The State of Things November 2022

• This was going to be a tweet, then a thread, but now it’s long form.
• This was spurred by frustration.
• This isn’t well researched, is off the cuff, and probably has typos.

“Is it all over?”

Being associated with crypto leads to random messages from friends (past, present, and future) wondering if this may truly be the end. No man steps in the same river twice and no one sends or reads the same “are you okay?” text twice.

Those messages do a number of things, they seek information and solace. Sometimes they seek to gloat and sometimes they seek to question. Over the years I’ve allowed these messages to impact me in different ways, often more than they should. My resolve has remained strong and has only increased as I’ve spent more time around the technology. I’ve followed crypto since 2014 but I’ve only worked full time in the industry for a year. Making transactions on-chain every day for a year changes how you think about crypto.

What is “crypto” really? And who has the right to say what it is?

The type of energy we’ve seen in crypto over the past 2 or 3 years has been mostly presented to the public through the lenses of Web3 and CEXes.

The interoperable collectibles we’ve been enjoying (or imagining) in Web3 have brought a new social and creation space to the crypto product spectrum. The adoption and momentum around Web3 brought a lot of good and bad aspects to crypto culture, as did the activities related to financial instruments. In both cases, a mix of off and on-chain realities came together to form “crypto” for those involved. We can try to define it, but most will create their own definitions.

Personally, I love the off-chain aspects of crypto. The rise and fall of technologies, their creators, and their users is fascinating. At the center, an immutable record allows us to keep score in a transparent and trusted way but the ones that push the boundaries or shift the momentum of the masses are individual people. We have new technologies now. These technologies allow people to organize in new ways, to accomplish old tasks in more efficient ways, and to perform previously unthought of actions. Are we creating solutions to problems that don’t exist? Maybe. But isn’t it fun?

The issues that we’ve seen in crypto more recently with Three Arrows, FTX, etc. falling apart show what happens when the center isn’t an immutable record. Financial empires were built not on top decentralized blockchain technology, but alongside it.

Crypto works because of blockchains, not because you made $15k by meme bidding the Constitution or minting a rare NFT.

Every time an exchange, trading firm, etc is about to explode the messages start rolling in. The earlier messages are from people in the indusry, often those closer to defi or traditional trading roles. These messages are more of a “yo, have you seen this? You think it’s going to be okay?” — they may seek information and solace but more often than not it’s general information flow that is relevant to what may happen over the next few weeks/days/hours. Many of these folks don’t spread the news widely, preferring to chat in private spaces or one on one.

As things pick up, messages start to come from people closer to the Web3/NFT crowd. In my experience, these messages are spread far and wide with many individuals taking on the role of saving their peers from something that may happen. If DMs from defi founders are secondary source, this is tertiary aggregation. Messages from this crowd are demanding information and solace.

At this point, things either blow up or simmer down. Recently, things have been blowing up and in a big way.

This is when the messages from old coworkers and family members start coming in. These range from concern to gloat. Concerned messages come from people who you talked to about crypto 18 months ago who invested funds into a CEX because it seemed safer. These messages are the toughest to handle as it’s usually too late by this time and reaction speed required often calls for specialized information.

Mixed in with the people losing their life savings is a stream of gloating messaging from people who told you that crypto would never work. In the past, I may have responded passionately to these message extolling the values of a decentralized immutable database — you know exactly the stuff that someone laughing at you about your magic internet money wants to read.

At this point, I try to let the messages come and go without giving them much thought beyond seeking or providing information and solace amongst those I trust and know. I’ve been questioned and laughed at for believing in obscure concepts my whole life. I spend a lot of time questioning and laughing at my own ideas and beliefs.

But I’ve greatly reduced the amount of time I spend questioning crypto.

Others around me have reduced the amount of time they spend questioning it as well.

The value of that “Is it over?” text is fully based on the level of time spent historically and currently questioning crypto as well shared knowledge between those individuals about those vectors and their values. Shared experience through the rise and fall of technologies and their human musculature allows much more horizontal conversations about the state of things and creates foundation for trust.

You have to learn to enjoy the waves if you want to swim around whales.

“So how bad are things really?”

Financially? Honestly, I don’t know. That’s not my department. I personally positioned for major downturn a year ago and expected things to generally follow another four year Bitcoin cycle as we’ve seen before. People were over invested and the system was propped up on false leverage so it doesn’t seem great. Between Terra Luna, 3AC, FTX, and all of the other names we’ve seen fall recently a lot of money has been taken out of the system. Maybe more concerning, was how much of that money was ever really there? We can see tokens on-chain and who owns them but CEX and stablecoin reserves are blurry. Candidly, this financial aspect is the necessary evil in crypto. The financialization of crypto is the only reason it took off, but it is also the aspect that destroys individuals’ savings and draws regulatory scrutiny.

Regulatory? Frustratingly, regulation will come from an actor group that cares more about what FTX has done than anything else about crypto. With SBF funneling large donations and taking an active role in new legislation, FTX was very much on their radar. My perception is that this actor group views crypto as weird internet money that threatens the order of things — they don’t care about Gitcoin. This is somewhere I would like to become more educated on. I’m thankful for vocal leaders like Ryan Selkis and for the work done by Coincenter and others. I don’t totally know what they do and if I agree with all of their viewpoints but I am glad that they are starting the conversation between regulators and industry insiders.

People? This is a mixed bag. I look around and see people in absolute disarray over losing massive amounts of money right next to people having the time of their life building with their friends. As always communication is important. Check in with people, but only if you have the capacity to do it genuinely.

Tech? Y’all the tech works. None of the defi primitives have broken, NFTs have become more sophistocated, we’re genuinely operating in a multi-chain ecosystem across multiple chain types. Each chain and ecosystem has its own community and culture. People have always organized and with these new technologies we have new things to organize around and new way to facilitiate collaboration. Honestly, things keep getting better in this department and it is a beautiful sight to behold. Personally, I am having a blast building dope shit with my friends.

As technologies evolve, the human behavior around them does too.

We’re living and writing shared histories and we’re fortunate that the stories we get to be a part of are thrilling. How can it be over if we’re only now getting started?