The Breakdown - America and the Metaverse

Starting point is 00:00:04 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by Nidig and produced and distributed by CoinDesk. What's going on, guys? It is Sunday, November 28th, and that means it's time for Long Reads Sunday. Now, I have obviously had a few shows in a row, my gratitude for Bitcoin mini-series, that have been focused on what's happening in the Bitcoin ecosystem, what the big of this year were, what we have to look forward to, and for this Long Read Sunday, I wanted to, again, stay in this kind of zoomed out mode, but shift gears a little bit. Today we're reading excerpts

Starting point is 00:00:48 from two threads by Punk 6529. Punk 6529 is perhaps one of the best examples of a big content trend this year, which is that some of the most interesting and thoughtful discourse, particularly around NFTs, Web3, and the Metaverse, has come from Anon's in Twitter threads. I have always loved great Twitter threads, but also always appreciated how ephemeral they are. And so hopefully by capturing some of them in Long Read Sunday, they will have a longer shelf life, although I'm not sure, frankly, that these ones need the help. So the first thread we're going to read is called On America and Crypto, and I thought this somewhat fitting after such a quintessentially American holiday like Thanksgiving.

Starting point is 00:01:28 On November 7th, Punk 6529 wrote, There is no more natural home for crypto than the United States of America. There is no more strategic weapon for the United States of America than crypto. The USA has never gone wrong betting on freedom and things are no different this time. First, let's knock out the major alternatives. China. Non-convertable currency, top-down social credit system of integrated control. Russia would like to be China.

Starting point is 00:01:51 EU blissfully unaware that technology matters. India, Bologi's fighting hard, but it's a tough battle. Now let's knock out the rest. Switzerland. Zug is cool but antsized. Singapore, same. Dubai. UAE.

Starting point is 00:02:03 Same. Theoretically interesting, but busy running out of crisps or whatever these days. Nigeria hates it. Brazil, unaware of crypto's existence. The rest, come on. The USA is, on the other hand, swole. Largest economy, strongest military, largest tech industry, largest financial industry, largest media industry, deepest capital markets, convertible reserve currency, unending consumer market. The USA has something else, too. It is a fundamental belief in freedom from the state and a healthy distrust of the

Starting point is 00:02:30 infallibility of the state. Boston Tea Party, Constitution, Bill of rights decentralized system of governance. Has the USA deviated from these ideals? Sure, many times. It is the worst state in terms of freedom except for all the others. Take two examples, one for each political persuasion, the first and the second amendment. There is nothing like this in any major power. The First Amendment is a unique extraordinary devolution of rights to the citizens. There are very few countries where you can say what you want to on practically any topic without fear of arrest. And what countries pay a price like the USA does in service of the Second Amendment. The system of governance is also quite decentralized. The USA is a federation, something not fully

Starting point is 00:03:09 understood outside the USA, with a massive number of states' rights. And within states, there is further decentralization like local schooling. In other words, the United States has all the ingredients to lead the Web 3.0 revolution. Financial and technological muscle, world-class creative industries, a belief that its people shouldn't be micromanaged by a centralized set of government employees in the capital. So what is going wrong? I mean, the USA is the center of global crypto, but it is a grind. The relationship between crypto and Washington, D.C, is all tension. The positioning is all defensive. What are the things that can go wrong and how can we control them? I think the first issue is the generally unexamined growth of AMLKYC measures. AmLKYC is an important

Starting point is 00:03:49 topic, but it is just a series of regulations, nothing more. They should be subject to cost-benefit analysis and subordinate to constitutional rights. The second issue, similar in nature, is the securities lawization of literally everything. Matt Levine discusses this in a public market context that all types of things are now indirectly regulated as securities laws violations, even if they may not be directly illegal. The same thing is happening in private markets. The current regime is woefully inadequate for Web 3.0 business models. If you try to return value to users, you risk breaking the law. The only safe choice legally is to keep all the value to yourself. Odd. The net effect of the Howie test in a Web3 context is to lie.

Starting point is 00:04:28 lock in the web two firms like Facebook. The way to reduce Facebook's power is not to call Mark up to yell at him in Congress. It is to let people build economically incented community-based alternatives to Facebook. The third issue is the deep national security state believes it has organized the world nicely right now. In other words, the views that the U.S. derails

Starting point is 00:04:47 and correspondent banking around the world are a point of serious strategic control. This is a complex issue because they're not wrong. The USA currently might be at its point of maximum control over the infrastructure of the global financial system. The question is, is this sustainable, or will progressively others, see China, build their own rails? The fourth issue is that the communication from crypto field is incoherent and sometimes nuts. From We Will Replace the Dollar to All Crypto is going to go offshore to here are 439 detailed regulatory

Starting point is 00:05:17 recommendations, it is impossible to find fundamental principles. My view is that the progressive consolidation of our digital lives in a handful of firms in Silicon Valley is deeply un-American. We did not fight for centuries to increase the scope of our freedom to hand it all back to some new industrial conglomerates. On the geopolitical front, Washington has to think offensively, not defensively, and be more bold. China can and will replicate rails of control. China cannot function in a Web3 model in its current system. Nidic sponsors this podcast and they are helping banks, corporate treasuries, and fintechs integrate Bitcoin into their products and balance sheets. See why Bitcoin

Starting point is 00:06:00 Bitcoin means business at nydig.com slash nLW. That's nydig.com slash nlw. The analogy I think about is the internet in the 1990s. The internet pressured a very centralized media industry in the United States that manufactured consent in some type of unofficial subconscious collusion with the political establishment. One defensive view would be to shut it down to maintain control. The much better offensive approach was to encourage the development of the internet at home and internationally and open the opportunities and challenges of the internet globally. My view was very simple. The USA can handle open systems. Its strategic competitors can't. My view is the literally anti-Peter Thiel view. His view is that China was encouraging

Starting point is 00:06:47 Bitcoin to reduce USD dominance. It was the most backwards thing I've heard in years. The USD can handle Bitcoin just fine. A closed system like the Yuan cannot. A different way to put it, I am much more optimistic than our political establishment. I believe the USA can lead the way a greater freedom, innovation, and decentralization, and that will help the United States and the world. If the USA leads on this topic, the EU will follow. If the USA and the EU choose the path of freedom, we start to build systems that citizens of more closed systems aspire to. This, to me, is the way. It is a running joke to look at the terms of service of crypto services and see that they aren't available to residents of North Korea, Cuba, Yemen, Iran, and the state of New York,

Starting point is 00:07:28 due to the bit license requirements. Ha ha ha, but actually a total embarrassment. New York is the financial and creative capital of the United States. Its residents are not idiots. The idea that New York should be the state of maximum regulation of crypto globally is wild. We lost this battle in 14 and how much opportunity has been lost since then. So it is time to stop thinking defensively and start thinking about opportunity, about offense, about building the next generation of internet-enabled organizations. The 1990-2020 to 2020 cycle has run its course. The next cycle will be decentralized.

Starting point is 00:08:00 Time for America to start playing to win again. Not playing not to lose. Now, NLW say, but what about the Metaverse? Isn't just thinking about America and geopolitics in a traditional way so last year? Well, never you fear, Punk 6529 also has you covered. Our second read is actually from about a month earlier, and it's called On a Pathway to an Open Metaverse. We're going to make a run at changing the arc of history. It is a return of the Jedi versus the Death Star-style mission.

Starting point is 00:08:30 They have the money in power. We mostly have our brains, our community, and good. morning. But it might just be enough. A step back. 6-529 has been involved in crypto since Bitcoin summer 2013. From the first day, I was convinced that Bitcoin and its successors would change the world, make it a better world, decentralized power away from choke points, and that this was a net good for humanity. I played a small role in Bitcoin's development and guidance. Small in the scheme of things, but important to me, and at the time, it was a risky move. And since then, I've been waiting for our more decentralized social systems to emerge. And waiting, and waiting.

Starting point is 00:09:02 6529 has institutional credentials. I am completely comfortable in the system and the system is good to me. I am not a loser in our current system. I am a winner. But my heart is in crypto. I spent a lot of time on crypto-ir-IRL and know a lot about crypto. I did not look seriously at NFTs until February and within months, well, I like the JPEGs and by summer I had quite the NFT portfolio. So what next? The easy choice was to sit back and relax. Enjoying my RRL life while making lots of beef looking at pretty JPEGs is about is level four as 6529 can get. But I had a problem, and that problem is I can see a window, a wormhole, a lever that can maybe lead to an open metaverse. It is one of the most important things in the world. It is a very narrow window, both scope and time limited. Soon, it will be

Starting point is 00:09:44 too late. It is very easy to complain that the world isn't how it should be while doing nothing about it. In fact, often while contributing to the exact problem we are complaining about. Hi, Crypto Fam, on single point of failure, Twitter, looking at you here, talk is cheap. life is short and then you die, friends. If people like me and a lot of crypto whales aren't willing to put some skin in the game on decentralization, then we are larping, we are bullshitters, and we are just using decentralization for marketing. So in late July 2021, 6529 was booted up. The goal of everything I've been doing is to help you see the window too, to see what I see and yearn for it. What do I yearn for? That our children and grandchildren will remain free. That they will remain sovereign beings. That we don't sleepwalk into a panopticon society controlled by a handful of people with God's view of

Starting point is 00:10:27 big data machine learning enabled systems. This sounds dramatic, but the trendline on this topic is bad. China is already gone, and the U.S. and EU are creeping in the wrong direction. We need to act now before it becomes irreversible. Acting now is a no-lose proposition. If the apologists are right and the system is not centralizing, then our efforts at decentralization will be welcomed by governments and companies. If we are not welcomed, then it will have been a good thing that we acted. My view is that the default outcome of the metaverse will be centralized. Big Tech is the money, talent, massive reach, and interestingly, the full support and encouragement of nation-states to exercise more control, not less control. So what is left for us? There is only one thing stronger

Starting point is 00:11:06 than money, reach, talent, and the vast power of the federal government. That one thing is shared, myths or memes. Memes are the apex object of society. We've never had a social organizing tool this powerful. NFTs are the same class of solution as Bitcoin, but looser, more abstract, more human. Buying a Bort-Ape Yacht Club does not commit you to a super-strick set of rules like 21 million only, but that is okay, because humans are non-fungible. Every BORApe holder can extract and interpret their own meaning from BORAPE. It will not and should not be the exact same thing for each individual. We are humans, not drones. But like on average, B-A-Y-C holders will think and act more alike than non-BAYC holders. This is how all societal myth-building institutions work. The Republican Party,

Starting point is 00:11:48 the Democratic Party, the Catholic Church, the United States Marine Corp, the ACLU, Greenpeace. Each member is different, but the group has broadly coordinated goals. will be exactly like this. Some people will be truly dedicated true believers. Some will help a bit. Some will be along for the ride. Some will be there for the free beer and pizza. Some will be sent by enemies to sabotage the show. This is fine, normal. So why do I say GM to all of you? Because it is a reminder that behind those avatars are real-life people. I say GM at home, at work, to people in a coffee shop. Why wouldn't I say GM to you? Now, I'm going to pause here because this thread goes on a really long time. And the reason that I wanted to share this and that I wanted to pair it with

Starting point is 00:12:28 the other piece is that I think sometimes people don't realize just how committed to the ideas behind these NFTs people are. And that's not to say that I agree with everything that 6-529 is saying or that I see the world through the same lens that he does. But I love, love, love the fact that these random little JPEGs are provoking fundamental questions of sovereignty. They may not be the answer that other people are looking for when it comes to how they assert their sovereignty. But the fact that sovereignty is the conversation inherently that comes up is a powerful thing. The stakes of this crypto game are going to get higher. Or perhaps we're going to realize how high they've been the whole time. In any case, I'm excited for the future. I think the battles that we face are necessary for coming

Starting point is 00:13:17 out the other side. And I'm excited to have you all here along for the ride. Until tomorrow, guys, be safe and care of each other. Peace.

The Breakdown - America and the Metaverse

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.