I use crypto to denote cryptocurrencies -- what dark-suited consultants might call "digital assets", what venture capitalists may call "Web 3.0", what engineers might call "blockchain". The word Cryptocurrency is a linguistically honest definition -- a fitting distillation of what makes crypto, crypto.

cryptography

/krɪpˈtɑː.ɡrə.fi/

the use of special codes to keep information safe in computer networks

currency

/ˈkɜr·ən·si, ˈkʌr·ən-/

the state of being commonly known or accepted, or of being used in many places

My definition of cryptocurrencies: technology that uses computational and economic incentives to organize resources, people, and society.

In exactly 22 days from now, Bitcoin will be 15 years old. and Ethereum 11 years old. Crypto has forged a long path, but it has further to go still. In the history of humankind no other technology has attracted so much hostility and patronage; at the same time bestowing so much polarization and radicalism. From the initial monetary ideal of a world reserve, grew the offshoots of a world computer. Now crypto touches every plane of human activity: Banks, Art, Games, and more.

In this essay, I want to address some misdemeanours alleged of cryptocurrencies, and hopefully warm one's thinking up to its place in our common future.

Subverting crypto technology by reducing its use case to speculation.

1. Speculation is not inherently bad per se; it is a natural, fitting property of competitive markets. Speculation is enabled from financialization of things -- the tokenization of voting rights, organizational control, community access which is core to crypto's ethos. These are openly traded, on a market without financial intermediaries. Unproductive speculation is arguably more pervasive in crypto; though that line is too blurry to toe.

2. What is worrying is uninformed speculation, and the fraudsters that arrive to exploit it. I am hopeful that the market is far more mature now, with demands for monitoring and transparency more pressed than ever.

3. Observe how quickly Binance utilized Zero-Knowledge Proofs to cryptographically attest to its liquidity. Notice how quickly the centralized exchanges adopted such a policy, and its ease of implementation. Notice how Chainlink set up an oracle service to verify bank audits and asset ownership, and then bring them on-chain.

4. Cryptocurrencies uniquely enable these forms of financial transparency, although they will only come about if the industry demands them. There are limitations to blockchain technology, and some aspects of common law cannot be outsourced to code. Hence institutions such as the SEC step in to fill that gap. But there will be less of such a need as time passes, conditional on industry participants' increasing acuity towards scams and immoral behaviour.

Using faulty empirics to measure success.

1. Commentators often tighten the timeframe for which cryptocurrencies should gain "mass traction", or, for the eager investor, "business profitability". Critics fail to appreciate that step-function achievements in technology come after long periods of dull gestation.

2. The first-ever LLM like chatbot was designed by MIT researchers in 1967, and the field of language processing remained largely stagnant until 1997, when Long-Short-Term-Memory networks were introduced. OpenAI was then founded in 2015, 8 years ago.

3. It is almost a necessary pre-condition for technologies to incubate behind the limelight before it is widely adopted. Thomas Edison himself had built electricity generating systems since the late 1880s. Yet by 1900, still less than 5% of mechanical power in US factories was derived from electricity. We tend to remember history as a flash of compressed events, thinking Rome was built, used, and recognised for its grandeur in a day.

Claiming that “if it's good, current firms should succeed in using cryptocurrencies more”.

1. Bending new technologies to fit the fabric of the existing economy is an exercise in vanity; as incumbents never adapt well enough, and the mode of resource organization in crypto differs so vastly from its precedents. In many cases, we cannot speak of a business model, much less reduce a protocol to the conformities of GAAP accounting. Cryptocurrency - native businesses, or should I say, networks, are the Schumpeterian force of creative destruction. They propose an entirely new way of creating value, using programmable incentives that are thus dynamic, far-ranging, and suited to particular use cases. Take Filecoin, for example, which creates a peer-to-peer network of storage hosts and storage users through specialized cryptographic proofs, and staking incentives. This is far cry from the revenue model of Amazon’s S3 service, which interfaces between storage vendors and IT customers. Almost by this definition, progress will be non-linear, materializing slowly, then all at once.

Saying world systems work well the way it is.

1. This apathy has hijacked all sorts of technological debates beyond crypto. It is 1. A rather hubristic and privileged view; as it is not true in countries where economic and political institutions are weak and 2. A rather dangerous way of thinking that unquestioningly accepts the status quo, reminiscent of the pre-enlightenment era.

2. A mindset of passivity endangers our future -- the world works today because generations demanded the expansion of its capabilities in the past. Through the adoption of technology, strikingly. Indeed, most problems in the world can be resolved within the current system. But progress will be incremental and pained, akin to maintaining legacy code.

3. Here's an example. There was the cheery case of SOFR finally replacing LIBOR as the default reference rate in 2022. SOFR is known to be a more grounded in actual financial transactions, and less prone to manipulation. JP Morgan hailed it as a "landmark". Yet, observe how asinine it is that it took mankind more than a decade to remove a statistic wrought by years of scandals. Many historical appendices of our system remain in the same manner -- from T+2 FX Settlement, to the inter-dealer system for Treasuries, to the use of deprecated inflation indices (RPI) in inflation-linked gilts.

4. These cases are in our economic organization, because it is what I study. But one can observe similar forces grinding down our political institutions, such as in the United Nations. UN's charter cedes veto power to countries like France merely on the basis that it was a founding member, and couples Asia and Africa as one representative region.

5. If today, we were to recreate such systems in the snap of a finger, would we opt for these mechanisms still? Observe the same pattern in the institutions of your own countries, and the patchwork of stitches needed to ensure the system chugs along. Crypto provides the platform for humanity to coordinate on a fresh start. As a general mental model, most coordination failures we see in the world today can be solved by an autonomous, programmatic blockchain or smart contract platform. Power over this platform is distributed in itself.

6. Crypto, blockchains, DAOs, Ethereum, is useful not because our current political contract is faulty, or because the wheels of the financial system fail to turn; our present system works well as it is. Even if the system has flaws, these too, with much ardour, can be resolved. But a new approach, cryptocurrencies, can do as much as the same, as well as so much more.

"The King is Dead, Long Live the King" is a prayer said in jest. The medieval saying signals the end of an old King's reign, and welcomes the arrival of his heir. But in this passing, the phrase imbues the very continuity, the very infinite-ness of monarchical rule. Today, the organization of man takes on more egalitarian forms; and our structures supporting democracy and capitalism have wrought prosperity, though unevenly spread.

Cryptocurrencies offer us a system closer to the capitalist ideal, free of the many historical knots our present system must untie, with a persevering ability to self-correct.

Take not the failed, abject experiments of the cryptocurrency ecosystem as proof of its weakness; take the rebellious survivors, the builders and founders who stay, as proof of its resilience.

New cycles may come, and more protocols will appear, each building upon each other, inching on incremental improvements, making big occasional strides, thriving and extinguishing by the will of the free market.

Cryptocurrency is dead, long live cryptocurrency.