The Plan
“Our formula is this: We go out, we hit people in the mouth.”
- Mike Singletary, San Francisco 49ers Interim head coach
In the last week I’ve come across a couple of ideas that inspired this post.
The first was an episode of Crypto Market Wizards with Arthur0x, in which Arthur suggests it’s vital to have a philosophy about the market as the baseline for your investments.
The second was a Twitter post by Vance Spencer about the plan:
I do think this is in general the plan, and that’s in part because of the Philosophy behind what blockchain is, why we’re all here in the first place, and why/how more people will join us in the future.
100% of us are here because of number go up
I found out about Bitcoin in 2010/2011 by going to libertarian festivals.
The idea was simple if you were young, idealistic, and without too many preconceived notions and dependencies:
The Federal Reserve is an insidious organization that steals from all of us through inflation
And we can counteract this by trading with each other using alternative systems and methods of trading with one another.
For a while this meant buying things with junk silver - old US dimes, nickels, quarters, and half dollars that have silver in them.
By 2010/2011 this started to also mean Bitcoin - this new “digital currency,” decentralized and limited to 21 million so it wasn’t subject to the whims of fiat by corrupt people.
Out of these principles I later bought 20 BTC for $8 each - because I wanted to invest in an alternative, a better world where we’ve overcome corrupt systems to live in a freer and happier society.
Then out of the principles of “I’m 19 with little financial stability working at a bottom-barrel restaurant job” I sold them all because I needed $160 a few months later.
Afterward I watched BTC go from $8 to $1100 and realized maybe this libertarian philosophy stuff actually had some tangible, real-world effects and benefits.
And because of that, I’ve paid some level of attention to this space ever since (but am not a Bitcoin millionaire, no need to come find me wrench in hand).
So I think there’s a case to be made that those of us pre-2013 came to cryptocurrencies for something that supersedes number go up.
But almost all of us from that era have stayed because number go up, I’m no exception.
And that massive rocket up is the reason why pretty much everyone else is here; even if you’re the most honest buidler, the most “in it for the culture” cool kid, you found out about this space because of the people who rushed in after that insane price action to build and trade and vibe.
Whether you or those people stayed because of the tech and principles or not, it was because number went up that crypto caught your attention in the first place.
And that is not only okay in an “it’s okay to eat ice cream every now and then” sense but also in a “there is a case to be made that you being here because number go up is a good thing.”
Here’s why:
Fundamentally, blockchain is about decentralizing trust
For most of human history, most of us have relied on leaders - people with authority to tell us what to do/not do because they were stronger and meaner or more economically successful than us.
The psychology and sociology stems from the premise that social and economic success are more conducive to reproduction, so the genes that had that success - as well as the ones that supported those genes - were more likely to survive.
Beyond simple might makes right and success makes right, started to develop culture - a set of implicit and explicit rules and norms that govern our behavior - so we can anticipate how people can react without having to experience them doing it, without having to trust in them as much.
If we both speak English, I can presume you’ll mostly understand what I say when we speak with each other - this saves a lot of time and limits a massive amount of risk in our interactions.
As culture enabled more sophisticated social interactions among larger groups, institutions were developed - sub-groups and subcultures with a sub-purpose that enables them to more efficiently produce certain outputs from certain inputs.
Rather than wonder, plan, hope, and act all on my own in relation to a car accident, I can fill out some forms, make a couple of phone calls, make a few payments and for the most part anticipate that an Insurance Company will to some degree cover the legal and financial work related to said accident.
With culture alone the rules can be unclear, how to change them can be unclear, and their enforcement can be unclear - just because we both speak English doesn’t mean you won’t lie to me when it’s to your benefit without much cost.
With institutions if they do defect it the causality is amorphous - who’s actually responsible, what is the actual source of the problem and how do you solve it when an insurance company denies your legitimate claim.
Blockchains aim to decentralize trust by:
Making the rules transparent, uniformly enforced, and voluntary - here’s how to participate for mutual benefit, here are the costs of defecting - both will be absolutely enforced, you decide whether you want to play.
Balancing the ossification and innovation - the system needs to be able to adapt to unforeseen challenges and unaccounted-for risks without being fundamentally manipulable by a small enough cohort that it is in fact manipulated.
The decentralization of trust affects money first because money is the simplest, clearest, and most concentrated expression of the value created and preserved by increased trust.
In a general sense “trust” means “reduced risk.”
Usually we just apply the concept of trust to interactions between humans, but in this more general sense it can also be applied to chance and mechanism in nature.
If you learn the life cycle of salmon, you can expend fewer calories per salmon caught because you won’t go to the river when they’re not there - thus you have an increased profit in salmon-shaped calories per unit of time and energy spent fishing.
Likewise, if you can trust that someone will cook your salmon dinner for you when they say they will, you can spend more time catching salmon to everyone’s benefit because you’ll both be able to catch your salmon and eat it too.
The more we can reduce risk socially and environmentally, the more we can trust profit will result from time and energy spent, the more wealth can be created and preserved.
Moving from the Monetary to Something Else
So how do we expand the recognized value of decentralized trust beyond its simplest and most obvious form: number go up?
Eg with social media, where decentralization is less directly tied to anticipation and reward - why would someone get more effective dopamine engagement from being able to own their social graph?
Eg DePin, where the physical supply chain and infrastructure building means experimentation exists on the scale of years and billions.
I think there are two things in general, one that Vance points to and another based on some of the above reasoning
We need more number go up, because that will translate to more attention and more available capital that will generate more building and experimentation action.
Along the way, we need to continue to iterate on the decentralized trust infrastructure that generates and preserves wealth in an environment that allows participation of everyone, including anonymous defectors.
Anonymous defectors meaning people who are here to take from others and can do so in a way where they aren’t able to be punished for it because they don’t have to play the game when they don’t want to.
So they can do things like hack a DEX or create scam wicks and get away with it.
We’re on a continuum of building out a more sure sense of “A=A” with blockchains - that what’s yours is yours, that you have what you say you have, and we don’t need to trust you or anyone who might be your friend at our expense to know those two things are true.
And as the technology and social consensus gets further along that path, number will continue to go up.
Because first and foremost, the key outputs of increased trust are increased wealth creation and preservation, and the most concentrated expression of this is the language of money and number go up.
As number go up, more attention will flow into this space, because at a fundamental level humans are attuned to wealth creation and preservation as it’s deeply linked to our survival and reproduction drives (the more stuff I have, the more likely my offspring will survive and have even more stuff for their offspring to survive on).
That attention will be translated to action:
Because there is more capital to allocate to building and
It will be even clearer to more people that there is opportunity here
Defi is a logical extension of blockchain tokens going up, not just because it requires lower technological advancement than DePin and DeSo, but because there’s a whole suite of tools that can be re-marketed and expanded upon that are fairly primitive extensions of base wealth creation/preservation.
Eg trading one token for another.
Humans have traded bananas for sharp sticks for millenia; once we have a thing that is a specific instance of wealth, we quickly want to be able to trade it for other people’s different specific instances of wealth.
Somewhat more abstractly, we’re all going to die, so there is existential pressure to have things now and not later, hence borrowing from future wealth to have current wealth is a simple, high-demand facility.
How do we leap from BTC/ETH number go up, then DeFi number go up, to “actually” making the world a better place with DeSo and DePin?
Social Media Users are exactly that
The average social media user doesn’t actually care about decentralization directly.
The effects in their lives being better, sure, but to reason backward from “I can enjoy TikTok videos because of cloud infrastructure which is built based on the principle of decentralization” is more work than most people will do.
And most people live according to norms, not outliers, because as much as that puts you at risk of system degradation errors and black swan events, on average it’s the safest and most efficient bet to make.
For the most part, the average social media user enjoys having their anticipation and reward circuits hijacked by the intentionally addictive substances that are images, videos, likes and comments arranged in a high hit-per-minute order.
So to get them over to a web3 social app, the relative cost/benefit ratio as expressed in the form of dopamine hits needs to be improved or there needs to be a black swan that fundamentally shifts what the norm can be.
In Running Lean, Ash Maurya suggests that to get people over the inertia of their existing habits AND the friction of change, your thing has to be 3-10x better than the existing alternative.
Can “blockchain” in and of itself really make a social app that 3-10xes the dopamine hits of TikTok and Instagram?
If builders aren’t engaging in the same level of neuroscience research to incorporate addictive properties into their apps… doubtful.
Even if they did that, it’s unclear whether there’s that much more dopamine to squeeze out of a brain than what Youtube, Instagram, and TikTok can create.
There is dopamine value in the right kind and amount of Novelty, unclear whether blockchain can bring the right kind at the right cost to win over web2 apps.
The real killer edge of web3 social apps is obviously the financial aspect - Tiktok but you can gamble with real money as you like and comment yourself into oblivion could 10x web2
But in my limited understanding this isn’t really what Lens and Farcaster are focused on (I’ve done no specific research so this could be very wrong).
Instead they’re looking at novel ways to do things with blockchains and content/social graph “own your content,” “new forms of revenue for creators,” “take your social graph with you to another app.”
Experimenting along these lines may eventually lead to a eureka moment where something new and better than TT comes along, but it’s also at risk of nerds just being nerdy until no one cares anymore.
Try explaining the joys of “owning your own social graph” to your grandma or Gen Z niece and watch how quickly they stop paying attention to you (there are approximately 5,000 people doing the same dance to the latest ‘oldie but goodie’ in a slightly different way to be watching rn I ain’t reading all that happy for you though or sad it happened).
People will argue that blockchain based social networks are better for “creators” due to the ownership of their social graph and content/revenue streams more directly.
These elites will “get it” and the herded masses will follow them and their content to web3 Valhalla.
But I’d bet a bitcoin most social media content producers are essentially dopamine sharecroppers who rely on the fertility of the land they work, so no matter how much “good content” you create content quality alone won’t overcome the dopamine hits per second of highly engineered platforms like the Tub, Tok and Gram.
Which means no real audience (attention feeding the ego being currency number one for “creators”) or revenue (actual cash money being currency number 2).
We may see something akin to a black swan should TikTok be banned from the US for failing to sell to a US corporation.
With a sudden dearth of reliable dopamine hits Gen Z might find Farcaster or another web3 social platform if they can be sufficiently built up by the time TT goes offline.
But playing the probabilities that probably won’t happen (though I’ve created a Farcaster account to take advantage just in case!).
So for the foreseeable future, I think DeSo is dependent on continuing to attract and engage the fringe groups of people that derive enough value from the new and novel to hang out in places like Farcaster “for the tech and vibes.”
Until someday not so soon the products themselves become 3-10x superior for more mechanical reasons.
Getting to the 3-10x point means:
Sustaining the attention and activity of builders
Sustaining the attention and activity of early adopters
Garnering more attention from less early adopters
Sustaining the capital flows that allow builders to keep building
ALL of which is dependent on the background context that is number go up.
If we do it right, later people can come to realize that these products are different and better because of the fundamentals that are self-ownership (you own your content, revenue, social graph and thus people have to make better products because you can easily leave) thanks to decentralized trust.
It's so Depin my soul
Because Depin can feed into B2B principles, strategies, and narratives I think the value prop of this space is clearer than DeSo.
It’s not so clear how DeSo and its principles can actually provide an experience that retail social media users value 3-10x more.
How the fuck does decentralization increase dopamine hits without just being a number go up casino?
Or even harder - how do you convince the average person just looking to get by with the least risk of pain and the most pleasure to value higher principles when it’s way less obvious those “principles” will make their lives better in any meaningful way?
Who knows
But with Depin we can leverage Economics.
Make a play to improve one or two of the qualities of the Project Management triangle, sell the cost/benefit to middle management who’s career defining move was that one time they saved .1% per annum on the cost of server maintenance, cash out billions and retire to be a speaker and life coach.
We already know from IP networking, cloud and microservices architecture that decentralization and modularity work, that the second order plus effects of these principles are highly valuable, enough to displace centralization and monolithic structure.
Can we build faster, more reliable cloud and AI infrastructure through Depin?
Unclear but probably, there’s a lot of bloat in Google, Microsoft, and Amazon.
The trick is that their infrastructure took massive amounts of capital and years to build and now have economies of scale and incumbency inertia.
Blockchain offers cheaper, faster capital through the regulatory arbitrage that is convincing people to ape into your crypto token - which is a meaningful edge.
The question just becomes whether or not we can attract competent physical infrastructure builders and give them enough time and capital to build.
And also whether blockchain tokens can have any meaningful use other than cheap fast capital.
Here, micropayments for usage and AI agent payments should work and might be valuable enough that it makes sense to build this stuff with blockchain.
So with Depin, it’s not so much that the value proposition is unclear as it is that the building and experimenting take time because of physical constraints, and the space needs to attract enough of the right talent to solve these problems before the opportunity is regulated or bought out.
And so the plan is this
ETFs fuel capital inflows to BTC and ETH, thus making number go up more and down less, meaning more overall attention brought in. That attention is of increasing quality. And that it’s sustained over time.
Defi continues to fuel number go up even more as it builds out the financial infrastructure that creates and preserves wealth - because it’s simpler to build, clearer in its value prop, and useful for Depin and DeSo.
Then, because there is attention and capital continuing to flow into this space, action can continue be generated to build and experiment with DeSo and Depin to unlock new forms of value creation beyond those directly related to wealth creation and preservation.
For DeSo, the main risk and opportunity is whether blockchain tech can be used to create a product that 3-10xes the dopamine hits per second powers of TikTok, Instagram, and Youtube.
And/or whether there’s a way to sway people into using a social media platform at scale for some other reason than fastest/most potent dopamine firing.
For DePin, the main risk is in whether enough capital and attention can be spent to develop infrastructure that’s faster and cheaper than incumbents that have massive economies of scale.
And/or whether the blockchain element can be useful enough beyond fast and cheap capital to matter.
If you’re a real builder, good luck and godspeed.
If you’re the rest of us, have fun memeing and dreaming and don’t fumble your bags while we wait for the adults to make something useful.