The past 18 months in crypto have been the most trying times for me in the 6 years that I’ve worked in this industry. The technology we built was abused by scammers and con artists to steal billions of dollars, driving many to suicide and poverty. If it had been one bad apple, I think we as an industry would have moved on quickly by now. But when it’s almost every major centralized actor, plus the collapse of the largest decentralized algo-stable-ponzi, it’s required deeper, more introspective reflection to understand why we are here building. Pairing this with the onslaught of three-letter agencies pursuing legal action against every major participant for tax, compliance, securities violations, its been difficult to understand why we build.
Eating at my being was this very dark and depressing nhilism that all we were building was for naught and would never stand the test of time against an overtly hostile regulator and poltical administration. Over the weekend I watched Kathrine Boyle, who is General Partner at a16z, give a speech that helped center my soul during these troubled times.
In her speech she starts by stating her love for America:
In the essay I stated that my firm Andreessen Horowitz, one of the largest venture capital firms in the world, was unabashedly and proudly declaring its unanimous support for America. That we were betting on America. And that this wasn’t a marketing gimmick or some ESG-adjacent nonsense, but a strategy. We’re in the business of value creation. Of taking bets on things that get very big, very fast. We concluded that America and our allies are best off when we’re building technology companies that support the national interest.
It’s rare to hear someone be so unabashedly US centric these days. Global leaders tend to focus on the “global commons” or some form of shared international citizenship.True patriotism is on life support, where one’s country and the shared goals of freedom and liberty are valued by all. She goes on to say:
We believe a strong America means a strong world. A safer world. A more civilized world, which is a term we should use more. And that technology is the backbone of maintaining this order and civilization and always will be.
This positive-view is what she calls “American Dynamism,” a belief that the American way of life is exceptional and a “miracle.” Jamie Dimon, she says, compares it to poker:
“That America has the best hand ever dealt to any country on this planet, ever. Whether it’s our geography, our universities, our peaceful neighbors, our natural resources, the rule of law, our work ethic, innovation in the core of our bones, the widest and deepest financial markets, and the best military on the planet. We will have this last item, he said, “for as long as we have the best economy.”
So why is it that we’ve seen massive unrest and protest these years? An ever creeping nihilism and post-modern relativism has seeped into our society at all levels. America is no longer considered a force for good by many. We’re the oppressor, with a history founded on the backs of the oppressed.
We’ve stopped innovating, we “greet builders with suspicion,” we’ve allowed entrenched powers to use regulations to squash new ideas and technologies, we’re beholden to identity politics, degrowth, and AI doomerism, and we’ve turned our police and intelligence agencies into weapons of mass surveillance.
It’s all too easy to fall into the trap of tepid apathy, simply believing the system is broken and cannot be changed. Crypto, while esoteric and controversial, is just another technological tool that helps check governmental powers against the tyranny of repression.
Repression breeds innovation
For my own story, what started as a fascination with buying drugs on the internet a decade ago has morphed into a deeper desire for a credible, neutral money that can serve as a check on the current status quo. Free markets demand free money. And new monetary systems, like the Eurodollar and crypto always emerge from systems of financial repression.
The emergence and growth of the Eurodollar market can be traced back to a series of geopolitical and economic developments during the Cold War era caused by US financial repression. Communist Bloc banks, increasingly wary of storing their dollar balances in the United States due to fears of asset freezing by the U.S. government, began looking for alternative storage and credit options. This concern intensified as tensions with the U.S. heightened, leading Eastern Bloc central banks to move their dollar balances from New York to London. These relocated funds essentially became the seed funds of the Eurodollar market.
The Eurodollar market, once established, experienced rapid growth, largely due to certain advantages it offered over traditional dollar financing sources in the United States. European banks, operating on narrower margins compared to their American counterparts, provided higher returns for depositors and lower interest rates for borrowers. Additionally, the European banks were not bound by certain Federal Reserve regulations, allowing them to offer interest on a broader range of deposits. And so Eurodollars allowed for global actors to store wealth in dollar denominated debt and access international finance.
Comparatively, over the previous century the US has levied financial repression against certain amoral “sin” or political industries: marijuana, guns, sex work & pornography, and gambling are just a few of the most heavily targeted industries. It’s no surprise that Bitcoin’s first use cases were all to “liberate” these industries from the tyranny of US banking laws. Free value exchange was in greatest need where banking rules and laws were most gray. In 2023, it's somewhat ironic that Ross Ulbricht is serving two life sentences for operating a website where Marijuana was the primary good sold. Marijuana laws, in particular, in the US have shifted over the last decades, with an ever increasing realization that firm illegality only breeds underground markets, crime, and gangs.
America has used its status as a global superpower to weaponize the dollar and attack various countries, people, and industries, both domestic and international. Using its power, the US has established a global KYC/AML/BSA/FATCA regime for unlimited warrantless surveillance of the financial system. Given these powers, politicians and agencies have waged war against their enemies.
The IRS unfairly targeted conservative groups, banks debanked religious groups over political differences, or gun manufacturers, banks are breaking Federal laws to provide financing and services to weed companies, and just recently OFAC sanctioned Tornado Cash inadvertently affecting US persons. The US financial system is a mess at the margins.
These are just a few examples, but politically motivated financial abuse foisted on US persons by their own government and major banking institutions has been egregious and detrimental to US growth. More so, it’s created an us-versus-them mentality where new industries like crypto and weed are derided and actively targeted by opposing political parties.
Growth, Movement, Momentum and Opportunity
What’s needed to escape this financial morass are new technologies that create “growth, movement, momentum, and opportunity” Katherine goes on to say:
In his techno-optimist manifesto, Marc Andreessen wrote, “We believe everything good is downstream of growth. We believe not growing is stagnation, which leads to zero-sum thinking, internal fighting, degradation, collapse, and ultimately death.” Dynamism is life. And we embrace dynamism and the values upon which the country was founded because they are true and worth defending. Dynamism makes America the country people want to be from, to immigrate to, and to build a life, career, or company in.
Alexis de Tocqueville described America as many things, but he was struck by the insatiable spirit of American dynamism and opportunity:
The American lauds as a noble and praiseworthy ambition what our forefathers stigmatized as servile cupidity. In America, fortunes are lost and regained without difficulty, the country is boundless and its resources inexhaustible. . . . Boldness of enterprise is the foremost cause of its rapid progress, its strength, and its greatness. Commercial business is there like a vast lottery by which a small number of men will continually lose, but the State is always a gainer.
The State is always a gainer. America always wins.
What’s needed to win is courage. Courage to innovate and build new systems for growth. Courage to stand against repression. Courage to fight for what you truly believe and hold dear.
The builders who remain at the end of the bear cycle are those truly dedicated towards building a better future. If you’re still a believer in the long-term goals of the crypto industry after the last 18 months, you most likely believe wholeheartedly that what we’re building is important and will impact the world for good. This fight is far from over, with many battles yet to come, however, with a deeper understanding and reflection of what's important, our resolve will remain steadfast.