Pushing Things Forward
Why crypto is still so, so early
👋 Welcome to the 24th issue of The Syllabus from Invisible College — a weekly newsletter that helps you navigate the fast-moving world of web3. To get this newsletter delivered to your inbox, subscribe here:
Before we begin, a disclaimer — nothing in this piece should be construed as financial advice. With that, let’s dive in.
Upcoming Events
We’ve got a packed event calendar over the next two weeks. Here’s what’s coming up:
Building Token-Based Communities (Wed. 7/6 @ 12 pm PT)*
Building a Web3 Wine Club (Thurs. 7/7 @ 3 pm PT)*
Town Hall (Fri. 7/8 @ 9 am PT)*
Office Hours w/ Rockwell Shah (Mon. 7/11 @ 1 pm PT)*
NFTuesday (Tues. 7/12 @ 3 pm PT)*
Bear Market Lessons from a Crypto OG w/ Mike Dudas (Thurs. 7/14 @ 12 pm PT)
* To access these events, you’ll need to hold at least one Decentralien NFT.
Now onto this week’s post…
It has become cliché to mention how early we are in crypto. But clichés emerge from truths.
Being early in crypto now is similar to being early to the web twenty-some-odd years ago. Amazon’s stock price at the time tells the story.
In December of 1997, $AMZN was trading at just under $0.25. Almost two years later, in November of 1999, the stock price had soared to $4.25, a 17x increase. Fast forward almost two more years, to September 2001, and the price plummeted all the way back down to $0.30.
Of course, we all know what has happened to the stock price since then. But imagine holding onto it through that huge runup and subsequent drawdown. That might be how you feel right now if you’re holding onto basically any crypto assets.
The good news is that there’s still a ton of money getting invested into the industry, lots of builders are pushing the space forward, and many entities are championing regulatory efforts.
Let’s get into some recent examples.
Bitcoin ETF
Last week, Grayscale, one of the biggest digital asset managers for institutional investors, filed a lawsuit against the US Security and Exchange Commission (SEC) over the rejection of a spot Bitcoin exchange-traded fund (ETF). An ETF is a pooled investment security that works similar to a mutual fund, but can be traded like a regular stock on an exchange.
Notice the $GBTC hashtag in the CEO’s tweet above? That’s Grayscale’s Bitcoin Trust stock ticker. It generally follows the price movements of Bitcoin, although it can sometimes trade at a premium or a discount. But, most importantly, it can be traded on a traditional stock exchange. This is important because institutional investors can’t just go out and buy Bitcoin on Coinbase like you and I can. They aren’t equipped to properly store it, so they effectively have Grayscale securely store it for them. Since GBTC can be bought on the open market, it’s available through brokerage firms and it’s even offered in some IRA and 401k accounts.
Now, you might be thinking, what’s the problem? Why is Grayscale suing the SEC if GBTC is already on the market?
The problem is, with current regulations in place, Grayscale can only invest in Bitcoin futures, rather than the spot price of Bitcoin. The spot price is the current price of Bitcoin at any given moment in time—like the price you see on any cryptocurrency price-checking app. The market for Bitcoin future is much smaller and not as correlated with the spot price of Bitcoin. So if investors are trading GBTC, it’s as if they’re not truly trading Bitcoin. A spot ETF would fix this.
A true Bitcoin ETF is a key landmark on the path toward legitimizing and clarifying the regulatory landscape for crypto. And if the SEC approves a spot ETF, it would theoretically open the flood gates to tens if not hundreds of billions of dollars and be a major catalyst for the next bull market run.
Building
Solana recently unveiled that they’re building a web3-focused mobile phone called Saga, which will be available in early 2023.
It’s built on Android and uses Solana Mobile Stack (SMS), “a framework…allowing developers to create rich mobile experiences for wallets and apps on Solana and create a ‘Secure Element’ for private key management.”
Solana Labs Co-Founder Anatoly Yakovenko has deep experience in the mobile world, having previously worked at Qualcomm. In an interview with Bloomberg, he described the goal for the Saga phone:
“One of the most important parts about crypto is self-custody. Not a lot of people understand it. Not a lot of people use wallets like Phantom or Metamask around the world. The goal of the phone is to make that experience delightful and easy and simple. And have the user experience of Google Pay or something like that.”
Additionally, they’re creating a developer-friendly app store without the hefty, extractive fees that exist in other mobile ecosystems like Apple’s App Store.
Undoubtedly, an easy-to-use mobile experience will be an important step for web3 to truly gain mainstream adoption. The question is, is Solana the team that can pull it off?
After the news dropped, the jokes immediately started flying on Twitter:
Other people dunked on the idea as a whole, calling it a waste of time and money to try to compete against Apple and Google. It’s easy to criticize the decision to build a hardware device. After all, that path is riddled with the gravestones of prior attempts—there’s a reason the Facebook and Amazon phones never really became a thing. Sure, it might end up being a massive waste of time and money for Solana, but that doesn’t mean it’s not worth trying.
Experimenting
Even profile pic (PFP) NFT projects are helping to push the space forward.
At first glance, the We Are All Going to Die (WAGDIE) project might seem like yet another pixelated PFP collection, but they’re using a combination of web2 and web3 to create a fascinating and mysterious story.
Here’s a sample of what they’ve done:
Hosted Twitter Spaces with voice actors that tease bits of lore
Used on-chain mechanics like governance votes via Snapshot to decide what happens to characters
Burned/sacrificed other NFTs. So far they’ve burned a Mutant Ape, a Beeple, and a Cryptoadz (that’s nearly 40 ETH worth of NFTs!)
Airdropped additional NFTs called Tokens of Concord to those who sacrificed their original WAGDIE NFTs
Pushing the boundaries of storytelling with web3 tools could unlock all kinds of different artistic approaches and mediums we never could’ve conceived of otherwise.
Other teams, such as Genesis, are working to push the idea of what a crypto wallet could be, beyond a basic utilitarian app like Metamask. And some people are starting to explore how wallets could be unbundled into various web3 use cases (i.e. DeFi stakers likely want something much different than NFT traders).
Experimentation is a key component of innovation. It’s about creative people coming together and innovating on consumer experiences and community design. Not all of these experiments will work. But that’s okay. It’s all part of the process. The future is often built on the backs of those who tried and failed.
Other Recommended Reads and Listens
The Crypto Revolution
Josh Rosenthal, a crypto-native with a Ph.D. in history, joins the Bankless podcast and compares crypto now to the American RevolutionAtoms, Institutions, Blockchains
Josh Stark writes a theory piece on how blockchains are the connection between money, law, and governmentSummary of State of Web3 Report by Chainalysis
Joel John summarizes the recently released 109-page web3 report from Chainalysis
Invisible College, is a school that helps people learn to build and invest in web3. To access our courses, events, and learning community, you’ll need to hold at least one Decentralien. You can get yours on Magic Eden.