The Breakdown - The Future of Bitcoin Lies with Renegades and Malcontents

Episode Date: April 4, 2021

On this week’s “Long Reads Sunday,” NLW reads CoinDesk journalist Brady Dale’s “Don’t Follow the Suits, Follow the Weirdos.” NLW argues this topic is even more important in the context of bitcoin institutionalization. -- Earn up to 12% APY on Bitcoin, Ethereum, USD, EUR, GBP, Stablecoins & more. Get started at nexo.io -- Enjoying this content?   SUBSCRIBE to the Podcast Apple:  https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M=   Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW   The Breakdown is produced and distributed by CoinDesk.com

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 nexo.io and produced and distributed by CoinDess. What's going on, guys? It is Sunday, April 4th, and that means it's time for Long Read Sunday. Today I'm going to read a piece by Brady Dale from CoinDess called Don't Follow the Suits, Follow the Weirdos. And at the risk of trying to draw the analogy too much, I did want to make mention of the note that this is being recorded for release on Easter Sunday. One of the things that I've always found fascinating about Christianity and faiths in general is that there tends to be a tension between the individual relationship with rightness, with good, with God, with any deity that's a part of the faith, and the institutions that arise around it. Are you supposed to be like the example that you see laid out in the Bible of Christ's actions and deeds?

Or are you supposed to do what the clergy in your church say? Is there a tension between those two? This tension throughout the ages has created schisms in organized religions. In fact, you don't really have any major religions that don't have some version that haven't experienced some backlash, some group that tried to say that you should reject the principles of the institution, and instead focus on your direct relationship with the divine, even if it leads you in strange and unexpected places. This is, of course, what Sufism, for example, in Islam is all about. Now, I don't really buy the idea that Bitcoin is a religion, although certainly we can act

like fanatics on occasion. I do think, however, that we are in a moment of institutionalization, and by definition it's going to create some tensions between our ideas of what Bitcoin is or what it represents or what it's supposed to mean for us, and what the institutions who are adopting it as an asset, as an investment, will think we're supposed to do. Maybe this will come out in the form of big institutional holders saying that we should get rid of and not care about censorship resistance and privacy as long as we get to keep our sound money. Now many plebs might respond that you can't actually separate those two, and that's a pretty important debate to be had. So with that all in mind, let's get to Brady's piece, don't follow the suits, follow the weird

The subtitle is, the big wins in crypto are going to come from the punk's, hippies, and contrarians. In this very bullish season, don't be enraptured by the grown-ups. Cryptocurrency was invented by a guy who liked message boards. Then a young developer who thought decentralization could go even farther, kicked off a world computer with a white paper and some emails. The big wins and crypto are going to come from the punks, the hippies, the malcontents, and the contrarians. What I'm saying is, in this very bullish season, don't be enraptured by the sort.

suits. We see the allure of the suits here at CoinDesk in a very different way. For a few years, we saw an onslaught of corporate blockchain accelerators and pilot projects that were never about, well, anything. It was obvious innovation theater, but toward what end? Who knows? I appreciate the allure. The whole argument to be grown up seems very convincing. Yes, the future of blockchains is probably enterprise something something. It sounded truthy. Now the suits are back, and it looks like this time they are here for real. Instead of blockchain, not Bitcoin, it seems like we've hidden inflection point, where a lot of the rich guys hold a little BTC and maybe some eth. So is it all game over once Goldman or Morgan Stanley opens up a crypto division?

Game set match, Satoshi is won. So Wall Street can take it from here, right? Just today, Visa announced a demo project using an Ethereum stable coin, so this is all settled? That's not where I'd place my bets. I would suggest continuing to look at what the tinkerers are up to. The method works. It's where I've invested my reporting attention and it keeps paying off. Like non-fungible tokens now, I first wrote about them in 2018. I told you about OpenC three years before the venture capitalist at A16Z dropped 23 million into the NFT market. Were you happy about the Uni Air Drop? This guy gave you a heads up about Uniswap a year before it started to shake up the space. The DeFi summer of 2020 was wild, right? Well, I first told you about the decentralized finance

market compound in 2018, and I was digging into MakerDAO regularly through 2019. It's not hard to find real stuff out on the edge. That's where all of it is. The suit shows up when sectors become safe after they plateau. They show up when something can turn into a nice, predictable little business. They show up once it's boring. If they manage to show up early, they show up to make it boring. Looking for the best way to unlock your crypto's liquidity? Nexo.io is exactly what you need. Barrow against your digital assets at just 5.9% APR. Earn passive income, with yields of up to 12%, and swap between more than 75 market pairs with the Instant nexo exchange. Try the nexo wallet app to get the whole 360 degrees of crypto banking.

Get started at nexo.io. The opposite of suits is DAO's decentralized autonomous organizations. The first big one didn't work out great. Shortly after that debacle, MakerDAO decided to get a lot more formal, though the protocol itself continued to be governed by token holders. For a while, it might have looked like the suits and their proofs of concept and press releases and sticky note-covered innovation labs were winning. But that had clearly changed by last. summer when we saw DeFi take off and people started to once again get excited about organizations that exist entirely on blockchains, with no formal instantiation in the legal governed world.

The most prominent Dow in this space doesn't even really use that branding. It is YERN finance. I often wonder how many people who put their assets into YERN think about the fact that there are a bunch of actual people behind this thing. What might be called the staff of YerN put a ton of time into it, they make a lot of money from it, and at least insofar as I've been able to determine, none of that occurs under the auspices of any sort of formal organization as you or I might normally expect. No company, just a baby giant, growing. Basically, we have a bunch of smart contracts written by an enigmatic DeFi artiste that attracted a bunch of other savvy DGens that get involved and start suggesting ways to juice the already considerable profits on assets dropped into yearn.

This is not normal. This is weird. Yet, yearn and other Dow's like it will grow and shake things up further. On the other end of the spectrum, we have Facebook's foray into crypto. Born as Libra, downgraded to DM. The social network thought that it could convince global regulators to allow it to upend the way money works by asking nicely and showing up at a lot of legislative hearings. Turned out that asking permission to disrupt global industries doesn't work that well. Zuckerberg and Co. never really appeared to have actual conviction about decentralization. The company needed to diversify its revenue streams if Facebook was going to let users communicate privately, as the company had been promising in 2019. But playing nice with the global money cops didn't work out, so it moved on.

actual change comes from folks too irascible to quit doing something because someone tells them it's a bad idea or it doesn't fit into their conception of how we've always done things. So if big banks and financial companies and payment firms want to hop in, cool, let them. But that's not when the excitement starts. That's when the excitement ends. If you want excitement, keep your eyes on the folks with unicorns on their shirts, buzzes on their hair, and chains hanging off wherever. Weirdos for the win. back to Nathaniel, and I agree entirely with the core sentiment that this is an industry full of people who are fundamentally reimagining the way that the world might work, particularly from the vantage point of finance. I spent a decade in Silicon Valley, and the average conversation, the average day spent by anyone in that place, was less disruptive than the average throwaway note in a Rome research file for one of the people in this Bitcoin in crypto space. I don't think that this is protocol dependent. I mean, this week, this week,

you had Jack Mahler's bringing strike to Silicon Beach in El Salvador with a bunch of other Degentines. It's the first non-U.S. market. These guys are building something without permission and because it's about their future. It's a joke, but it's also really not that this week, Goldman Sachs gave its $25 million holding clients permission to do their first dabbling with Bitcoin, when a bunch of kids in Nigeria have been on this idea of financial freedom for years. This is both like and unlike lots of different disruptive movements in history. It's like it in that it always comes from young people, disaffected people, frustrated people, people who don't see the world in the same way, people who have the ability to see the world in a different light, people who are willing to work

to make the world the way that it should be, not the way that it is. That's the part that's the same. The part that's different is it comes with economic power, and that's never happened with a movement before. Certainly not like this. The disruptors, in short, have the De Niro to do something real. And so like Brady, when it comes to where real change is going to come from, I'm not betting on the suits. I'm betting on the kids. Anyways, guys, I appreciate you listening. I hope you're having a great weekend wherever you are. Happy Easter to those who are celebrating. Until tomorrow, be safe and take care of each other. Peace.