. But in crypto itself, ETH is the black hole for BTC. Zoom out, and the growth in wrapped / bridged forms of BTC on Ethereum is clear and consistent.

It’s relatively straightforward to buy and own bitcoin on Ethereum. With that collateral, you can then participate in all of Ethereum’s verbs.

But you can’t do the reverse. There is no method I know of, to move ETH onto Bitcoin’s blockchain. And why would you? You’d be missing out on all of ETH’s verbs and ETH-native staking.

6. ETH has narratives that normies like

With the transition to PoS, ETH is positioned as an ESG friendly asset with a small carbon footprint (unlike BTC with its “miners use more electricity than a large country” false equivalence).

Ethereum has a publicly known and generally liked genius “founder” in Vitalik, who is both very prolific and very measured in his actions. (Unlike BTC with its anonymous founder with the Japanese pseudonym and dogged rumors of a connection with US central intelligence)

Ethereum generates significant and growing revenues, which makes it easier for tradfi to model and value. This helps to tell the Wall Street story. This also gives Ethereum a more sustainable model for blockchain security — while BTC is still reliant on new token emissions.

The ETH ETF trade: if Bitcoin’s ETF is approved, it follows that the same institutions will apply for — and probably get approved — an ETH ETF. This may take a year or more, but the expectation is there and the same pattern has played out with the ETH futures ETF and ETH’s global regulatory acceptance.

Normies understand and use stablecoins. Everyone wants more (US)dollars.  Stablecoin growth will predominantly occur in the ETH ecosystem (and TRON, but let’s not go there). So to use USD or EUR onchain, most normies will likely familiarize themselves with Ethereum and hold some ETH to conduct onchain transactions.

7. ETH actually has LESS regulatory and geopolitical risk

There was a moment there where the SEC wanted to classify ETH as a security. But I think that moment has passed, the risk is now lower in the current US political environment, and this improvement is not priced in.

On all other dimensions, and especially ex-US, Ethereum has arguably less regulatory and political risk. Reasons include, to repeat myself somewhat:

-ETH’s position as an ESG-friendly and sustainable asset

-Bitcoin’s direct competitors are fiat currencies like USD and RMB. Ethereum is more about new internet infrastructure and new financial architecture. Bitcoin competes with nation states, while Ethereum arguably competes with FAANG and banks. Which one worries the politicians more?

-Bitcoin is often called “digital gold”, and the US has banned gold ownership before

-The squeaky wheel gets the grease. Bitcoin is currently the largest and best known cryptocurrency. Bitcoin offers more political points and more at stake for politicians and regulators. For now.

8. It’s not Web3, it’s EVM3

Web3 has been memed to a timely death. But there’s a new 3-letter in town and that is EVM. In other words, Ethereum’s core technology has essentially won the L1 blockchain wars. L1s are the foundation for the decentralized web, and so Ethereum the brand, the tech, and likely the ETH blockchain and $ETH token itself are essentially the basis for whatever we want to call it: Web3, the decentralized web, the new internet, the distributed computer, the blockchain economy, etc.

Aside from Solana, no one talks seriously about competing layer 1s anymore. Every blockchain is slowly becoming a spoke to the ETH hub. Because ETH is where all the value is, where the users are, where the tech innovation is, and where you have access to the most verbs.

Bitcoin’s technology has largely ossified, quite purposefully, and as mentioned before, all the innovation bright spots (like Ordinals, Lightning, Sidechains) lag ETH development by 1-2 cycles.

There’s a lot more that I haven’t covered, and I could probably write a passable if more stretched case for why ETH will never flippen BTC. But the above is what I think *likely* to happen. My bet is that ETH briefly flips BTC this cycle (like late 2024 / early 2025), then it falls back below BTC again during the next bear, then ETH will securely take the top spot in the 2028 halving.

*I’m setting a calendar reminder to come back and review this every 6 months (next up is April 2024)

**I used DALL-E 3 for the lead imagery and I am blown away…

Is money always remade by powerful new technologies?

roblox-robux

In Lyn Alden’s fantastic new book Broken Money, she talks about the natural arc of money towards increasing “hardness”. Any time there’s a new form of money — say, like rare pearls — the ingenuity and incentive of humanity is to find a way to “break” that money by, for instance, developing new ways to harvest and grow the oysters, or manufacture fake replicas, or travel far distances to collect more for less effort. In her (and others’) estimation, this is perhaps the primary reason gold has remained the hardest money for thousands of years. It still hasn’t been broken — but that could change in the future if, for example, we developed asteroid mining or found massive new gold mines.

Anyway, it got me thinking that perhaps new technology is what really drives the development of new money. Gold is an outlier, and we just haven’t yet developed the technology to enable cost-effective gold production or scalable asteroid mining.

The question I’m asking myself is something like — do powerful new technologies almost inevitably lead to the creation of new monies? I use the word “technology” in the broad sense, to quote one of my favorite simple definitions, “technology is anything that breaks a constraint”.

A brief and incomplete history of money follows:

Nature’s commodities eg, shells, teeth, shiny rocks – these required the (then novel) technologies of finding, harvesting, cleaning, storing

Metal coinage – the technologies of mining, smelting, minting, verification

Paper money – the technologies of paper making, writing, printing press (printing @ scale), counterfeit methods

Fiat money – the technologies of nation states (that could organize, distribute, and track it at great scale), distribution networks, telecommunications networks

Bitcoin / Ethereum – the technologies of the internet, cryptography, encryption, digital mining, distributed systems

All of these new monies were the products of new technologies, which both enabled their creation, while also rendering older forms of money either “broken” or inferior.

**On a somewhat related note, think about in-game currencies like Robux in Roblox. The game of Roblox is not a new general purpose technology, but rather an application of many technologies, yet it is cutting edge, and though Roblox the game doesn’t *require* Robux the money to function, it feels like a natural moving forward, in much the same way that humans evolved to prefer burgers and bagels though we could technically eat nuts and plants

Alright I’ve rambled enough. Just wanted to get some thoughts down on blog.

I ask the question because for me, the above conclusion implies that as powerful new technologies are developed, they may inevitably lead to the development of new kinds of money. On the horizon I see technologies like AI, VR / metaverse, bioengineering, and many others (known and unknown). And aliens, of course. Hopefully wise and peaceful ones.

🤔🤔🤔