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What blockchain maxis & critics both get wrong– crypto revolution is in fact NOT about tech.

It’s a revolution about how we organize the economy. This is tech agnostic & may or may not involve blockchain.

Understanding this will help you make better investments. Here’s how 👇

Many bitcoin OGs missed Ethereum, not realizing the power of smart contracts. Many Ethereum OGs missed Solana, Avalanche, etc, not realizing the power of cheap, fast transactions. Many alt L1 OGs—just wait for it— will miss the next big thing, whatever it is.

All these misses have one thing in common— a fundamental misunderstanding of what makes crypto revolutionary.

The crypto revolution is not abt decentralization, cryptography, or resisting censorship. It’s abt a huge shift in how society organizes its economy & distributes economic outputs. The value of any technology feature is only proportional to how much it facilitates this shift.

Market & corporation are two traditional methods of organizing economic activities & distributing values.

The last major breakthrough in “value distribution technology” happened in the 17th Century when Dutch East India Company invented the 1st “publicly owned” enterprise in history, drastically lowering entry barrier for the mass to get bigger shares of economic pie.

That innovation, among others, triggered increasing diffusion of economic power & more wealth equality. Since then ownership models haven’t changed much. Yes distribution of economic outputs is more equal than 500 yrs ago, but progress has stalled. Even in US, country w/ highest share of equity ownership, only half the population owns stocks. The number has declined since 2008 crisis, esp among younger, lower-income groups.

Meanwhile, wealth inequality is at a generational high for multiple reasons & technology progress has—and will continue to— exacerbate that in many ways.

How to allow more of humanity to participate in & benefit from increasing economic abundance of the world is one of the most pressing problems of our time.

Why is this important to you as an investor?

Because the real reason that crypto caught on like wild fire is b/c it provided solutions—however tentative— to that problem. And crypto’s future growth will continue to depend on how well it helps to solve that problem.

In other words, the magic power of crypto comes from it being an enabler of *Massive Open Distribution of Economic Values*— MODEV.

Bitcoin was the 1st MODEV project in that it allowed a community of people to claim values out of thin air & openly send/receive those values. And the censorship resistance / be-your-own-bank meme is brilliant for attracting loyal group of libertarian early adopters.

But if you know that MODEV is the ultimate growth driver, you’d see the bitcoin type of meme has limited mileage— Libertarians are a social minority (7-10% of US adults). To reach a wider mass you’d need a different message than tech utopian anarchy.

And if you understand MODEV, you’d also see that strong hodling is not good for project’s long term growth, as it makes growth benefits disproportionally accrue to OGs— the opposite of more equal value distribution.

(BTW, like this so far? I write about ideas on investment, macro and human potential. Subscribe to my newsletter for updates.)

Similarly, through the MODEV lens you’d see that smart contracts are inevitable cuz they leverage blockchain to allow more ways of MODEV.

You’d see that proof of stake overtaking proof of work is a matter of time, as the former allows economic values of blockchain ecosystems to be distributed to all users w/ the mechanism of staking, i.e. enabling more MODEV, aside from any environmental benefits.

You’d see that projects like Helium, Gala, Render are almost sure bets if executed well, cuz they are essentially MODEV plays in their respective industries.

You’d see that alt L1s were destined to flourish cuz scaling in cost & speed, not decentralization or privacy, is the primary bottleneck right now in enabling more MODEV via blockchain.

Extrapolating forward, you’d see there’re bound to be more waves of exponential MODEV growth & associated investment opportunities to come from new projects.

Cuz crypto is still child’s play right now. For it to be mass adopted, new waves of users need to make their 100x, too. They’ll champion new projects that create their own network effect at the expense of older ones.

This is inevitable if crypto is to achieve its historical mission of massive distribution of values to billions of people and bridging old & new economic paradigms.

You’d also see that blockchain is but one of the potential technology vehicles to enable MODEV. Governments & web2 organizations will employ different techs to leverage MODEV business models once they realize its social benefit & economic power.

As an investor evaluating projects, it’s useful to not get carried away by fancy tech claims or clever tokeneconomics. At the end of day, some of the most important Qs to consider are—

  • Does this thing create MODEV in long term?
  • Does this thing enable better MODEV than competitors?
  • Are there signs that MODEV is happening in this project/platform/protocol & will continue to happen?

And if you understand MODEV is the driver, you’d see that being a maxi of anything is overrated. The industry moves fast and where hyper growth happens will be changing constantly. You won’t catch every wave but keeping an open mind will allow you to catch more than most others.

14 Comments

  1. Brilliant. Moving forward I’ll think about MODEV to look beyond both the maxi hype and FUD when evaluating investment opportunities. I like how it reminds me of massive open online courses, since being enlightened through education can lead to bigger economic value.

    I appreciate both the historical context and optimistic future focus you bring!

  2. I love these articles / newsletter. Really appreciate the perspective and the thoughtfulness you bring to the noise in crypto.

  3. Thank you for the clarity.
    As someone outside both tech and economics it’s great to be given a framework to assess what’s happening.

  4. Hi Tascha, first time I read you outside twitter, and… Great article,
    I also have been thinking about how this is more about the social aspect than the economics or tech. Because it impact in the economics, and is enabled by the tech, not viceversa.
    But what I was just thinking, you put it into words… thanks.

    I would like to see a more in depht article about the 3 questions you sorted there.

  5. Thought provoking, thanks!

    Though one thing I don’t understand is: How is investing in new crypto tech a more fundamentally more powerful wealth equalizer than buying stocks? These days, buying stocks is exceedingly easy with apps like Robinhood and 0 costs, and still remains easier than buying crypto.

    The one caveat I can think of is that in crypto *sometimes* (though increasingly less often) you can buy a project very early on (e.g. BTC), whereas doing so in stocks is not possible unless you are an accredited investor with lots of capital to risk. In that sense, crypto’s ICOs have presented an opportunity for wealth generation that stocks don’t (although – the sheer percentage of rug pulls on ICOs is in itself a testament to the value of regulatory bodies overseeing that things are done properly).

    Thoughts?

    • Because to be able to buy stocks you will need a bank account, and you also need a broker. Those two prerequisites are not for everyone – lots of people are simply unbanked. Also stocks are not like 100X investments as cryptos can be. Next the community around crypto is very inclusive in my opinion.

  6. Awesome. I read the whole article carefully but I am still hungry for more definition around the concept of MODEVs. When I try to apply that metric to various projects it’s not so simple to gauge. Can you do another article MODEVs. I think your spot on, it makes sense but can you give some detailed examples of better or worse MODEVs and explain in more detail what exactly is really happening when projects exude Massive Open Distribution of Economic Values.

    Thanks 😊

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