There is a recent term that crypto has become enamoured with, a term that supposedly accounts for the phenomenon that is memecoins: “financial nihilism”. The concept is fairly self-explanatory. By most objective measures, the economy is cooked. Consider interest rates, the housing market, the cost of education and healthcare, inflation and the rest of it. Not to mention the world is burning up all the while! How is anyone -- let alone “the kids” -- supposed to get ahead in such a dire circumstance? The apparent answer: gamble. Hence, memecoins. Indeed, against this economic backdrop, people are so disillusioned with things, so disenfranchised, so frustrated, that they have resorted to the most extreme and circular kind of speculation -- that is, speculating on speculation itself. Or so the rhetoric goes. However intellectually satisfying this hypothesis may be, it’s interesting to note that very few who actually partake in memecoins would offer this as an explanation for their behaviour. While those who stand outside the speculative fervour offer financial nihilism as a diagnosis -- as if the underlying behaviour were fundamentally pathological -- those who actually participate in it tend to have a very different perspective.

There are many ways to conceptualise, or otherwise attempt to understand, blockchain networks. You can think of them narrowly as digital asset ledgers. Alternatively, you could choose to understand them as new kinds of collective computers. If you broaden the aperture even further, you could also view them as a novel, emerging class of social network (e.g. network state). That blockchains are different things to different people, or different things at different levels of abstraction, is precisely what makes them so hard to define. But blockchains aren’t unique in this regard. As with anything of intellectual interest, they contain multitudes and thus transcend any singular classification. However, while there are many -- equally valid -- ways to conceive of blockchains, and their web of human relations, my more recent and now preferred way of framing them is as a new kind of -- intrinsically financial -- media network.

Spending my days, as has become habit, thinking about such esoteric notions as tokens and token designs, blockchains and blockchain communities, digital ownership and digital wealth, and the nature of the web -- its uses and misuses -- as a whole, I find myself asking, How’d this happen? How is it, I mean, that I’ve become so fixated, indeed positively obsessed, with such arcane concepts as these? Though I’ve always had an interest in the history of computing, I’m far from a computer scientist. I’ve never really considered myself a technologist. Neither have I ever particularly cared about the nature of finance, minus a few fleeting thoughts about capital formation and its mechanics. And yet here I am. Thinking about computers. Thinking about people. Thinking about money. And about how it all intersects. So how did this happen? How is it that I find myself here? -- “into crypto”, as it were.

There was once a time when ‘crypto’ was synonymous with ‘cryptocurrency’. Today, the term is far more expansive, spanning NFTs, zk-stuff, identity systems, stable coins, and more. Given the recent expansion of crypto, as a term and now veritable industry, it’s interesting to consider what crypto’s ‘killer app’ might be. Many take the view that the cryptocurrency piece is just the beginning, that eventually we will see ‘non-speculative’ use cases sporting ‘real utility’. Farcaster is a current example of such a phenomenon; a product that leverages the immutability of a blockchain to house their name space, in the form of a smart contract, and PKI (i.e. wallets) as an identity augmentation, in service of a new brand of ‘sufficiently decentralized’ social media. Conspicuously absent from Farcaster is any native use of cryptocurrency, lending credence to the idea that crypto might just transcend the realm of the explicitly financial. In the background, however, it is largely the allure of financial incentives -- in the form of memecoins -- that is driving a lot of Farcaster’s recent adoption. And so it is that even in the context of what is considered the shining exemplar of a ‘non-speculative’ crypto app, speculation and cryptocurrency remain the dominant themes. This would seem to support the more ‘conservative’ perspective that the fundamental use case of crypto is, and always will be, money, financials services, and speculation. So, which is it? Is cryptocurrency simply a chapter of the emerging crypto story, or shall it remain the primary motif?

It’s easy to dismiss the ‘Network State’ notion as some technocratic, libertarian fantasy, divorced from the practical realities of human life. However, the impulse to do so reveals more about how constrained our political imaginations have become than the underlying merits of the idea itself. Details aside for a moment, the fundamental thrust of the Network State idea is simple: where the nation state, and its underlying social apparatus -- rule of law, sovereign money, state monopoly on violence etc. -- have served as the guiding socioeconomic principle by which modern homo sapiens coordinate at scale, perhaps the Internet -- and its associated technologies -- might equip us with a fundamentally new mode of social organisation, one uniquely suited to the dynamics of the Digital Age. While Balaji -- the leading proponent of the Network State movement -- proposes a rather specific manifestation of this idea, if we simply suspend disbelief for a moment, there are many conceivable ways this idea might take form. In fact, in some meaningful sense, we already have what we might think of as ‘proto Network States’ in the form of blockchain networks.

The most popular mental model for blockchains today is that of a shared computing platform. As computing platforms, they are touted for their ‘credible neutrality’, 'permissionlessness’ and marketed according to their various security and performance characteristics. Most commonly, they’re presented as an open, decentralized alternative to the prevailing paradigm, whether that be finance or tech. Within this framing, it’s generally assumed -- and explicitly asserted -- that there will be one or two platforms that end up winning a disproportionate share of this evidently existent market for decentralized trust and compute. If security and decentralization is what matters most, then we should expect Ethereum to capture the majority of demand. If speed and cost -- and UX generally -- is the primary determinant of success, then Solana -- or some other high-throughput chain -- would seem destined for the top spot. While this frame of things is entirely reasonable, it is, I suggest, an incomplete view of what blockchains ultimately are, and how they will be employed in the future.

Cryptoeconomics is the term used to refer to this emerging discipline at the nexus of computer science, cryptography and economics. Ultimately, it’s a form of mechanism design; that is, the art and science of crafting systems that produce some desired set of downstream behaviours. Personally, however, I’ve found it more helpful to think of cryptoeconomic systems as a certain kind of game; specifically, Internet-native economic games. While it’s a subtle shift in emphasis, I find it productive in terms of better understanding the nature of the systems already at play in crypto and for speculating on how we might build even more interesting ones moving forward.

One of the least understood phenomena in crypto, I’ve become convinced, is the underlying networks that constitute them: “cryptonetworks”. In an earlier piece I mentioned them in passing. Here I plan to delve a little deeper. So, without further preamble, what is a cryptonetwork? While there are many ways to get at their essence, fundamentally, a cryptonetwork is a community -- that is, a collection of human beings, and in the future, agents more broadly -- coordinating, via public key cryptography, around some shared source of value (i.e. a “token”), mediated by a public blockchain. As of the present moment, they represent somewhere in the neighbourhood of $2T in economic value and some tens of millions of active on-chain accounts. What makes these networks so fascinating is that, at a high enough level of abstraction, they emulate a lot of the same properties as nation states. For instance, they have some built-in notion of property rights, a native economy mediated by its own sovereign money and monetary policy, and a citizenry that engages in all manner of social and economic activity. Another interesting point of overlap between the two constructs is the sense of patriotism they elicit. Just as one might feel a particular tribal affinity towards their country of residence, and even a sense of genuine community and belonging, cryptonetworks exhibit a striking capacity to ignite a similar sentiment amongst its participants. While there are parallels one may draw between cryptonetworks and other historical online communities -- traditional social networks, open source software communities etc. -- there is, it would seem, something fundamentally unique about the collective sociology of cryptonetworks. The source of this uniqueness is, I suggest, the sense of underlying mission and purpose that all of the most popular cryptonetworks convey. Bitcoin, for instance, exists to supplant the existing monetary order and establish in its place a far more equitable financial scheme; a system ‘for and by the people’. Ethereum extends this spirit beyond finance to include the entire Big Tech order as well, while Solana seeks to do more or less the same only better, cheaper, faster. While these are fundamentally secular endeavours, there is something palpably religious about the psychology of these networks. Amidst a broader societal crisis of meaning and identity, the epidemic of loneliness, people are finding many of the same virtues of religion in these online communities instead. Where religions and cryptonetworks diverge, however, is that you can actually own the latter, which adds considerably to the fervour.

When you abstract away the details, Bitcoin is an incredibly simple construct. It’s a piece of software that defines the existence of some 21 million fungible units -- i.e. bitcoins -- and the rules by which they ought to be distributed and exchanged. The software serves as a ledger, a record of who owns what and how many BTC. None of this, however, is what makes Bitcoin interesting let alone revolutionary. What makes it both of those things is that it’s a piece of software that is managed by and replicated across millions of otherwise uncoordinated computers all across the planet. This is what gives it its “decentralized” property, what makes it a money for and by the people, what makes it among the most secure computer systems in existence. What enables any of this is the notion of verifiability.