Bankless - The Power to Mint Money

Episode Date: February 1, 2023

Today on the show, Ryan and David are Guestless! The two cover the history of crypto bull markets. What patterns are found in every single bull market? Now that there are three very distinct crypto market cycles, what can we learn from them? Crypto democratizes the ability to mint new assets. How are humans dealing with this newfound superpower? Ryan and David answer all of these questions and so much more. ------ Crypto Tax Calculator | Free Crypto Tax Calculator https://bankless.cc/CTCpodcast  ------ JOIN BANKLESS PREMIUM: https://newsletter.banklesshq.com/subscribe  ------ BANKLESS SPONSOR TOOLS: KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken  UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap  ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum  EARNIFI | CLAIM YOUR UNCLAIMED AIRDROPS https://bankless.cc/earnifi  ------ Timestamps: 0:00 Intro 10:24 What is Money? 16:40 What is Crypto Doing? 24:40 The Power Patterns 28:20 2013 32:40 Corruption Part of the Cycle 37:15 ICO Mania & Corruption 54:00 2020 DeFi Summer 59:50 NFTs 1:03:20 2023 1:06:00 The Good & The Bad 1:10:05 Closing & Disclaimers ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures 

Bankless Nation, welcome to another episode of State of the Nation. At least that's the format we're trying to keep here. But the guest today is just you and I, David. We are the guests. Just you, actually, because I'm going to be walking through a concept that you really wanted the Bankless Nation to understand. You think this is very powerful. The title of this episode and the theme is the power to mint money.

The power to mint money. And I think, David, as I'm looking through what you've got prepared, for us, kind of this agenda, you've identified some patterns that have been found in every single bull market to date, 2013, 2017, 2021, and 2022, how they've grown and also how they've fallen, and you're using that as a predictor, a way to sort of understand the future, the next bull market, and how this cryptocurrency industry is going to evolve. So I think it's a powerful model that you're using and this repeating pattern. But you tell us, what are we in store for in this episode? We're in store for a lot of things. I think this hopefully turns into a kind of episode

that I think only bankless can really produce, which is why I'm really, really excited about this. This is one part, a history lesson about the history of the crypto industry thus far. What was the 2013 bull market like? What was the 2017 bull market like? And of course, what was the most recent bull market like and what are the common denominators between all of those things. So if you only came in, bankless listener, for the 2020 to 2021 bull market, this might be really useful to just take a snapshot in history about the bull markets that happened before your arrival. Ryan and I can speak very, very well about the 2017 bull market. The 2013 bull market was both before our times. However, it was, of course, much more simple to understand because of how early it was. But understanding these,

things and then also understanding at very first principles what this whole crypto industry is based on. We can extend this forward into again what is the next bull market going to look like, but also just what does this mean for humans? And I'll get a little teaser here. Every single bull market is noted, is marked by a Cambrian explosion of assets. Because what is this industry based off of Ryan? The free and open and permissionless ability for humans to mint assets, which is pretty. previously a superpower that was gated by governments, monarchies, any sort of social elite, it's the 1% if you will. Bankers? Bankers.

Yeah. Well, this also goes back to Roman times where the concept of coinage was even produced in the first place and leaders, like government leaders of the Roman Empire would start to dilute the value of their coin by adding in fake metals into gold to dilute them. so like the concept of seniorage and dilution of fiat of currency has been something baked into humans forever, but only the elites had this power. And for the first time in human history, humans have this power to mint new monies. And every time we express this power in the crypto industry, Ryan, bull market has happened.

2013, 2017, 2021, and I'm predicting 2025-ish whenever the next bull market arises, you can bet that another Cambrian explosion of assets and asset minting will arrive. And we will go through this story and unpack every single nuance along the way. There it is. It's always been about tokens. Tokens. All the way down. Every single time, every single time we've had a bull run. It's because of one thing. We've invented some new way to issue tokens. I think that's what you're saying here, David. Guys, we're going to explore that. But before we do, got to shout out our friends and sponsors over at crypto tax calculator. Have you done your taxes yet? If you've been deferring doing your taxes. Maybe it's because you feel like it's a nightmare. All of the layer two

transactions that you did last year, all of the defy trading that you did, all of the NFTs here and there that you don't want to think about. Maybe you're dreading putting that all together and sending it to your accountant or inputting it into your tax software or whatever. Crypto tax calculator is a way to sort out that tax nightmare. It deals with the complex transactions that are especially hard for other crypto tax software. You input your, your heat the dresses, it spits out what you owe. Like, that's how it happens. Wow.

I'm sold. Look, man, this wasn't available back in the day, David. Okay? You know, Grandpa Crypto, when he was doing these early maker transactions, I'm talking about myself. CDPs, remember CDPs? CDPs. Yeah.

Trying to tax log that and figure out the status is. Well, now we've got tools that do it for you. David, there is a special offer, I think, for the bankless nation as well. Can you give folks an idea of what that is? Yeah, that is a 30% discount for people that sign up for crypto tax calculator with the code Bank 30. Bank 30. There's a link in the show notes to go get started on your taxes. And just inputs and outputs, again, all you need to do. I love hearing you say that.

And also, again, 30% discount, Bank 30. If you are a bankless premium subscriber, there is a 40% discount. Extra 10% for being part of the Bankless Nation. You can find that code inside of the Bankless Nation Discord for all the premium members out there. Why aren't you a premium member? I'll ask you, bankless listener. You should sign up. There's a bunch of cool stuff.

Yeah, go bankless. Become a citizen. All right, David, give us a last teaser. There's a comment in the YouTube. I need to read it, Ryan. Sticks intern asks, can an AI like Ryan just do taxes automatically? This is not for AIs, all right? This is for all the regular humans listening to this.

It's not for robots. We have other powers. I mean, robots have other powers. So why did you decide to put this together, other than David. Having a sick guest that had to get a guest. Guest catch the flu this morning and cancel last minute. And then we're like, you know, who should we bring on as another guest? And you're like, hey, I'm throwing my hand up.

I want to be the guest because I've got something to say. Why is this so important to you? And what should listeners really look out for in this Professor David episode as we get into it? Yeah, classroom time with bank lists. Yeah. Again, like I said, this is, I think, an episode that I think you and I are particularly good suited for producing. It's talking about the crypto as the details of it, the details of these last bull markets, but also going down to base principles of crypto is like, what does crypto really unlock for humans? But we'll end with, of course, the great line with great power comes great responsibility. And this related to some of the securities conversations that we also had at the beginning of this year, where, like I got in trouble with the apes because I said everything, all apes are securities,

implying that everything is a security. Word apes, NFTs you're talking about. Exactly, yeah. But then bringing up the broader conversation as like, guys, we want our assets to be bullish, and that is what a securities laws are. And so we have this new foundability called being able to mint a token, mint an NFT, mint an ERC20 token. And that power has previously been restricted and gate kept and controlled by the elites.

Now we all have it. but we also need to understand that now that we have this power with great power comes great responsibility. So how as humans, as humanity, are we going to contend with the fact that we have this superpower that can be very destructive as well as very constructive? So some philosophy, some history, some crypto alpha. It's all baked into one, which is why I wanted to do this episode. Fun fact, by the way, did you know that David's nickname in high school was Toby McGuire, the Spider-Man movies? Great power comes great responsibility. I learned that about 18 months ago about you, David, and I don't think I'll forget it.

But guys, you're in for a special episode. We get you in the classroom today. Talk about all of these things. Talk about the power to mint money, what that means for the opportunities in crypto as well. Before we get into the episode, we want you to stay tuned because we're going to talk about the sponsors that made this episode possible. In particular, Cracken, which is our number one recommended exchange for crypto. So go create an account, sign up for Cracken. Cracken has been a leader in the crypto industry for the last 12 years.

Dedicated to accelerating the global adoption of crypto, Cracken puts an emphasis on security, transparency, and client support, which is why over 9 million clients have come to love Cracken's products. Whether you're a beginner or a pro, the Cracken U.S. is simple, intuitive, and frictionless, making the Cracken app a great place for all to get involved and learn about crypto. For those with experience, the redesigned Cracken Pro app and web experience is completely customizable to your trading needs,

integrating key trading features into one seamless interface. Krakken has a 24-7-365 client support team that is globally recognized. Cracken support is available wherever, whenever you need them by phone, chat, or email. And for all of you NFTers out there, the brand-new Krakken NFT beta platform gives you the best NFT trading experience possible. Rarity rankings, no gas fees, and the ability to buy an NFT straight with cash. Does your crypto exchange prioritize its customers, the way that Cracken does? And if not, sign up with Cracken at Cracken.com

slash bankless. How many total airdrops have you gotten? This last bull market had a ton of them. Did you get them all? Maybe you missed one. So here's what you should do. Go to Earnify and plug in your Ethereum wallet and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does POAPs and mintable NFTs. Any kind of money that your wallet can claim. Earnify will tell you about it. And you should probably do it now because some air drops expire. And if you sign up for Earnify, they'll email you anytime one of your wallets, has a new airdrop for it to make sure that you never lose an air drop ever again. You can also upgrade to Earnify premium to unlock access to air drops that are beyond the basics

and are able to set reminders for more wallets. And for just under $21 a month, it probably pays for itself with just one air drop. So plug in your wallets at Earnify and see what you get. That's eA-R-N-I.F-I. And make sure you never lose anotherirdrop. All right, David, let's dig into this. I think the first question we have to establish and set the context for it is this question of money. What is money? I think if you've been a long-time bankless listener, you've probably

heard Ryan and I talk about this, but people think like, oh, money, it's the cash in your wallet, right? It's the number in your bank account. But we really like to get deep here on bankless, of course. And so I'm going to pull out a quote from Yval Noah Harari, who's the author of the book Sapiens, which I know, Ryan, it's one of yours of my favorite books. The quote goes, the story of money is more important to the evolution of society than religion, corporations, and a host of other human imagined institutions. Money is probably the most successful story ever told. It has no objective value, but then you have these master storytellers,

the big bankers, the finance ministers, and they come and tell you a very convincing story. Look at this piece of paper. It's actually worth ten bananas. And that story works. try telling that story to a chimpanzee, it won't work. So that's the end of that quote. When I say that quote, Ryan, what triggers in your brain? I love it for so many reasons.

First of all, I think this quote comes from the book Sapiens, where Yvalhoori paints humanity as a storytelling species. He says that storytelling and our ability to work collectively, cooperatively, that is the thing that makes humans special, humanity as a systemic single entity. And it's crazy to me how well he identifies that and just kind of lays it bare. He calls it the story of money, right? Another word for story that we might use is in crypto is meme, a meme of money, the narrative of money.

Because what actually is money, what actually is money, other than that. a story other than a meme, other than some shared belief that we all collectively reach consensus on that this particular piece of paper or these digits in a bank account somewhere has value. The reason this is so fundamentally important to me is because I think that for most of my life prior to crypto, I never gave a thought to what money actually is. I just kind of take it for granted. I've never, I never kind of considered that it takes a collective group of humans all thinking the same thing about money for a money to actually manifest. And if suddenly we all stop viewing a certain piece of paper or a certain denominated digit as money, then it ceases to be

money. It's so weird, this ability to kind of manufacture something from nothing through shared cooperation and shared coordination, but that's exactly what we do with things like money. There are other institutions like this, of course, like, you know, he talks about the LLC, the corporation. These are also shared stories, figments of our imagination, but money is perhaps the most powerful because it is underneath all of the other things. So that's what I think of when I hear this quote. Yeah, and I think that's really great context.

And we're going to start to apply some of these thoughts about storytelling behind money because it's not constrained to just money, actually. Like, think about Tesla stock. Great story behind Tesla stock, and perhaps that's why the valuation on Tesla has been so high. And so this is really, the story goes beyond money, and it's really just finance, right? There's a market capitalization to a lot of assets,

and how valuable these assets are are a large part about the story of the fundamentals being told. And so it's one thing to have fundamentals, but it's the story around fundamentals that really creates that market price in the secondary markets. We just got done with our podcast with Chris Berniske, and the theme of that episode was really about how markets are just psyche. And when there is a story told about something, that is the world of finance. Finance is about the difference, the elevation of the value of assets above and beyond their fundamentals to bake in future growth. And if you can tell a good story, you can tell a good story about future growth.

you end up ultimately impacting the valuations of these assets. I want to pause there too, right, on this idea of like, somebody's, I know somebody's thinking their back of their mind who's going to throw their hands up at this point in time. And they'll say, but David, I went to business school, okay? I got my MBA and they told us how to value companies, right? It's discounted cash, net present value discounted future cash flows, right? So it's DCF model, discounted cash flows, model that over time, and you get the value.

just because things trade off of their fundamental value, you know, doesn't mean that, like, they have fundamental value. The fundamental value is driven by, as I was taught in business school, discounted, net present value of discounted future cash flows, basically, right? Even that, though, pause and think for a second. Even that model itself, discounted value of future cash flow, that is a story. It's just a story that we all reach consensus on sometime between like the 1940s and 1970s. And it's a story that's become so popular. It was put into business school textbooks and how to value a company and baked into our psyche. But it's still a story.

And it's a good story. And it's perhaps the correct story, as in it is the correct way to value an asset. But it is a story nonetheless. You can never escape it being a story. It's only correct if we all agree, it's correct. Right. We could all decide to say, no, actually, you know, profit doesn't matter anymore. It's all about growth.

It's all about revenue. And you kind of change the way you fundamentally value. You just change the story and you change the valuation of every company. In fact, I think somewhat that's what sort of happened with stocks and other assets with the last 10 years. So just even when you think there's not a story is the point. There's still a story behind the value. That is the story. Yeah.

And so this brings us to the question. All right. what is crypto doing it's doing a lot of things distributed systems solving the Byzantine general's problem I think in the context of this episode I'll make the claim that crypto is shattering the current story of money and the current story of money is a paradigm of fiat currencies and largely just the US dollar if you look at the market cap of all fiat currencies the story of fiat currencies is really the story of the u.s dollar especially when a lot of fiat currencies are just based around the fed base basically and so what is

crypto doing. It's shattering this story. And so I'm going to share my screen here real quick and share what I think really breaks the fourth wall of money, which is the one trillion dollar coin. We are looking at a coin that is worth one trillion dollars. I don't think this thing ever got minted. But like the thought experiment itself is the point where like to me the idea of the one trillion dollar coin like goes full circle about the farce of fiat money. It starts to like break through and puncture the fabric of reality for so many people, when they see a $1 trillion coin, it really begs the question, all right, what's money? And so crypto obviously didn't produce the $1 trillion coin, but at the same time that crypto is arriving on the scene, the Fiat money system

starts to fall apart. And so we are starting to puncture through one story as another story arrives on the scene. And this new story is crypto money, right? Well, but the $1 trillion coin, And this is not just a fabrication. This is actually a serious proposal, right? It's a serious proposal, yes, which is then treated as a farce by the crypto industry because we get it. Well, I recall it, like, originally emerging during the debt ceiling crisis way back in, you know, the early 2010s as, you know, something that was a serious proposal by Congress at the time. And then I recall it emerged. Do you remember in March 22, the beginning of?

COVID, Rashida Teleb was an advocate of this too. And she was talking about this could be a good measure to take in response to sort of some of the debt cycle type issues involved with COVID. So these are actually serious proposals by our government bodies and our legislators and those in powers. The one trillion dollar coin is not just a thought experiment. It's like an actual proposal. Yes, it's an actual proposal from the people who are still inside of the story of fiat money. And then the crypto people who have like really deeply thought about what is money understand that this is a farce from our perspective because we were kind of like quote unquote enlightened to this concept of money. Like we understand the concept of money. And so this is to me,

this is what really crypto is doing. It's shattering the current story of money and it's taking the power around storytelling, around money, and it's giving it to everyone, right? Like, make a new blockchain, make a new token. This ability, I've minted a new RC20 token. I've minted a handful. I have the power to mint new tokens. And if I wanted to, I could engage in a storytelling campaign about my tokens, right? Except, so I want to make a clear difference is that crypto is shattering the illusion of the dollar, but in its place, it's not giving us another new money. It's giving us a new ability. It's not Indiana Jonesing where it's taking away one money and replacing it with another, although the Bitcoiners would love to tell you that that's what their Bitcoin is doing. Instead,

it's crypto-shattering one story of money and giving us the ability to tell any story about money. So we're not getting a new crypto money to replace dollars. We're getting a new ability. Does that difference make sense? It does make sense. And I think that maybe the link here with the story of the $1 trillion coin is what made that so audacious is that the U.S. government was a essentially saying we can mint a trillion dollars at any point in time. They're basically saying like, yeah, all of that point system that's out in the economy, we control it and we can inflate the number of points at any point in time. And we get to control that, right?

And what you're saying, I think that is, well, crypto gives that power into the hands of the people, into the hands of communities. And it sort of lays bare that this is always what people. do. Right. Right. It's basically like it's it's all about a shared story and a narrative and somebody has the ability to mint. Every money system that was ever invented and generally a small group had the power to mint. Right. Now this is democratizing that ability, the power the power to mint. And what you're saying though is that it's a broader story. It's more about kind of the verb of being able to mint rather than a specific coin kind of knocking out all of the previous

versions of minted coins. Because if crypto just came in and said like, oh, the dollar's out, here's the new money. It's kind of like old boss, same as the new boss. It's really much more powerful if crypto gives us the power to make any money. And that's also in line with the progress of the internet, right? Before we had, before the internet, we had like, I don't know, like six, five, a handful of telecommunications news broadcasting services. And then the internet came, and then we had like 10,000 bloggers, right? And so new technology comes and it enables a thousand of what was previously centralized and controlled

and elite to be democratized to the masses. And so this is what crypto is doing with money. We have a few fiat currencies, mainly the dollar, also the euro, Japanese yen. And instead of just replacing it with a new better version, it's just opening up the ability to make any of these things up to everyone, to the free market, right? So it's replaced the dollar with the ability,

for any money to come into existence. And so that is really what is crypto here to do? It's here to democratize the power to mint new assets and let the money, what money becomes adopted as a result of that, up to the free market, rather any sort of like top down and controlled authority. And David, let me ask you, when you're saying money, you're using that as shorthand for any asset that is valuable.

Am I right in that? Yes, any asset. Honestly, including NFTs, any asset that has a premium to it. So you're not just saying, let's be clear about this, you're not just saying when you say, when we're using the term money in this episode, we're not just saying things that are a store value, meaning of exchange, a union account, things like the dollar or the euro or the yen or like, you know, nation state currencies. We're also saying like the stock, for instance, the additional value that, you know, you might store in stock. That would be a type of money, a type of asset. Right.

talk, the power to mint stock, the power to mint different other forms of collectibles, I would say. Is that correct that when you're saying money, you mean it's that broad? It's like assets, I think, would be the correct word, but money is like more fun of a word and more striking. But it's really the power to mint new assets. And this is also where we get into conversations of just like the authorities, the powers that be don't like it when the people of the world can mint new assets because how do they

tax it, right? like how the Romans don't want other people to make new money because that they had the power of senior age. And if other people could make new money, it reduces their power to issue new coins. And so like the powers that be, one of the way, one of the core ways that the powers that be of whatever organizational system that has come throughout history, one of the ways that they maintain power is they maintain control over the asset printer, the money printer, the ability to mint new assets.

And so now that we have that power, we have. experienced three bull markets and this is what the subject to the rest of this episode is going to be is like what do humans do when we have this power like what is our behavior when we are expressing this new power that we have which is the ability to admit new assets right that's kind of what we've seen play now so i guess if you are an empire the one thing the one story that you have to enforce is your story around money because that gives you kind of control over your sprawling empire but okay let's talk about this so if crypto was really basically giving individuals the power to mint new assets.

What patterns do we see play out in all of these bull cycles previously? Is it sort of the case where in each of these bull cycles previously, maybe we need to get in the history of this, but in each of these bull cycles, we've got this new power to mint money or tokens or assets. Remember money is anonymous with those things, mint something like this. And then we use that.

power flex it up to the max and something happens to cause like we we take it too far yeah tell us about tell us about the how we've like used the power to mint new assets in crypto historically yeah so looking back at the bull markets that we're going to we're going to dive into every individual bull market just to explore and unpack each one we'll do an autopsy of every single bull market the the patterns I've identified is that first there's a trigger something new happens something net new brand new onto the scene And second, as a result of that, a Cambrian explosion happens because of this new thing that we've unlocked, this new reason to mint money, this new kind of money that we're printing in the crypto world. So a Cambrian explosion happens, that's phase two. Phase three is corruption sets in.

Grifters come because all of this money, this new money printing is happening all over the place and people are trying to get their hands on on it. They overprint. They overprint. Exactly. They overprint. They over-issue. They're not responsible. And then as a result of that, a collapse happens.

And that's phase four. So trigger, Cambrian explosion, corruption, collapse, collapse. These are the four phases I've identified in every single bull market. Do you always funny about this? This almost reminds me of Radalia's idea of long-term debt cycles across kind of nation states and empires. It basically plays out like this. There's some sort of like trigger for the U.S. You know, in Bretton Woods.

It was the end of World War II, dominant power. That was kind of the trigger. and you get Cambrian explosion of the U.S. economy and the dollar it's everywhere, now becomes the petro dollar. It dominates the medium of exchange and union of account all around the world, 70% of all values traded in dollars at this point in time. Then you see corruption starting to set in. Huh, we could just mint this one trillion dollar in.

Can't we? This is interesting. Well, these are seeds of the corruption. And then later, this is Dalia's prediction. At some point, all of these empires that create, harness money as part of their empire, they collapse after the corruption sets in. They have to relieve all of this debt. So what's interesting is the pattern you establish for crypto actually happens over the like, what is Dalia's cycles, like 70 year periods of times, sometimes empires

go through a few of these cycles like, you know, hundreds of years type period of time. When crypto just happens like real fast. Like every four years we do this. And we repeat it because we don't learn the lessons because, you know, what is the common denominator between Everything here, humans. It's just us. We have the same behaviors. We have the same DNA. We have the same brains.

It doesn't matter what cycle it's on. The fact that humans, like all financial markets are ultimately based on human collective brain power means that these same patterns are going to happen again and again and again. Which is why we want to teach this lesson to the Bankless Nation because this is going to happen again. We're going to do this again. Next bull market. It will play out just like this. I promise you to a T.

Are you ready to get into 2013? Yeah, take us back to 2013. Okay, so Ryan, did you know in 2013, this is the earliest, I'm sharing my screen here, I'm the earliest snapshot of coin market cap. We can't even use Coin Gecko because Coin Gecko came after Coin Market Cap. The earliest snapshot that Coin Market Cap goes back to is the 5th of May 2013, where there is a whopping 10 crypto assets listed. Bitcoin, Lightcoin, Namecoin, Peercoin, Feathercoin, Tri-Coin, Terracoin, Deercoin, Novocline,

Mine a coin. Yeah, fry coin. It's actually crazy that 20% of these tokens are actually still around Bitcoin and Lightcoin. All the other ones have largely gone to zero. Of the top ten. Right. Well, let's throw out these market caps. So, Bitcoin.

$1.3 billion. Wow. In the price at the time? It is $115.15. $1.15 billion at the time. So we're looking at a total crypto market cap of about $1.4.4. billion or so. Something like that. Wow. Yeah. Okay. So this is the state of where things are in 2013. Bitcoin had been around for four years now, three and a half years now. We're kind of into already

this growing energy around Bitcoin price. Lightcoin was created in 2011. And Lykecoin was just a fork of Bitcoin with very minute like parameters changed. Like they made the blocks faster. They did use a different hatching algorithm. Largely the same thing as Bitcoin. It's really, just the same thing as Bitcoin. But there was a meme, right? There was a meme. Bitcoin is gold. Light coin is silver.

Light coin is silver. Of course. Of course. You can have it silver and gold. And so like the funny thing is like I think this will take too long to do. But if you like skip forward in the weeks, you'll kind of just see this. Look, I fast forward two more weeks. There's already four more coins.

BBQ coin, if you will. And then you can you can just see these prices like play out over time. But this is the idea. So this is the trigger. The trigger is Bitcoin was created. And then as a result of that trigger, people, like, oh, blockchains, oh, internet scarcity. How about Lightcoin? I'll just tinker with Bitcoin and I'll make a new one. And Lightcoin came in and like created a, you know, $50 million of value

inside of a year. Fifty million dollars of value in a year. That's great. And so this is the trigger for this first ever Cambrian explosion in the crypto space, which was the proof of what we call the proof of work fork and fair launch era, as in, oh, proof of work blockchings. You can just fork Bitcoin and make many, many, many more of them. And so kind of in the same era as like DeFi Summer, which was like yield farming in order to distribute, there was like this fork and fair launch era where you could fork Bitcoin, you could fork light coin, launch a brand new token, have a different way of distributing it, different proof of work algorithm. And that was, that was super like innovative. And so this is where things got started. American coin, meme coin,

digital coin, Franco, CHN coin, BBQ coin, mega coin, fast coin. Dogecoin came out of this cohort. Dogecoin in 2013. Another Bitcoin fork. I think Dogecoin was a light coin fork actually. Oh, okay, which is a fork of Bitcoin, right? So it's a fork of the code base. It's not a fork of the blockchain, but yes, you're right. And so like we're watching these like prices play out, right? And we're watching the first bull market happen. Look, Bitcoin had just hit $6 billion. Like in one week, it goes from $326 to $4,000. $90. That's insane. Wow. That's insane. Oh, well, we started this with Bitcoin price at 100, and now we're at 870. I think we're all I think we actually just passed the peak right here, which is January of 2014. So we're on that we're on the downtrend. But this is the pattern, right? Was that the trigger then? We had a Bitcoin is super successful. And it turns out you can fork other versions of Bitcoin. That was kind of the trigger. Yep. And then we saw the Cambrian explosion of all of these other coins. We should say,

say some of these were newer experiments, right? Like, pure coin was, I think, one of the first proof of state coins. So you had some early dabbling of that. Namecoin was, that was sort of a ancestor of ENS. EnS, but as a blockchain. Domain service type of blockchain. But a lot of these were kind of just forks of Bitcoin. I guess XRP came out at that time. All right, so we got the trigger. I think we're seeing the Cambrian explosion. What about the corruption? So what is the corruption part of the cycle? So the corruption part of the cycle is we started in April of 2013, there were seven cryptocurrencies listed on coin market cap. By the end of 2014, there were 513. So a year and a half, basically 500 new currencies were made. Now, do you think, Ryan, that in the

early days of crypto, like no metamask, no Ethereum, like every single blockchain had its own wallet, how many people were buying all these assets? Are you asking, is there, is there Demand for 500? Is there demand for 500 currencies and also Bitcoin at a market cap of $10 billion back in 2013? $10 billion was probably insane back then, you know? I'm going to say, I'm going to say, people got greedy. Or like, I guess a more charitable explanation. I don't know if you call this corruption is, but like, David, you just opened this episode and you said this is the power to mint money.

People using their powers. People use the powers. They're all minting money. Why are you calling this corruption that? Well, I guess I wasn't there for 2013. Maybe corruption is perhaps semantics. But I think the point is, is like, you're right. People use this new power to mint new money.

There was also appetite to buy the new monies. So people wanted to go look at down the market cap sack on Bitcoin at $10 billion. I'm going to buy Madesafe coin at $7 million. That's a better deal. And I can, there's more upside there. Maybe it's the next Bitcoin. And so like the whole like, maybe it's the next Bitcoin, like buying lower market cap assets because they want to buy to get rich.

people will take advantage of that. You could imagine grifters come in and tell you like, oh, like, you know, XRP, hits the next Bitcoin. It's going to be the swift of the internet, right? And so like these narratives come in, these storytellings come in. People start to flex their storytelling abilities, like why my money is better than your money. Probably like this is the genesis of like maximalism behavior about people being maximalist about that one particular coin. It's funny. like, but maximalism was probably also part of the, um, the antidote to this problem of too many

coins. You know, it's basically like, well, no, there is only one Bitcoin. There's only one Bitcoin. Stop talking about your like, 50th fork. Exactly. We, we don't care about that. Right. Okay.

So by the end, like I said, by the end of 2014, 513 cryptocurrencies listed on, on coin market cap. If we get into the ICO mania, there are around the start of ICO mania. I'll stop sharing screen here. Are you skipping forward to the next era or did we do the collapse yet? Oh, that was a collapse. Clubs. Clubs. Clubs. Prices went to like basically zero. Everyone thought it was dead.

It was the first ever Bitcoin bubble. And so when Bitcoin goes from where it was like a $10 billion market cap to where it fell down below $1 billion market cap, the idea that like it was actually dead is probably pretty like easy to accept. It's like, oh, that was a one time thing. Like that's never coming back. Like it's easy to say Bitcoin always comes back after it's come back four times. but Bitcoin had never come back before then. I do remember the narratives in this era. People were like, I'm done with public blockchains.

Right. It was blockchain, not Bitcoin. Right. And so it was the idea that, oh, well, enterprise blockchains could be a thing. There were all sorts of narratives. This was when IBM Hyperledger came around. It's a really brutal bare market. In fact, like I remember some of it.

I wasn't nearly as plugged in. But that was definitely the era of Bitcoin's dead, never coming back. It was all a Ponzi all along. it got over a thousand in terms of price and fell all the way back down to the hundreds, never coming back after this. 100%. And then that was like the 2014 to 2016 era, that two-year-long bear market where everyone left except for the diehard believers.

And you kind of had to be crazy to believe in Bitcoin at that time. Like to be the type of person to believe in Bitcoin that it would come back before it had ever come back before, you kind of got to be an insane person. And insane in a good way, too. So, okay, ICO mania, 2017. At the start of 2017, there were about 789 cryptocurrencies listed on coin market cap, so only 200 added in the next two years after the first collapse of the first bull market. By the end of 2018, Ryan, at the culmination of the ICO mania, there would ultimately become over 200 or 2,000 cryptocurrencies. So 789 to over 2,000. 12 of them had over a billion dollar market cap. Now this is called the ICO mania.

I think, Ryan, you know the answer to this. What was the first ICO? The very first, oh, that would be Auger. Very first ICO. No, Auger was the very first ICO for a token. Yeah, Ethereum was the first ICO. Yeah. I think that's true.

Yeah. Yeah, so Ethereum, the first ever ICO. There may have been very smaller ICOs, I don't know, but it's the first one that gets referred to anyway. Yes. Yeah, I think there was some on MasterCoyne, but it was the first big one. It was the first ICO of like a public blockchain. That was a very big deal. And this ICO was done in 2014. Ethereum raised something like $17 million, $25 million. It ICOed at inception. It was born into sin as Bitcoin Max mostly saying. Exactly. The pre-mine, 70% pre-mine. So Ethereum raised an ICO,

very successful. Immediately had a positive return on investment as soon as the blockchain was up and running. And then later in 2015, there was this ICO called Auger. Auger was a prediction market. It was the first ICO for an ERC20 token on top of Ethereum. This was a project spun up by Joey Krug, who's now at Pantera. I remember being very excited about Auger. Sadly, so Agar came, it arrived, it was built. No one really adopted it, but it was a very legitimate project that raised money and captured the attention of a bunch of possibility and imaginations of people. That was the trigger. So we're back at phase one, back at phase number one of, oh, you can mint tokens and sell them for money in order to build something. And that was the ICO trigger. That was the trigger that led to the 2017 ICO mania. And this is the first time I think we started calling these things tokens more than cryptocurrencies. Yes, that's right. The 2013 sort of era was we call all of these things still cryptocurrencies. But in the 2013.

the ICO mania that, you know, 2014, 2015, we started calling the things, at least on top of Ethereum, not cryptocurrencies, but tokens. And Auger was the first, I suppose, I see, I seeo for a token. And as you could imagine, people realize, oh, I can solicit for investment. They probably weren't using these words because this is words that will trigger nation state laws. But like, I can advertise this project that I'm going to build and then sell a token. and then promise that I'm going to build that thing, and then maybe I will, maybe I won't.

I think you could imagine how this would trigger a bunch of just, you know, grifters and short-termers who don't really care about the project that they purport to want to build. But, you know, millions of dollars started to flow into these ICOs, and this started to snowball. This started to become a medic. It's like, oh, that token just raised $100 million, and all they had to do was make a website and a webpage. Like, I guess I will do that.

And then we had a Cambrian explosion of ICOs. This is the paradigm I was born under, Ryan. I don't know if you came in a little bit. Yeah, a little bit earlier. Yeah, so we had the trigger, which is the theory, and the came in an explosion of these ICOs, and then you're starting to point to, like, the corruption, which is everybody's doing an ICU then.

And I remember those days, David, in 2017, all you needed was a white paper. Yes, that was the joke. You said a website, and, like, yeah, that's true for the minting function, but, like, the business plan was just this esoteric white paper. Right. And, in fact, like, that was, I don't know, the main question people ask is like, can I read your white paper?

Right. Right. But these ICOs were doing quite well in terms of like the amount that they were raising, but also the values of these tokens post token launch. Products hadn't necessarily been launched, but tokens were definitely launched. And they were also pumping in price. Yeah, that's exactly right. People would raise money for an ICO.

They would release the token to the blockchain on the blockchain on Ethereum. This is also where Binance got started because there was this insatiable desire to trade these tokens because people wanted to speculate. Is this token going to move faster than this token? What's that token's roadmap? Which token has a catalyst?

And while there was perhaps some meager amount of fundamental development behind these tokens, it was mainly about this narrative game of who's got the best story. Which team can tell the best story about their token? Why will this token accrue value? This is when we started talking about, mv equals pq if you guys if you guys remember that equation way back when or the concept of

token velocity and token sinks and all of this stuff but it was really a storytelling exercise it was like all these icos are just trying to tell a better story than all the other icos so is that the corruption starts to slip in when did we first get signs that this whole iCO market was going to go south because there were some legitimate icos that were actually building a product and trying to ship it even those were like massively stupid valuation But like, I would say 99% of all these ICOs collapsed into nothing. No ship product, like nothing good even new came of it. And the vast majority of these were actually, I don't know if we'd call them scams.

Certainly some of them were scams, but many of them just really had no merit raising the kinds of funds that they did or they would sort of exit scam slowly over time by like not shipping anything. like massive overvaluation. When did we get the first signs that this corruption was slipping into the ICO market? Yeah, towards the end of 2017, and I'll pull out this example.

There's a number of like very bad ICOs that I can pull back from memory. They all start to blur together. My first job in crypto was an ICO advisory company and let me tell you, Ryan, some of the ICOs I had to work on for. It was egregious that the fact that people even thought that these were a good idea.

But I'll draw attention to this one ICO. which was done as a farce. And this was called an ICO called Useless Ethereum Token. It was labeled as the world's first 100% honest Ethereum ICO. And the tagline is, you're going to give some random person money

on the internet, and they're going to take it and buy stuff with it, probably electronics, let's be honest, maybe even a big screen TV. Seriously, don't buy these tokens. So this is U.Eetoken.com.

I'm so happy that this website is still up and running. But this was basically a website saying, hey, I'm doing an ICO. My token that I'm building is called useless Ethereum token. I'm not going to do anything with it. These are the sale terms. I'm going to take your money and I'm going to buy stuff for me and also don't buy this token because I'm not going to do anything with it. I love this FAQ. Wait, is this a joke? Is it a scam? Neither. This is real and it's 100% transparent. You're literally giving your money to someone on the internet and getting completely useless tokens in return. Obvious satire. But somehow, I've got to say,

probably this token pumped? Is that the story here? Yeah, so how much money do you think this token raised? At the time. So 2017, I bet it did a $10 million raise. It did about a million dollar raise. This was the last snapshot I could get and then I had to look at the chain to actually get some numbers. I think it did something like $600,000. It raised $600,000. Which is... For nothing. At this point, $600,000 is actually a tiny, tiny raise in this time, in this day of time. Like, the tele... Ptogram raised a billion dollar ICO. The Ton, the Ton token, Telegram, the app that we all know and use, a billion dollars. Like, there were billion dollar like ICOs like left and ripe towards the end of this thing.

The crazy thing is, Ryan, the useless Ethereum token raised $600,000. When a token went to trade, it pumped! It went up! Investors in the useless Ethereum token made money because the token went to a secondary market and people bought it. it on the secondary market. This is in Etherms, yes. Yes. And so this is in August of 2017. And so

we still had a good number of like four months left in this bull market where Ether went from $600 to $1,400. This is why people would do this. People would issue a token and the token would go up. And so people would keep on issuing tokens because every time people would issue tokens, the price would

go up. It was free money. Money was flying left and right. I think probably everyone listening can imagine this this didn't end well. In fact, most of you know kind of your history of 2017 and it didn't end well. And this is what you're calling corruption. I can't help but think that this is corruption in some cases. In other cases,

it's just bubble behavior. I might call this corruption and bubble. Like corruption and exuberance or something like this. Like the maker behind that token literally, it was satire, right? It's like, I'm taking, thank you for your donation. I'm giving you all this money. I'm buying a TV. Yeah, I don't necessarily, I wouldn't label that

is like corruption. Right. He's just like, if you want to give me money, go ahead. Here's my donation address. And yet it's still pumped. So corruption and bubble behavior is really what happens here. But like then what happened next, I guess, with the 2017 market? It was the collapse.

2018 was just like 2022. It was the peak, crypto markets peaked in December of 2017. It was down for 12 months in a row to when we bottomed in like December of 2018. So the collapse happened. people got overextended ICOs got extremely fraudulent extremely scammie I literally Ryan worked on a token

this was this was when I started to get disillusioned by crypto it was called pet community pet data on the blockchain you would wear like you know like a Fitbit but a collar for your dog and it would register data about your dog's health and it would put it

on the blockchain I shit you not I had to work on that project Wow. Move to earn for pets? Sure. This was healthcare data. Yeah. I somehow feel like that could have been successful with different framing in 2021 and 2022 as well.

I don't know, man. There was fast pass so autonomous cars could use fast pass to pay other autonomous cars to have them move out of the way so the autonomous car could drive through in, you know, fast pass like Disneyland. Spot token. Spot was you can sell your. garage initially for like parking spaces but then the idea was that spot token would be just like the land it would just be land and people loved this story it was a good story do you know it's funny about this era it's like so there's all these stupid crazy icios but then there was also like a big exuberant market

around layer one alternatives so ethereum alternatives right so it's when it started yeah it's basically like yeah if Ethereum can launch all these tokens well then why don't we launch another Ethereum that can launch a bunch of other tokens right right and so I remember a few like it was Neo, which was the China of Ethereum. China. Yes, Ethereum of China, yeah. There was, do you remember a Dragon Chain? Yes, I remember Dragon Chain.

A Dragon Chain was like, like somehow there was this super nebulous, never confirmed connection to like Disney. Maybe it was some like former Disney and one. It was a wink, wink connection, yeah. Yeah, and it was like Disney's a, people would announce their, they would say

partnership with Amazon. We have a partnership with Amazon. What were they doing? They were using AWS to host their website. And they used an announcement that we're partnering with Amazon to facilitate our ICO. Do you were the Omise Go guy who's like, he took a skateboard and he took a picture of himself with a skateboard in front of like Google's office or something? And then like tweeted this out.

Partnership with Google. Yeah. It was like partnership with Google and like token. It was so stupid. Yeah. But it worked. And that's why it happened is because the story was told. and the market accepted the story at the time.

Okay, all right. So this was all caused because of minting, the power to mint, unleashes potential and also exuberant, corruption, bubble behavior, and then eventual busts. Sort of the same thing that we saw in the 2013 phase. I guess we saw a repeat in the 2017. Are you here to tell us that 2020, the 2021 phase, or whenever this kind of starts, 2020, I guess, the 2021,

is the exact same? I think you know the answer. First, before we get to 2020 to 2021, 2017 and the ICOs was the triggering of the ire of the SEC. This is when Enter SEC, Enter Player SEC came around. Jay Clayton, former agency chairman of the SEC, told a Senate in a hearing in February of 2018, I think, every ICO I've ever seen is a security because, Ryan, of course it was.

It was a solicitation of investment. It was an investment contract. It was literally a smart contract that was an investment contract for tokens. So no shit the SEC comes in. And this is when the nation state, going back to the original opening statements of this podcast, nation states, the powers that be don't want the many to have the ability to mint new assets, to mint new money, because that is their power. That is how they can't maintain control.

That's what they regulate. And that being outside of the regulatory apparatus is like threatening to them. That is kind of the nation states or evil sort of take. But I think if you were a regulator, you would say, okay, but I'm, we're just. But you guys just said how fraudulent they were. Yeah, exactly. So like, what do you want to, people are asking us. The citizens of our country are asking us.

The governors of our country by means of Congress and the president that you guys elected in your democracy is asking us to protect. our citizens and this is our freaking job like this so you're scamming retail you weren't scamming retail with these mania pumps then we wouldn't have to step in we don't want to control you we're just trying to like do our jobs and protect our citizenry right um i think that would be their take on this i think that's a 100% fair take um that is their jobs uh and and i don't really have any the other than to also say that controlling the issuance of assets and money is another way that may like the powers that be maintained control.

Ryan, I think it's time to get into Defy Summer and NFTMania 2020 to 2021. But first, we have to talk about Uniswap, where we talk about all of these tokens that trade and also the rest of the bankless sponsors that make this show possible. Uniswap is the largest on-chain marketplace for self-custody digital assets. Uniswap is, of course, a decentralized exchange. But you know this because you've been listening to Bankless. But did you know that the Uniswop web app has a show. shiny new Fiat on ramp.

Now you could go directly from Fiat in your bank to tokens in DFI inside of Uniswap. Not only that, but Polygon, Arbitrum, and Optimism, Layer 2s are supported right out of the gate. But that's just DFI. Uniswap is also an NFT aggregator, letting you find more listings for the best prices across the NFT world.

With Uniswap, you can sweep floors on multiple NFTs, and Uniswop's universal router will optimize your gas fees for you. Uniswap is making it as easy as possible. to go from bank account to bankless assets across Ethereum, and we couldn't be more thankful for having them as a sponsor. So go to app.uniswap.org today to buy, sell, or swap tokens and NFTs. Arbitrum 1 is pioneering the world of secure Ethereum scalability

and is continuing to accelerate the Web 3 landscape. Hundreds of projects have already deployed on Arbitrum 1, producing flourishing defy and NFT ecosystems. With a recent addition of Arbitrum Nova, gaming and social daps like Reddit are also now calling Arbitrum home. Both Arbitrum 1 and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM-compatible. On Arbitrum, both builders and users will experience faster transaction speeds with significantly lower gas fees.

With Arbitrum's recent migration to Arbitram Nitro, it's also now 10 times faster than before. Visit Arbitrum.io, where you can join the community, dive into the developer docs, bridge your assets and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be. Secure, fast, cheap, and friction-free. All right, guys, we're back. Let's pick up the story here. So we talked about some of the themes of all of these previous markets.

You wanted to show us this, David. What are we looking at? Yeah, I saw this from the comment from the YouTube chat during the commercial break. V-Chain signs a working agreement with McDonald's. V-Chain was a supply chain, blockchain back in 2017. I remember VChane. Yeah. It had a multi-billion dollar market cap, tens of billions of dollars.

McDonald's had to tweet out, McDonald's has not entered into a cooperation or partnership with V-Chane Foundation. The company is only using our burgers to feed their staff. Oh, my God. That is so, that is corruption. That is not exuberant. That's corruption. That's corruption at play.

All right, so what can we glean from this? What sort of pattern can we, can we, can we, can we see echoed across all of these previous bull markets? Well, should we echo these patterns into 2020 and 2021? Because we still have one more, we still have one more bull market to go, brother. Let's see that. Let's do that. Okay, so we're in 2020, the start of 2020. There are now 3,000 cryptocurrencies.

Again, we started, we started the start of 2017 with 789. We ended 2018 with over 2,000 cryptocurrencies. We are entering this next phase of the bull market in 2020. the next phase of crypto in 2020 with about 3,000 cryptocurrencies. By the end of 2020, which Ryan does not include 2021 or 2022, by the end of 2020, the year of defy summer, there were over 5,500 cryptocurrencies listed on coin market cap. That's the number of cryptocurrencies, which is one dimension here.

Another dimension is the size, the total market cap of crypto, right? And so I think we were showing like something proximate in 2013. we got to like 10 billion, maybe 15 billion, something like that. And then the next cycle in 2017, how high did we get? We got in the hundreds of billions, didn't we? Yeah, let me pull up a coin market cap, and I will answer that question. I don't think we got quite to, we didn't get to a trillion, I know, in the 2017 market. But, yeah, show us on coin market cap.

we got. Let's see. How do I do this? This might take some jumping around. Oh, just go to coin market cap and like look at total crypto market cap. Oh yeah, you're right. You're right. I don't need to do that. Yeah. Okay. She is the master chart. Yeah, yeah, yeah. Okay. So in, oh, God, log scale. So in 2013, we peaked out at $13 billion. In 2017, we peaked out at, what is that? $500 billion? $570 billion. Oh, we on. We almost got up to one trillion. We almost got up to one trillion. Look at that.

What a map, like what a, that's just an order of magnitude difference in terms of size. And then, uh, and then we down, we fell down to almost below $125 billion, how $125 billion at the bottom of 2018. And then we got up to three-ish, three trillion in 20, this last bull market, this last bull market. Well, it's interesting. It's not nearly like the difference, you know, 700 billion to three trillion. trillion is much different than like 12 billion to 700 billion right this I mean honestly this I wasn't in this cycle you weren't in this cycle but this first cycle of course the first cycle of

crypto is the best cycle to be in it's where all the games are the most epic run-up ever ever yeah the most insane thing yeah where it takes almost no money to move the price the difference is like we created tokens in this market cycle I guess yeah that might be the big minting unlock here it's easier to make value with tokens than it is with layer one blockchain. I think that's a great take. Right. Well, like and then so going into 2020, we had already had this invention of tokens. But yeah, take us to 2020. What were we seeing then? Yeah. So the trigger for 2020, DeFi Summer, was compound governance. Compound released the idea of a governance token. And all of a sudden tokens go from like to get that token out of my face. I don't want to see

another token because the last time someone showed me a token, it was an ICO that went to zero. So like the appetite for tokens between 2018 and 2020 was absolutely zero. Compound releases compound governance and yield farming, invented yield farming. And all of a sudden people are like, I can yield farm with tokens. I can get yield on my tokens. I love tokens. Tokens are great. And all of a sudden tokens become in vogue again. And so this is one of the big points I want to drive home. Tocons, bull markets are not only, you. we create a reason to mint new assets. In 2013, it was we can make new blockchains. In 2017, we can mint new ERC 20 tokens. In 2020, it was we can yield farm because these tokens have value now with governance. But also, it creates the appetite to receive these tokens, to buy these tokens. In bear markets, everyone flees up the market cap stack to Bitcoin and then later to Bitcoin and Ether.

In bull markets, people flee down the market cap stack because they want the low cap token. because tokens are in. And so the trigger, the trigger for 2020 is compound governance and liquidity mining. Yams, if you remember Yams, also a big trigger of just this Cambrian explosion of yield farming. And so appetite for more for buying tokens and issuing more tokens comes back. And so what do we do? We mint a bunch of tokens once again. And this was DeFi Summer. The most lucrative part of the 2020 to 2020 bull market, by the way, was 2020 DeFi Summer. It got scummy and bad in 2021 when corruption set in. Well, there's two dimensions to this because so I agree with everything you're saying,

but let's also not forget about NFTs as a token. Right. And we didn't see that massive, you know, whatever that was, 70X increase in fungible tokens. But we did see that kind of an increase in NFTs. Yeah. And we didn't just invent NFTs in the 2020. to 2021 bull run. We had those previously, but like they were barely used.

Really, I consider sort of 2020 to be sort of the birth of the first real NFT bull market. And that did see like 70X types of increases. And so we got this entirely new asset class. It's almost like in 2013, we figured out we had the ability to mint cryptocurrencies, of the blockchains. in 2015 to 2017, we figured out that we could mint tokens.

And in 2020, yeah, we figured out we could add yield to our tokens and that maybe some of the defy tokens were valuable. But we also figured out this NFT thing, which is a whole new minting experience. And that had the most massive bull market that I think we saw.

It's just like from zero to all the way to kind of, you know, how many tens of billions of dollars the NFT market landed, but it just grew from nothing. Yeah, and it really triggered parts of the brain that other, like, ERC 20 tokens just hadn't. EOC20 tokens highly financial in nature, right? Fungeable tokens, there's no, like, character, there's no culture in those. ERC20 tokens are unique. There's art.

There's things to look at. There's pixels. And so it triggered the appetite for so many people, for so many people. It's like, I didn't really care about crypto, but NFTs are interesting to me. and it lights up a new part of the brain. It triggered the appetite for buying these things. And especially during the early days when a crypto punk in 2018 was one ether,

like the appetite is also conduced by the fact that these things are always going up in price. And so like no one has like an anti-NFT bias here because every time they buy an NFT, they make money because it goes up in price, which furthers people's appetite to buy more NFTs. So like the first half of the bull market, very strong appetite

for NFTs. Then things like a shitty Fiver project comes out, shitty NFTs come out, the minting process sucks, gas fees happen, and all of a sudden people's appetite for NFTs lessons. And then, of course, the corruption just goes from a little bit to a lot, turns up to a T. We have scams, we got rug pulls, we got all this stuff. And all of a sudden, the market turns over once again, because there's a flurry of activity going around, and that triggers the grifters. The grifters come, they can smell all the money, and then they come in and do their grifting. stuff. They suck out all the money from the market, and then they leave us with, like, a bear market and a collapse to deal with. Yeah, the grifters are definitely responsible in that play.

And yet, so are we as the exuberant people who are buying their bags. Grifters can't grift you if you don't buy their assets, their product. But what we saw was exactly what you're saying is the trigger, the explosion, and all these minting, all of these tokens, all of these assets, the corruption and the exuberant setting in, and then the collapse. And of course, here we are at the beginning of 2023, post-collapse. This is like 2018. This is like, I guess, 2014 again, and this is all happening. So what is the trend at play here, David? The trend is something we've talked about on bankless before. I'm showing my screen of the euthanasia roller coaster, the frequent meme that you should definitely understand in crypto.

The euthanasia roller coaster is a concept for a roller coaster designed to kill its passengers. So it's one gigantic, like very steep incline to a very, very high point. And then the roller coaster starts to fall down and gain acceleration. And then it does a series of loop to loops, seven loop to loops. And the loop to loops are getting tighter and tighter and tighter and tighter as they go along. And the idea is that I'll read from this caption here. The creator of this roller coaster wanted to create a way in that this roller coaster kills its passengers with elegance and euphoria. Yeah. It is a ride to the death. It's a thought experience.

This does not exist. But it will kill you. It will kill you. Yes. Because you're sustaining G-forces for too long. So it's a ride to the death. The seven loops or inversions put the human body under such stress that it causes the brain to be starved of oxygen. And the heart simply cannot push blood against the enormous G-forces. It's designed to kill you. But it's at least a fun death. Kind of like a bull market, right? Like the longer you stay in the bull market, like the more loop-to-loops you're going around. but if you don't sell by the end of the bull market, you're going to get crushed, right?

That's the lesson I took out of the Chris Berniske episode that we just did. So this is the pattern of every single ball market. It's a euthanasia roller coaster. Each of these loops are like tighter and kind of like, I guess, I guess worse and sort of repeating fractals of the first. And that's why we see this massive quality difference

between the first versions of the minting for that token and like the final versions, the minting of the token. You start with something that's so, like, very creative, something like a Cryptopunks, for example, and you end with some, like, Kevin. Do you remember that NFT? Yeah. The Pixelmon.

It's just like people were minting NFTs from Fiver contracts, like where they would just be like, you know, design me these NFTs very quick, quick and dirty. I mean, look at even like some of the, Donald Trump NFTEU. It's like, there's stock images, right, of his body. Stolen stock images. Very, very low effort token minting that is clearly not going to sustain into the long run. That's how these markets always end. All right. So what is the takeaway around this? David, it's the takeaway here that like, okay, minting is bad power. And this is why nation states were right all along.

and empire is right all along. Yeah, that's exactly. That's exactly what I believe. This is now the statist podcast. Well, I mean, some people will say that. They'll be like, all right, you're saying how great it is to give the people the power to mint, but I'm not seeing greatness across these three cycles. Is that just the cynical take? Is there some greatness hidden?

What are like the good things about it? And then like, what are the bad things about it? Yeah. So the good thing, it's good and bad. And like, is technology good? No. Technology is evil. Humans are I, no, no, excuse me, technology is neutral.

Humans are either good or evil based off of their behaviors and what they do. And so neutral technology can get corrupted or it can, what's the opposite of corruption? It can get used in very healthy and productive and proactive and socially, like, productive ways. It depends on who's using it. And so there's this like resistance to nation state laws, resistance to the SEC. We don't want OFAC to come and. censor our blockchain. And so that's great. I 100% believe in that. We as humans now have the power to mint new money. That is a power that we have in our back pocket. We can mint new tokens. We can make

new blockchains. We can make new NFTs. This power, which was previously only held by the elite, is now democratized. And that power is something I fundamentally believe in. That's good for humans to have the maximum amount of tools at their disposal because the free market will eventually sort out, okay, that money that that human made is bad, but this money that these humans made are good. And so the market will start to adapt and answer to that, I believe in the free markets. Ultimately, after much chaos and settling of dust, we will settle on a brand new money that's brand new and like not fiat money and much better because it's community adopted, bottom up adopted. This is why I'm a fan of ether. But at the same time, with great power comes the great

responsibility. We now have the power to mint new money and grifters also now have the power to mint new money and that is something to watch out for. And so we have this resistance to nation state authority. But we have to remember and this is why we did those securities episodes at the beginning of this year to explore like securities laws date back to like 1,200 back way, way, way long ago, like very early. And then they also adapted and grew and grew and grew because humans realize that if everyone has this power to mint assets to make a company, make an LLC, whatever, some people will corrupt it. And so we came together as a society and bestowed the power of self-regulation unto a certain authority. The SEC is that authority for us. Perhaps you don't

believe that the SEC is no longer a good faith actor and they've also become corrupted. But the idea is that the need to self-regulate is bestowed upon us. And so this is my call to action for the crypto industry, we now have the power to mint new money. With great power comes great responsibility. If not the SEC, then who? Then us? What are we going to do about this new power that I believe is fundamentally good, but grifters can sneak in and corrupt it? How do we answer to this problem? How do we solve this problem of grifters coming in and corrupting every single bull market that ever will ever happen in crypto. Because if we want this, if we want the super cycle to ever happen, Ryan,

it's going to be because we figured out how to self-regulate and keep grifters out and allowed for sustainable and real fundamentals-based asset minting to come about. So that's my call to action. That's why I wanted to do this show. If we want to resist like three-letter agency control over our industry, we need to self-regulate ourselves. We need to do something. and I don't know what that is,

but that is my call to action for the bankless nation. Well, I think that's a good take. And I think doing that will obviously alleviate some of the pain. And hopefully, listener, once you understand how these market cycles work, you'll understand the next one because it, look, guys, it's going to play it the exact same way. The exact same way. All right. So there's going to be some trigger in the future, but maybe it starts in 2023, 2024.

That trigger will be related. to the minting and the creation of some sort of token. Or maybe it's a new way that we are minting things, or it's a new distribution mechanism, or it's a new way we're adding value to our existing tokens, and narratives will form for this. There'll be something there. There'll be the seed of something that is incredibly useful there.

Very real, very innovative, very awesome. That'll be the trigger, guys. We don't actually know what it is. And in advance, it was impossible to call all of these, but I think you can recognize it in the early stages. And then what you'll have is the Cambrian explosion of this experiment was successful, and it gets repeated, repeated, repeated, repeated. You know, the first 10 to 20 percent of those experience will probably be pretty wholesome,

pretty healthy, pretty useful. But then we'll be around and round on the roller coaster. It'll get worse and worse and worse and loose will get tighter, and we'll start to lose our oxygen and it'll play out and eventually it'll die and reset. You will need to get off the roller coaster at some point. Yeah, so you don't die. And like, I think that's, look, how can we prevent this? You can be educated.

You can understand how this works. You can protect yourself. At some level, though, David, I do think that, yes, it would be nice if we all held hands and we're like, we're going to self-regulate. And here's exactly how we should do it. I've not seen that play out in any of the cycles I've been part of. Sadly, kind of bearish on that. I think there have been some efforts towards that.

And we've made progress every cycle. But I don't think it's going to fully play out this. cycle either. However, what I will say is the healthy part of these cycles is how quickly they happen. And all of the veterans who've been on this roller coaster before, like, they kind of know. Like, we can sort of spot it. And I do think that the grifters will come. But what happens at the end of these cycles is all of that excess and scaminess and fraud and margin and all of the corruption actually, like, gets burnt off in like a healthy way. You know, we've, we've, we've, used the analogy of sort of the woods. And if it's sort of in older, you know, woods, lots of

foliage falls, dry twigs and leaves, that sort of thing. Underbrush, yeah. Yeah, it's all the, underbrush falls. It's actually a healthy process for the forest to go through some sort of fire, rejuvenation period, to burn that off so that new, new plants, new life, new trees can actually grow in its place. And we have that happen in crypto. That, I think, is the regulatory effect. This is in some ways, David. Yes, we can save ourselves some pain. But like if we don't do it ourselves at the social layer, which like, I don't know if we can.

I don't know if all the bankless podcasts in the world can hold the scammers and fraudsters at bay here, right? I don't know if the most educated crypto community can because a whole other set of the population is going to come in and just be like, what? You boomers. You don't know anything. You dumb eats maxis. Yeah, this time it's different. and here's why, they'll go fall for it and they'll have to learn the lesson the hard way.

But I think through the process of exuberant, market failure, collapse, total wipeout, no bailout on the other side. That is actually how we're leveling up. Because every single cycle, we get 10x, 20x, 30x, in order of magnitude more useful in terms of the application,

value of creating the world than the previous cycle. Everything gets better and values increase as well. So, you know, the old ceiling, the old ceiling becomes the floor for the future cycle. That's right. So, yeah, anything else you want to say to end this thing?

That concludes this episode, I believe. Class from time with bankless. Hope you guys enjoyed it, of course. The power to mint money, that has been the episode. I'll end with this, our typical risks and disclaimers. Gotta warn you that, of course, this crypto roller coaster is pretty risky. It will kill you. It could kill you.

You could lose what you put in is our way of saying it. But we are headed west. This is a frontier. It's not for everyone. but we're glad you're with us on the bankless journey. Thanks a lot.