Takeaways From Permissionless 2 (Part 1)
Insights from the 2023 Permissionless 2 Conference in Austin TX
IN TODAY’S REPORT
What we cover: NonceSense edition. American values technology. TradFi is (one) bridge. TradFi may also be the bridge exploit. VDACs and PDACs. It’s about the experience.
TODAY’S REPORT
Cool Weather and Hot Topics
Under “cool weather” conditions — i.e., with daily highs finally under 100 degrees — the second Permissionless conference just wrapped up in Austin, TX. The conference spanned three days of intense crypto/Web3 immersion across three tracks: the Future of Finance, Institutional, and Culture. While I’ve long been devouring white papers, books, charts, articles, podcasts, art and even attended a small boutique event in Manhattan in 2017 — a pre-ICO gathering of hedgies sponsored by a now defunct shitcoin — Permissionless 2 was my first actual major crypto conference. Worth it? Yes, without question.
Here are my top takeaways from Permissionless 2, written in bite-sized paragraphs, and in two parts. Why? Because the event just ended and I’m both exhilarated and utterly exhausted. Here goes…
1/ Crypto Is An American Values Technology
Crypto OG and ShapeShift founder Erik Voorhees posed a simple question in his opening remarks: Why are we here?
For the Lambos? Because we all love banks? No. We’re here to further the “peaceful rebellion” which crypto intrinsically embodies. True crypto protocols enable permissionless money. For Voorhees, permissionlessness is the essence of crypto.
“We should care about its [money’s] quality. We should care about its [money’s] character. We should care who controls it.” [Voorhees, 9/11/2023]
To require permission to transact with any form of money — the literal embodiment of one’s time and energy — is subservience, anti-freedom, and inherently unamerican.
Later that day, Ryan Sean Adams stated that “crypto is an American values technology.” I’m pleased to report that these values were evident at Permissionless 2 from the main stage to the expo hall to the breakout sessions. Hard-coded values. American values.
2/ TradFi Is (One) Bridge To Crypto
TradFi is not the bridge to crypto, but rather one of many bridges.
While builders build, developers develop, and innovators continue to innovate no matter the market cycle, countless others look to TradFi to provide a regulation-approved onramp into crypto and in turn launch the next bull cycle.
It’s hard to argue with the logic, however long it takes that onramp to be permissioned. Everyone likes their bags pumped, no?
Currently, Americans and non-Americans alike await Daddy Gensler’s permission to buy spot Bitcoin in the already regulated, fiat-rails form of an ETF. While many readers know that this prospective form of buying Bitcoin will not provide true keys-level ownership, the potential pent-up demand and subsequent allocation/execution via RIAs and other intermediaries will undoubtedly bring millions into the space through pseudo-ownership (i.e., permissioned ownership of a permissionless asset).
Thinking favorably, the coming TradFi bridge to crypto will enable new rails of value transfer and provide a bridge to greater adoption. This may be my bags talking, but LFG.
3/ TradFi May Also Be The Bridge Exploit
Let’s fast forward for a moment. Imagine a world in which we’ve got a U.S. exchange-listed spot Bitcoin ETF, a spot Ether ETF, and potentially various spot-alt ETF listings. Crypto has finally won, right? Not so fast.
The best actors in crypto, or values-driven actors in crypto— VDACs for short — care about first principles. By definition, VDACs care about values.
Which values? While this varies by VDAC, generally speaking they care about freedom, the right to privacy, self-sovereignty, and the nature of money among other things.
Regarding the latter, VDACs particularly value time. On a planet with no free lunch, humans trade their energy for a fungible representation of that energy, i.e., money. While nearly all profligate, fiat-based nation states continue to devalue their currencies over time to varying (typically excessive) degrees, their respective fiat money bleeds value, erasing the energy store of the holders of that money. In short, fiat money erases the time of those who earned it. Time itself is irreversible, but fiat nation states have managed to implement an insidious hack, rolling back the value embedded in the passage of time.
On the other end of the motive spectrum, Wall Street cares immensely about Wall Street. More investment vehicles means more profits. Period. The majority of Wall Street players moving into crypto can safely be labeled PDACs — profits-driven actors in crypto. There’s absolutely nothing wrong with this, but many at Permissionless 2 expressed deep concern about the approach of TradFi en masse.
My takeaway? The coming world in which TradFi PDACs flood into the permissionless world of VDACs will be massively disruptive to crypto as we know it. Positive upside price disruption will almost assuredly come with negative downside values disruption. TradFi may be a bridge into crypto, but also the bridge exploit. Beware the barbarians at the open gates.
4/ It’s Not About The Tech. It’s About The Experience
Consider this line from a Blockworks article dated 10/25/2022:
Social platform Reddit has been silently rolling out new features and onboarding millions of new users to Web3 — 2.8 million to be exact, according to data provided by Polygon and Dune Analytics. [“Reddit Makes PFP NFTs Cool Again, Marketplace Trading Volume Surges”'; italics mine]
Millions of new Web3 users, many unaware that they were now inhabiting the crypto space. While the Reddit rollout may not represent the optimal user experience, it does illustrate that it’s not about the tech. It’s about the experience.
As investor Li Jin eloquently stated, “culture sits upstream of technology.” Stated another way, culture flows downstream to push technological development.
If Web3 brands are telling their audiences why they should like the tech, the brand’s adoption prospects may be doomed. Conversely, if Web3 brands sell a new and unparalleled experience, adoption may flourish. A Web2 look with Web3 ownership may provide the best vehicle for the tech. Have a culture-driven product running on crypto rails? Don’t let them see your blockchain (at least not right away).
Lastly, while I’ll have more to say about Permissionless 2 in the forthcoming Part 2 next week, I’d be remiss if I didn’t say how grateful I am for this space and for all who made Permissionless 2 happen. Cheers for now.
peace_love_crypto-DB
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