The Only Crypto Story You Need, by Matt Levine

A financial system is good if it makes it easier for farmers to grow food and families to own houses and businesses to make awesome computer games, if it helps to create and distribute abundance in real life. A financial system is bad if it trades abstract claims in ways that enrich the people doing the trading but don’t help anyone else. (View Highlight)

Bitcoin are generated by mining; there was never an initial allocation of Bitcoin to Satoshi Nakamoto or to early investors or anyone else. This is the answer to the question of where Bitcoin come from: They were all mined. (View Highlight)

Crypto built an efficient system to make the customers of a business also its shareholders. (View Highlight)

There are efforts to set up DAOs using normal legal techniques and getting limited liability, but it’s early (View Highlight)

Other DAOs are just weird larks. ConstitutionDAO made some headlines in 2021 for raising a bunch of money from crypto investors to buy a copy of the US Constitution. They failed to buy it, did some DAO voting stuff on what to do next, and ultimately returned most of the money (minus gas fees), and shut down. It was a quick way for people to pool their money online to have fun together. It was a Discord chat with a pool of money. (View Highlight)

When issuing a tradeable NFT, an artist could issue the NFT from their Soul,” says the paper, beautifully. It would be amazing if theology could be replaced, or perhaps solved, by cryptography. A person’s soul is nothing more than the things and people that she loves, the people who love her, and the impact that she has on the world, and we’ve encoded it on the blockchain, here it is. It would be a bummer to lose the private key to your soul.37 (View Highlight)

if you’re buying a Walmart gift card with your billions of dollars of stolen censorship-resistant currency, then your money laundering is not going w (View Highlight)

One possible future is that the world will be increasingly like that, at least for some people.40 Technological progress will make the basic necessities increasingly abundant and also less fun, the physical world will become more homogenous and boring, and everyone will spend more of their time online. Their friendships and romances and family life will occur on computers; their lives will get meaning from stuff that happens on computers. (View Highlight)

Note: xiandao is essentially taking the other side of this bet

I’m sorry to be This Type of Guy, but it’s hard not to think of the movie The Matrix. You know the premise: Everyone is a sack of meat in a bath of nutrients with their brains plugged into a remarkably realistic simulation of late-’90s America. Why a remarkably realistic simulation of late-’90s America? Why does Neo, the main character, have to go work at a boring desk job if he’s just a brain in a vat being fed a soothing simulation by the machines? Agent Smith explains: (View Highlight)

So they simulated late capitalism instead. Even in a world where all the goods are digital and available in limitless abundance, you still have to have a (simulated) desk job to pay for them. Digital scarcity. (View Highlight)

The main investments are 1) starting or expanding a business and 2) buying real estate (View Highlight)

if you deposited money in that bank, you had a senior claim (the deposit) on a senior claim (the CDO tranche) on senior claims (the MBS tranche) on senior claims (the mortgages) on houses. (View Highlight)

A key lesson of crypto is: A bunch of people can get together online and make their community have economic value, and then capture that value for themselves. If you explain the mechanism for that, it sounds even worse. “Well, see, there’s this token of membership in the community, and it’s up 400% this week. Also the tokens are JPEGs of monkeys.” But look, pretty soon, what are we going to sell to each other? Online communities are valuable. There’s money to be made. (View Highlight)

But we’ve only really seen the boom. The problem with making every product also a Ponzi is that you can’t be sure if your customers are there for the product or the Ponzi. When it collapses, you can. If they’re still there–if they still use your product without getting rich off the token–then that means your product is promising (View Highlight)

Here’s another way to tell this story. There’s the real world, and people do stuff in the real world. They grow food and build houses.

Over many centuries a financial system grew up, as an adjunct to the real world. That financial system enabled people to do more stuff in the real world (View Highlight)

They could build railroads or semiconductor factories or electric cars, because they could raise money from strangers to fund their activities. They could buy bigger houses, because they could borrow money from banks. They could also trade out-of-the-money call options on GameStop, because that’s fun and you can make memes about it, but that’s an accidental feature of a financial system that mostly does serious stuff in the real world (View Highlight)

There’s a house there somewhere, under the CDO-squareds (View Highlight)

The real world came first, then finance, then the more complicated epiphenomena of finance. (View Highlight)