A Crash Course on Crypto Economics in 1 Hour by Natasha Che

A newer one with a focus on stablecoins and fiat.

The whole series is worth a read if you have any interest in cryptocurrencies. Tascha also has a newsletter.

How NFTs Create Value

“[Non-fungible Tokens (NFTs)] enable new markets by allowing people to create and build upon new forms of ownership. These projects succeed by leveraging a core dynamic of crypto: A token’s worth comes from users’ shared agreement — and this means that the community one builds around NFTs quite literally creates those NFTs’ underlying value. And the more these communities increase engagement and become part of people’s personal identities, the more that value is reinforced.

Newer applications will take greater advantage of online-offline connections, and introduce increasingly complex token designs. But even today, it’s less surprising than you might think that people are making money selling pictures on the internet.”

Steve Kaczynski and Scott Duke Kominers, “How NFTs Create Value.” Harvard Business Review. November 10, 2021

I was of the mindset that NFTs are a scam. But, then again, people think the same thing about cryptocurrencies, which I think is a new computing paradigm. This overview and explainer convinced me that perhaps there is more going on in this space than I realized. If you want to go deeper down this hole, you could do worse than Rolling Stone’s coverage of the Bored Ape Yacht Club.

The Internet of Grift (Non-Fungible Tokens Edition)

“The moment that something has bubbled up to the surface long enough for it to establish real value is the exact moment at which those engineering the system for their profit are planning to exit or have already left. All of the flashy press has likely died down due to the market cap crashing from $1.1 billion to today’s cap of $726 million and $1 million in volume – with a few days this week below $350,000. For context, the top cryptocurrencies have daily volume in the billions or hundreds of millions of dollars. Now the market is flooded with cheaper cards that people can’t recoup value from, with no real market to sell them into. But the guys who got in early got rich, as they always do…

…When you remove the idea that an NFT could forseeably be sold for more money than you paid, what value does it have? What beauty? What does it symbolize? What meaning does it have? And what’s the point of it being unique? It’s not a Rolex, that actually has a quality and heft and look to it, nor is it something you can admire outside of the computer, and even if you don’t care about that, it’s a status symbol of wealth and taste (if you feel that way about expensive watches).”

-Ed Zitron, “The Internet of Grift.” ez.substack.com. October 1, 2021.

It’s interesting because there are people that make this same argument about cryptocurrencies, “They are a solution looking for a problem.” I’d argue that programmable money does have obvious utility in ways that a non-fungible token of art doesn’t. But, it’s a point where reasonable people can disagree.

Is/Ought Fallacy: Exhibit A

“Crypto is gambling, and you should never gamble more than you can afford to lose, right? So the only people who held onto their bitcoin when it was worth $100,000 dollars were:

* People who could afford to lose $100,000

* People who couldn’t afford to lose it and were therefore making a very, very stupid gamble

And that’s the same at every dollar amount. Some people can’t afford to lose $1000, some people $100, but whatever level you’re at, you would have and should have sold when it hit that figure.

That means it’s literally not possible for a sensible person to make life-changing amounts of money from cryptocurrency, because the only way to do it is to bet more than you can afford to lose.”

McKinley Valentine, “No FOMO: If you’d bought bitcoin 10 years ago, you wouldn’t be rich today.” The Whippet. September 15, 2021.-

The way logic works is if you argue something is not possible, then pointing to one (or dozens of) counter-example(s) refutes your argument. You’ll notice the chart after the table of names that indicate that “investors” make up the majority of Bitcoin billionaires. So, it is literally possible. If you had limited resources, it could have been as simple as putting together a mining rig, well within the capabilities and budgets of most technical people back then.

If you want to feel good about not investing in Bitcoin back in its infancy, consider what sudden wealth tends to do to people talked about in this classic Reddit post on the lottery. It’s enough to make you never want to be rich, ever.

Crypto Canon

“…a list of crypto readings and resources. It’s organized from building blocks and basics; foundations (& history); and key concepts — followed by specific topics such as governance; privacy and security; scaling; consensus and governance; cryptoeconomics, cryptoassets, and investing; fundraising and token distribution; decentralized exchanges; stablecoins; and cryptoeconomic primitives and crypto goods (non-fungible tokens, cryptocollectibles, token-curated registries, curation markets). We also included a section with developer tutorials, practical guides, and maker stories — as well as other resources, such as newsletters/updates and courses, at the end.”

Crypto Canon

Cryptocurrency Platform Cardano & Ada Coin

Disclosure: I own Ada. This is a condensed summary of what convinced me to start buying cryptocurrency, specifically Ada. I’m happy to share what I learned, but this is not investment advice. I don’t know you. I don’t know your situation. Cryptocurrencies are a speculative investment, and you could lose all your money. If that’s not something you can live with, then do something relatively safe, like invest in an index fund, a certificate of deposit at a major bank or U.S. Treasuries. Also, if you are making investment choices based solely on the suggestions of some random blog on WordPress, written by The Deity knows who, without engaging your own mind and taking responsibility for your own choices, then you deserve to lose all your money. Caveat emptor!

Cardano is an open source crypto platform that runs a decentralized public blockchain for the implementation of smart contracts. The native cryptocurrency, or coin, of Cardano is Ada. There are 45 billion Ada coins, something like 32 billion are in circulation at the moment. It is currently capable of 1,000 transactions per second, and with a future upgrade, it will be capable of millions, on the level of global payment systems like Visa. As a point of comparison, Ethereum and Bitcoin are both less than 20 transactions per second. It is also able to complete these transactions at a fraction of the cost of Ethereum and Bitcoin. But, the killer app for the Cardano platform is the Plutus integrated development environment (IDE) for smart contracts, which allows for programmers to write and “run end-to-end tests on their program without leaving the integrated development environment or deploying their [Haskell] code.”

All of these features will be available as of August 2021. Right now, the Plutus IDE is being tested for the August 2021 deployment. Once the new upgrades launch in August, there will also be a staking system that will allow holders of Ada coins to stake their coin in a pool that verifies the distributed ledger – a function that earns returns, a bit like interest or dividends. Cardano also has the capability of hosting other coins or minting new ones.

Right before Cardano launches, Ethereum will launch Eth2, which will move Ethereum to a proof of stake model like Cardano’s and introduce many of the same features. However, it won’t have is the integrated development environment Plutus. Ethereum also uses Solidity and Vyper programming languages to program their smart contracts. The criticism section from the Solidity Wikipedia page basically says that Solidity is a hot mess.

Compare Solidity to Cardona’s Haskell language, which is an industrial strength language used in cryptography algorithms, semiconducter design, and was used to formally verify an OS microkernel. As a functional language, it doesn’t have side effects. It has type-safe operators and type inference. Basically, it is powerful and has many features designed to cut down on bugs in the code.

Of course, Haskell has drawbacks. It’s hard to learn, and the universe of people that can code in it is relatively small to other programming languages. Depending on your use case, there are other problems as well. But, every choice implies trade-offs, and Haskell is a good language for the implementation of smart contracts.

If you wanted to implement smart contracts into your business workflows. The more money, the higher the stakes, the more likely you’ll be to want to make sure you are not going to have problems later. You’re going to choose the best option available, Cardano.

Ethereum will have more name recognition, as the second highest capitalized cryptocurrency. It’s smart programs will be easier to implement, and they’ll, more often than not, be good enough for a given purpose, probably one that isn’t mission critical.

The good news is that these two systems, and others that come down the pike like PolkaDot, will likely all work together and have different niches. To illustrate, Occum.fi announced a liquidity bridge between Ethereum and Cardano, designed to encourage fund transfer between the two systems, which suggests there could be a symbiotic relationship between them in the future?

Anyway, I think this is going to change the world. These are the two choices in smart contracts, at the moment. And, one has clear advantages.

The current price of Ada on Sunday night, April 11, 2021 was $1.28. You can buy Ada coin through Coinbase.com and most other cryptocurrency exchanges.

This is the video that sold me on Cardano, Plutus and Ada.

For a slightly longer discussion, see this recent Reddit thread.

Bail Bloc

https://bailbloc.thenewinquiry.com/

Here’s how it works: When you download the app, a small part of your computer’s unused processing power is redirected toward mining a popular cryptocurrency called Monero, which is secure, private, and untraceable. At the end of every month, we exchange the Monero for US dollars and donate the earnings to the Bronx Freedom Fund and through them, a new nation-wide initiative, The Bail Project.

100% of the currency your computer generates is used by the Bronx Freedom Fund to post bail for low-income people detained in New York effective immediately. Beginning in January 2018, funds will be routed to The Bail Project, which will over the next five years post bail for people detained in more than three dozen cities nation-wide.

Bail funds accumulate: Bail funds are “revolving,” which means they’re returned to their source when people appear for all their court dates–which, for clients of The Bronx Freedom Fund, happens 96% of the time.

Most Bail Bloc users can expect to generate around $3 to $5 per month. It might not seem like much, but because of the revolving funding model, it adds up quickly…”

The State of Cryptocurrency, Mid-2017 Edition

Main takeaways:

  1. It’s not that hard to get up to speed.
  2. Overall, the cryptocurrency ecosystem feels younger than I thought.
  3. Blockchain is the technology that will let lifestyle businesses cross the chasm from fringe to mainstream.
  4. Micropayments still aren’t going to work.
  5. Money leads to Power which leads to Centralization.

Cryptocurrencies and their technologies can seem overwhelming, but it’s easy to get up to speed.

“I really only started reading up in depth on cryptocurrency and the related technology like blockchain three months ago, and felt like I could at least follow all the talks.

If you want to get up to speed, you’re only a couple Saturdays of reading away…”

—Pearson, Taylor. “The State of Cryptocurrency, Mid-2017 Edition.” Hackernoon.com. August 16, 2017.