The Breakdown - Mass Adoption - But Of What? And At What Cost?

Episode Date: October 30, 2019

Times, how they've changed. The surge in bitcoin price and the explosion of China into blockchain has heads spinning. Some argue that we should be celebrating mass adoption of any type. In this audio op-ed, however, I argue that there are two key questions. First is - adoption of what? What is the connection between open, permissionless money networks and an immutable record of a political loyalty pledge? Second, what is the cost of adoption, in moral terms? As the industry ascends, these are key questions to ask now.  Watch: https://www.youtube.com/nathanielwhittemorecrypto

Yes, you're too busy to watch this ad. Uh-huh. Just like you were too busy to invest in Bitcoin or Ethereum. Oh, who's a Gucci Boo Boo? I see Gucci Boo Boo. You're a Gucci Boo. You think trading crypto is hard? How hard is it to open E-Toro?

Pick a coin and hit trade. Now, maybe you're thinking, but I'm just a food blogger. I can't do this trading stuff on my own. Well, I got news for you, pal, with you. E. Toro's social trading, you don't have to. This is called a news feed. It's like your social. Welcome back to another Crypto Daily 3 at 3. Obviously, a little bit of a late edition today. But I wanted to jump in. So it's Tuesday, the 29th of October, as Alec Baldwin in the E. Toro ad plays behind me. And I wanted to talk a little bit about the idea of mass adoption today.

And the reason for this is that, you know, last week I think was kind of seminal, right? We had this huge moment with Congress and Libra, quickly followed by China, making major moves into the crypto space, followed by a screaming Bitcoin price rip up, followed by a lot of attention returning to the space. I don't know if you guys have been seeing the same thing, but I'm getting, I'm seeing announcements of announcements. I'm getting random DMs about air drops and things like that. And so, you know, at the risk of overstating the case, you know, Bitcoin could go back to $7,000 tomorrow and no one would care anymore. But it feels to me like there's a little bit of a shift. And I think that one of the big conversations that has to happen as we uplevel the industry

and we talk about a lot of the new types of attention and energy coming in is regrouping with ourselves about what our goals are as an industry. And so this is kind of about just looking at the conversations that I see happening that I think we need to be having around the idea of mass adoption. By the way, I grabbed this E. Toro ad to kick us off because I think it kind of fits with this idea of mass adoption, particularly given that it features Alec Baldwin. I think they did a really great job actually with this ad. And if anyone is interested in advertising efficacy, we can have a whole conversation about that. But that's kind of not, that's just the kickoff. What I really want to kick off with is China, right? And so, and the first question I think is mass adoption

and at what cost. And so one of the themes that I've really seen kind of blown out over the last couple days is this idea of, or the debate really around whether adoption, any adoption is good, right? So what really kicked this off is CZ from Binance saying, remember, adoption is always good for crypto. Don't push people away, including JPM, including Libra and even JPMorgan. And then he says, even though China will certainly create its own cryptocurrency, I wonder if Bitcoin Maximilus will be kind enough to thank President Xi today. And that set people off, right? So you had Jameson Lop, who really summed it up nicely, he said, adoption is always good, leads to adoption at all costs, leads to let's compromise fundamentals to support adoption. This is the Silicon

Valley style high growth mindset that led to many Bitcoin forks and more shitcoins than you can shake a stick at. Nick Carter also made the point that this is a very kind of Silicon Valley style idea. Other folks brought up and had attention with this. So Dennis here says, Bitcoin are celebrating Beijing's embrace of blockchain is akin to AI enthusiasts celebrating facial recognitions in Xinjiang prison camps, except worse. Bitcoin is antithetical to authoritarianism. If you don't see this, then you miss the point of Bitcoin. I pointed out, CZ, saying, this is big, the country with the biggest population on earth. Now, one of the highest GDP growth in recent years just took a big step in the right direction. What is your country going to do? Follow or get left behind. Peter McCormick,

always soft-spoken, though he is, says, this is big. The tyrannical, oppressive, murdering, censorship, happy, ethnic cleansing, human rights abusing CCP stepped up their surveillance plans. Let's all turn a blind eye because yay blockchain. Jacob over here, Kostecki, says, if you've bought an an iPhone or a pair of Nikes or watched a Hollywood action movie or bought from Walmart these past 15 years you've been supporting this bloodthirsty government. The blockchain news is just an extension of that. It's absolutely nothing new about the evil of the party. So there's really two things going on here. One is, I think, a much bigger question which has been around forever, but we are especially grappling with now about China and the role of China in the global economy. And to what extent we can get past things that we don't like about how China runs its government and China runs its economy in order to,

have them be kind of integrated into the global economy in the way that we'd like. That is a much larger question than just crypto, but the aggressive move into the blockchain space and into the digital currency space where China is really leading the charge to have a central bank digital currency is putting crypto at the center of that conversation. This is, of course, while things like Hong Kong go on. And so that's raising kind of awareness in general. So part one is just this idea of China specifically. Part two is this question of mass adoption more broadly, right?

And going back to CZ's point is adoption is always good for crypto. And the question is, well, why and what? Which gets us to our second point. So let's maybe jump there. So mass adoption, but of what? So question one is mass adoption, but at what cost? And specifically, are we cool with the, is anyone who does blockchain who does crypto cool with us because we think it leads to more good

or is there a version of this technology that we decide is morally reprehensible or ethically beyond the pale and is something we don't want to support? The second question is mass adoption, but of what, right? So right after China announced this news, within days, you saw 500 plus enterprise blockchain projects be announced in China, right? That they were all registered. clearly this has been ongoing for a while. They wanted to make a big splash. And what they were was kind of all over the place. Now, of course, going back to the at what cost, Nick Carter here says it took China about three days of being officially interested in blockchain to make their intentions clear, transparent, panopticane, immutable social credit dystopia. And this came after CoinDesk reported

about an app where people can pledge their loyalty to the Communist Party on the blockchain, right, on an immutable public record. And Nick kind of goes off. It's where, reading. And so, okay, so one is, I think it's a reasonable question to ask, like, well, what are we really talking about? We're talking about mass adoption. And frankly, what is the connection point between enterprise blockchains and these sort of tools of party loyalty and even less nefarious uses, but still that have nothing to do with free open list, permissionless networks? Like, what is the path? What are we adopting? And I think it's important to recognize that this question is not just about China, and we can even remove it from the at-what-cost

question, right? If you look at the news just over the last couple of days in the U.S. you have top U.S. food co-op to track seafood using MasterCard's blockchain technology. IAG-backed firm raises $5 million to put airline security on a blockchain. Paxos wins SEC no action letter to settle equities on a blockchain. Like all of these are interesting, right? They are, they could be really impactful for what they're trying to do. You know, like this idea of tracking, sourcing ingredients, right? These are things that are interesting to a huge number of people and could be really cool. You also see consumer use cases, right?

So Backt announced that it was going to have a consumer app where consumers could pay for their Starbucks with Bitcoin, to which Jake Chavinsky, I think, caught a lot of the, the feeling on crypto Twitter about this, where he says, I honestly have no interest in spending Bitcoin on coffee or anything else for this matter. So the point of all of this is, again, mass adoption, but of what? And this is something that, you know, this is not me kind of parroting maximalist screeds. I think it's really important that we, look, the industry is mature enough that I think that we can handle the fact that a similar technology route is having tons of different manifestations. And those different types of use cases and manifestations of that technology might exist on a spectrum from super interesting and powerful to interesting in a different way to outright horrifying and scary.

And I think that we need to be clear about setting our terms of when we're talking about mass adoption, what are we actually interested in? And so by way of example, if you're saying mass adoption right now, well, are you referring to the seafood ingredient tracking app? or the settlement securities, the equity settlement type of thing. Or are you referring to Lebanon right now, where there's these currency controls in place and there's a bank shutdown, basically. So this viral tweet, I live in Finland, and I'm okay with the current banking system here.

My parents in Lebanon haven't had access to their bank account for 10 days. They can't send money abroad. Not until today I've raised the power, realize the power of Bitcoin. let Bitcoin spread like virus and unemployed illegal crooks. Talib of Black Swan fame says the most potent case for cryptocurrencies, banks are never there when you need them,

and they're trying to bully the public so they actually avoid accountability and profit disbursements. Bankers are legal crooks. Just because it's more interesting when things are complicated, Suna says going to get ratioed, but this is actually the right move talking about Lebanon. It's not the impoverished citizens or protesters trying to move small amounts of money out of the country.

One reason protest started was people embezzling and sashing money overseas. The point of this is that, like two things. One is when we're talking about mass adoption, are we talking about the, the use case of people being able to move their money out of economies that aren't serving them, or are they talking about, again, enterprise blockchain stuff? And reasonable people can be interested in different parts of this while recognizing that they're very different. And when we are trying to get into, the reason that this matters is that within the context of even what we are interested in, right? Let's say that everyone agrees, they're like, oh, no,

No, we're not talking about enterprise blockchain. We're talking specifically about mass adoption of these kind of free, open, and permission list networks. Well, then even that's complicated, right? As soon as shows here. And so what does this come back to for me? Like I said, this is, this to me is not one where I'm trying to make a definitive point so much as open up what I think are important sets of conversations.

So I think two points that maybe to leave you with to just think about. One is, when it comes to China, I think that this is a conversation that we need to be having. It is, you know, I really believe that the next 15 years are going to be shaped by the economic and kind of social power struggle between the U.S. and China. And that doesn't mean that it has to be antagonistic all the time, but it's that kind of give and take and push and pull for power is going to be hugely impactful. And not just here, not just in the U.S., not just in China, but around the world, right? And so we have to ask the question of what we are and are not willing to accept on that part, not just in the context of crypto, but certainly as a crypto community, I think that we have an obligation to really be talking in specific terms rather than kind of glossing things over.

So I'm not going so far, I guess, in this to say, to kind of rally against China as a whole. But I do think that we have to be able to have those conversations and not just bury them in the name of mass adoption. So I think that we have to kind of be complex as we talk about this. But it's not easy, right? So that's part one. Part two, it is, I think, completely reasonable to have a different stake in different parts of this weird melange that makes up this industry, right? Like, you don't have to just be like there are plenty of people who, because of their particular life context, because of where they are, won't care about what Bitcoin offers them. right? They won't have ever had to think about an unseasable money. They won't have ever had to

think about censorship resistance as a property of the money and financial system that they care about. And like, that's fine. Maybe what they're interested in is tokenized securities, right? Maybe what they're interested in is the provenance of their seafood ingredients. I'm a supporter of all of that, right? Like, I think, though, that at the same time that we need to be clear when we're, when any of us are kind of talking about adoption, what it is that we're trying to get adopted. Why? Why these systems matter, right? Like, I'm with Jake. I don't care about Starbucks. Now, I also don't necessarily think that it hurts the cause of Bitcoin to enable more uses, right? I think that it provides liquidity to the network and potentially could provide more security

to the network with more people participating in the network. So this isn't an argument that BACS shouldn't do this. But for me, the thing that is interesting is this unseasable, unsensible money, right? Like, I'm thinking about these other parts of the world where this is live or die in a different way. what gets me excited. And so when I'm talking about mass adoption, that's what I'm talking about. My point, I guess, which is kind of like silly that we even have to state it, but like, let's use the terms that we're trying to use to actually describe what we're trying to describe, right? Let's be clear about what it is that we're talking about. We don't need terms like mass adoption. We need clarity around what it is that we're trying to do, what it is that we're trying

to convert people to, why it is this should matter to them. We don't need to bulldoze our way into this and just kind of subsume all the nuance that makes this space so interesting. for the sake of kind of easy tweets. So, you know, the reason that I feel like it's important to have this conversation now is that it does feel to me like we're shifting again. And the axis of this is leveling up, right? Like I was thinking about what I'm going to do for kind of end of the year 2019 coverage today. And for sure, as of right now, the 2019 narrative to me is the shift from crypto being magic internet money

to crypto being and just digital currencies more broadly being a fraud. and a major front in the global economic power struggle. That is a fundamental shift that is massive and significant. And again, maybe that is not a shift for those of us in the industry who think of those terms already, but the fact that governments are viewing it that way is a shift, right? So it's the right time to be having these conversations. And for me, the more clear we can be have about what we're trying to argue and what we're trying to do, the more likely it is we're going to succeed. So that's my little, my little kind of op ed for the day. I appreciate you listening. I'll be back tomorrow. There's a lot of interesting news going on. There's Bitmain stuff.

There's Canaan that filed for an IPO. So we'll be back with more news stuff. But again, it's a pretty seminal time right now, I think, in the industry. So welcome to the big show. I'm glad you're here. And let's have some fun and let's have some actual smart conversations about it. All right, guys, thanks for listening. If you're listening, thanks for watching. if you're watching and I will see you tomorrow. Peace.