Part 0: What really is crypto?
"Crypto" is now 100% verbalism and doesn't mean anything. Full of scams, there are only four things that really matter.
What even is “crypto”?
What everyone refers to as “crypto” is not one thing, but a collection of many things lumped together. Even the terms most people use to describe crypto have kept changing ever since crypto first became a thing in 2008. Terms, among others, include (in rough chronological order): “Bitcoin”, “Cryptocurrency”, simply “crypto”, “blockchain”, “digital ledger technology“, “blockchain but not crypto”, “digital gold”, “tokens”, recently very popular “web3”, “CBDCs”, and somehow also “metaverse” (??), and now back to “crypto”.
All these words don’t always refer to something new or separate. Sometimes there are overlaps, sometimes they’re completely different things wrongly clubbed together. That’s a problem. Some of these things are not even real. But some are, so it becomes important to draw the lines and separate out the real from the scam.
[Today the era of “web3” is over, and the term of choice is “crypto” again. It’s one of the oldest terms and keeps coming back to the forefront after every hype-cycle. Bitcoin is probably the oldest term, but there are enough non-Bitcoin things that feel real now, so its fair to not consider it as an omnibus term anymore. For ease, throughout these essays I will use the term crypto too.]
Verbalism
In an upcoming book, Taleb defines Verbalism as the following:
“Verbalism is the use of terms both central to one's discourse and devoid of rigidity of meaning; their meaning can change with context or circumstances.”
Useful examples are "freedom of speech", "globalist", “fascist”, “Western Civilization”, etc. For a variety of reasons these terms are always under some debate.
This sounds a lot like what has happened to “crypto”. For a term that people use to refer to a set of things, it surely has ceased to mean anything specific. It means everything and nothing at the same time.
“Crypto” is verbalism
Crypto is and isn’t cryptocurrency. E.g. Lens Protocol & Metamask are crypto projects but not cryptoCURRENCY, i.e. there’s no token.
Crypto is and isn’t cryptography. E.g. Passwords and PGP are cryptographic but not crypto.
Crypto is and isn’t decentralized ownership. E.g. Circle is a crypto company but is privately owned and not decentralized.
Crypto is and isn’t anonymous and censorship free. E.g., CBDCs are a whole new can on worms best not opened right now.
So what does crypto mean? Does it even mean anything?
Then what really is crypto?
To understand what’s actually happening here, what is a scam and what is real, it’s important to separate out each of these things from within “crypto”. Once we can untangle them, give them different names, only then can we really identify value, have clearer conversations and create better regulations. Only then do we move on from the omnibus “crypto fixes this” to definite optimism.
Accordingly, I think crypto is just four main things. The whole crypto world stands on four pillars, where all the real value is. If crypto vanishes tomorrow, this is what the world will actually miss out on.
Payments: The most advanced payment system, that’s global, internet-compatible, uncensorable, and works at the speed of light.
Legal: Unprecedented expansion of the Overton window and reduction of cost of securities law & offshoring experiments.
Ownership: Tokens are ESOPs on steroids. Its Ease and liquidity create new incentive & rewards structures, collective ownership, and decentralized systems.
Culture: Internet and open source culture meets the workplace and wrote a playbook for the future of work.
Each is very important on its own, and on its own hold the ability to take crypto to real “mass adoption”. Over the next few weeks, I will write more about each in some more detail.
Each of them contain a definite optimism, i.e. specific ways in which we can see the future therein being much better than the present, better than everything that came before it put together. As of this writing, we’re just crawling out of the what seem like the worst depths of indefinite pessimism. When crypto completely fell off the hype cycle, entered a “bear market”, and when everything made it seem like there is no good way forward for crypto. It’s the right time to figure out what’s worth paying attention to at all.