Crashes aren’t only painful because of price declines, although it’s never fun to see your account balances slashed relentlessly, day after day. Crashes are also painful because belief drains from the market as quickly as cash does. And those who never believed in the first place rush in to fill the void with a chorus of schadenfreude-laced I told you so’s.
If you felt smart a couple of months ago, you feel less smart now. If you were proud to tell people about what you’re building a couple of months ago, you’re less proud now. Nothing you’re doing has changed – you didn’t get dumber, your idea didn’t get worse – but the sentiment has shifted around you. (The opposite is true, too: if you’ve been calling the top, calling crypto a scam or a bubble, you’re feeling very smart right now.)
That’s not to say nothing is different. The market has undoubtedly changed. The prices of BTC and ETH have tumbled 76% and 69%, respectively (nice). Many alt coins are worse off than that.
A big part of it is that macro conditions have changed dramatically. After two years of COVID-induced free money, the Fed is tightening rates. Worse, the US faces 8.6% inflation and there’s doubt that hiking rates will be effective in slowing it down. Worse still, there are supply chain issues and inventory issues and a war, which is bad in its own right and also bad because it means higher food and energy prices.
Originally published on Not Boring
Not Boring’s mission is to make the world more optimistic.
I’ve never written that down before, or even thought it coherently until very recently, but it’s been an undercurrent throughout many of the essays I’ve written: Schumpeter’s Gale, Compounding Crazy, Existential Optimism, The Best is Yet to Come, The Best is Still Yet to Come, The Invisible Swarm, The Laboratory for Complex Problems, Ownership and the American Dream, Newton’s Alchemy, and more. It comes across in the pieces I write on specific companies, too.
This piece is a collaboration between Tina He and Packy McCormick. Tina is the founder of Station, which I was lucky enough to invest in via Not Boring Capital, and the author of one of my favorite Substacks, Fakepixels. All the smart parts are hers.
When trying to understand tokens, it’s tempting to draw from what we already know.
Sometimes, tokens function like equity in a company, and owning a token is akin to holding a stake in the project’s potential upside. Other times, tokens function like a “token-of-gratitude” and symbolize goodwill among close friends in the purest sense. The wide-ranging role isn’t a bug but a feature representing value in the most abstract sense, whose meaning is given by the system's very design. In other words, a token doesn’t necessarily have any intrinsic value but relative value. It’s the encapsulation of a unit of value universally recognizable and enforceable by a system.
Tokens are barely a new concept. Shells and beads were the earliest types of tokens as a medium of exchange. Others that we’re familiar with today — casino chips, credit card points, stock certificates, concert tickets, and club memberships – are all forms of tokens as they represent a unit of value universally recognized and enforced by the system that issues that token. When the respective systems fail to enforce and recognize the value of these tokens, the jurisdiction can step in to protect the token holders.
It looks easy because there's a cute Axie, an innocent-looking Axie. But when you're in the game, it's like playing chess. It's a strategic game.
-- Howard, Filipino Axie Infinity Player, Play-to Earn
From an internet cafe in Cabanatuan City, Philippines, a 22-year-old named Howard described the game he plays to make a living as innocent-looking but strategic. That game, Axie Infinity is a Pokémon-like game built on the Ethereum blockchain in which people buy digital pets, called Axies, as NFTs, and breed, battle, and trade them. It’s cute. It’s unassuming. This is what it looks like:
But Howard’s quote could just as easily describe Axie Infinity as a business and an economic force. It’s cute. It’s a game. There’s blockchain stuff. It’s fun! But there’s a lot going on under all that cuteness.
This didn’t start as a piece about games. I set out to answer this question: why are tech growth stocks sagging while crypto moons and value roars back?
If you retweeted this tweet and included your ETH address before the end of the Power to the Person NFT Split Auction...
If you’ve spent much time on the internet recently you might have noticed something: it’s gotten really fast-paced and really fun. It just keeps getting faster and funner. Bitcoin, Clubhouse, NFTs, unicorn startups galore, the Creator Economy. Each feels simultaneously like a potential fad and a nascent revolution.
From the eye of the storm, it’s hard to tell exactly what it means. Will digital artists continue to mint millions from NFTs? Will Creator Economy startups continue to raise early stage rounds at dizzying valuations? Will consumer social apps need top-tier influencer founders to cut through the noise?
I have no idea, and instead of singling out any company or NFT, a thought exercise seems more appropriate, based on three ideas that keep coming to mind: