The crypto world is going ApeSh!t. Yes, the Bored Ape Yacht Club have teamed up with Timbaland to create videos and music of their apes. The crypto world is going ApeSh!t over the marriage of music, video, and digital finance. At this point, you, dear reader, will fall on one side or another of a genuine digital divide.
On one side, we have the Incredulous. These are people who have either never heard of the Bored Yacht Club Apes (it’s okay to admit this now, but it won’t be in a year), or think people are genuinely insane for buying jpegs of any kind for hundreds of thousands of dollars (which is the price for now but it looks set to get into the millions shortly). These Traditional Finance people think the Fed has spawned a digital monster that will soon look like the tulip-mania bubble of the 17th century. Saying, “It’s a stupid JPEG of an Ape,” immediately reveals who you are and how you think. You might as well say, “I never got the hang of these mobile phones.” The apes are not JPEGS. They are networks of bright people who are loaded with influence and cash. They have a mutual vested interest in shifting products through these guerilla networks.
On the other side, we find the Astonished. These are the people who have figured out that digital assets represent networks of switched-on high net worth people who have both selling and buying power. Decentralized Finance people think that the Fed has so debased traditional money that the only solution is to opt into a digital money system where no single government or firm or person can make off with all the money at everybody else’s expense. The switched-on Astonished crowd is mad at Facebook for trying to culturally appropriate the metaverse. They are astonished that the TradFi folks are so slow to pick up on a technological leap into a world where assets will be digitized and owned through fractions, tokens, and other mechanisms that fundamentally democratize the access to the underlying cash flows.
The world is divided along so many fault lines it becomes hard to keep up – left vs. right, woke vs. non-woke, Tesla Crazies vs. Tesler Grumblers. But there is one divide that gets deeper every day: DeFi vs TradFi. Audiences that I speak to are often totally TradFi and typically have no idea what DeFi really means. I recently canvassed the senior management of the top banks and financial market businesses around the English-speaking world. They get that there is something called “Decentralized Finance.” They get that Bitcoin is becoming more accepted and that it’s been wildly appreciating since it launched. But, The TradFi crowd only grudgingly accepts DeFi and blames the Federal Reserve for having induced a speculative crypto bubble. TradFi says all this digital gobbledygook is nothing more than an act of imagination.
They are right, and that is precisely what makes the Incredulous crowd so wrong. All money is an act of imagination; a belief system based on a collectively imagined truth. Governments, banks, savers, lenders, and accountants all believe that the piece of paper represents the ability to translate that $100 bill into something real. The Astonished are similarly engaging in an act of imagination, albeit a newer version. For them, the digital world, with its cartoon-like coins and strange lampoon avatars, represents the ability to defeat the current imaginary ideology which is embedded in the dollar that sits in your pocket. This new imaginary world has a stricter monetary policy and more transparency than we’ll ever get from central banks.
This is why everyone needs to understand that there is a hard fork coming in the road. No, not the Defi hard fork which means that all the nodes/users must upgrade to the latest version of protocol software, an event that often means new and old coins will be minted according to the new and old protocols. No, this is the hard fork where Defi players either comply with what the SEC and regulators want or be arrested at the airport in some fabulous tropical location when you arrive for your no-expense-spared vacation. Of course, the SEC has not yet specified what it wants. Instead, it seems to rule by what it does not want. For example, it declined to support the Van Eck Spot Bitcoin ETF on the grounds that it does not want Bitcoin to have a spot market. So, Van Eck is launching it as the Bitcoin Strategy Fund under “XBTF” on the CBOE. The SEC also approved the ProShares Bitcoin ETF “BITO” which raised $1b in assets in record time. For those who still think they can deal in DeFi in defiance of the SEC and other regulators, take a look at the metaverse. Every time you log into your digital assets, governments have the opportunity to track you and your passwords. Perhaps this is partly why the Australian’s are pioneering the expropriation of social media accounts when people are arrested. They can take and delete all your social media data. Apple and Starlink seem very likely to work ever more closely with the authorities to make sure that internet users are not getting up to “no good”. For now, the SEC and the Federal Reserve seem to view these new money technologies as “no good”, even though they are rasing to replace fiat currency with sovereign digital money. Why the sudden rush? Governments are fast-registering that digital money is actually a surveillance system designed to look like money.
It requires a good deal of imagination to comprehend digitized money. Remember what the British Academy economists told Queen Elizabeth? She had asked, “How did no one see the financial crisis coming?” The answer? “The failure to foresee the timing, extent, and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people.” Is this a replay?
Today the revered New York Times Times columnist David Brooks says that imagination is not an “airy-fairy luxury good” but rather, as Aristotle argued, “one of the foundations of all knowledge.” Brooks says our imagination is left to wither by our schools. “What happens to a society that lets so much of its imaginative capacity lie fallow? Perhaps you wind up in a society in which people are strangers to one another and themselves.” That’s a pretty apt description of the imaginal gap between the old money beliefs and believers and the new money beliefs and believers.
Perhaps this is the key to understanding our time. Those who have been trained to be analytical tend to look backward to find data, proven beliefs, and traditions. The capacity to comprehend the future, though, lies in imaginal acts. Usually, it takes a crisis to compel people to move from analyses to imaginative leaps. This is how we ended up with Brady Bonds, Special Drawing Rights at the IMF, and now the Chinese Sovereign Digital currency (the DCEP). These were all acts of imagination brought on by lack of any practical alternative.
The DeFi market is fundamentally about people trying to imagine a better way to work, a better way to save, a better way to buy and sell. Technology is facilitating imaginary scenarios and making it possible for them to come to life. Even the static image of a Bored Yacht Ape is about to become dynamic and musical thanks to the Timbaland deal. Could it be that the Bored Yacht Apes represents a better way for people to come together to create value and cash flows than the East India Company model that has served us so well for 400 years? Already, McDonald’s is minting it by aligning itself with Axie Infinity, a digital game that requires people to buy something at McDonald’s. Gucci’s Garden in Roblox is shifting products faster and at higher prices than in any of its brick and mortar establishments. What is the difference between the Bored Yacht Apes and Hopin? Hopin is like Zoom. It’s a platform for holding virtual meetings. It was founded in 2019. None of the staff have ever met in person. They have no headquarters. Hopin is worth nearly £8b. But they are incorporated. The Bored Yacht Apes are not incorporated. Like Hopin, they have never met each other. They have no headquarters and the value of being in the network is rising exponentially. It may take a little imagination to understand the magnitude of what is happening here. We are witnessing the end of the East India Company as a model.
If people do not have to incorporate to generate wealth, then they won’t. That means the end of stocks and IPOs. Increasingly people are looking to bypass IPOs by engaging in tokenization and fractionalized ownership. This means our kids will say “Wow, that’s so cool, you remember the stock market?” Meanwhile, everyone from a single individual to a pension fund will increasingly transact in tokens across the metaverse. Brandessence Market Research says Tokenization has a CAGR of 19.46% and will reach $6312.8 million by 2027. The joke is going to be on the Incredulous. Even the Astonished will be astonished by what is to come.
Even if most of the 17,000 cryptocurrencies and all the crypto punks fall away, this technology revolution is set to totally transform capitalism as we have known it. The dot.com bubble burst and many firms disappeared, but the internet now totally dominates our lives. The same will be true of digital money, although this is no longer a private game. Governments are now entering the digital fray. The US, EU, China, and Russia are all progressing towards digitized sovereign money.
Notably, the Mayor of Miami City, Francis Suarez, has already introduced a digital coin, The Miami Coin. He is compelling and is clearly headed for greater things. He knows crypto is new and may be volatile. But, it has already provided his city with $20m in revenue in just a few months. Estimates are that it could generate as much as $60m for next year. The idea is to transform Miami into a “knowledge economy” and a “cryptocurrency innovation hub.” CityCoins deal with Miami is simple. The City of Miami agreed to take cryptocurrency “donations” from constituents. Meanwhile, anyone can mint the Miami Coin simply by running CityCoin software on their personal computer. CityCoin gives 30% to the City of Miami and 70% stays with the user. No doubt this is a new way of negotiating tax payments to the City of Miami as well. The users make money and so does the City. He is shepherding his constituents into the knowledge economy by giving everyone a digital wallet and a Bitcoin dividend. They'll be learning by doing. Everybody is happy as long as the coins are appreciating. This is one reason that so many financial services firms are moving to Miami. Major players from Peter Thiel to Ken Griffin of Citadel seem to be establishing more and more operations in Miami. Ironically, Thiel bought a 10k+ square foot mansion that was previously owned by The CEO of Ford, Jacques Nasser and once in MTV’s “The Real World” for $18m. This former party town is now becoming an important innovation hub.
Mayor Suarez is even taking his salary in Bitcoin and allowing city workers to opt into Bitcoin too. Note that Mayor Suarez is part of the leadership at The US Conference of Mayors. Others are already following his lead. Mayor Suarez’s Bitcoin announcement prompted the Mayor-elect of New York, Eric Adams, to say that he’ll take three months of his salary in Bitcoin. He’s launching crypto for the Big Apple too. Next thing you know every city in the US, if not the world, will be establishing its own revenue base by using these new digital money instruments. It does not take much imagination to realize what will happen to politics when cities and megacities have their own sources of funds. The UN says there are 34 megacities in the world. They contain half the world’s population. Soon, they will have their own money, too. We will see the rise of “self-financed CryptoCities.”
Innovation attracts cons. It always does. Some like Quartz are rightly asking, “Is Tether actually tethered to anything?” Could we have a crypto crash that rivals the financial crisis or the bursting of the Dot.Com bubble? Yes. But does that mean that crypto is dead? No. The technology is real even is some of the players are less than scrupulous.
This imaginary money is going to have a very real effect on the balance of power both within and among nations. Imagine that! The Incredulous and the Astonished will both be busy going ApeSh!t.
I’ll be speaking more about all this at MGM Resorts' Las Vegas properties and Real Vision’s premiere blockchain event, The Takeover, December 9-11, 2021 alongside:
Dan Morehead, CEO & Co-Chief Investment Officer, Pantera
Caitlin Long, Founder & CIO, Avanti Financial Group
Piers Kicks, Gaming at Delphi Digital & Investment Team at BITKRAFT
Najah Roberts, Chief Visionary Officer & Founder, Crypto Blockchain Plug
Mark Yusko, Founder, CEO & CIO, Morgan Creek Capital Management
Micah Johnson, Artist & Creator
Denise Shull, Performance & Strategy Advisor, ReThink Group
Raoul Pal, Co-Founder & CEO, Real Vision
Andrew Rosener, CEO, MediaOptions Inc.
Kevin Kelly, Co-Founder, Delphi Digital
Dr. Gio Valiante, Former Head Performance Coach, Point 72
Jason Buck, CIO, Mutiny Fund
Matt Milson, Director, Qantex Capital Management
Brian Estes, CEO & CIO, Off the Chain Capital
Bill Tai, Venture Capitalist
Subscribe to stay informed on new developments as they bubble up.
It's very cool to be named one of the 9 "most interesting" podcast guests in 2021 by
@moneyweek. Here's my interview explaining what NFTs are in plain English https://bit.ly/346yL1A
Thank you
@John_Stepek
and
@MerrynSW
https://bit.ly/3mHQ8fp
https://twitter.com/DrPippaM/status/1476227128744108044?s=20
I'm saving this article to show to my kids one day, if I'm lucky enough to have them. It will be hard to explain this kind of breathless fantasy to people not alive at the time.
As a late millenial CS grad I was into crypto long before hucksters and I've made more returns from them than the average investor makes in a lifetime. That said, you can count me as Formerly Astonished. The technology is, unfortunately, trash. Mining sucks, PoS is infinitely worse and ultimately crypto on Satoshi's model is a nice proof of concept but *can not and will not scale*. Without Tether and binance/bfx/CB you have an untransactable mess which can in no way support the economic activity of billions of people. Another generational leap in technological innovation is required to produce something functional. Until then all you have is a nice plaything for scammers to sell worthless crap and convention tickets (does raoul accept crypto as payment for RV?) to the gormless rubes who want to get rich without working for it.