In this episode of Bankless Shows, Erik Voorhees joins Ryan and David from Bankless to discuss how this bull/bear cycle is similar, how we preserve crypto’s core principles, and most importantly– why are we here.
Read our notes below to learn more.
Where Did Crypto Go Wrong?
Recent events have impacted the perception of crypto from outside of the industry.
Some people in the industry have made mistakes but the diversity within the crypto community is a strength.
It is not important to portray the industry as a unified group with a single perspective.
Crypto Labels
“Crypto” may be seen as embarrassing by some and many are coming up with more organic labels to describe themselves and their involvement in the decentralization and fintech aspects of the industry.
Labels and words used are superficial and the focus should be on the technology and principles behind crypto.
Reputation of crypto can be negative during a bear market but it is important not to worry about the opinions of those who don’t fully understand the industry.
Responsibility
The diversity of people within the crypto industry includes scammers and others being public good maximalists.
The industry has something for everyone, but it is also small and can feel like everyone is connected in some way.
The community should speak out against bad actors within the industry.
The goal should be to highlight virtuous projects and principles within the industry.
Accountability
Important to invite influential people in the crypto industry to speak on a podcast.
It is important for the crypto community to hear from leaders of major exchanges, even if they may not align with the values of the industry.
Advises to focus on the structures and principles of what individuals have built rather than just the individuals themselves.
Emphasizes the idea that in crypto one can know how things are designed without having to trust the people or rely on their reputation.
FTX Collapse From Erik’s POV
SBF's exchange, FTX, paused withdrawals on November 6th and then filed for bankruptcy on November 11th was surprising to Erik.
SBF seemed off and flustered on the debate Erik had with SBF before the collapse of FTX.
SBF may have had questionable financial practices and the events have had a negative impact on the crypto industry.
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SBF’s Headspace
If the market had performed well, SBF may have been able to resolve the issues and continue operating.
It is unlikely that someone who committed such an atrocity and got away with it would have a change of heart and stop their corrupt actions.
It is ultimately good that SBF’scorruption was rooted out, but if the situation had played out differently, it is possible that the consequences would have been much worse.
Potential Alternative Realities
There is an influence of politicians in the crypto industry.
The markets handle issues better than government coercion.
Criticizes the use of regulation as a marketing pitch by cryptocurrency companies and advocates for the use of open-source, immutable code as the true salvation for the industry.
SBF’s D.C. Relationship
Crypt has seen the impact of certain individuals with ego and hubris on the market and the importance of humility in navigating the industry.
The ambition of the industry is to revolutionize the financial system.
Important to recognize the role of luck and the contributions of others in one's successes.
Was this Cycle Unique?
People in the industry need to understand the dangers of custodial exchanges and wallets.
If the majority of crypto funds and wealth are held by intermediaries, it will be difficult to escape regulation and the need to trust humans.
Increasing usage of DeFi with better user experience may encourage people to move towards self-custody.
The best solution to counter CBDCs (central bank digital currencies) may be the use of free and open permissionless blockchains, which will be more appealing due to their ease of use.
Lessons From Past Cycles
There is a process of evolution and improvement through violence and difficult processes.
Entrepreneurs in the industry should be trying to solve problems and minimize pain, and believe that government regulation causes complacency and stagnation.
The crypto industry should not become heavily regulated and lose its passion and fire.
Learning Through the Pain?
Important to empower individuals over concentrated power systems.
Decentralizing power leads to a more dynamic and adaptive world where individuals are able to make their own decisions
Centralization of power can lead to abuse and a brittle system, as seen in nature and markets co-opted by governments.
In terms of governance, it is beneficial to keep power small, local, and decentralized to prevent large-scale conflict and abuse.
Why is Individual Empowerment Correct?
Government and religion can be seen as social structures that help coordinate people but the use of violence and coercion to enforce these structures is not acceptable.
Both extreme centralization and decentralization can be problematic.
There is a tendency in human society towards seeking more centralization through appeals to coercive government, but this often leads to negative consequences.
The first step in addressing this issue is to advocate for systems that avoid violence and coercion.
Coordination, Order & Power
Believes that coordination, order, and collaboration are important, but that violence and coercion should not be used to achieve these goals.
There are two types of power: voluntary power or influence, and coercive power.
People who seek power for the purpose of growing their own power are not those that should be in positions of power.
Yields in the crypto markets can lead to centralization.
Big corporations like Amazon should not be grouped with coercive governments as they do not have the same level of power and do not engage in the same actions.
Important to find a balance between centralization and decentralization in the crypto space.
The U.S. Constitution
The Constitution was a significant development in that it attempted to decentralize power and put limits on the centralization of power.
Over time it has been degraded and has lost much of its meaning.
The use of code such as in an Ethereum smart contract is seen as an improvement as it is objective and cannot be degraded over time.
Why Are We Here?
Money is a vital technology in society and should not be controlled by a monopoly provider, such as a central government.
Dedicated to separating money and state through supporting technologies and blockchain applications that promote decentralization.
Some people may be motivated by financial gain but Erik is motivated by the principle of decentralizing money from the hands of the state.
Baked-In Crypto Principles
Blockchains are tools that have the potential to advance certain values or principles.
Important to preserve core crypto values as the industry grows.
Perserving Core Crypto Values
Active management and influence are required to maintain those values.
Crypto tech can take over the world without requiring everyone to share the same values or ideology.
Through adoption, the values embedded in crypto protocols will eventually be adopted by society.
The society is becoming more radical.
Is Erik Radical?
Society is sick because most people claim to be pro-peace but then advocate for actions that go against peace such as taxation.
Crypto protocols can help move society towards peace because they provide an alternative form of money based on the market rather than coercion.
Holding the principle of peace as a fundamental moral principle makes Erik a radical in society.
Will Crypto Ever Go Mainstream?
Crypto will eventually go mainstream and become a major financial asset due to its ability to allow for capital to flow more easily.
Money and information are similar as both want to be free and spread.
There is a possibility of another bull market peak in 2025.
Cycle Common Denominators & Bear Market Advice
Advises that during bull markets, people should be skeptical and only invest in good ideas.
During bear markets, people should remember that the tech has not changed and not be too negative about potential opportunities.
Encourages people to recognize that they are in the middle of a revolution and not to let it pass them by.
Erik believes that there will be a shift in the market in early to mid-2022 and Bitcoin could potentially reach $40,000 by the summer.
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TODAY’S EDITION IS BROUGHT TO YOU BY TREZOR HARDWARE WALLET
Navigating the waters of crypto is risky; even the biggest CEXs & stable coins can have huge risks…
Act now, click the link below & become your own bank via self-custody.