We've been here before, and we've been right all along
You can route around any border with Bitcoin. If you can get your body out, Bitcoin can take care of your funds.
“In reality, the opportunity is immense, and bigger than our most creative minds can imagine, but not as it’s been articulated over the last few years.
This blockchain adventure has always been about finance: open financial rails for anyone and everyone on the internet.” —Lily Liu.
Bitcoin’s price fell apart last week. It fell below the crucial level of $67,000, the prior all-time high set in the 2021 cycle.
It felt bad.
Ethereum’s coin of the realm, ether (ETH), which never really caught a bid during the run-up of Trump’s first year in office, crashed even harder.
There’s a reason why every civilization has an apocalypse myth. Worlds end when eras pass. People in the past might as well be from other planets. The question for crypto right now is: Are all the assets headed to zero or is this a metamorphosis?
I don’t think they are going to zero, and I want to tell you why.
I think this is a metamorphosis, and epochal change is painful. The question each of us have to ask ourselves is whether or not we want to stick around for what’s coming on the other side.
It probably won’t be as fun as the last ten years, but it for sure won’t be the same.
To get out
“Real trust starts when leaving is easy.” —William Mougayar
Whatever happens, don’t look for Bitcoin or Ethereum to disappear any time soon. They are now wired into the global economy. They have enormous vested interests keeping them running and they have devoted communities of true believers.
Each of them is like a religion and a Fortune 500 company rolled into one, but without headquarters and CEOs that any enemy can target.
And this is actually really important for the world. Even if nothing else about these networks ever really takes off, they each have a utility that will never go away. Bitcoin and Ethereum provide means of exit.
Do you live in a nice country with a crappy government that keeps inflating away your paycheck? That stinks, but you have options now. You can take your cash and you can buy tether or usdc. Now your wealth is protected against local profligacy.1
Decentralized settlement layers gives you a way to stick around in the place where you have family and social capital, but without exposing your wealth to the vicissitudes of a corrupt government.
That’s Exit Lite.
Then there’s Exit Hard.
Exit Hard is when you need to go. You are living in a bad place, under a regime that makes you wonder if life is even worth living. You don’t leave places like that, you escape.
Once upon a time, getting out of that kind of place with any of your assets intact was very difficult. But now you have a new option. Now, if you can buy bitcoin, you have a way to carry wealth out without being detected, without it being checked, without declaring it to anyone.
Stablecoins are no good for this. If your departure gets detected, stablecoin issuers will cooperate with a demand from a sovereign. They will freeze your tokens.
But you can route around any border with Bitcoin.
If you can get your body out, Bitcoin can take care of your funds.
People use Exit Lite all over the world.
Exit Hard doesn’t get used often at all, but it’s nice to know it’s there.
And it’s nice that regimes know it’s there, too. Now, they have to take into account the fact that folks can go without leaving all their wealth behind.
Security guarantee
“So this is what the end of an era feels like.” —Arthur Cheong
Crypto does more than that, too, of course. There’s more than $300 billion worth of dollar-backed stablecoins in the world. People are doing more with those than tucking them under mattresses in the sky.
You’ve seen the litany of stablecoin justifications endlessly over the last year or so. Here’s the point: The U.S. government has acted to enshrine the basic concept of stablecoins into the law. Now people all over the world have a workaround when they live under a regime that insists on picking everyone’s pockets with a money printer.
You did this. We did this.
Worlds end when eras pass.
Everyone who has been bull-posting about Cardano on Crypto Twitter or urging your aunt at Christmas to buy a little ETH or that’s been liquidity mining their way through COVID, you all helped make this happen. You helped to build the social capital around this space and bring the liquidity into it such that grew it enough that eventually the financial powers that be couldn’t pretend it was fake any longer.
Were there scams, wild swings, thefts, ridiculous hustlers and absurd narrative gamesmanship on the way here? Yes. Is that a fundamental indictment of the technology or the culture? No.
Frontiers aren’t settled by Boy Scouts.
Crypto in its first era was risk way, way on. The gross truth is that this is always the way, until the new land gets settled and the time comes to start deputizing sheriffs and marshals and cleaning up the place.
That’s what it took to get here, but we did. We got within the regulated perimeter of the biggest economy in the world, the one everyone else looks to: the United States.
It was unlikely that anyone ever really could destroy either of these networks, but the United States could have made it all but impossible for either one to really reach escape velocity. Getting cleared here was a crucial threshold.
But somehow none of those enormous achievements mattered last week.
Even though there are bitcoin and ether ETFs, even though there’s a pro-crypto U.S. President, even though stablecoins are becoming the de facto cash in out-of-control economies all over the world, crypto still vomited out all its gains from late last year as the new year began.
In the past, it has been reassuring every time there’s a market rout that bitcoin price falls somewhere around the prior all-time high.
To me that’s always meant that even though bitcoin is volatile, the asset picks up true believers who are going to hold on for the long term each time around.
Not this time, though. This time it’s fallen below that crucial level of 2021’s all-time high.
It seems like old hands really are leaving.
It’s about the money
“The disappointment has been especially acute for all the speculators and opportunists that thought crypto was the lowest-effort way to get rich. Over time this struggle has produced widespread burnout across the industry.
This is a healthy development of course.” —Ryan Watkins
There is a crucial lesson here though. It’s showing what actually matters to crypto’s denizens, the cryptoletariat and blockchainerati alike.
Price.
Price actually is what matters.
And there’s nothing wrong with that, because cryptocurrency is about finance. It’s about the money. It’s about changing how money works in the world.
It’s about an open financial system that can’t hide a bunch of ridiculous risk.
It’s about the transaction flows that ignore borders.
It’s about the inalienable right of human beings to transact.
It’s about money native to the internet, that can move at the speed of data, where machines can transact with machines and humans can transact with strangers.
It’s about buying a blender without anyone needing to know your name.
In order to ensure that we have transaction optionality, price is important. If the price is high enough, relative to the rest of the global economy, then lots of people will hold the decentralized assets. If lots of people hold them, then they can be used to transact.
A price high enough that it matters on a global level also guarantees that validators will maintain the security of the networks. That way, we can trust the best ones as credibly neutral mediums of exchange and storehouses of value.
We need those two things to be true, so we need these assets to be valuable.
And even after last week, they are still valuable, but they are a lot less valuable than they were, not so long ago.
But I don’t think the value is going to evaporate. The core use cases discussed here really do provide something new under the sun: stateless, trustless value exchange guaranteed by code, decentralization and electricity — never force.
Mirages
“if you still say ‘web3’ you are a fed” —Erika Lee
The crypto world has been hypnotized by two different mirages.
Narrative. This has been driven by the speculative money game, one in which investors make bets on which tokens represent bets other bettors will pile into. It’s the Keynesian beauty contest, but, unlike in the stock market, there was basically no fundamentals at all.
Web3. This whole idea blockchainifying everything. The new internet. The new art world. The new metaverse. The new telecoms. At best, the world hasn’t been ready. At worst, there’s no there there. Either way: It was, in fact, just the most persistent reiteration of narrative.
The money is enough — certainly for now. Maybe forever.
Changing the money can change many of the things it could be good to change. We could have money on the internet that doesn’t know your name. We could have tiny transactions that credit card companies would never bother with. We can have money that streams, that pays you while you work or that you spend as you watch. We can have savings accounts that actually pay again, with clear parameters and transparency on where yield comes from.
And, of course, we can have money that GTFOs.
In this new era, the big crypto substrates, in particular Bitcoin and Ethereum, have been cleared for participating in the global economy.2 Others will be built (have been built and are being built). Maybe they will matter, maybe they will be valuable and maybe they won’t. What we know for sure though is that those two substrates are here to stay.
They are no longer a sure bet though. That’s what last week showed us.
If you can get your body out, Bitcoin can take care of your funds.
Now the old gods of the new internet have placed a new demand on the ambitious members of this industry: speculative games are the little game. The big game has become creating actual businesses, with revenues, profits and organic growth.
2010 to 2025 was the fake it till you make it era.
2026 came in and flipped the switch — fast. The show me era has begun.
Keep your utopia
“If there’s one hill I’m willing to die on over and over, it’s this: All utopias are tyrannies” —Sarah Friend3
I’m not interested in utopias.
I want to live in a normal place that’s familiar to me, where everyone is a little disappointed by the situation, but hardly anyone is genuinely miserable. I guess that’s a topia? But if my topia takes a turn toward dystopia, I want a way out.
Bitcoin and Ethereum have delivered that for money. And I’ll need some money on the other side if I have to go.
That’s a great achievement.
There’s a place for this technology in the world as long as you believe we live in a world where, no matter how good we might have it at any historical moment, there’s a chance that we might need to get up and go, and fast. As long as there’s a chance that some maniac might grab a hold of power because he thinks he knows better than everyone else how we ought to live our lives.
As long as you think any of that might be possible in your lifetime, then there’s a place for this technology in the world.
You did that. We did that.
We all know decentralized money can do a lot more than get us out of a bad situation, but we needed it to get big enough that it could do that, for sure, in practice as well as in theory.
But we got there, so now it’s time to clear out the hustlers and get serious. Rules are coming. Now it’s time to quit promising and start performing.
You thought you were nearing the top of a mountain. It turns out you were clearing the path to base camp. Now we’re there, and it’s time to climb.
Thanks to Zelinar Xy, Priyanka Desai, Matti 👾, Joon Ian Wong and Aaron Stanley for looking over an early draft of this post.
Yes, I understand that — big picture — you might say the same for the U.S. dollar. One step at a time.
You’ll often hear folks bemoan the fact that suits have shown up as some sort of compromise for crypto. I don’t see it that way. The fact that BlackRock’s running ETFs does not change the fact that I can buy 1 BTC in Nigeria and carry it in a brain wallet across the sea to Malaysia.
Sarah Friend just started a newsletter, called Mud and Dust, btw.