The Breakdown - The Most Important Essays in Crypto 2024

Episode Date: December 29, 2024

A retrospective on the essays that defined crypto in 2024. The essays: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4985877 https://time.com/7111315/kamala-harris-crypto-laura-shin-essay/ https://vitalik.eth.limo/general/2024/07/17/procrypto.html https://x.com/Travis_Kling/status/1753455596462878815 https://x.com/Travis_Kling/status/1764696621097378299 https://x.com/Travis_Kling/status/1830981118566244633 https://www.piratewires.com/p/crypto-choke-point Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

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. What's going on, guys? Welcome back to another breakdown end of year episode. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, for this last last.

Last LRS of the year, I thought it would be fun to, instead of just picking a single article, actually go back through and look at five articles that defined this year. These articles shaped the way that we think about Bitcoin and formed a cultural touchpoint from the industry. There were some that even rattled the halls of power. In a year filled with paradigm shifting events, big changes in the industry, and countless words published. These were the five articles that really moved the needle.

I want to kick it off with a three-parter. It started in February. Part two came in March. And part three came all the way in September. No one captured the mood of this year quite like Travis Kling. The Aiki Guy Founder kicked off his three-part market thesis in February with an essay called A Lack of Pretense that Any of this shit does anything or will ever do anything. After observing the nonsense projects that dominated the crypto winter, Kling realized that we are

a long way away from the era where white papers and roadmaps matter. Crypto at that moment was about attention, air drops, and asinine degeneracy. Kling wrote, So the thesis is the market is going to shi-coin hard. Bitcoin prices will rip, and that setup doesn't have the prerequisite of actual use cases or actual growth in the end-user demand. Looking at the way Long Dead Alt rallied over the past month even after really actually significant things happened, it's hard to argue that Kling was wrong. The second installment came in March and was called financial nihilism, the zeitgeist

of Young America. We had watched the Bitcoin ETFs push the price to new all-time highs, but that wasn't enough. Young people wanted to gamble harder. Kling unpacked the reason that it doesn't matter that none of these things are pretending to do anything. Young people felt systematically locked out of housing, sustainable employment, and opportunity. To borrow a phrase from DGEN Spartan, you get a short period of time after you graduate to hypergamble into elite status,

or you end up wage-cucking for life. Kling walked through a series of charts that showed how little opportunity there is for young people. And he wrote, that's the setup. The boomers have all the money, the rich have been getting richer while the poorer getting poorer. The American dream of upward mobility has been slipping out of reach for increasingly more people. That is financial nihilism. So if you're like the large majority of Americans and you're on the wrong end of this, what do you do about it? You'd take bigger risks. You'd feel driven to take bigger risks to try and leapfrog your current financial position. So you gamble, you effing gamble. You look anywhere for anything that can give you a 50x

payout. From Doge to GameStop to Fartcoin, this is what investing looks like for young Americans of this era. The final installment came in September called pervasive quiet quitting. Travis discussed how the minimal progress in crypto had caused people working in the industry, not only to leave in droves, but more perniciously, stay but feel completely hollowed out. Kling wrote from the perspective of multi-cycle crypto participants who had seen countless projects crash and burn or fade to irrelevance, commenting, all of a sudden, your life's work starts to feel mostly like a waste. You don't like what crypto has to show for itself, and you don't like the direction that it's headed. This one resonated so hard. It was something that I saw all over the place throughout 2024,

especially early 2024. And yet, of course, this year is ending on a very different note. The vibe has absolutely shifted in some meaningful ways. There's a big, almost electric feeling that 2025 could be the year of you can just do stuff. The question is what we will choose to do. Next up, we move to an essay from Ethereum founder Vitalik Buterin. This came out in July and was right as the political conversation was starting to heat up in Cryptoland. Now, there are tons and tons of articles from this year, but Vitalik, because of who he is, was a lightning rod and focused attention on the issue.

His essay, he called, Against Choosing Your Political, allegiances based on who is pro-crypto. It dissected the wave of enthusiasm at the time around declaring oneself a single-issue crypto voter and promptly pledging allegiance to the first pro-crypto candidate that appeared. It was released shortly after the Republican Party put a shortlist of Bitcoin policies on their official platform, a first for U.S. politics. Vitalik argued that the important thing is not whether a political candidate is wearing a badge that says pro-crypto, but rather whether they subscribe to the principles important to crypto people. He listed freedom and privacy of communication, freedom and privacy friendly digital identity, freedom and privacy of thought, and high-quality access to information.

Vitalik wrote, Don't stand with crypto as in cryptocurrency, stand with those underlying goals and the whole set of policy implications they imply. The main thrust of the piece is that Vitalik believes the industry should be advocating for a lasting change in the status quo of digital rights. Legalizing cryptocurrency is just a small piece of the puzzle. Vitalik concluded his piece by arguing, if a politician is pro-crypto, the key question to ask is, are they in it for the right reasons?

Do they have a vision of how technology and the economy should go in the 21st century that aligns with yours? Do they have a good positive vision that goes beyond near-term concerns like smash the bad other tribe? If they do, then great, you should support them and make clear that's why you were supporting them. If not, then either stay out entirely or find better forces to align with. Up until that point, there had been a sense among some that the Trump vote was primarily about voting for a president who would pump your bags. This essay got many people to think and articulate more about why they were actually voting

the way that they were. Our next essay is almost a part two of that in some ways, and it was Laura Shin's why progressive should support crypto. This came out in the twilight days of the presidential race in late October. In the piece, Unchained host Laura Shin explained why Kamala Harris should embrace crypto. By this stage in late October, it was already a lost cause. Harris had multiple overtures from the crypto industry, and her campaign showed very little interest in taking a strong public stand.

Shin wrote, The Democrats, and more specifically its progressive wing are making a mistake being anti-crypto. Their opposition is threatening to not only turn the U.S. into a technological backwater, but also to imperil our country's status as the world's only superpower. Being hostile to crypto could chip away at the U.S. dollar's dominance as the world's major global reserve asset. Plus, progressive opposition isn't even logical, since crypto broadly aligns with progressive ideals. Most urgently, their stance could cost vice president and Democratic nominee Kamala Harris, the election. What followed was a concise and straightforward version of a progressives case for crypto. Shin explained how crypto can be used across all manner of marginalized

groups the world over, she highlighted that the idea that the global financial system doesn't need a change only makes sense in places like coastal America. The article acted as both primer and rallying cry. While nominally, Shin was making a last-minute appeal to the Harris campaign, it was clearly more aimed at future Democrat leaders. Being anti-crypto is a losing proposition at a political level, but it also risks undermining human rights in the digital age. Part of the reason that Laura's piece makes it to this is that in the wake of the Democrats' defeat, that party is obviously going through a ton of soul-searching and rediscovery about what it actually wants to stand for. It is undeniable that right now, the Republican Party is the party of crypto when it comes to the

United States, but it is also the case that in the long run, the best version of crypto is not one that's subject to U.S. partisanship. Laura's article did a lot to help create a template and messaging to help people make that point. Our fourth piece, another one from October, was one of the only pieces of FUD to really capture attention this year. And that was a research paper published by ECB economist Ulrich Binzail and Yergen Schafe called the distributional consequences of Bitcoin. It was certainly the most controversial recent

academic paper published on the topic of Bitcoin. The author suggested that if the price of Bitcoin rises for good, the existence of Bitcoin impoverishes both non-holders and late comers. They argued that, quote, non-holders should realize that they have compelling reasons to oppose Bitcoin and advocate for legislation against it. It was incendiary among the Bitcoin community, triggering a massive response on Twitter, and at least one response from Bitcoin-friendly academics. The authors felt the heat so immensely they eventually revised the paper, softening the argument and walking back the call to action. The drama itself isn't worth a rehash, but it is worth noting how this paper changed the discourse around Bitcoin. These authors had also written the famous

ECB paper, Bitcoin's Last Stand, which marked the very bottom of the last cycle. That paper captured the zeitgeist of that moment, with Bitcoin primarily viewed as a vehicle for fraud. Their October paper was received very differently. Multiple Bitcoin academics who moved in the same circles discussed how they had read the pre-print and given advice on the subject. The rebuttal paper while adversarial was polite and to the point. We even saw lawmakers in Europe reach out to the authors and make their case. One mentioned that she had been unsuccessful in getting a meeting with ECB officials

to discuss how Bitcoin was being used among refugee communities that she had worked with. She argued that her story could have been used to better inform the paper if only the officials prioritized the meeting instead of blowing her off. Basically, the paper was not received as well as previous Bitcoin-Fud papers, and Bitcoiners were much more assertive and clear in their response. Ultimately, what it led to was the ECB economists seeming completely out of step with a world that was quickly coming around to Bitcoin, and the paper felt like a significant signal that Bitcoin criticism no longer had a hold on the narrative. Now, these aren't rank-ordered, but to the extent that they were, the number one spot

would have to go to Nick Carter's fantastic series on Operation Chokepoint, published in Pirate Wires. With the first edition published in February of last year, Nick was on the case even before the failures of Silvergate and Signature Banks. The story has become only more resonant in the editions published this year, which spelled out in chapter and verse exactly how the crypto industry was debanked. The articles challenged the mainstream narrative that Silvergate was a failed bank. Carter showed exactly how it was forced to shut down by banking regulators. His reporting has since been fully supported by legal documents emerging from the Silvergate bankruptcy. He zoomed in on comments from Signature Bank chairman Barney Frank, one of the

authors of the Dodd-Frank Act. Frank claimed that regulators were trying to send a message by seizing the crypto-friendly bank. He also uncovered specific details that explained what was really going on, reporting that banks were required to limit their crypto customers to 15%, an impossible task for the few crypto-friendly banks. Carter wrote, The government's desire to decapitate the domestic crypto industry through covert rulemaking aimed at crypto-focused banks both initiated and worsen the banking crisis of 2023. Now, over 18 months since the first article was published, we're starting to see Operation Choke Point unraveled. The FDIC is in the process of handing over documents compelled by a judge who has criticized

the agency for abusing freedom of information laws. Without Carter's series of articles, the story likely wouldn't have surfaced to the extent it did. It likely wouldn't have become the topic of congressional hearings and a key focus of the incoming administration. As Carter wrote in July, if you post stuff on the internet hard enough, sometimes the past and future president ends up repeating it. A year ago, to many, the idea that the government would be trying to debank an entire industry and could have been easily written off as a conspiracy.

Nick Carter, more than anyone else, demonstrated it was real and ensured it couldn't be swept under the rug. And those friends are our top five long reads from the year. Certainly tells the story of the year that was. I will, of course, include links to all of them in the show notes. But for now, that is going to do it for today's episode. Appreciate you listening, as always. And until next time, be safe and take care of each other. Peace.