What precisely is crypto for? Not really a question I’d mulled hard over personally as a “normie,” before the summer of 2022. A former journalist and avid news reader, I was more informed than most, or so I supposed. Really, though, I had only paddled through the cultural swells gleaned from New Yorker features, late night bar conversations with strangers, and general misunderstandings about the efficacy of NFTs. I knew who Sam Bankman-Fried was — and what he looked like — but only glancingly.
Fast forward to an opportunity to take on a position as head of communications at a venture capital firm, Standard Crypto, that specialized in exactly what the name says: Crypto. Or blockchain if you prefer. Or decentralized protocols, if you’re a native. (Excuse me, as I sling some lingo.)
Before I took the job in late October (and they agreed to take me in turn), I did a journalist-style deep dive into the sea of decentralization. I was fascinated. Look beyond the headlines, I realized, and the ecosystem was creating an up-leveling of the web, and generally aimed at empowering regular people over corporations.
But by November, the tidal suck of crypto winter was already dragging the entire industry toward the cresting wave that would become the tsunami of FTX. (One of my early learnings: FTX was never a true crypto company anyhow. It’s an offchain business, so actually pretty traditional, whereas the decentralized finance (DeFI) sector worked exactly as promised.)
"If you accept that the internet is a real thing [with] very real outcomes, then you’ve got to think that the ability to own something on the internet is also very important”
True to crypto form, there is never a dull moment. Just in the last couple of weeks, there have been any number of sizable moves against crypto from the U.S. powers-that-be, from the FDIC mandating that any potential buyer of the New York-based Signature Bank give up its crypto business, to the SEC’s saber rattling against U.S.-based Coinbase via a Wells notice.
Should any of it matter? I mean, surely it does to my firm, and our dozens of portfolio companies, and the many thousands of people working in the ecosystem, and the millions who have invested. But if you can’t prove crypto’s basic efficacy, isn’t it easier to simply agree with the many voices out there decrying it as a scam, or evil, or, somehow worse — simply pointless?
Recently, I had a drink in downtown NYC with Michael Ippolito, the co-founder of the crypto media brand Blockworks, and he mentioned that everyone he knows in crypto had their own “a-ha!” moment — when crypto’s worth clicked into place for them. He asked me about mine.
It happened during one of my long, early conversations with my firm’s co-founders, Alok Vasudev and Adam Goldberg. Alok was talking about the importance of ownership historically, and how the advent of property rights specifically had helped advance modern civilization.
Suddenly you could own your own house. You could also leave that house, lock it up, and return to it, and expect that nobody had forcibly moved in with the claim of “finders keepers.” (Bloomberg’s Matt Levine made the same basic point in his massive Businessweek crypto treatise: “Owning a house means the government thinks you own the house, and if someone else tries to move in, then the government will kick them out. Homeownership is mediated socially by a government. The database is a way for the government to keep track. You don’t have to trust any particular person; you have to trust the rule of law.”)
That sense of ownership, in the digital realm, is key. “If you accept that the internet is a real thing, and that it is where we live a lot of our lives, and that it has very real outcomes,” Alok said to me, “then you’ve got to think that the ability to own something on the internet is also very important.”
Dude. Yes. Totally.
Because right now, you and I are just squatters: Serfs serving the feudal kingdoms of King Alphabet and Monarch Meta. (Whom it should be noted don’t get along any better than most any other of history’s rival kingdoms.) We don’t own our digital house, or anything in it, really.
When we’re talking about decentralization, what we’re actually talking about is releasing our digital selves away from serfdom — digital rights! — a very basic right that is easy to overlook
Let that idea sink in for a second. Wouldn’t it be nice to actually own the digital stuff you buy, or have invested your time in, on the internet? For instance, remember when you used to own music? You could go to a store and resell a CD and get back dollars for it?
Excuse me as I age myself, but as I learned back in the day, the albums I thought I owned on Apple’s iTunes would suddenly disappear from my library. The same thing with movies or books that I’d “purchased” on Amazon Prime. That list of “friends” I once cultivated on Facebook is an amazing rolodex of former colleagues, but I have no wish to actually go on Facebook and serve that kingdom, thank you. Twitter? I’ve got thousands of followers, but I can’t port them to another platform. See, just another serf who has signed away almost all rights in the endless scroll of an User Agreement.
When we’re talking about decentralization, what we’re actually talking about is releasing our digital selves away from serfdom — digital rights! — a very basic right in this age that is easy to overlook.
How do you prove you own something digital? Well, yes, by way of non-fungible tokens (NFTs). NFTs aren’t in fact dumb, and in many ways the least technologically innovative aspect of them is when they are treated simply as art. (Though something called generative art is hella cool if you ask me.) The blockchain allows you to prove something unique is in fact uniquely yours. Digitally. Which is far more verification than you’ll get buying many material goods, such as a second-hand Birkin handbag.
The power of decentralization can manifest itself in all kinds of ways. One of which is to enrich creators by investing in them directly rather than giving a percentage of the proceeds to an intermediary — ie, a big digital corporation. In our own portfolio, we’ve got protocols that do exactly that. Audius is a music site where musicians interact directly with fans, and Farcaster is a decentralized social network where users control their data, feed algorithm, and app interface.
Yes, But wait! What about tokens? And all the financial stuff we constantly read about? That stuff is all very real (or sometimes not), and a major part of what makes up crypto. But the parts of crypto that most electrify me are the ones that traffic in ownership.
Speaking of very real outcomes in the digital world, I’ll leave you with this: as ChatGPT and all its derivative AIs are truly upon us, the number of deep fakes and bots and manufactured voices coming from the digital wilderness are going to be overwhelming. How will you be able to prove who you are, digitally?
Wouldn’t it be great if a number of great minds had been working for a number of years on a digital system of trustworthiness that can uniquely identify a unique thing? (We’re going to be hearing a lot about proof of humanity soon, I bet. Here’s a quick primer if you’re interested.)
For those looking for a killer crypto reason for existing, this digital proof of humanity just might be the gateway that many didn’t even know they were looking for. Ultimately, a redistribution of trust and power back to regular people is a pretty compelling argument. Many of us may find our “a-ha” moment after all.