To appreciate this crypto winter in context, it is helpful to analogize it to the boxing career of Muhammad Ali.
Ultimately the story of Crypto will be glorious. It will include World Championship highs and a few knockdowns. It will include political drama and great moments of humanitarian compassion. Crypto will ‘Shock-The-World’ with the power of open finance and it might even suffer regulatory humiliation as Ali did when his belt was stripped for refusing the draft.
We recently saw one of the largest setbacks in Crypto’s 13-year history. We saw Terra/Luna go from the most valuable alternative L1 behind Ethereum to the complete evaporation of $Billions in value. The failure of an ecosystem is one thing, but the loss of supposedly ‘stable assets’ due to extreme hyperinflation is another.
Many pundits are reaching for their microphones and keyboards and started preaching an obituary for crypto.
However, in the grand scheme of things, crypto is still in the Cassius Clay phase of its career. In fact, it’s the 4th round of the Sonny Liston fight. Cassius cannot see because Sonny managed to rub lineament in his eye during the clutch.
The mitts contained an illegal substance that can be blinding if it gets in the opposing fighter’s eyes. An old professional fighter’s trick.
Cassius yells at his coach to cut off the gloves as he believes someone is trying to poison him and fix the fight. However, Angelo Dundee isn’t about to cut off Clay’s gloves in a Heavyweight Championship bout. As the bell rings for round 5, Dundee pushes him forward back into the ring.
“This is the big one, daddy. We aren’t going to quit now! . . . Run until your eyes clear! run!” - Angelo Dundee
Like a young Cassius Clay, blinded in the ring with one of the meanest and toughest heavyweights in boxing history trying to take his head off … crypto is in trouble. But by no means is it out of the match.
In fact, like Cassius Clay, crypto will soon clear its eyes, get its legs back underneath it, and start using its jab to snap back the head of its centralized adversaries.
Soon, the Central Banks will have trouble answering the bell … and a young Crypto Clay will Ali Shuffle to the center of the ring and shout to the camera … I MUST BE THE GREATEST!!
Evolution
Nevertheless, the events of the past week provide time to reflect on the story of crypto. Just as we need an iteration of decentralized stablecoin design, we also need an iteration of the crypto narrative. The general population views crypto as a speculative casino, rather than a tool for empowering humanity. This largely is the fault of crypto natives, who allow crypto’s focal point to be coin speculation and 6-7 figure cartoon rocks.
The public and regulators need to understand crypto may be at the beginning of what will be a great story not just for technology, but for all of humanity.
I believe crypto can achieve this transition by evolving from the brash, braggart, and me me me nature of Cassius Clay … to the humanitarian freedom fighter, Muhammad Ali.
Less cocky, more impact.
Less speculation, more freedom.
Sovereign Money
While growing up, my father went through a serious Andreas Antonopoulos phase. My brother and I listened to hours of interviews burned onto CDs as we drove to boxing practice. It was the philosophical implications of decentralized banking, not the speculation on a token, that was most intriguing. The growing movement to develop a monetary system formed outside the supervision of the state was a revolutionary and worthy ambition. Andreas often referenced Austrian economist Friederich Hayek. Hayek argued that the best monetary system would be one that replaced government-issued currencies with currencies issued by private banks.
Source: Denationalization of Money, Friedrich Hayek
Although seemingly radical in hindsight, the impact of sovereign money on society piqued my curiosity. It was a loftier aim than the potential for financial upside. A genuine revolution to fight for and stand behind.
At that point in my life crypto represented a potential path to real freedom.
To bring crypto mainstream, more people will need to have the equivalent of their ‘sovereign money’ moment. A powerful narrative that attracts them to crypto beyond the scope of financial upside.
There seems to be this underlying assumption in Web3 that the financialization of everything is a powerful enough tool to attract users and advocates to the space.
If we take a look at the lessons learned from behavioral economics we realize that human behavior isn’t necessarily predictable. People are extraordinarily oblique and strange in their behavior. Logical incentives often have the opposite effect.
As Rory Sutherland so eloquently stated, paying people to perform creative tasks, rebrands that activity as work and makes people less keen to do it.
“If you actually reward children for painting pictures, they actually stop doing it earlier than children who are doing it for fun.” - Rory Sutherland
Likewise, simply applying token incentive structures won’t result in the adjustments necessary for mass adoption. In a field so embedded in mass financialization, a new narrative is required. A narrative that motivates individuals to stick around through market cycles. A narrative that will motivate people to combat the power of legacy systems to ensure crypto’s survival.
Instead of prioritizing truly impactful ideas, most crypto discussions revolve around short term speculative gain. Crypto Twitter is a comfortable home for ‘degen’ discourse. When the most impactful stories coming from your industry are expensive limited addition JPEG monkeys, it’s no surprise that crypto naysayers believe this movement will not have any real impact.
How can we transform this industry from an emphasis on short-term speculation to real-world social impact? Promoting the development of the developing world? Creating a more fair and more inclusive society? Empowering opportunity? All of which it has the potential to achieve.
The New Crypto Narrative
Going back to the story arc of Cassius Clay, crypto’s transitional narrative could be akin to Clay’s progression to Muhammad Ali. The Boxing champion who stood for true social impact. The man who sacrificed his career by refusing induction into the Army at the height of the Vietnam War. The man who was effectively banned from boxing for three and a half years, was stripped of his passport, and unable to obtain a license to box in any state.
I believe crypto can have that future. As Richard Kim mentions in ‘Warm Crypto’, ‘how sad would it be if this whole movement were ever only about money and status’ when it has the potential for more. Web3 builders should spend less on speculative ponzis and more time on ideas that can impact humanity. Mass adoption will come as a side effect.
He lays out three areas of focus:
“How crypto can be used to create millions of jobs in the digital realm, how it can create real world social impact, and how it can kindle our passions and drive us to connect with meaningful communities.” - Richard Kim
I believe these concepts individually or intertwined will help propel the space forward. An example of real-world social impact and economic opportunity would be protocols innovating in both the digital and physical realm. Or as Peter Thiel would say, innovating in the world of atoms and bits.
Yield Guild Games and the rise of gaming guilds converge the digital and physical world. Guilds transform atoms (legacy jobs) using bits (games). These projects have pioneered real employment in the digital economy.
Another example would be Multicoin’s Proof of Physical Work thesis, which emphasizes crypto’s ability to create incentive structures in the physical world. These projects incentivize individuals to build real-world infrastructure. They leverage token incentives to create economic opportunity and real world social impact.
Proving to crypto naysayers that this technology can create real world social impact, create employment in the digital realm, or help develop the developing world, will transform crypto in a positive light. The new narrative should provide people with their individual ‘aha moments,’ … in which they begin to appreciate the potential of this technology. Besides, it’s time crypto transitions from Revenge of the Nerd’s to It’s a Wonderful Life.
Moving Forward
An alleviation from short-term speculation to societal impact will bring crypto mainstream. It is the job of the investors, builders, and users developing this industry to lead by example, and not let the fast-moving nature of this space lead us astray from the prospective future of this movement. A renewed focus on prioritizing economic opportunity and social impact, developing the developed world, and connecting with meaningful communities should drive us forward.
Despite the trouble over the last couple of weeks, Crypto can still have the magnificent career of the great Muhammad Ali. We must ensure that the story of crypto includes the triumphant moment of Ali lighting the Olympic Flame, rather than the conclusive regulatory landscape of Joe Frazier's left hook.