A while go, maybe a year or two back, I wrote an article about Web 3.0. Or at least what I thought it was at the time. Between then and now I’ve continued to explore the crypto landscape and have been studying Bitcoin. So much so that I’ve exited all of my other interests from the Web 3.0 stuff and gone solely into Bitcoin. Those who’ve gone before me call this going down the rabbit hole. The process of learning about this novel use and mix of several powerful technologies (developed over the past 70 years or more) has one finding themselves looking at the world through a new perspective. This is referred to as being Orange Pilled.
Bitcoin is an interesting subject for me, like how I once went down the rabbit hole of yo-yoing when I was 13, it feels fitting that 20 years later I’d go down another rabbit hole for similar reasons. Yo-Yoing is one of those throwaway hobbies not many but those who practice it find any value in. Well-meaning but ignorant strangers, acquaintances, and sometimes family, will tell you, “You spend all your time playing with a toy, why are you wasting your life? Get a real job.” Meanwhile they spend their every evening drooling into the couch as reruns of shows they’re too uncomfortable to outgrow drone on in the background. Yo-Yoing has(had) an underground online community of hobbyist across the planet. Every country seems to have a group of them practicing the craft and periodically they’ll hold community meet ups or competitions to see who has the most skills at that time. Some don’t like the competition side of it, but that’s fine. Like any rabbit hole worth its quarry, there’s many branches and chambers containing rewards to explore.
So what is Bitcoin then? It’s a very complex subject. It takes time and effort to understand it because like I said above, it seems to require a perspective shift to understand and appreciated it. Especially if you’re a judgmental person who struggles to mind your own business. Kind of like the blur of people who told me I waste all my time yo-yoing, a lot of the world looks at something like Bitcoin and thinks, “That’s such a waste of energy, why would anyone do that? Shouldn’t that energy be stored for something better like a hospital or soup kitchen?” They don’t know why it was created, they don’t have the life experiences of struggle where holding on to anything of value becomes impossible because of the constant phone calls from debt collectors. They don’t know what it’s like to stand in line waiting for diapers and being told this is the last time you can ask for help here. They have their comfortable lives, they feel fulfilled and entertained and probably have a good sense of purpose. Why would they want anything to do with this internet money that people seemingly have lost their minds over?
They don’t feel the pain of your bank account suddenly being negative right when you were checking out the lentils and ramen. Or how no matter what you do to save up some economic energy it constantly gets drained away by an irresponsible and emotionally abusive partner. How you can’t even open a bank account in an attempt to follow the advice of folks like Dave Ramsay or the book The Richest Man in Babylon because your current bank has you blacklisted in the area till you fix the overdraft you can’t possibly fix because you’ve just been fired and now have to use the wire service at the grocery store to pay your electricity, which gets shut off anyways because it arrives late. Which comes with a reactivation fee, by the way.
Or maybe they do and they’ve simply forgotten the pain now that it’s a few miles behind them. I remember my pain. I try hard not to dwell on it. Honestly I thought one day I’d write about it to help make that moment of my life bearable. I never did.
But now I’ve found this thing called Bitcoin. At first I thought it was internet money. I didn’t understand why it wasn’t pegged to the dollar or why anyone would want to use it. I didn’t care that people were; as a tech enthusiast I love new things and cool ways of doing things. But back then it was just a word. I wasn’t aware of any depths to it. I remember a friend from high school reached out to me because of it and I ignored the message because it was also when everyone else from high school was trying to get me to join their multilevel marketing schemes. In an effort to avoid all annoyance I sadly missed one of those “once in a lifetime” opportunities. At least that’s what everyone says when they finally understand.
So where to start? It’s a protocol. It’s a ledger. It’s a commodity. It’s property. It uses a system called “proof of work” to secure its network. It’s decentralized in that there are thousands of individuals running nodes all over the planet validating transactions. It’s permissionless. Protean in nature. Uncensorable. Unstoppable. And it taught me everything I thought I knew about money for the last 34 years of my existence was wrong. It showed me why everything was getting so expensive. It showed me how the people I trusted to protect my funds were messing with me. It showed me how I could maybe save some economic energy for later rather than scramble to feed myself each and every day. It also taught me that scarcity is important. There will only ever be 21 million bitcoin.
I know now this isn’t simply going to be one article. The rabbit hole is too deep. Everything I write shows me both holes in my knowledge which will require more research, and presents more questions I know I’ll need to answer. What do I mean it’s all those things above? Well to be honest it’s even more than that. That’s just what I could think of off the top of my head.
Some of the people I’ve listened to teach about Bitcoin think of it like your own Swiss Bank in your pocket. I heard that (or similarly phrased utterances) from the likes of Andreas Antonopoulos, Michael Saylor, Guy Turner, and Peter McCormack.
Some of the people I listen to like Jason Lowery think it’s the next age of warfare. Going as far to shame the old WW1 general who thought airplanes were toys and not worth anything as far as war is concerned in his thesis where he equates those planes then to bitcoin now. He talks about how nations might use this system as a sort of Softwar. Where you’d fight with watts of electrical power rather than using the physical power and cost of human life.
Others think it’s the future of money. That it will replace these weak government backed currencies which are easily manipulated (whenever they need a few extra bucks to buy your votes) with something requiring real work to create. People call it digital gold. A store of value. Some call it an inflation hedge but according to Parker Lewis it’s not a good one. Especially in the short term.
Who controls it? All of its participants control it. Who created it? A pseudonymous figure who went by “Satoshi Nakamoto”. When did they create it? A few days before my birthday on January 3rd in 2009. Why did they create it? The central banks printing money, the housing crash, the bailouts, because they could, etc.
What makes it different than just using PayPal, Venmo, debit/credit networks, dollars (or your flavor of fiat currency), or another “cryptocurrency” like ethereum, Solana, Cardano, xrp, link, etc etc etc? So many things. Payment processors require middlemen to facilitate the movement of money between parties, consumer and business, or b2b. Along the way every hand that moves it takes a cut, and when it arrives at its destination it can be taken back from you if for some reason a person along that chain decides they have an issue with you. In the processor world that would be called a chargeback. Merchants hate chargebacks. They equate it to someone coming and taking the food out of their children’s mouths. And in the case of most local ma and pop shops, it’s exactly that. The merchant service providers offer themselves as a trusted third party. But that doesn’t mean they can be trusted, and anyone whose going through the headache of proving you actually sent that rare collectible with a tracking label on eBay just to have them dispute it never arriving knows this.
What of the other cryptocurrencies? Wasn’t I praising Ethereum and NFTs the last time I was here? Yes I was. I still think it’s interesting, and I truly enjoyed my time exploring NFTs. I think of them as html (hypertext markup language), or what you used to build websites out of before web hosts started giving you prebuilt skeleton sites. Just a platform or something you build on. But after I went down this adjacent and more traveled rabbit hole I started having some doubts about how exposed I was to it and why. Ethereum originally was also a proof of work network. A little while ago it pivoted to “Proof of Stake”. At the time I remember staying up all night with folks on Twitter, celebrating the change. I thought this would finally get the environmentalist types off its back and the network would allow my old friends to see the light. The digital world was where I spent all my time after all, why wouldn’t value in those lands be apparent to anyone but myself? But by then the term NFT had taken on a negative vibe by the general public. Artists I hoped would begin publishing their work on ethereum so I might collect a digital copy of their amazing work would not come.
This saddened me because since I was 19 or so I have been into this concept called minimalism. I try not have have a physical object unless I really need it. When I don’t I get rid of it. I loved the idea of being able to both support an artists’ passions as well as being able to keep a memento of that support in my digital wallet. You see, NFT means Non-Fungible Token. In otherwords it’s provable via a public ledger that it’s a unique token, or at least its hashing is unique. The image, video, music, game asset, contract, diploma, etc. might have multiple copies of itself available. Sort of like a limited print run of posters, signed by the creator. The original piece would be worth far more than the prints but prints are a great way to support someone whose work or skills you admire without having to break the bank. And the cool thing about prints is if your artist friend one day becomes the talk of the town you might be able to eBay that poster for a profit. Or simply feel pride in your great taste way before anyone else knew about it. Not everyone thinks like that of course but it was what made me think NFTs were a great technology. Additionally because they were on a public blockchain anyone with the knowledge of how to use a block explorer could verify that a token was authentic. Another cool feature was that the person who created the token had the option of programming it. If it changed hands in the future for funds, the creator could program a royalty into the token and receive some ongoing benefit for their past efforts.
A lot of musicians, writers, and Hollywood actors have had this benefit for ages because they or people who cared built systems around them to enable that to be so. (Lawyers, studios, etc.) NFTs were a way to do this without needing those middlemen. And so, if I was so excited about it, what changed my mind? Proof of Stake.
Proof of Stake is a system wherein you take a portion of the digital currency from the network it comes from, and lock it up to not be used for a period of time. In exchange for doing this, stakers have the opportunity to help facilitate the updating of the network’s ledger. In exchange for their willingness to lock up their funds and also do the work of creating a valid block of transactions (should they be selected to do so) to move the network perpetually forward, they get to earn a fee from those transactions. This to my understanding was picked at random. Essentially it has become a pay to play system, where if you have enough money you can buy 51% of the network or more and take over the whole system. To keep people from doing this there are punishments that happen should a bad actor be caught. They can have their stake slashed and burned, and their real money goes away.
Okay, if there’s consequences, why’d I stop doing it? There’s another aspect of these systems that also use the networks tokens. It’s the governance structure. On ETH they’re called DAO’s. Decentralized Autonomous Organizations. Typically one token equals one vote. So early participation is heavily rewarded. Or unfairly precreating tokens and distributing them to investors is common. Meaning that if you bankrolled the development team of some new token or nft project they might give you a big batch of the tokens as a way of saying thanks. In the securities world I think this would be considered equity. The more I learned about token distribution and the more I learned about Bitcoin the less I liked the way the other networks operated. If you happened to be a famous twitter personality some projects would gift you large amounts of tokens without asking just to make it look like a valid project. When the community spied one of those tokens in the famous persons wallet (yes it’s public), often the floor price of the project’s tokens would explode, and the creators of them often would sell a bunch of them. Also if someone wanted to take over a DAO and had enough money to buy all the votes, they could vote themselves the DAO’s treasury.
I found a few projects I believed in back then. And though I’ve divested from them now I still do think they are good people and are building interesting things for enthusiasts of the industry. Maybe they’ll last the first few years and truly be whatever Web 3.0 was supposed to be back when my eyes were still wide and starry. But there was so much time required by me to stay on top of the happenings of that space that a few days felt like a month and a month felt like a year. Being that I was watching the industry I was constantly in twitter spaces, listening to podcasts of prominent industry figures, and eventually I found my way to Michael Saylor. I think it was on his Lex Fridman interview. I had been binging his show back then, back when it was more technology focused, before it was a pop culture thing… I’ll see my hipster self out…
I think this is a good enough place to pause, that’s a bit of a data dump. I will go through it again later and think about where to focus next time. Please let me know what you want me to write about on this subject if anything specific caught your eye and you want to know more. At this point I’m not anywhere near being an expert. I’m just hopeful that my various life experiences and my perspectives will give you a chance to see what I think I see. And what several millions of others think they have seen.
Here’s one last thing. I mentioned about my yo-yoing hobby, how it had communities all around the world. Another side effect of that was you felt like you had friends all over the planet. You didn’t hate anyone from anywhere because “they were from there”. You judged them by how they treated you and others on the forums. Or gave them grace because they knew sick tricks. Bitcoin feels like that. NFTs did feel like that at first. But Bitcoin has that same feeling. And I think that’s another piece of why I was drawn to it. I don’t really engage with the online community. Last year I made the choice to focus on my family and my website. But if that’s something you look for it’s worth knowing it’s there.