The Crypto-ist Manifesto [Review]

This is a review of the article ‘Crypto for People Who Don’t Follow Crypto’ published on 1729.com. A link to the original article by Jon Stokes can be found here.

For many who have been following the development of the blockchain space, it’s easy to forget that a large majority of the population neither understands nor cares about the immense possibilities the crypto revolution promises. The discourse is oversaturated with pundits and get-rich-quick gurus who often degrade and pervert the mission blockchain economics empowers.

Stokes strikes at the heart of the blockchain revolution’s fundamental idea: decentralization. This excerpt was especially well-articulated (if you excuse that the first sentence starts with a comma-less “so”):

So when I speak of "unbundling" and "decentralization," it's important to know

that we will still have intermediaries, but they'll be decentralized. Even more

importantly, the intermediating and facilitating functions that are currently

bundled together in specific intermediaries (retailers, banks, even governments)

will be unbundled into an array of smaller, function-specific intermediaries that

compete with one another in specialized market segments.

To those like myself who believe in the reforms the crypto revolution promises, the primacy of decentralization seems like a no-brainer. But to many on the outside, these concepts are completely foreign. An April 2021 survey conducted by GamblersPick reported that “1 in 4” respondents “believe Dogecoin is the future.” I admit the sample of respondents from a gambling blog is likely not representative of the larger population, but the conclusion is frightening nonetheless: a significant portion of the “somewhat familiar with crypto” crowd is more interested in “meme stocks” and riding bubbles than they are with the the DeFi or financial democratization.

But one need not trust the survey to realize how influential pundits are in the crypto conversation. I saw this screenshot floating around Twitter this weekend, which supposedly provides hard evidence to be bullish on Ethereum because it is “sound money”.

The screenshot is actually from an economic model designed by CADLabs (for the Python-literate, you can download the code for simulation on Github). But the insights such projects provide are too often drowned out by meaningless chatter about deflationary periods that will herald the era of $10,000+ ETH. Suffice to say, I’m skeptical.

Some might say “who cares”? And they have a point: a considerable amount of people who are “interested” in cryptocurrency and blockchain technology are likely more interested in making lots of money in very little time. The volatility that has characterized the token market in the past few years has drawn countless twenty-somethings with extremely high risk portfolios to flood the market. The market is also becoming highly gamified: Twitter personalities like Elon Musk often unabashedly blur the lines between Dogecoin enthusiasm and market manipulation. I’ll admit that this trend is not crypto-specific and may just be a predictable characteristic of youth culture (I’m reminded of the pump-and-dump r/WallStreetBets controversy earlier this year), but that is not a reason to ignore the issue.

I imagine the “true” crypto revolutionaries (by this, I mean those who share the ideals of increased decentralization and privacy in financial markets) are akin to the Girondists of the first French Revolution. They are revolutionary, yet reasonable. The crypto grifters, on the other hand, are the Jacobins: thirsty for influence to maximize their gains and eager for chaos in the name of pumping token prices.

I fear that as more young people are courted by this twenty-first century Jacobin club, the public will see all blockchain advocates, true believers and carpetbaggers alike, as little more than market manipulators. When the Jacobin faction eventually kneels, whether it be to the pressure of public opposition, strict regulation from government bureaucrats, or some other unforeseen event, it will leave only distrust in the mouths of the public, perhaps permanently kneecapping the blockchain movement. When the dust settles, the big banks and intermediaries will emerge and crown themselves emperors of the financial markets once again.

The solution to garnering public opinion of cryptocurrency is not by showcasing its tendency to create (and destroy) lots of cash in very little time, but by developing and presenting solutions to real inefficiencies in the status quo. The path forward is uncertain and the disruptive innovations that blockchain presents will certainly sow discord. “But the destruction will be creative because the crypto-powered creator economy will distribute the rewards of good work to many more individual creators than our current, centralized system.”