After being deep in Web3 for awhile now, I’ve been going back to basics and reflecting on areas I’m most excited about.
I got into crypto in the first place because I was concerned about the future of the US dollar as the world’s foremost reserve currency. I wanted to understand Bitcoin & Ethereum as assets and form my own viewpoint on whether they might be “digital gold”, as the meme goes - or even something more.
Fast-forward 2.5 years since my first real foray into crypto, and I’m convinced of two things:
Blockchains will underpin the future of the internet
Blockchains will do to money what the internet did to publishing
This post focuses on the second one.
Reflecting on all the projects I’ve had the pleasure of interacting with in the crypto space over the past couple years, among all my observations around what’s different in Web2 vs. Web3, there is one thing that really strikes me as I reflect at a macro level:
Anyone can create and manage a currency out of thin air.
And, I do mean literally anyone. An extreme example:
No, I don’t think the US Dollar is getting replaced tomorrow.
And, no, I don’t think fiat currencies are going away anytime soon.
But the early days of this shift are, in my opinion, clearly indicative of an inevitable future. Money, like any other construct invented by humans, has the potential to be disrupted.
And the status quo is so incredibly archaic. Creativity in monetary policy, at any sort of meaningful scale, has been limited to Central Banks and their mandates, scopes, and risk appetites.
Already, in these early days of crypto, we’ve seen monetary policy experiments - successful, unsuccessful, and yet-to-be-proven - that we can learn so much from.
A few obvious examples that come to mind:
Ethereum’s EIP-1559 as, what I would call, a successful monetary policy experiment (to date, at least)
The collapse of UST (Terra/Luna), painfully teaching us about the vulnerabilities of algorithmic stablecoins
Even Bitcoin’s simple hard-capped issuance policy - with 21M BTC as the upper limit - as a new structure to explore & entertain
And beyond these, there’s so much more. There are tens, if not hundreds, of Layer 1 blockchains with their own tokens in circulation, and hundreds more ERC-20 tokens on the Ethereum Blockchain. Each of these has its own monetary policy to analyze - whether fine-tuned & intentional or completely yolo’ed.
From a competitive analysis standpoint, fiat just feels so incredibly ripe for disruption. With high inflation, decreasing consumer confidence, and many Central Banks finding themselves in between a rock and a hard place - I’m surprised more people aren’t talking about this massive design space and how rapidly it’s opening itself up.