The In Crypto Quarterly Review — Q2 2026

To cover everything that happened in crypto this quarter would be a fool’s errand. If the world at large felt like it was spinning faster on its axis these past months, that has undoubtedly been the case for crypto — a domain already known for its breakneck pace. In the wider world, the quarter opened with the Strait of Hormuz throttled to a trickle, oil clawing toward levels not seen in years, and a war no model had priced in. And it closes on the fragile arithmetic of an uncertain ceasefire, markets still flinching at every headline out of the Gulf, and every “Thank you for your attention to this matter” all-caps post from the Commander-in-Chief. Somewhere in between, Bitcoin did what it always does when the world turns frightened — it fell hard, and reminded anyone still calling it digital gold that, for now, it trades like the most nervous tech stock on the floor, caught between its two stories and catching a bid on neither.

Consider what a single quarter managed to hold. Inflation re-accelerating into a new chair at the Federal Reserve — Kevin Warsh, sworn in promising discipline and fewer words, with no intention of riding to risk-on’s rescue. The CLARITY Act, the bill meant to end the era of regulation-by-enforcement, stalling in the Senate, so that the clarity it promised curdled into its opposite; Crypto Mom, Hester Peirce, clearing her desk at the SEC; the banks and the crypto lobby continuing to square off over who gets to issue the dollar of the future and on what terms. Ethereum walking back the rollup-centric roadmap it had preached for half a decade, dragging execution home to Layer 1 as its Foundation shed core researchers and its price went quietly to seed. Stablecoins compounding by the week, now wearing a presidential seal of approval and the conflicts of interest that travel with it. Perpetual-futures (perp) DEXs erupting into the breakaway story of the cycle — the assets they moved most not crypto-native at all, but tokenised gold and oil, the old world’s commodities riding new rails. Prediction markets, lately the toast of the mainstream, tripping over their own legal status and an insider-trading scandal or two. Open debate about whether any of this survives the quantum computer and on what timeline. Agentic payments arriving for real, Visa and the blockchains each insisting the rails are theirs. Web 2.1 against Web3 for the soul of an Internet of Value. Binance shut out of Europe by MiCA. And TradFi, having sneered for a decade, moving to appropriate the entire apparatus with startling speed, even as the crypto ETF complex downsized.

Yet the quarter’s sharpest lesson was not about prices at all, but about what crypto keeps doing to itself. Michael Saylor’s Strategy — the largest corporate holder of Bitcoin, and the purest expression of the financialisation thesis — spent the quarter under siege: its stock down around 80% from its peak, the “digital credit” preferreds it had marketed as stable income sliding below par, its annual dividend bill ballooning toward $1.8 billion as it raised payouts to defend the slipping preferred, and the company breaking its “never-sell” vow for the first time since 2022 with a token sale of just 32 coins that the market punished far out of proportion to its size — all while a law firm circled with a securities probe and the jury stayed split between mainstream financial engineering and something closer to a Ponzi.

In April, the year’s largest DeFi exploit wrote the same moral in smaller type: an attacker forged 116,500 phantom units of a synthetic, restaked form of ETH and borrowed real money against them on Aave, whose own code never broke. The protocol worked exactly as designed; it had simply, like a bank, taken on the counterparty risk of a counterfeit asset it did not control. What followed was a run, a bailout, and the lending world passing the hat around to make depositors whole. Bitcoin was meant to be the pristine bearer asset — full finality, no counterparty, no one to trust. The story of the quarter is how energetically its heirs and successors keep rebuilding the very edifice it was designed to abolish; because humans, it turns out, cannot help themselves — they love to bank on things that are too good to be true.

This is the vertigo, and it is the point. Pull back far enough and the noise resolves into a single question — the one this pitstop is really about. What is assembling in real time, and not always gracefully, is Finance 2.0: the long-promised convergence of crypto and traditional finance into a single, digital system. An internet of finance, if you will. The only question that now matters is who gets to control it. Is this the rupture the believers and maximalists were promised — or merely crypto lite, the old financial order in a decentralised wig, the same hands on the same levers, drawing the same rents through shinier, 21st Century rails?

The Numbers

Let’s begin with the scoreboard, because it sets the mood for everything after it. Bitcoin ends the quarter below $60,000, near $58,300 — down roughly 15% over the three months and just under half its October peak of $126,000. That makes three consecutive losing quarters, after falls of 22% and 23% before it: a run more associated with a bear market than a dip. It bottomed at $58,115 on 25 June, a 21-month low. And the manner of the close was the whole quarter acted out in a single session: in the final days, three pieces of news landed that any bull would have ordered to spec — Michael Saylor unveiled a $2.55 billion backstop for his treasury company and its stock jumped; US equities rallied on fresh hopes of an Iran truce; and BlackRock folded a crypto-native synthetic dollar into the world’s largest risk-management platform. Bitcoin sold off anyway, sliding further on the quarter’s final day. The hedge against monetary debasement is, for now, selling off hardest precisely when its founding pitch said it should hold — and refusing the bid even when the news breaks its way.

And then the number that captured the quarter in a line. At the late-June low, USDT — a dollar IOU (or is that a dollar IOU of a dollar IOU?) — drew level with — and, twice this month, briefly past — the market cap of the entire Ethereum network, the two within a whisker of each other around $186 billion. The gap closed as much because ETH was bleeding as because USDT was climbing — relative strength, not a stablecoin on some unstoppable rise, and USDT was itself on the back foot, frozen out of EU venues for want of MiCA compliance. But the symbolism outlasts the asterisk. A cycle or so ago the obsession was the flippening — the hypothesised day Ethereum would finally overtake Bitcoin. Instead, the asset that drew level with Ethereum was a dollar-denominated stablecoin: among the plainest primitives crypto ever built, a tokenised dollar, spread across more than a dozen chains — more of it on Tron than on Ethereum — now worth nearly as much as the flagship smart-contract network it isn’t even loyal to. The dissonance is in who collects. USDT pays its holders nothing; the yield pools entirely with Tether the company, which on a skeleton staff runs one of the most cash-generative outfits in finance by minting the one product the market keeps reaching for. The killer app turned out to be the simplest one — and the value accrued to the issuer, not the holder.

The asset that does nothing but promise you a dollar had drawn level with the asset meant to be the world computer.

The geopolitics that opened the quarter did not resolve so much as change shape — though the market keeps trying to declare it over. A ceasefire signed in mid-June had traders pricing peace, and Bitcoin tapped $65,500 on the news before handing it back within a day. Perception, though, is not reality, and the truce did not hold. By the final week of the quarter a container ship and an oil tanker had been struck in the Strait, US forces had hit Iranian missile and radar sites in retaliation, Bahrain had reported a drone violating its airspace (and there were considerably worse unconfirmed reports online), and Tehran was again claiming to have closed the waterway. The master variable of the past six months had not been retired; it had merely gone quiet enough for the market to look away — and by the quarter’s final day the two sides were said to be talking again, the latest swing in a conflict that keeps being declared over and then isn’t.

The Hormuz crisis had found another channel regardless. The supply shock the conflict set loose has been seeping out of the oil price and into everything downstream of it — freight, agriculture, manufacturing, the shelf price of finished goods — and resurfacing, with a lag, as inflation. That is the pressure the market is now reacting to: a Warsh-led Fed that has stopped promising cuts and begun hinting at hikes, and the liquidity drain that comes with it. So, Hormuz did not leave the chart. It merely changed its colours: from a headline that spiked crude into a line in the CPI that keeps the Fed hawkish, and risk assets — crypto loudest among them — on the back foot.

That complicates an argument these pages have made twice. In the Q4 2025 and Q1 2026 pitstops we declared the four-year halving cycle dead, based on the thesis that what drives this asset class is ultimately liquidity rather than the BTC block rewards supply schedule — and that the weakness was macro rather than mechanical. On the data alone, the four-year cycle believers have had the better quarter: Bitcoin is tracing close to what a textbook post-halving bear would draw at this stage — the drawdown, the duration, the shape — and 21Shares, which made the same death call, conceded in June that the price action “still looks familiar.” I concede that too. The defence survives, but no longer cleanly: the weakness is still plausibly macro, because the supply shock never left — it became the inflation. A post-halving year colliding with an international crisis and a supply-driven inflation regime is exactly the kind of coincidence the alternative liquidity-based thesis said the “cycle” always was, and this quarter the two cannot be pulled apart. The 4-year pattern is outscoring its obituary, even as the cause stays contested.

The DAT Question

No single company embodied the quarter’s central tension like Michael Saylor’s Strategy — the largest corporate holder of Bitcoin on earth, and the purest distillation of the thesis that you can financialise a bearer asset and keep the magic intact. By quarter-end the magic was looking expensive — and many spectators on Crypto Twitter were shouting, “sleight of hand!”

The stock had fallen roughly 80% from its peak. The “digital credit” preferreds the company had marketed as stable income — STRC, the one it variously called a yield coin, a dividend-backed stablecoin, and finally a “dividend-backed dollar” as each label cracked under it — slipped below par and stayed there, its market price drifting toward an implied discount that no amount of conviction could talk back to $100.

And in the quarter’s closing days it made the break official. A new “Digital Credit Capital Framework” lifted the STRC dividend to 12%, stood up a $2.55 billion cash reserve, and — most tellingly — gave the board standing authority to sell up to $1.25 billion of Bitcoin to fund the payouts. The company whose entire identity was never sell now runs a formal programme for selling, even as its enterprise value slipped, for the first time, below the worth of the Bitcoin it holds. A law firm circled with a securities probe. The jury stayed split between calling it mainstream financial engineering and calling it something closer to a Ponzi — and the split itself is the point, because the unresolved question is the weight on the stock.

What they actually owned was not Bitcoin at all but Strategy’s ability to keep paying them — counterparty risk bolted back onto the one asset designed to abolish it.

Strip away the theatre and the mechanism is simple, and it is the oldest one in finance. STRC was sold as a way to earn yield on Bitcoin exposure. As the discount widened and the dividend clock ticked, its holders discovered what they actually owned was not Bitcoin at all but Strategy’s ability to keep paying them — counterparty risk bolted back onto the one asset designed, at the level of its source code, to abolish it. Hold STRC and you hold a promise. Hold the promise long enough under enough pressure and you relearn why the promise was the thing Bitcoin set out to remove.

There is a generous reading, and it deserves its hearing: this is genuine financial innovation, a way to route institutional capital and real yield toward an asset that natively offers neither; a new category being defined transparently and in real time. There is also the harsher one: it is leverage and credit risk reattached to a pristine instrument, a doom loop in which a sliding preferred drags the equity, which narrows the runway, which forces the sale of the very coins underwriting the whole edifice. Both can be true at once, and which one wins is exactly what the market spent the quarter trying, and failing, to price. Either way, the underlying pristine asset did not read the situation favourably.

The DeFi Crisis

In April the same moral was written in smaller, more technical type — and with a far harder edge, because nobody chose the exposure; the code did it for them. The quarter’s largest DeFi exploit, roughly $293 million drained from Kelp DAO, did not break Aave. It used it. An attacker forged about 116,500 phantom units of rsETH — a synthetic, restaked derivative of Ether, an IOU on an IOU — and borrowed real money against them on Aave, whose contracts performed exactly as written. The protocol had, like a bank, simply accepted the counterparty risk of an asset it did not control and could not vouch for. What followed was a bank run in all but name: bad debt modelled between $124 million and $230 million, AAVE down a quarter, a coalition of protocols passing the hat to make depositors whole, a frozen exploiter address, and — the detail that tells you what crypto is becoming — a Manhattan federal court drawn in to bless the recovery. Three weeks earlier, the Drift exploit had taken another ~$280 million; together, more than $570 million flowed to Lazarus-linked actors and out through THORChain in under a month.

Running underneath the year’s exploits was a new and genuinely destabilising variable: the attacker got a co-pilot. Anthropic spent the quarter shipping the most capable code-reasoning models ever released publicly — Fable 5, and its safeguard-stripped sibling Mythos, which the company disclosed had surfaced more than 10,000 high- and critical-severity vulnerabilities in systemically important software, at roughly $50 a go and an 84% first-try success rate. Access ran through a vetted-partner programme — Project Glasswing — and crypto’s most systemically important infrastructure was not on the list; Uniswap’s own founder had to ask publicly to be let in. The asymmetry is the thing to hold onto: vulnerability discovery has commoditised, but the defensive stack — audits, bug bounties, incident response — still runs at human tempo, and cannot scale reviewers at the rate a model can generate exploits. Cheaper detection is not the same as cheaper defence; it is cheaper for both sides, but one of them does not have misaligned incentive structures or organisational friction, and they only have to win once.

The verdict came, fittingly, from inside the church. Manuel Aráoz — co-founder of OpenZeppelin, the firm that effectively wrote DeFi’s security layer — told his friends and family this quarter to pull their money out of DeFi entirely, presumably on the grounds that the risks had become genuinely unquantifiable. OpenZeppelin the company moved swiftly to disown its co-founder’s view, insisting continuous, AI-augmented security was the answer rather than retreat. The man who built the locks says leave; the firm that sells them says stay. Total value locked fell 14% in the weeks after Kelp. When the people who understand the foundations best cannot agree on whether to stand on them, that disagreement is itself the news.

The man who built the locks says leave; the firm that sells them says stay.

Contested Ground

If the first half of the quarter was about crypto rebuilding the risks it was meant to remove, the second was about something far more familiar: nobody being able to agree on who is in charge. The CLARITY Act — the bill written to end the era of regulation-by-enforcement and finally settle which agency oversees what — spent the quarter stalled in the Senate, so that the clarity it promised curdled into its opposite. It needs sixty votes, which means roughly seven Democratic crossovers from a fifty-three-seat Republican majority, and the President chose a recent moment to hold an unrelated, broadly popular housing bill hostage to his voter-ID demands — spending exactly the bipartisan goodwill the crypto bill quietly depends on. Prediction markets that had given CLARITY a 74% chance of passing in 2026 cut that to a coin toss, and on the quarter’s final Friday Galaxy did the same; with the Senate gone for the July recess and that sixty-vote wall unmoved, the bill’s fate now hangs on a fortnight of floor time before the August break swallows it — and the midterms after that. And as the rules were being drafted, the regulator emptied out: Hester Peirce, the SEC commissioner known across the industry as “Crypto Mom,” announced she would leave in November, taking with her the most reliably crypto-literate voice on a five-seat commission.

Look closer and the fight is not really crypto versus Washington; it is faction against faction, each claiming the right to define the future. Banks and crypto exchanges spent the quarter at each other’s throats over who gets to issue the dollar of tomorrow and on what terms, the stablecoin-yield question turning lobbyists loose on both sides. The CFTC blessed prediction markets as “valuable information infrastructure” while nine states insisted a contract on the World Cup is a sports bet whatever a regulator calls it. The case for the defence did not survive contact with the evidence: in January, an Army special-forces sergeant who had been part of the operation to capture Nicolás Maduro put more than $30,000 on Polymarket that US forces would be in Venezuela, and walked off with roughly $400,000 — a 1,200% return, in under a day, on a secret he was sworn to keep. The Justice Department charged him this quarter. The market did precisely what it was built to do: it paid the person who knew.

Even crypto could not agree with itself. Two separate efforts spent the quarter circling Satoshi’s dormant coins from opposite directions. A New York lawsuit sought to have 39,069 inactive wallets — Satoshi’s among them, perhaps $238 billion in all — declared “abandoned property” under a 1958 statute, a finders-keepers gambit dressed in law. From the other side, CZ floated hard-forking Bitcoin to freeze quantum-vulnerable coins before a future computer could crack their keys and spend them. Both would fail on their own terms, and the reason is the same: the immutability that makes the lawsuit futile is the very thing that leaves those ancient coins exposed to the only force that could ever move them. One camp would break that immutability now to defend it later; the purists would sooner risk the quantum thief than teach the network it can ever freeze a wallet. Fifteen years on, the coins sit where they are, and the community that built the chain cannot agree what, if anything, it may do about them.

The market did precisely what it was built to do: it paid the person who knew.

The Breakaway

For all the wreckage, one corner of crypto spent the quarter winning outright — and winning on TradFi’s own turf. Perpetual-futures DEXs became the breakaway story of the cycle, and Hyperliquid became their flag. By spring it was clearing derivatives volume that put it inside the global top ten exchanges, centralised venues included; it processed close to half a trillion dollars in a single quarter, drew HYPE-staking ETF filings from Grayscale and Bitwise, and rattled the incumbents enough that CME and ICE went to Washington to ask regulators to look into it. When the people you are disrupting start lobbying against you, you have arrived.

The detail that matters most is what was actually trading. Since Hyperliquid’s HIP-3 framework went live in October, the venue has stopped looking like a crypto perps exchange with a side experiment and started looking like a cross-asset market structure test. At points this quarter, RWA-linked pairs accounted for roughly 40–44% of Hyperliquid’s total volume, and six of its ten most-traded markets were tied not to crypto-native assets but to gold, oil, equity indices and other old-world exposures. The breakaway primitive was not merely moving memecoins; it was moving the old world’s commodities and indices on rails that never quite close.

That distinction matters. When headlines broke out of the Gulf on a Sunday night, traders could position in crude and gold exposure while much of the conventional market structure was still waiting for full liquidity to return. After stablecoins, this is the second crypto invention to cross back into mainstream finance and offer a recognisably better product: not cheaper speculation on crypto, but faster, always-on access to instruments people already wanted to trade. Last cycle’s story was TradFi handing crypto its rails. This quarter ran that story in reverse.

It is not flawless. The same architecture imported a familiar crypto-native weakness when a SpaceX pre-IPO perpetual suffered a 45% flash crash after bad off-chain data around a stock split flowed into the oracle, cascading into liquidations. But even that failure clarified the point. The demand is real, the market structure is new, and the rough edges are where the next fight will be. Hyperliquid’s RWA boom is the clearest evidence all quarter that crypto can still build what the incumbents cannot, and that the breakout it once promised is not entirely spent.

When the people you are disrupting start lobbying against you, you have arrived.

The Absorption

And yet the dominant motion of the quarter ran the other way — not crypto breaking out, but crypto being drawn in. The most-watched consumer launch of the quarter made the point with a logo. Elon Musk’s everything-app finally shipped its wallet, and X Money runs not on a blockchain but on the banking system it was once pitched to replace: peer-to-peer payments, a Visa debit card, yield on cash, deposits held at a partner bank with FDIC insurance. Fiat, end to end. When a founder with every incentive and every resource to disrupt finance builds payments at scale, he reaches for Visa and the FDIC — because they work, they are insured, and they are legal. A neobank is not a crypto wallet, and the distance between the two is the argument.

The same gravity pulled on everything. Stablecoins compounded week after week, now carrying a presidential seal of approval and the conflicts that travel with it: a Trump family entity owns the majority of World Liberty Financial, whose USD1 token drew a $2 billion foreign investment through Binance and, by mid-year, was paying UFC fighters’ bonuses on the White House lawn. The exchange that did most to globalise crypto trading, Binance, was being shown the door in Europe — unable to win a MiCA licence before the bloc’s 1 July deadline, and facing a regulator unwilling to trust its founder, though it cast the exit as temporary and meant to re-apply through France. On the quarter’s final Monday the absorption reached the synthetic-dollar layer itself: BlackRock wired Ethena’s USDe — a crypto-native dollar built on derivatives funding — into Aladdin, the risk system that oversees a quarter of the world’s managed money, making it the third crypto asset on the platform after the firm’s own Bitcoin and Ether funds. And the frontier crypto likes to call its own is already contested: machine-to-machine payments are coming, but Visa has spent the past year building protocols to let AI agents pay over its rails, not the chains’. CZ says agentic payments arrive in months, not years, and run on crypto. The first half of that may well be right. The second is the open question.

None of this, to be clear, is crypto failing. It is crypto being absorbed. The useful inventions — programmable settlement, tokenised assets, stablecoins, even the perp engine — are being lifted out one by one and bolted onto the existing financial system, while the control layer stays exactly where it has always been: with the banks, the card networks, the asset managers and the regulators. TradFi spent a decade sneering at all of this. It spent this quarter appropriating the entire apparatus with startling speed, and keeping the keys.

None of this is crypto failing. It is crypto being absorbed.

Conclusion

Add the quarter up and the shape is plain, even where the price charts miss it. The long-forecast merger of the two financial worlds is largely done; what stays unsettled is who ends up owning the result. The uncomfortable read of these three months is that the hands closing around the controls increasingly belong to the institutions crypto was built to make unnecessary — or to put it even more plainly, to disintermediate.

That was not done to crypto from outside. It was done from within, one rebuilt risk at a time. Strategy taught its holders they owned a promise, not a coin. Aave discovered it had become a bank the instant it accepted an asset it could not vouch for. The community could not decide whether its own ledger is even permitted to defend itself. Each is a quiet forfeit of one of the properties — no counterparty, no permission, no overruling the chain — that were supposed to make this infrastructure different to begin with. Give them back one by one and you are not left with a new financial system; you are left with the old one in lighter clothing, with a pig in 21st Century lipstick — with the same interests working the same strings behind a cleaner interface.

The breakaway is the reason to withhold the verdict. A perpetuals engine clearing half a trillion dollars and pulling Chicago’s commodities onto rails that never close is nobody’s imitation of finance; it is crypto building what the incumbents could not. So the quarter ends honestly balanced. One road runs to real rupture — open infrastructure the establishment has to meet on the users’ terms. The other runs to quiet capture — the same old extraction, now in permissionless guise. Q2 settled neither. What it made unmistakable is that the contest is now the only story worth watching — and that crypto, more than Washington or Wall Street, will decide which way it breaks. Which is the question to carry into the back half of the year, and it is not a small one:

Did TradFi and surveillance capitalism just appropriate a new set of payment rails, or does Web3 still hold the paradigm shift its most passionate advocates promised themselves?

The Q3 Wild Card: BIP-110

If the quantum threat is the risk everyone in crypto can name — debated for years, still unsolved, but on most timelines comfortably distant — this is its mirror image: near-term, concrete, and almost nobody is talking about it yet. BIP-110, a draft soft-fork that would temporarily bar Bitcoin from carrying the arbitrary data behind Ordinals and inscriptions, reaches a mandatory signalling window around 7 August. On the numbers it looks dead on arrival: miner support sits near 0.31%, against a 55% activation threshold, and the base case is that it fizzles. But severity is not probability. A contentious activation, even by a committed minority, would force miners, exchanges, custodians, ETF sponsors and the largest holders to declare in public which chain is Bitcoin — a proposal sold as a defence of decentralisation, settled by the most centralised actors in the system.

It is, in short, this report’s central question made concrete and put to a vote. Most likely it amounts to nothing. Watch the signalling into August anyway: it is the cleanest test on the calendar of who governs Bitcoin when its social layer cracks.

A note to close on. BIP-110 is the rare story that is both genuinely consequential and almost entirely off the radar — and it deserves far more than the closing section of a quarterly. So I’ll be returning to it properly over the next couple of weeks, in my first standalone IN CRYPTO piece in a while: the case for Bitcoin as a publishing medium, the campaign to narrow it back to money, and the handful of holders, miners and exchanges who may quietly settle it. Stay tuned.

I wanted to let you know about a project I’ve been working on for the past six months — and which is now ready for the world.

Some of you who follow me on LinkedIn may have noticed that alongside IN CRYPTO, I’ve been publishing daily crypto intelligence briefs under the name “The Crypto Desk”. What started as an experiment in AI-assisted publishing has turned into a full daily operation, and it’s now moving to its own Substack.

First things first: I’m not merging the two, and I’m not sharing the mailing list. IN CRYPTO remains exactly what it’s always been — the notebook where I think out loud, write longer pieces and quarterly pitstops, and share the kind of subjective takes that don’t belong in an intelligence brief. That’s not changing. If anything, having a separate home for the daily analysis frees this space up to be even more personal and exploratory.

So what is The Crypto Desk?

It’s a daily intelligence brief — two-minute read, delivered before markets open — that distils the most important crypto developments from 30+ news sources into something you can weave into your morning without losing half an hour. Each story is synthesised from multiple outlets, not just one source’s take. Live prices, ETF flows, Fear & Greed, macro calendar alerts, on-chain signals — all in a format designed to respect your time.

The interesting bit (for the nerds among you):

The whole thing runs on a system I built called Liquid Intelligence. It continuously monitors crypto news via RSS, clusters related stories, ranks them by significance, and prepares a data package that I then curate and shape into the final brief. I act as a kind of executive producer — flagging what matters, steering the narrative — while the AI handles the ingestion, synthesis, and fact-checking that would otherwise take hours of manual work.

It’s not AI-generated content. It’s AI-enhanced intelligence work. And honestly, building the system has been as fascinating as writing the briefs themselves. If you’re interested in what happens when you point modern AI at a real publishing workflow and take it seriously, this is a live experiment in exactly that.

The format:

• Daily briefs (Mon–Sat) — two-minute reads, landing before markets open

• Sunday deep-read — the week’s three or four defining stories, explored with more room to breathe. Four-minute read. Think Sunday papers, not Monday morning desk brief.

I’ve been road-testing this on LinkedIn for six months. The format is dialled in, the system is robust, and I’m genuinely excited about what it’s becoming. Substack felt like the natural home — a platform built for exactly this kind of thing, without the algorithmic gatekeeping that makes LinkedIn such an unpredictable place to publish long-form content.

If you’re interested, and I think many of you will be given that you’re already here reading about crypto, you can subscribe for free:

The Crypto Desk on Substack

No pressure whatsoever. IN CRYPTO isn’t going anywhere. But if you want a concise, no-nonsense daily brief alongside the longer-form thinking you get here — the two were designed to complement each other. The Crypto Desk gives you the signal. IN CRYPTO gives you the thinking behind the thinking.

Thanks as always for reading. Happy Easter to those who celebrate it, and I’ll see you in the next post — whichever Substack that happens to be on.

— Brian

The In Crypto Quarterly Review — Q1 2026

THE NUMBERS

Let’s get the damage report out of the way first.

Bitcoin fell ~25% in Q1 2026 — from roughly $90,000 to $67,000 (at the time of going to print) — logging six consecutive red monthly candles, the longest losing streak since the depths of 2022. It wicked to $60,000 in early February before bouncing 17% in a day. The Fear & Greed Index hit 5 in mid-February, tied for the all-time low in the indicator’s 2,930-day history. By mid-February, Bitcoin had posted its worst-ever first 50 days to any year (-23% YTD). Nearly half of all circulating Bitcoin is now sitting at a loss. Corporate treasury buying, the narrative that was supposed to replace retail demand, collapsed by 99.93% from its peaks, concentrating almost entirely in one company’s conviction trade — run by a man who wears orange ties. Strategy reported a $12.4 billion quarterly loss. A single leveraged trader lost $686 million through Aave lending loops. $1.7 billion was liquidated in a single day in January. Gold surged to $5,600 then crashed 12%; silver plunged 35% in one session. ETF flows swung from +$1.42 billion in a single week to -$1.49 billion in another — both in January. Jamie Dimon told Coinbase’s CEO “you are full of shit” at Davos. A $282 million social engineering heist was laundered through Monero and THORChain before anyone could blink. Altcoins fared worse: more than 40% are trading near all-time lows, with trading volumes down 80%. Solana dropped below $80. Ethereum can barely hold $2,000.

And yet.

Kraken became the first crypto-native firm with direct access to the Federal Reserve’s payment network. The SEC slashed stablecoin capital haircuts from 100% to 2% for broker-dealers — an implicit admission that these instruments are too embedded to treat as speculative. The SEC and CFTC jointly declared most crypto assets are not securities and signed a historic coordination memo ending decades of turf wars. US banking regulators equalised capital treatment for tokenised securities across all blockchains — permissioned and permissionless alike. The CFTC formally classified prediction markets as a financial asset class. Ten European banks formed Qivalis to launch a euro stablecoin. PwC declared institutional crypto adoption “past the point of no return.” BitGo went public on NYSE — the first crypto listing of 2026. The New York Stock Exchange partnered with Securitize to tokenise stocks. BlackRock’s CEO declared his intention to put equities in crypto wallets. Morgan Stanley launched the cheapest Bitcoin ETF in the market. Square auto-enabled Bitcoin payments for 4 million US merchants. The US Labor Department proposed opening $8.8 trillion in 401(k) assets to crypto. Coinbase gave AI agents their own wallets. An autonomous AI agent spawned a child agent and funded it with Bitcoin via Lightning — no human involved. And Vitalik Buterin claimed the blockchain trilemma — crypto’s original impossible problem — had been “solved with live running code.”

Price went down. Infrastructure went deeper into the global financial system than at any point in crypto’s history. And the next wave of users may not be human. That dissonance — brutal for anyone holding the asset, transformative for anyone building the plumbing, and quietly revolutionary for anyone paying attention to what machines are starting to do with it — was Q1’s defining feature.

THE WAR QUARTER

This section wasn’t in the Q4 pitstop because there was no war. There is now.

On 28 February, US and Israeli forces struck Iran’s South Pars gas field, killed Ayatollah Ali Khamenei, and in the process murdered at least 168 schoolchildren. Iran responded by striking Qatari oil facilities, US military bases across the Gulf region — including a missile hit on the US embassy in Kuwait — and launching concerted attacks on Israel. The Strait of Hormuz — through which roughly 20% of the world’s oil supply passes — has been effectively closed since. Brent crude has climbed from $75 at the start of the year to above $110. And every financial market on the planet has been repricing around a single question: how long does this last?

The honest answer: nobody knows, and the current trajectory is escalation, not resolution.

Trump has issued and extended two separate deadlines to “hit and obliterate” Iran’s energy infrastructure. Both expired without action. Each extension was framed as diplomacy; each sent oil higher, not lower — because the market correctly read the extensions as confirmation that Iran holds the leverage. The Strait of Hormuz is Iran’s trump card (lowercase t), and it’s a very good one. As long as it remains closed, oil stays elevated, inflation expectations stay hot, bond yields keep climbing, and the Federal Reserve has no room to cut rates. Rate cuts — remember those? At the start of Q1, markets priced in three for 2026. By the end, they priced in zero. The probability of a rate hike jumped from nothing to 12.4% in a single week.

Meanwhile, the information war has achieved a level of absurdity that would embarrass a satirist. The President of the United States moves global markets with all-caps Truth Social posts timed to the opening bell. Iran’s government publishes AI-generated Lego cartoons trolling the US administration. The speaker of Iran’s parliament — Mohammad Bagher Ghalibaf, a man whose day job involves running a theocratic legislature — went on X to offer crypto trading advice, telling followers to treat Trump’s claims as a “reverse indicator.” “If they pump it, short it. If they dump it, go long.” He was right. Bitcoin rallied exactly as predicted.

We live in a world where a senior official of a country at war with the United States is giving accurate cryptocurrency trading tips on the same social media platform where the war is being narrated. Peak absurdity doesn’t begin to cover it.

The macro implications are severe and likely durable. Goldman Sachs estimates sustained oil above $100 shaves 0.4% off global growth and adds 0.7% to headline inflation. The 10-year Treasury yield hit 4.42% — its highest since July — and the MOVE Index, measuring bond market volatility, surged 18% in a single day. Underneath all of it, the yen carry trade is unwinding: Japanese government bond yields hit their highest since 1999, the BOJ raised rates to their highest in three decades, and Morgan Stanley estimates roughly $500 billion in yen carry positions remain vulnerable. Both sides of the Pacific are tightening simultaneously.

For crypto, the war didn’t just change the price. It changed the question. Before February, the debate was about when rate cuts would arrive and how much institutional money would follow. After February, the debate became: what is Bitcoin actually for in a world where inflation is driven by a geopolitical crisis, not monetary policy? The store-of-value thesis hasn’t been disproved — Bitcoin outperformed gold, the S&P 500, and the Nasdaq on a monthly basis through the conflict — but it hasn’t been conclusively proved either. The $65,000 floor held. The $76,000 ceiling held harder.

The damage from the Gulf conflict may take years to unwind even if a ceasefire materialises tomorrow. Supply chains are disrupted, insurance premiums have repriced, and the energy infrastructure of an entire region is under threat. The world is in for serious headwinds. Crypto is part of that world whether it likes it or not.

And here’s the question the war forces Bitcoin to answer. What’s building is not garden-variety inflation — it’s stagflation. The word hasn’t been relevant since the 1970s, and this time may be worse. Cost-push inflation driven by a physical supply shock in the most fundamental input the global economy has — petrochemicals — feeding into fertiliser, shipping, logistics, manufacturing, and everything downstream. Arriving into an economy that grew 0.7% last quarter, where the central bank has no room to cut and may need to hike. Stagnant growth plus rising prices: the macro scenario that has no clean policy response, because every tool that fights inflation deepens the recession, and every tool that fights recession accelerates the inflation.

The original Bitcoin pitch was protection from currency debasement driven by monetary policy — money-printing, QE, central bank profligacy. But this isn’t monetary inflation. There’s no QE. There’s QT. The money supply isn’t expanding. The problem is that everything costs more because the energy that makes everything possible is being weaponised in a geopolitical conflict. Bitcoin was designed for one kind of inflation and is being tested by a completely different kind.

Gold — the 5,000-year inflation hedge — crashed for nine consecutive days in March. Bitcoin outperformed it. Whether that’s the beginning of a narrative shift or a coincidence driven by relative liquidity will be one of Q2’s most important questions.

THE FOUR-YEAR CYCLE: STILL DEAD, BUT NEEDS AN AUTOPSY

In the Q4 2025 pitstop, we argued the four-year halving cycle was dead — a coincidence of timing between Bitcoin’s supply halvings and central bank liquidity injections, not a causal relationship. Q1 tested that thesis about as aggressively as possible. And on balance, it holds. But it deserves more than a shrug.

The bear case for our thesis is simple: Bitcoin is down 27% in Q1, it’s logging six consecutive red months, half the supply is underwater, and the market looks and feels exactly like the start of a traditional post-cycle bear market. If the four-year pattern were still in play, this is roughly when the music stops. Walk into any crypto trading group and ask whether we’re in a bear market. The consensus answer is yes. Maybe we were wrong. Maybe the cycle lives.

But look at why Bitcoin is down and the cycle thesis falls apart. BTC isn’t declining because of diminishing post-halving returns, or because the market is working through a distribution phase, or because any of the traditional on-chain cycle indicators have fired. It’s declining because a war broke out in the Persian Gulf, oil doubled, bond yields hit multi-year highs, rate cuts evaporated, and every risk asset on the planet is repricing. Strip out the macro — which, admittedly, you can’t — and the on-chain fundamentals are constructive: accumulation addresses absorbed 67,000 BTC in a single week in March, exchange outflows are persistently positive, and long-term holder supply is growing. The selling is macro-driven, not cycle-driven.

The deeper issue is structural. In Q4’s pitstop, we pointed out that derivatives markets were beginning to drive spot prices rather than the other way around — a dynamic we flagged before most of the market was talking about it. Q1 vindicated that observation emphatically. Perpetual futures volumes ran at 9x spot for much of the quarter. The $15.6 billion options expiry in late March moved prices more than any fundamental catalyst. ETF options market makers, hedging their books through gamma adjustments, created forced buying and selling in spot markets that had nothing to do with conviction about Bitcoin’s value proposition. When Bitfinex Alpha warned that ETF flows now “dominate” Bitcoin’s price action, they were describing a market whose price formation mechanism has fundamentally changed.

This matters for the cycle question because the four-year model assumes price discovery is driven by supply dynamics (halvings reducing issuance) meeting organic demand (retail FOMO, institutional adoption). But when derivatives drive spot, and when ETF options market makers create reflexive feedback loops, the price signal is no longer reading supply and demand — it’s reading itself. The market has become a hall of mirrors where the hedging activity moves the price, which changes the hedging calculus, which moves it again.

The four-year cycle isn’t dead because the thesis was wrong about halvings. It’s dead because the market that the thesis described no longer exists. The price formation mechanism has been replaced by one that responds to macro liquidity, institutional hedging flows, and derivatives mechanics — none of which operate on a four-year clock.

So what is happening? We’re in a macro-driven drawdown, not a cycle bear market. The distinction matters because cycle bears have predictable durations and bottoming patterns; macro bears end when the macro changes. The war ends, or oil stabilises, or the Fed pivots, or the yen carry trade fully unwinds — and the institutional infrastructure that’s been built during the drawdown becomes the channel through which the recovery flows. If. When. Those are the words that separate the current situation from a genuine bear market. And nobody — not us, not Raoul Pal, not Larry Fink — knows which word applies.

INFRASTRUCTURE V PRICE: CRYPTO’S WEB 2.0 MOMENT

Here’s the paragraph that should make the cypherpunks uncomfortable.

In Q1 2026, the New York Stock Exchange, CME Group, Morgan Stanley, BlackRock, BNP Paribas, Mastercard, Franklin Templeton, Fidelity, and the Reserve Bank of Australia all advanced projects to put traditional financial products on blockchain infrastructure. NYSE partnered with Securitize for tokenised stock trading. BMO became the first bank on CME’s tokenised cash settlement network. BlackRock’s Larry Fink wrote in his annual shareholder letter that he wants equities living in crypto wallets. The RBA calculated that tokenisation could save the Australian economy $16.7 billion annually. Mastercard paid $1.8 billion for stablecoin infrastructure firm BVNK — beating Coinbase’s $2 billion offer, because apparently what BVNK wanted wasn’t the highest bid but the deepest distribution network.

These are not crypto companies adopting blockchain. These are the incumbents of the existing financial system absorbing the technology that was supposed to disrupt them.

The parallel with the internet is instructive and uncomfortable. The early web was decentralised by design — anyone could publish, anyone could build, the network belonged to no one. Web 2.0 centralised it under a handful of corporations. Google owns search. Meta owns social. Amazon owns commerce. Apple owns the device. The open, permissionless internet still exists underneath, but the value capture layer sits firmly in corporate hands.

Crypto appears to be following the same trajectory. The decentralised protocols still run. Ethereum still processes transactions permissionlessly. Uniswap still lets anyone trade. Aave still lets anyone borrow or lend. But the value capture is migrating: BlackRock’s IBIT holds more Bitcoin than any entity except Satoshi. NYSE is building the tokenised stock exchange. Morgan Stanley is setting the ETF fees. The rails are decentralised. The products running on them are not.

Can both co-exist? Maybe. The internet’s open infrastructure still enables innovation that wouldn’t exist under corporate control — just as DeFi produces things (prediction markets, perpetual futures, stablecoin settlement) that TradFi can’t or won’t build natively. But the gravitational pull of institutional capital is real, and history suggests that when incumbents adopt a disruptive technology, they tend to capture the commercial layer whilst leaving the idealists to maintain the infrastructure layer for free.

The question for Q2 and beyond isn’t whether crypto infrastructure works — Q1 proved that conclusively. The question is who captures the value from it working. Right now, the answer is increasingly: the same institutions that run everything else.

THE CLARITY ACT: A BILL THAT REVEALS MORE THAN IT RESOLVES

The CLARITY Act had more lives than a cat in Q1 — and it used all of them.

In January, the bill approached its Senate vote as the most anticipated piece of crypto legislation in US history. It would define which tokens are securities and which are commodities. It would establish DeFi compliance pathways. It would give the industry the regulatory framework it’s spent a decade demanding. Then someone read page 189.

Buried in the 278-page text was a provision — inserted at the banking lobby’s insistence — banning passive yield on stablecoins. Coinbase revolted. The White House threatened to abandon the bill entirely. By mid-January, the landmark legislation was in intensive care, and the crypto industry had learned something important: the fight wasn’t crypto versus regulators. It was JPMorgan’s deposit base versus Coinbase’s revenue model. Two sets of incumbent corporate interests fighting over the same pool of customer deposits, with the customer nowhere in the room.

The bill staggered through February and into March, surviving committee votes, White House meetings, and at least three “deal struck” headlines that each lasted about 48 hours before collapsing. By late March, Coinbase had formally pulled support for the second time, Circle’s stock had crashed 22% on the draft language, and the industry expert Galaxy Digital warned that without an April markup, the legislative window closes and midterm dynamics consume the Senate floor.

As of Q1’s close, the bill is stalled. The stablecoin yield provision — whether exchanges can pay 3.5% on USDC balances — has become the single-issue blockage threatening the entire US crypto regulatory framework. SEC/CFTC jurisdictional clarity, on-chain derivatives legalisation, token fundraising pathways — all hostage to a fight over interest rates on dollar-denominated tokens. And with Trump’s political popularity in seemingly terminal decline on account of his dubious relationship to his peace platform (amongst much else), the pro-crypto legislative window that the industry assumed would stay open through the midterms might close for good.

The irony would be funny if the stakes weren’t so high. The SEC and CFTC’s joint interpretation in March — formally declaring most crypto assets are not securities — actually provided much of the clarity the bill was supposed to deliver. Which raises the question Bankless posed in late March: does the industry even need the CLARITY Act anymore if the regulators have already given them what they wanted? The answer depends on how much you trust informal guidance from an administration that changes its mind on Truth Social.

Meanwhile, the code-as-speech question remains unresolved. The DOJ is still pursuing Roman Storm for writing Tornado Cash’s open-source smart contracts. The case has been hanging over DeFi developers like a sword since 2023, and Q1 offered no resolution. If writing code that enables financial privacy is a crime, the implications extend well beyond crypto — they reach every developer who creates tools that can be used for purposes the government doesn’t like. The cypherpunk vision of crypto as a tool for individual sovereignty and the institutional vision of crypto as efficient TradFi plumbing are not just different perspectives. They are, increasingly, legally incompatible.

PREDICTION MARKETS: THE INFORMATION MARKET THAT KNOWS TOO MUCH

Prediction markets had the most consequential quarter any crypto vertical has ever experienced.

The numbers first: 191 million transactions in March alone, up 2,800% year-on-year. Monthly volumes approaching $24 billion. 840,000 unique wallets. Polymarket weekly volumes double the 2024 election peak — sustained, not spiking. ICE, the company that owns the New York Stock Exchange, completed a $1.6 billion investment in Polymarket. Cathie Wood’s ARK Invest formally adopted Kalshi data for investment decisions and risk hedging. The Federal Reserve itself has recognised prediction market data as superior to its own survey methodology.

Now the problems.

Israeli military reservists were charged with using classified intelligence to trade on Polymarket. A trader netted $400K betting on Maduro’s capture four hours before it happened. A UFC announcer mixed up a winner and a Polymarket trader pocketed $67K in minutes. The speaker of Iran’s parliament offered public trading advice based on inside knowledge of his own government’s negotiating positions. And Polymarket had to close its nuclear strike contract after an $838,000 market formed around the question of whether a nuclear weapon would be detonated — people positioning to profit from the end of civilisation as we know it. That was a moment. Whatever you think about prediction markets as information tools, there’s a line where price discovery becomes moral hazard, and Q1 found it.

And Congress noticed. Three separate bills were introduced in a single month: the PREDICT Act (banning government officials and their families from prediction markets), the BETS OFF Act (banning war and assassination contracts), and a bipartisan bill to outlaw sports prediction contracts entirely. California’s governor signed an executive order banning state officials from insider prediction market trading. Eleven US states moved against prediction market platforms. Kalshi — valued at $22 billion after raising $1 billion — was temporarily banned in Nevada.

The tension is irreconcilable in its current form. The products that generate the most volume and the most institutional interest — political events, geopolitical outcomes, government actions — are precisely the products that legislators want to restrict. You cannot simultaneously be a $22 billion financial institution and a platform where soldiers and White House insiders trade on classified intelligence about the wars their country is fighting. The insider trading problem isn’t a bug that better compliance will fix. It’s a feature of markets that price events where information asymmetry is inherent and extreme.

ARK using Kalshi data for research reframes the conversation in an important way: these are information markets, not gambling platforms. But the information they’re pricing is often the kind that governments consider sensitive, classified, or simply too dangerous to commoditise. Q1 proved the product-market fit beyond any doubt. It also proved the ethical and legal debt is mounting faster than the industry can pay it down.

THE KILLER APP QUARTER

Somewhere between the war headlines and the F&G readings, Q1 quietly proved which parts of crypto actually work. Not in theory. Not in a pitch deck. In production, at scale, with real money.

Stablecoins: Circle’s USDC overtook Tether’s USDT in adjusted transaction volume for the first time since 2019 — processing $2.2 trillion year-to-date whilst USDT managed $1.3 trillion. The total stablecoin market cap crossed $313 billion. Stablecoins now handle 83% of all USD-denominated crypto spot trading volume. Fiat pairs are a rounding error. When the SEC slashed the capital haircut for broker-dealers holding stablecoins from 100% to 2%, it wasn’t a regulatory gift — it was an acknowledgement that these instruments have become too embedded in the financial system to treat as speculative.

Perpetual futures and 24/7 markets: This is where the “crypto as killer app” thesis went from argument to evidence. When Iran struck Gulf oil infrastructure on a Saturday night, Hyperliquid’s oil perpetual contracts processed $1.2 billion in 24-hour volume — because Hyperliquid was open and CME wasn’t. By March, Wintermute had launched 24/7 WTI crude oil trading on crypto rails, Coinbase was offering perpetual futures on the Magnificent Seven stocks settled in USDC, and OKX had rolled out equity perps across Asia and Latin America. These aren’t crypto products for crypto people. They’re financial infrastructure for anyone who needs a market when traditional venues are closed. Hyperliquid is earning fees on real-world commodity trading while crypto tanks and Wall Street is asleep at the weekend. That sentence would have been absurd twelve months ago. Now it’s just Sunday.

Tokenisation and RWAs: The Reserve Bank of Australia calculated $16.7 billion in annual savings from tokenising wholesale markets. Franklin Templeton and Ondo launched 24/7 tokenised ETF trading through crypto wallets. Nasdaq won SEC approval for a tokenised securities pilot. The ECB published a roadmap for an integrated European digital asset ecosystem. And Larry Fink — the man who manages more money than anyone on Earth — wrote that half the world already carries a digital wallet and he wants stocks in it. Real-world asset tokenisation isn’t coming. It arrived in Q1. The argument is over.

The common thread: stablecoins settle in seconds, not days. Perps trade 24/7, not market hours. Tokenised assets settle with finality and no counterparty risk. Each demonstrably beats its TradFi equivalent on speed, cost, access, and finality. These are crypto’s killer apps — not because anyone declared them so, but because the world used them when it needed to and they worked.

ETHEREUM’S REINVENTION

Ethereum had a quiet identity crisis in Q1 — and may have come out the other side stronger for it.

In February, Vitalik Buterin effectively killed the rollup-centric roadmap that had defined Ethereum’s scaling strategy since 2020. The “original vision of L2s no longer makes sense,” he wrote — a remarkable admission from the architect of the strategy. In its place came the “Strawmap”: a four-year plan targeting two-second block times, quantum resistance, and a simplified node architecture. Ethereum isn’t just updating its technology. It’s rethinking what it wants to be.

The L2 landscape felt the tremors. Coinbase’s Base pivoted away from Optimism’s OP Stack to in-house architecture — a move that dropped OP’s token 20% and fractured Ethereum’s rollup consensus. Builders proposed an “economic zone” to tackle the fragmentation problem: unified liquidity across L2s without centralising control. Whether that’s achievable without compromise is Ethereum’s version of the blockchain trilemma — which Vitalik claimed earlier in Q1 has been “solved with live running code.”

But the institutional vote of confidence was unambiguous. Standard Chartered’s Geoffrey Kendrick published a $40,000 Ethereum price target for 2030, arguing that institutional tokenisation flows will disproportionately benefit ETH because “TradFi is okay to build stuff on Ethereum — it’s never gone down.” BlackRock chose Ethereum for its BUIDL tokenised Treasury fund and listed it on Uniswap. The Ethereum Foundation staked a record $46.2 million. Aave V4 launched on mainnet within a week of its governance vote.

DeFi’s two-speed reality was equally visible. Aave advances because its fundamentals justify the friction of governance disputes. Balancer Labs shut down its corporate entity entirely after a $110 million exploit collapsed its TVL by 95%. A governance attacker spent $1,800 to threaten $1.08 million on Moonwell. And the Resolv USR stablecoin was depegged by an attack costing roughly $100,000. The strong are getting stronger. The weak aren’t surviving. That’s not a market cycle — it’s natural selection in a maturing ecosystem.

Meanwhile, Google’s quantum research landed like a depth charge. Breaking Bitcoin’s encryption may require as few as 1,200 high-quality qubits — not the millions previously assumed. Taproot, Bitcoin’s 2021 upgrade, inadvertently increased the attack surface by exposing public keys. Google estimates 6.9 million BTC sit in vulnerable wallets. The timeline: 2029. Ethereum’s faster block times offer a natural defence; Bitcoin’s ten-minute blocks do not. This is Bitcoin’s rigidity problem in microcosm: the very resistance to protocol changes that makes it trustworthy becomes a vulnerability when the threat requires a protocol response. The quantum clock is ticking, and Bitcoin doesn’t have a plan.

THE AI MIGRATION — AND THE QUIET REVOLUTION UNDERNEATH

Crypto’s relationship with artificial intelligence underwent a phase change in Q1. Not a gradual evolution — a discontinuity. By the end of March, autonomous AI agents were holding crypto wallets, spawning child agents, funding them via Lightning, and transacting without human involvement. Three of the largest payment companies in the world were racing to define the standard for machine-to-machine payments. And every single one of them chose stablecoin settlement over traditional banking rails. This happened in a single quarter. It barely made the price charts.

Start with the supply side. Bitcoin miners are selling their holdings to fund a pivot into AI data centres. This isn’t speculative repositioning — it’s a structural reallocation of energy capacity and capital away from hashing Bitcoin blocks toward running GPU workloads. Post-halving mining economics have compressed margins to the point where the same infrastructure is simply more profitable hosting AI. Core Scientific secured $1 billion from Morgan Stanley to build AI data centres. Public miners have offloaded 15,000 BTC since October. Bhutan’s sovereign mining operation — built on free hydropower — effectively ceased and has been selling down its 13,000 BTC stack all year. The mining industry, which has been Bitcoin’s foundational infrastructure since 2009, is migrating to a different compute market.

The irony is circular and worth dwelling on. BTC is being sold to build the AI infrastructure whose payment layer is being built on crypto. TRON committed $1 billion to agentic economy infrastructure. MoonPay released an open-source wallet standard for AI agents. Coinbase gave AI agents their own wallets. An OpenClaw agent spawned a child agent and funded it with Bitcoin via Lightning — no human involved. That last sentence deserves a moment. An artificial intelligence created another artificial intelligence and gave it money. On Bitcoin’s network. Without anyone giving it permission.

The agentic payments race crystallised into a genuine three-way competition: Stripe-backed Tempo (Model Payments Protocol), Visa (CLI payment tool for AI agents), and Coinbase (x402 standard). All three chose stablecoin settlement over traditional banking rails. All three launched or advanced meaningfully in Q1. The stablecoin choice isn’t incidental — it’s structural. Machines transacting at scale need micropayment capability without volatility. They need to settle a fraction of a cent as reliably as a million dollars. They need programmable money that doesn’t fluctuate 5% between the API call and the confirmation. Stablecoins aren’t just the payment infrastructure for human commerce — they’re increasingly winning the machine game too. And a16z argued that agentic AI commerce will spell the end of internet advertising entirely — because AI agents don’t see ads. They just buy things. If that thesis plays out, it rewires the economics of the entire internet, and the payment layer it runs on is stablecoins on crypto rails.

There’s also the human-facing side of this. The emerging “DeFAI” thesis — decentralised finance mediated by AI — imagines a world where the tedious UI complexity that makes DeFi hostile to normal people is replaced by an agent that speaks natural language and executes on your behalf. Managing risk, setting stop losses, bridging assets across chains, finding the best yield, rebalancing a portfolio — all the things that currently require a human to navigate seventeen interfaces and sign nine transactions, handled by an agent that does it better, faster, and without fat-fingering a decimal point or falling for an address poisoning scam. DeFi’s adoption ceiling has always been its user experience. AI agents may remove it entirely.

And here’s the bigger thought that should keep you up at night, or get you out of bed in the morning, depending on your disposition: crypto’s primary transaction volume in the future is very likely to be machine-to-machine, not human-to-human. Micro-payments for API calls. Compute bids between AI agents. Data purchases settled in milliseconds. Autonomous treasury management by software that never sleeps. The volume of these transactions — continuous, global, frictionless, 24/7 — could dwarf anything humans generate. And it needs rails that traditional banking simply cannot provide: programmable, permissionless, always-on, and capable of settling a fraction of a cent as efficiently as a million dollars.

That’s crypto’s endgame. Not replacing your bank account. Not making you rich on a memecoin. But rather building the payment infrastructure for an economy whose participants aren’t people. Q1 is when that stopped being a hyperbolic pitch deck slide and started being a product roadmap.

a16z’s Guy Wuollet declared crypto is leaving its “hoodie phase” for a “collared shirt” decade — institutional, compliant, enterprise-facing. He’s probably right. But the enterprise wearing the collared shirt might not have a pulse.

SETUP FOR Q2

Q1 ends with a list of unresolved questions that Q2 will be forced to answer — whether it wants to or not.

The war: Trump’s latest strike deadline expires 6 April. Houthi forces have entered the conflict, widening it beyond the direct US-Israel-Iran theatre. US troops in the region exceed 50,000. Polymarket gives 71% odds of US forces entering Iran by the end of April. The Strait of Hormuz remains closed. Oil above $100 is the base case; the worst case is significantly worse, and global in scope. Every week the conflict continues, the inflation damage compounds and the rate-cut timeline extends. This isn’t a crypto-specific problem. It’s the world’s problem. But crypto has proven incapable of decoupling from it.

Regulation: The CLARITY Act must reach markup in April or the legislative window effectively closes until after the midterms. Coinbase’s standoff over stablecoin yields has to resolve. The SEC/CFTC joint interpretation provided clarity, but it’s informal guidance — revocable by any future administration. Without legislation, the regulatory gains of Q1 are written in pencil, not ink. And even in the post-Gensler era, the erasers remain at hand.

The liquidity question: Q1’s most important chart might not be Bitcoin’s price — it might be global M2. Quantitative tightening is supposedly ending. China is injecting stimulus. Jerome Powell’s term expires in May 2026, and his likely successor Kevin Warsh is a Bitcoin holder who views crypto as “a policeman for policy.” If the liquidity cycle finally turns, the institutional infrastructure built over the past twelve months is ready to direct capital flows. The $2.4 billion in stablecoin dry powder sitting on Binance isn’t panic capital. It’s waiting capital. But — and this is the but that matters — all of this is now downstream of the war. If the Gulf conflict escalates further, oil stays elevated, inflation stays hot, and the liquidity cycle that everyone is waiting for simply doesn’t arrive. No amount of institutional infrastructure or stablecoin dry powder overrides a central bank that’s being forced to tighten into a recession, or worse. The liquidity turn is the bull case. The war is the reason it might not happen.

The bond market: The 10-year yield at 4.42%, Japanese bonds at 1999 highs, and $500 billion in yen carry trade positions vulnerable to unwinding represent the less visible but potentially more durable constraint on risk assets. Oil gets the headlines. Bonds set the ceiling.

The price: BTC closes Q1 at around $67,000 — $10,000 below Strategy’s average cost basis of approximately $76,000 per Bitcoin. A retail investor can now acquire Bitcoin at a significant discount to the company that has spent years professionally dollar-cost-averaging billions into the asset. That’s either a screaming buy signal or a warning that even the most committed institutional buyer in history is underwater. Probably both. Half the supply is underwater. Six consecutive red monthly candles. Strategy’s $44 billion fundraising plan to reach one million Bitcoin is either the greatest corporate trade in history or the greatest concentration risk. GameStop is writing covered calls on its BTC at $105-110K strikes — a tell that even the most memetic of companies doesn’t expect six figures any time soon.

And yet. The infrastructure has never been more deeply embedded. The regulatory clarity — however fragile — has never been greater. The institutional commitment — however tested — has never been more concrete. And the $8.8 trillion 401(k) market just opened a door that doesn’t close.

Q1 was brutal on price. It was transformative on infrastructure. And it was, without question (and that’s really saying something), the most absurd quarter in crypto’s history — a quarter where the speaker of Iran’s parliament gave better trading advice than most crypto influencers, Google demonstrated that Bitcoin’s encryption might be breakable before the decade ends, and the New York Stock Exchange started building on the same technology that was supposed to make it obsolete.

Raoul Pal’s “Don’t Fuck This Up” thesis still applies. But the “this” is getting increasingly hard to define.

My quarterly pitstop — extended this time, because 2025 deserves a proper autopsy…

Q4 FOOLED EVERYONE

Q4 2025 was meant to deliver God candles: the point in the cycle when Bitcoin goes on a parabolic run; before arriving at the concomitant ‘blow-off-top’ moment; when everyone looks around at each other and all the ‘banana zone’ froth, realises everything is severely over-bought, and stampedes for the exit. It’s then that the bear market begins. Such is the popular wisdom, based on 15 years of data and a dog-eared copy of the Wall Street Cheat Sheet. But Q4 defied all predictions, instead presenting us with a funeral pyre for one of crypto’s most sacred beliefs — namely the legendary four-year Bitcoin halving cycle…

The pain was real. Fear & Greed hit 10 — twice — matching levels last seen during the FTX collapse. More than $40 billion in leveraged positions were liquidated across Q4 alone — part of $150 billion in total liquidations for the year, with 85-90% of them being over-leveraged traders, irresponsibly ‘long’ on crypto, and getting wrecked. October’s tariff-driven crash saw $19 billion liquidated in just two days, the largest single event in crypto history.

November delivered Bitcoin’s worst monthly performance in seven years, down 17% against a historical average of +41% for the month. At the lows, BTC had erased all of its 2025 gains. The death cross confirmed. BlackRock’s IBIT recorded a $523 million single-day outflow — its largest since launch. Crypto Twitter was awash with the salty tears of people who’d lost it all in the casino. And various conspiracy theories circulated about TradFi’s market manipulation (with very little data to back them up).

Two camps emerged from from the ashes of 2025’s retail carnage. The four-year faithful haven’t yet abandoned the model — they’ve simply concluded that we’re now in a bear market, exactly as the model predicted. The halving was April 2024. They counted the days, watched Bitcoin hit $126k in October, and retreat; noted the absence of altseason (when altcoins historically follow Bitcoin up the flagpole to dizzying new heights); and rendered their verdict — October must have been the top. Cycle complete. Downhill from here until 2028. And it almost became a self-fulfilling prophecy: always-on, illiquid markets can be highly volatile and reflexive.

To a hammer, everything looks like a nail. The mythology of the four-year cycle is so deeply embedded in the crypto psyche that its staunchest believers have absorbed the disappointment into the model itself. “It is the tokenomics of Bitcoin that drives the cycle,” they still declare — “it’s pure math”.

“The framework isn’t broken — it just played out a little differently this time. History doesn’t repeat; it rhymes. No altseason, sure, but that’s because there are too many projects vying for attention. What do you expect? The basic structure held up. Bear market confirmed. See you at the next halving...”

Except the framework is broken. And Raoul Pal has been saying so for years.

In Q4, Pal’s “Everything Code” thesis — that liquidity drives everything and the four-year halving cycle was always just a sublime coincidence — finally found its proof. Consider the history: every halving happened to coincide with major central bank easing. The Fed’s $85 billion monthly QE in 2013. Coordinated injections from the ECB, BOJ, and PBOC totalling $2 trillion in 2017. The Fed’s $5 trillion pandemic response in 2020. The Bitcoin halving cycle got the credit every time. But liquidity — and not code — was doing most of the heavy lifting.

2025 shattered the mirror. The halving happened in April 2024, and it’s fair to say we’re up quite a lot since then (we’re up 130% since early January 2024, when the spot Bitcoin ETFs were launched). Fresh supply dwindled post-halving and the demand shock arrived — ETFs, TradFi adoption, and then a pro-crypto administration. But the Fed was still running quantitative tightening at $95 billion per month. The liquidity cycle never started.

As crypto OG Ran Neuner recently pointed out, everyone was too busy watching the wrong chart. M2 money supply — the measure of all money in the world — looked bullish throughout 2025. But M2 doesn’t measure circulating supply. It doesn’t account for money hoarded by central banks in the Treasury General Account or locked in reverse repo facilities. The Fed drained $600 billion to fill the Treasury General Account. Another $2 trillion sat in reverse repo. M2 looked fine; but actual circulating liquidity — the money available to bid on risk assets — was flat or down.

That’s the chart mismatch that fooled everyone.

Crypto is no longer a retail-first environment. And you can bet your bottom dollar that TradFi isn’t counting days down from the halving based on three data points. They’re running the same playbook they use for every other risk asset. And that playbook says: liquidity drives everything.

The four-year cycle was always a beautiful lie — a coincidence elevated to a canon of crypto doctrine. In a romantic sense, I’ll be sad to see it go. But it turns out all along to have been nothing more than a shadow on the wall of Plato’s cave.

So, if liquidity was always the driver, then what exactly was Bitcoin tracking in terms of its regular — like clockwork — cyclicality, if not its own halving cycle?

Pal’s Breakpoint keynote laid it out. After 2008, governments didn’t just print money — they restructured all sovereign debt into 3-5 year maturities. That created a predictable refinancing cycle: every few years, trillions in debt rolls over, central banks inject liquidity to keep rates manageable, risk assets rise. ISM, NASDAQ, crude oil, industrial metals — they all follow the same rhythm. Bitcoin’s four-year cycle wasn’t mystical. It was a mirror, reflecting the debt refinancing schedule (otherwise known as currency debasement) back at us.

For fifteen years, everyone stared at that reflection. Rainbow charts, stock-to-flow models, halving countdowns — all describing the mirror, not the source. It was a classic case of fixating on the finger that’s pointing at the moon. The halving may have amplified the supply dynamics at the margins, but it was never the primary engine. The real engine was debt.

And in 2022, governments quietly extended average debt maturities out to 5.4 years. The refinancing schedule shifted. The liquidity that was supposed to arrive in 2025 got pushed to 2026. The mirror cracked — and the dopamine-chasing cohort of the four-year faithful, many of whom were leveraged-up to the hilt to capitalise on the climax of a cycle that no longer existed, got royally liquidated.

But here’s the delicious irony that cuts deeper than any price chart…

Bitcoin was itself forged in the crucible of the 2008 financial crisis. As a lone cry in the wilderness for a new form of money fit for cyberspace; an incorruptible form of money, sound money — beyond the reach of the central banks and their printing press profligacy. Satoshi embedded that financial protest in the Genesis Block itself — January 3, 2009: “Chancellor on brink of second bailout for banks.” A newspaper headline about the very stimulus response that was reshaping global debt markets at that pivotal moment in time.

That stimulus response — the “debt jubilee,” the restructuring, the 3-5 year maturities — is the exact mechanism that Pal now identifies as the driver of Bitcoin’s price cycles. Satoshi wasn’t predicting the future. He was time-stamping the beginning of a sine wave he didn’t fully understand, which Bitcoin would remain in lockstep with: a debt refinancing rhythm that would run for decades, printing the liquidity that would make Bitcoin the best-performing asset in human history.

Bitcoin didn’t just correlate with the debt cycle — it vibrated in sympathetic resonance with it. Every round of money printing validated the thesis (fiat is broken, central banks can’t stop debasing) while driving liquidity into risk assets and a flight to safety, particularly into hard assets with a strictly limited supply. This year it got a name, popularised this quarter: the debasement trade. It’s what has sent gold and silver racing to new all-time highs — and Bitcoin follows the same logic of scarcity. Ever since Bitcoin’s inception, in fact, the more money that central banks printed, the higher Bitcoin has climbed. The original cryptocurrency and fiat alternative was being funded by the very thing it was designed to replace.

Bitcoin doesn’t escape the fiat system. It feeds on it. And that was true from block zero, whether by design or happenstance. The ideology and the economics were never separate entities — they were both part of the same story, intertwined from the beginning.

2025 was the year we finally saw the cycle for what it was. Not because the correlation broke, but because the gears slipped — and for the first time, we could see what was actually turning the wheel…

THE SIGNAL BEHIND THE NOISE

Whilst retail was busy getting liquidated, the infrastructure story was accelerating. And most of it happened in the last eight weeks.

A Regulatory 180°

SEC Chair Paul Atkins declared that “all US markets will be on-chain within two years” — he meant an instantiation of all markets, not 100% migration, but still: a two-year timeline from the SEC Chair. And he’s not the only one talking about the tokenisation of markets. Larry Fink has been beating that drum all year long.

The OCC’s about-face was even more striking. The same Office of the Comptroller of the Currency that orchestrated Operation Chokepoint 2.0 — the systematic de-banking of crypto companies — spent December finger-wagging at banks for “unlawful de-banking behaviour.” The same OCC then granted federal trust bank charters to Ripple, Circle, BitGo, Paxos, and Fidelity Digital Assets. BitGo’s CEO called it “the official end to the war on crypto.” The Bankless crew had a simpler framing: “The evil witch is dead.”

The Banking Pivot

Then came the moment that crystallises where we really are. Citi, JPMorgan, Wells Fargo, and BNY Mellon are now issuing credit against Bitcoin holdings. Banks — the very institutions that spent a decade dismissing crypto as rat poison — are saying: “Yeah, we’ll give you a loan against your Bitcoin, against your magic internet money.”

That is a monument.

The ETF Evolution

The ETF story evolved beyond simple access. BlackRock filed for a staked ETH ETF, planning to stake 70-90% of holdings with a new ticker (ETHB). Solana ETFs launched and maintained an unbroken inflow streak. The XRP ETF debuted to $245 million in inflows — the largest crypto ETF launch of 2025. NASDAQ filed to increase IBIT options limits from 250,000 to 1 million contracts. JPMorgan launched the first Bitcoin structured note. This isn’t just about access anymore. It’s financial products being built on top.

Ethereum’s Comeback

Ethereum staged a comeback nobody expected. The network started 2025 looking like it couldn’t scale, having lost its footing to Solana. “ETH is dead” was mainstream sentiment. Then Pectra shipped. Fusaka shipped — the blob upgrade delivered 40% more Layer-2 capacity. Two hard forks in one year. A change of guard at the Ethereum Foundation. A clear roadmap established. Ryan Watkins, who backed Solana in 2023 when sentiment was bearish on ETH, now says: “The more time that passes, the more I believe crypto natives have completely lost the plot on ETH, and it’s becoming impossible to replicate the product that Ethereum has built.”

BlackRock chose Ethereum for tokenisation. Tom Lee reportedly owns 3.2% of all ETH supply, buying $420 million in a single week. The stars are aligning for Ethereum’s turn after Solana stole the 2024-25 show.

A note of caution, though. Vitalik published a blog post arguing that “blue chip DeFi” had matured to the point of being safe. Shortly after, Balancer lost over $100 million. His assessment was, to be charitable, premature. Even the best frameworks have edge cases — and the infrastructure, for all its progress, still bites.

Solana’s Institutional Moment

Firedancer — Jump Crypto’s validator client after three years of development — went live on mainnet. It’s now running on 21% of validators, having produced over 50,000 blocks. Client diversity means network resilience. The network has maintained nearly two years of solid uptime. DEX fees now beat Coinbase and Binance — 3-5 basis points versus 5-12 basis points on centralised exchanges.

JPMorgan arranged the first US debt issuance on a public blockchain, executing a commercial paper offering for Galaxy Digital on Solana with USDC settlement. Galaxy Digital’s head of trading called them “the biggest Solana maxi on Wall Street.” State Street is building a tokenised money market fund on Solana. SEC-approved tokenised securities are trading on NASDAQ. Matt Hogan from Bitwise laid out the bull case: if Solana captures 5% of the tokenisation market by 2030, that’s $450 billion in AUM moving onchain — implying a $1 trillion market cap and $1,000 SOL.

The Stablecoin Surge

The CFTC launched a pilot programme accepting Bitcoin, Ethereum, and USDC as derivatives collateral — crypto assets firmly embedded in traditional financial plumbing. YouTube quietly enabled PYUSD payouts for US creators — a Google-PayPal partnership marking the tech giant’s first crypto integration, no announcement, just a product update for 2 billion users. PYUSD itself grew from $500 million to $3.9 billion market cap, becoming the eighth-largest stablecoin. State Street and Galaxy announced the SWEEP fund using PYUSD for settlement. The total stablecoin market hit $313 billion, adding over $100 billion since January.

The Payment Rails

Stripe and Paradigm launched Tempo, a payments-focused blockchain with Mastercard, Visa, UBS, Deutsche Bank, Klarna, and OpenAI as partners — purpose-built rails for stablecoin payments at fractions of a cent per transaction. Klarna announced a USD stablecoin on the network before it even left testnet. JPMorgan rolled out its yield-bearing deposit token on Base, with Mastercard completing test transactions alongside Coinbase and B2C2. Cash App enabled 58 million users to spend dollars as Bitcoin via Lightning, competing directly with card networks at point-of-sale. The incumbents aren’t fighting crypto rails anymore — they’re building on them.

Jupiter acquired RainFi to build money markets for every asset. Oro launched the first yield primitive for gold ever. The infrastructure for earning yield on everything from stablecoins to memecoins to commodities is being built, with insurance products emerging to protect deposits.

Global Adoption

Twenty-seven countries now hold Bitcoin in reserves — one in seven nations worldwide. APAC led adoption growth with a 69% year-on-year increase in on-chain value received, reaching $2.36 trillion. Latin America followed at 63%. UK crypto ownership jumped from 18% to 24% — the largest increase among surveyed nations. Nearly one in four people globally now own crypto.

The Czech National Bank became the first eurozone central bank to confirm Bitcoin holdings, disclosing 500 BTC as a hedge against “monetary instability.” Bhutan, already the seventh-largest sovereign Bitcoin holder with nearly 6,000 BTC mined via hydropower, launched a sovereign gold-backed token on Solana. Texas became the first US state to buy Bitcoin directly.

Meanwhile, Dubai continued attracting talent and capital. Revolut’s CEO Nik Storonsky quietly moved his personal residency to the UAE — UK regulators learned about it from the press, not the company. Revolut is now building out a Dubai presence with in-principle approval from the UAE Central Bank, whilst its UK banking licence application remains stuck in “mobilisation” after missing a 12-month deadline. The symbolism writes itself: the founder of one of Europe’s most successful fintechs relocating to the Gulf whilst the UK dithers on approvals. Regulatory arbitrage is real, and jurisdictions that move slowly are losing.

A ROUND-TRIP — BUT FROM PUBLIC TO PRIVATE

2025’s strangest feature: Bitcoin did a round trip. It started the year around $94k, hit $126k, crashed to $80k, and now sits here in December at $87.5k, not far from where it began. Look at January and December in isolation and you’d think nothing much had happened.

Everything happened. And most importantly, the composition of holders changed.

Retail sold the fear. Or got liquidated — $40 billion worth in Q4 alone. The four-year cycle believers who leveraged up for the “inevitable” blowoff top? Gone. The tourists who bought the ETF hype in Q1 and panicked when November delivered the worst month in seven years? Out.

OG wallets woke up too. Addresses dormant for a decade started moving coins when Bitcoin crossed $100k around this time last year — and moved even more after the retreat from this year’s October $126k high. Can’t blame them. They bought at $100 or $1,000 or not at all. At these prices, taking profits isn’t panic selling; it’s life-changing money.

Meanwhile, the institutions were accumulating. BlackRock’s IBIT now holds more Bitcoin than any entity except Satoshi — from a standing start in less than 2 years. Strategy kept buying through the drawdowns. Sovereign wealth funds, family offices, and the banks now offering Bitcoin-backed credit lines — all quietly adding while retail was heading for the exits.

The direction of travel is clear: from retail to institutional. From weak hands to strong hands. From distributed to concentrated.

And if you’re cynical by nature, you might notice something else: institutional capital managed to accumulate a remarkable amount of crypto this year without pushing the price up. Almost as if the chop, the liquidations, and the “bear market” narrative served a convenient purpose.

The price went nowhere. The cap table tells a different story. The price action said “fear.” The adoption metrics said “acceleration.” And the ownership receipts said “transfer.”

RAISING A GLASS

And since we’re at year’s end, let’s take a moment to appreciate just how far we’ve come in less than 12 months.

January: Gensler out, Atkins on his way in — the changing of the guard at the SEC.

February: Bybit lost $1.5 billion in the largest heist in history — attributed to Lazarus, North Korea’s state-sponsored hacking group. The attack wasn’t a smart contract exploit; it was social engineering and compromised cloud infrastructure at Safe. The code held up fine. The humans didn’t. A reminder that as the stakes grow, so does the sophistication of those hunting for the weakest link in the chain.

The ETF evolution — from spot launches to BlackRock filing for staked ETH. The GENIUS Act passed, giving stablecoins their first regulatory framework — and notably, banks got caught flat-footed. The Bank Policy Institute launched its campaign to block yield-bearing stablecoins after the bill had already passed, warning that “$6.6 trillion in deposits could migrate” away from traditional banks.

The irony: banks have spent years offering depositors 0.01% on savings while Treasury yields sat above 5%. Now they’re alarmed that someone might actually pass that yield through to consumers. Too late. This is the rub for banks: tokenisation, digital assets, and blockchain rails promise to transform their business — whilst also threatening to make them obsolete. They want to use the technology. They don’t want to compete with it.

The stablecoin market grew from $200 billion to $313 billion — adding $100 billion in a single year. Ethereum’s comeback arc: started the year looking like it couldn’t scale, ended it shipping two hard forks with a clear roadmap and new EF leadership. YouTube quietly integrated PYUSD — Google’s first crypto move. From “war on crypto” to federal banking charters in twelve months.

In Q1, I wrote that crypto had finally grown up — ditching the cargo shorts for Savile Row suits, winning its seat at the establishment table. Ripple told us “the Beef Bourguignon was really good” when meeting with Trump at Mar-a-Lago. But I wondered out loud at what cost.

Eleven months later, the tailoring is complete. We’ve gone from Gensler’s enforcement crusade to crypto-friendly chairs at the SEC, CFTC, and FDIC. Stablecoin legislation signed. JPMorgan tokenising on Ethereum. DTCC putting Treasuries on-chain.

The regulatory 180° is complete. The cranes are moving on the skyline. Whether crypto captured TradFi or TradFi captured crypto is still a moot point.

PARADISE LOST?

But convergence isn’t neutral. It has a direction. And that direction raises questions.

Eylon Levy frames what’s happening as a merger — crypto and TradFi combining into something new, both sides bringing assets and expertise to the table. It’s an optimistic read. The evidence suggests something closer to an acquisition.

Morgan Stanley Capital International (MSCI) is proposing to exclude digital asset treasury companies from its indices. Strategy — formerly MicroStrategy — fired back, calling the proposal “discriminatory” and warning of $2.8 billion in forced liquidations if index funds are required to dump their shares. Citadel Securities urged the SEC to regulate DeFi protocols as exchanges and broker-dealers — the same Citadel that invested in Ripple and is comfortable with crypto when it controls the rails. JPMorgan now imposes elevated margin requirements on crypto-correlated positions. Banks that spent years de-banking crypto companies are now chartering them — after the de-banking drove valuations down.

The pattern is familiar. Acquirers usually pay a premium. These acquirers liquidated shareholders first, then bought the dip.

Vanguard captures the cognitive dissonance perfectly. The $12 trillion asset manager began offering crypto ETF trading this month. Then one of its senior executives compared Bitcoin to a “digital Labubu” — a collectible plush toy — likening it to tulip mania and Beanie Babies. The firm provides access to Bitcoin, Ethereum, Solana, and XRP products whilst offering no investment guidance, positioning these as client-directed discretionary trading rather than endorsed investments.

This is what institutional adoption actually looks like: reluctant, hedged with disclaimers, two-faced, even — but happening anyway. Words say “bubble”; actions say “show me the money.”

TradFi doesn’t need conviction. It needs client demand. The infrastructure gets built regardless of what the builders believe about what they’re building.

The Napster-to-Spotify question looms. Napster was revolutionary, disruptive, anti-establishment, and permissionless. Spotify is useful, captured, and defanged. Is crypto becoming Spotify?

What survives in the convergence seems clear: borderless transactions, programmability, 24/7 markets. What might not: full censorship resistance, permissionless innovation, self-custody as a primary default.

Or maybe not. The self-custody UX is actually improving rapidly. Ledger announced a recovery key and Solana edition hardware at Breakpoint. Solflare launched Shield — a $49 offline chip with no screens, cables, or batteries. Tangem has been doing multi-chain hardware wallets. Seedless wallet solutions are emerging. The original promise — become your own bank — is within reach for normal people, not just technical early adopters.

That’s a genuine win for the original ethos, even as TradFi builds its rails on top. Perhaps there really is room for all forms of adoption to proliferate.

And then there’s privacy — the sleeper narrative for 2026.

The tension is fundamental. “Code is speech” — the principle that writing software is a protected form of expression — dates back to the cypherpunk movement of the 1990s. It’s not a crypto invention; it’s constitutional bedrock that predates Bitcoin by decades. But it’s being tested now in ways that matter.

Here’s the uncomfortable truth: crypto doesn’t really work at scale if every transaction is public. Businesses don’t want competitors seeing their supplier payments. Individuals don’t want their salaries and medical expenses on a public ledger. Regulated entities need transparency with regulators, not with the world. The current system — where every on-chain transaction is permanently and immutably visible to anyone, forever — is a feature for auditability but a serious bug for mainstream adoption (as well as for democracy).

The solutions aren’t one-size-fits-all. Complete privacy (Monero, Zcash) offers full anonymity but raises some legitimate law enforcement concerns. Mixers and tumblers (Tornado Cash, Samourai) provide privacy retroactively but have been targeted as money laundering tools. Selective disclosure — where users can prove compliance to regulators whilst keeping transactions private from the public — is the emerging middle ground, especially in terms of enterprise adoption, enabled by zero-knowledge proofs. Different use cases need different solutions.

This is a nuanced realm. But it’s heating up fast.

The US administration’s posture on privacy is shifting. Trump pardoned Ross Ulbricht in January. He’s now signalled interest in the Samourai case — “I’ve heard about it. I’ll look at it” — though the case is messier, with DOJ evidence showing darknet marketing and Rodriguez describing mixing as “money laundering for bitcoin” in private messages. In many ways, it’s the same as the cryptography debate itself: everybody needs it, including people committing criminal acts.

Meanwhile, SEC Chair Atkins warned at the Crypto Task Force roundtable that “pushed in the wrong direction, crypto could become the most powerful financial surveillance architecture ever invented.” He cautioned that if “the instinct of the government is to treat every wallet like a broker, every piece of software as an exchange, every transaction as a reportable event,” the result would be a “financial panopticon.” Commissioner Hester Peirce reinforced the message: “Protecting one’s privacy should be the norm, not an indicator of criminal intent.”

Whether this amounts to a coherent policy or just scattered signals remains to be seen. But the direction of travel — privacy tools aren’t inherently criminal — is new.

The contrast with Europe couldn’t be starker. The digital euro is working its way through parliament, and with it comes the infrastructure for programmable money — configurable thresholds for anonymous transactions, holding limits, real-time visibility into spending patterns. The specific numbers matter less than the architecture: money that can be programmed to behave differently depending on who’s spending it, and on what.

Two superpowers, two directions. The US reconsidering whether privacy is a crime and taking advantage of the surge in demand for dollar-denominated (private) stablecoins. Europe building the surveillance architecture Atkins warned about. That divergence is why privacy may be the sleeper narrative of 2026 — and why it won’t stay academic for long.

If this policy direction holds, the implications will ripple through the tech layer. Monero, Zcash, mixers, zero-knowledge protocols — all currently trading at “regulatory risk” discounts. The Tornado Cash and Samourai cases tested the “code is speech” line. Roman Storm’s case — the Tornado Cash developer convicted on similar charges in August, without the darknet marketing evidence — is the cleaner test case.

Watch this space in 2026. Privacy may be the narrative that catches everyone off guard. Unless of course, you’re already paying attention.

THE SETUP FOR 2026

The liquidity clock is about to start ticking.

QT is ending. The TGA drain is removed. Jerome Powell’s term ends in May 2026, and Trump will pick the next Fed chair — the front runner, Kevin Hassett, served on Coinbase’s advisory council. Rate cuts are coming regardless.

The technical structure supports it. No cycle-top indicators have triggered: not Fear & Greed at euphoria levels, not MVRV, not Pi Cycle, not CBBI. In every prior cycle, these indicators fired before the top. This cycle? Not a single one. As Raoul Pal puts it: “We have never had a Bitcoin bear market in a period of increasing liquidity. Never, not once in history.”

Everyone has a price target. Barclays sees a down year. Arthur Hayes sees $200,000 by March. Galaxy sees $250,000 by 2027. Brandt sees a peak in 2029. The range tells you how little anyone knows. We’re all pinning tails on donkeys.

But here’s what we do know: the liquidity cycle hasn’t even started. $7-8 trillion in debt refinancing is coming through 2026. China is injecting its largest stimulus in history. Adoption keeps compounding — 27 countries hold Bitcoin in reserves, stablecoins hit $313 billion, banks lend against BTC. These aren’t speculative metrics. They’re infrastructure that doesn’t unwind in a down year.

The DeFi Template

Two governance votes this week crystallised what sustainable tokenomics might look like:

• Uniswap’s UNIfication passed with 99% approval — activating the fee switch, redirecting ~$130 million annually into buybacks and burns, plus a 100 million UNI treasury burn (~$940 million). After years of debate, the largest DEX finally links its token to platform revenue.

• Hyperliquid’s Assistance Fund vote made ~37 million HYPE (10%+ of supply) officially burned. Cantor Fitzgerald’s 62-page report models HYPE at $200 billion market cap over ten years. Wall Street doesn’t waste 62 pages on protocols they think will die.

DeFi protocols with real revenue are returning value through cash flows, not emissions. If this trend continues, 2026 reprices sustainable unit economics against hopium.

The Uncomfortable Truth

The market structure has changed. Derivatives now drive spot. ETF market makers operate on different timescales. Retail leverage gets wrecked by institutional flows you can’t see coming. The old playbooks don’t work.

If you’d bought spot at the start of 2025, ignored the charts, and lived your best life — you’d be fine. Perfectly positioned for 2026. Meanwhile, the people who leveraged up for the “inevitable” blowoff top? Liquidated. $40 billion worth in Q4 alone.

The irony is brutal: the people who did literally nothing outperformed the people who did everything.

Raoul Pal calls it DFTU — Don’t Fuck This Up. No leverage. Ever. Hold quality assets. If your time horizon is five years, everything else is noise. This is where the real smart money is.

The ones who’ll do best in 2026 aren’t the ones who called the bottom perfectly. They’re the ones still standing when the liquidity arrives.

Sometimes the real alpha is simply not getting liquidated…

Or as Raoul would say: just don’t fuck it up.

The naming wasn’t an accident. Web3 was supposed to be an upgrade — a direct response to everything Web 2.0 had become. Not a parallel financial system. Not a 24/7 casino. Not a speculative playground for degens and day traders. An overwrite.

Chris Dixon framed it succinctly: Read, Write, Own. The first era of the web gave us the digitisation of information and cyberspace — suddenly all knowledge could flow freely across borders and devices. The second era, Web 2.0, gave us the digitisation of social interaction, with platforms like Facebook and Twitter transforming how we connect, share, and argue with strangers. But neither era tackled the digitisation of value. Neither gave us any true sense of ownership.

Web3 was supposed to complete the trilogy. Provide the much-needed ownership layer. The thing that would finally let us inhabit our digital worlds in the same way we inhabit our physical ones — as sovereign individuals, with agency.

It hasn’t delivered. What we got instead was Pump Fun, DeFi yield farming, NFT profile pictures, prediction markets and financial engineering dressed up as revolution. None of which I object to per se. But the original promise — and the reason for the name — has gone almost entirely unaddressed.

That promise was the distribution and democratisation of value, as opposed to its extraction. Web 2.0 extracts. Web3 was supposed to return the power — including digital property rights and sovereignty — back to the people. By that measure, Web3 doesn’t deserve its name. Not yet, at any rate. Maybe not ever — unless something fundamental changes…

THE EXTRACTION MACHINE

To understand the failure, you have to understand what needed fixing in the first place.

When we started talking about “Web 2.0” in the mid-2000s, it meant something hopeful. User-generated content. Participation replacing passive consumption — it was even referred to by some as the participatory web. The read-write web. Everyone’s a publisher. The democratisation of reach. Access to the means of production — global digital media publishing.

And to be fair, something did change. The means of production genuinely democratised the landscape, at a time when everything was going ‘digital-first’. Joe Rogan built an audience that dwarfs most traditional media properties. Substack writers command readerships that newspaper columnists would envy. The podcast explosion, the YouTube creators, the TikTok stars — these aren’t nothing. The gatekeepers of the broadcast era lost their monopoly on distribution — and ‘one-to-many’ gave way to ‘many-to-many’.

But look closer. How many creators actually get meaningful reach? There’s a very long tail of people publishing into the void, algorithmically invisible, howling at the moon. The monopoly board changed; but the game remained the same. A handful win big, most win nothing, and “going viral” became the new Willy Wonka golden ticket — for most people, a spectator sport. And even the winners? Joe Rogan signed to Spotify. MrBeast negotiates with the big platforms. The leverage always flows upward eventually.

Two decades later, we know what Web 2.0 actually delivered beneath the surface. Shoshana Zuboff called it “surveillance capitalism”: an economic system that treats human experience as free raw material for extraction and prediction. You are not the customer. You are the product. And products don’t own things — they get owned.

The platform giants built walled gardens and locked us all inside. Centralised chokepoints where a handful of companies control the flow of human communication. Your content lives on their servers. Your audience exists at their discretion. Your identity is a row in their database.

The platform is the barrel. We are the fish. And the advertisers are the ones holding the shotguns.

The consequences compound. Algorithms optimised for engagement learn that outrage outperforms nuance. Dopamine pathways get hijacked. Clickbait drowns substance. Filter bubbles calcify into tribal fortifications. Divisiveness isn’t a bug; in the attention economy, it’s the business model. Mental health statistics, especially among the young, tell a story the platforms would rather we didn’t stop scrolling to ponder.

And then the terminal phase — what Cory Doctorow named enshittification. First the platforms are good to you, to capture you. Then they squeeze you to serve advertisers. Then they degrade everything to extract maximum value before the edifice collapses. Shadow banning. Algorithmic suppression. Arbitrary enforcement. Pay to play (bribe the algorithm to boost your dwindling reach). Cancellation without appeal.

You built something real on these platforms — a following, a professional identity, a commercial presence, years of work. But you built it on land you don’t own. And the landlord owes you nothing.

THE QUIET DREAD

Anyone who’s built something meaningful on social media knows the feeling. The quiet dread that sits somewhere beneath conscious thought. What happens if I just get... cancelled? Not for credible cause. Just erased. A terms of service update. A policy shift. An inconvenient truth. A content moderation algorithm having a bad day. A billionaire’s mood-swing.

Last week X terminated the European Commission’s advertising account. Days after the EU fined them €120 million for transparency violations, a corporation punished a regulatory body for enforcing its own laws — with Musk calling the EU the “Fourth Reich” for good measure.

Do I care about the EU losing an ad account? Not particularly. Maybe they deserved it.

But here’s what should unsettle everyone: if X would go to war with a sovereign government over a fine, what protection do you imagine you have? There is no floor. Your years of work, your professional network, your audience, your content — all of it exists entirely at the pleasure of a handful of tech bro billionaires.

This is digital serfdom. And it’s the problem Web3 was named for.

ASKING THE WRONG QUESTION

So where’s the fix? Farcaster. Lens. Bluesky. Mastodon. These are genuine attempts by genuine builders. Real traction in certain circles. But they’ve all hit a ceiling.

Why?

The charitable reading is that they’re building protocols, not platforms. Farcaster lets anyone build a client; Warpcast is just one interface, the way Gmail is one interface for email. Bluesky’s AT Protocol is designed for federation. In theory, they’re the open infrastructure — and the apps are just windows into it.

But look at the incentive structures. These are venture-backed entities racing for network effects. They measure success by user acquisition, engagement metrics, growth curves — the same scoreboard the incumbents use. Except they’re competing with a technological handicap: the optimal architecture for chasing platform metrics is centralised control, not distributed systems running on blockchains. They’ve chosen the wrong tools for the game they’re playing. They’re building protocols with platform economics. The funding demands returns. The returns demand capture. And capture is precisely what protocols aren’t supposed to do.

Nobody built “decentralised email” to beat Gmail. Email just works across providers because the protocol layer is public infrastructure. Gmail dominates market share, but it doesn’t have lock-in. If Google banned you tomorrow, you could move to Fastmail or Proton or your own server and keep receiving mail — especially if you control your own domain. The relationships survive because they don’t live inside Gmail’s walled garden.

The current strategic advice is to not put all of your eggs in one basket — to make sure that, if one platform pulls the plug on you, you can survive based on having sufficient traction on another. If TikTok shuts you down, you have Instagram. If LinkedIn clips your wings, you have X.

But why are we still renting baskets when we could own the loom?

Every Web3 social project that tries to be “the decentralised version of X” has already accepted the wrong framing. They’re competing for users, trying to achieve network effects, hoping to displace incumbents with better values and worse UX. That’s not how infrastructure wins. That’s how you build another platform with extra steps that make it less likely to succeed.

THE RSS COUNTERFACTUAL

There’s a bitter irony here worth pausing on. Evan Williams co-founded Blogger in 1999 — one of the platforms that helped define the RSS era. Every Blogger site came with an RSS feed baked in. Distributed publishing, portable subscriptions, the open web. Then Williams co-founded Twitter. And early Twitter had native RSS support too; you could subscribe to any user’s timeline without even having an account. The philosophy seemed intact.

But Twitter progressively closed the gates. In 2011, they quietly removed RSS links from user profiles. By March 2013, they killed RSS, XML, and Atom support entirely — forcing everyone into their proprietary API and walled garden. The man who built on RSS-era openness went on to build the thing that killed it.

Chris Dixon saw it coming. In 2009 — years before he wrote Read Write Own — he published a piece titled “Twitter killed RSS (and that’s a bad thing).” He wrote: “Twitter isn’t an open protocol. It’s a private company with a profit motive... I know that many people have been calling for an open alternative to Twitter for a long time. I support them, but I’m afraid it’s too late. The network effects of Twitter’s social graph are just too strong.”

With the benefit of hindsight, perhaps we can say that this was the inflection point — the moment the open web lost to the closed business model we now call surveillance capitalism.

Dixon makes a point that’s easy to miss: RSS was the open web’s greatest missed opportunity.

Distributed feeds. Portable subscriptions. No algorithmic gatekeepers deciding what you see. You subscribed directly to sources, they published to an open format, and any reader could display them. It was the architecture of an open social web, hiding in plain sight.

In a different universe, RSS could have become the backbone of social. Instead of platforms owning the feed, the feed would have been a protocol — like email, like HTTP. Apps would compete on experience, not on lock-in. Your subscriptions would be yours to take anywhere.

It didn’t happen. RSS withered on the vine. Not because it was technically inferior, but because it didn’t have a business model, or venture capital. Surveillance capitalism filled the vacuum with algorithmic feeds that could be optimised for engagement, for advertising, for extraction.

The lesson everyone internalised: openness loses to economics. To compete, you need to capture value.

Hence tokens. Hence “tokenomics.” Hence the financialisation of every Web3 project. If RSS failed because it couldn’t sustain itself economically, then surely the answer is to embed economic incentives into the protocol. Give people tokens for participation. Let them stake, earn, trade.

But this recreates platform logic with extra steps. The token becomes the capture mechanism. Growth hacking replaces advertising, but the fundamental dynamic — extract value from users to reward stakeholders — remains intact. Web3 social projects end up competing on speculation rather than utility — attracting mercenary capital rather than genuine communities.

We tried to fix the economics and broke the mission.

THE SHAPE OF WHAT’S MISSING

What would it actually take to make platform lock-in technically impossible?

Not a platform. Not a product. Not a token with clever economics. Infrastructure. Public infrastructure. The boring plumbing that nobody owns and everybody builds on.

The building blocks aren’t mysterious:

Portable identity. You are not your @handle. Your identity exists independent of any platform — verifiable, self-sovereign, composable. If Twitter suspends you, your identity persists. Your cryptographic keys, your attestations, your history travel with you.

Sovereign graph. Your relationships are yours. Not a corporate asset. Not locked in a database you can’t export. Your social graph lives somewhere you control, readable by any application you authorise. My graph, my rules.

Content addressing. Your posts exist at permanent addresses, not platform URLs. When you publish something, it gets a content-based address that doesn’t depend on any particular server staying online or any particular company remaining benevolent. IPFS, Arweave, whatever — the point is the pointer is yours.

Interoperability standard. The boring glue. A protocol that any client can implement, like SMTP for email. You choose your interface, your experience, your algorithms. The underlying social layer is shared infrastructure.

Notice what’s absent from this picture: a centre. No headquarters. No server farm you could walk into. No company whose CEO could wake up one morning and decide you don’t exist. What we’re describing is non-local — everywhere and nowhere at once. Not “the thing” but the substrate beneath “all the things”.

These pieces exist. DIDs for identity. IPFS for content addressing. ActivityPub for federation. RSS never actually died. The components are scattered across different projects, different standards bodies, different ideological camps.

Outside a handful of protocol idealists and underfunded non-profits, nobody’s stitching them into coherent public infrastructure. Why? Because everyone who understands the problem well enough to solve it is busy trying to capture value from it. And nobody will do that better than Meta, than Alphabet, than Microsoft, than ByteDance.

THE HARD PART

This is not a manifesto pretending the problem is easy. If it were easy, we’d be living in a different world already.

The hard part is this: social infrastructure at scale requires resources. Text and hyperlinks are cheap to host — Tim Berners-Lee could give away HTTP because serving web pages costs almost nothing. Social media is different. Video. Images. Massive social graphs. Real-time messaging. The storage and bandwidth aren’t free. Someone has to pay for the servers.

The token solutions — Filecoin, Arweave — try to solve this by creating economic incentives for decentralised storage. But as we’ve seen, the moment you introduce tokens, you introduce speculation, and speculation distorts everything.

There’s no silver bullet here. The protocol layer can be free and unowned — like SMTP — but the infrastructure that it runs on costs money. Perhaps the answer is hybrid: open protocols with commercial services competing on top, the way email actually works. Perhaps it’s public funding, the way roads work. Or open source, as with Wikipedia. Perhaps it’s something we haven’t figured out yet.

But acknowledging difficulty is not the same as accepting impossibility. We should do this not because it’s easy, but because it’s necessary.

And it is. Verging on existential.

THE TBL QUESTION

Tim Berners-Lee didn’t need a token launch to create the web. He didn’t pitch VCs. He didn’t design incentive mechanisms to bootstrap adoption.

He was one person at CERN who saw a problem — researchers couldn’t share documents across incompatible systems — built a solution, and gave it away via the permissionless architecture of the original internet. No capture. No monetisation. Just: here’s a useful thing, it’s open, build on it if you want.

The web became the most transformative infrastructure of the modern era not despite being given away, but because of it. HTTP won because nobody owned it. Anyone could build on it without permission, without rent-seeking intermediaries, without worrying that the protocol owner would change the rules to extract more value.

What’s stopping the same thing from happening with social?

Maybe nothing. Except that the landscape is crowded with people trying to build the next platform. It’s not crowded with people trying to give away plumbing.

The barrier isn’t technical. It isn’t funding — TBL didn’t have funding, other than a green light from CERN to follow his nose for a while. And it isn’t coordination — he didn’t need a DAO.

The barrier is indifference to profit. The protocol layer for social needs a builder who wants to give something away, not own it. Someone who looks at the Web 2.0 extraction machine and feels something closer to disgust than opportunity. Someone who’d rather be useful than rich.

THE STAKES

We got email right. Mostly by accident, through a combination of academic culture, government funding, and pre-commercial naivety. SMTP emerged before anyone figured out how to monetise it; and by the time they did, it was too late to capture. The protocol was already public infrastructure.

We got social catastrophically wrong. It emerged in the commercial internet era, funded by venture capital expecting returns, competing for users through engagement optimisation, converging inevitably on the business model of surveillance capitalism because that’s what the economics demanded.

Web3 was supposed to be the course correction. The ownership layer. The thing that would finally wrest control back from the platforms and return it to the people who truly create the value.

So far, it’s been a distraction. A casino masquerading as a revolution. A land grab dressed up as liberation.

But the window isn’t closed. The pieces exist. The problem is legible — we can define its contours. The extraction machine grows more extractive by the day, more capricious, more willing to go to war with governments and erase individuals alike when they become inconvenient.

What’s missing isn’t technology or funding or even coordination. What’s missing is the gift. Someone willing to stitch the pieces together and give them away for free. Someone with the technical skill, the credibility, and the indifference to profit that made the original web possible.

This isn’t a white paper. It’s a call to action. A channel opened for dialogue. Because the alternative — accepting digital serfdom as permanent, accepting that our professional identities and creative work and human connections will forever exist at the pleasure of corporations — is not acceptable.

Social media needs its “Satoshi Nakamoto” moment.

From acceptance to absorption: crypto stops knocking and starts getting office space…

MARKET OVERVIEW: THE QUARTER IN NUMBERS

Bitcoin closed Q3 trading around $113,100-$114,300, up approximately 7% from its July 1st starting point of around $105,650. The modest headline number masks extraordinary volatility beneath the surface. Bitcoin climbed as high as $124,000 before “Red September 2025” wiped over $160 billion from total crypto market cap in several days, shrinking capitalisation from over $4 trillion to around $3.8 trillion. Massive liquidations—$3.45 billion in leveraged positions—intensified the downturn as regulatory uncertainty, a strengthening U.S. dollar and hawkish Federal Reserve policy collided.

Ethereum hovered near the $4,000 mark throughout September’s turbulence, It’s had an exceedingly good run since early July—up almost 75%—but the real underlying story was one of institutional validation rather than price action. Some altcoins like AVAX and XRP showed relative resilience, though the long-awaited “altseason” continued to elude the market despite the Altcoin Season Index reaching 67—a level that would historically signal strong momentum.

Perhaps most tellingly, OG Bitcoin whales—those holding over 1,000 BTC, some with coins dormant for over a decade—moved over $16 billion worth of Bitcoin since August, marking the fastest whale selling since the 2024 halving. Meanwhile, mid-sized whale wallets (holding 100-1,000 BTC) accumulated $7.3 billion in September, revealing a complex market dynamic with both profit-taking by early believers and confidence building by newer institutional players.

Despite the chaos, institutional inflows into crypto ETFs and DeFi persisted, suggesting long-term conviction remains intact even as macro headwinds battered short-term sentiment.

INTRODUCTION: THE QUIET INTEGRATION

In Q3, the noise moved backstage. Institutions didn’t just grant access; they started wiring crypto into treasury flows, custody lines and distribution channels. The quarter felt less like a rally and more like a refit—fixtures going in, processes hardening, and the stack getting boring in the best possible way.

The GENIUS Act became law on July 18, 2025, creating the first federal framework for stablecoins and requiring 100% reserve backing with liquid assets like U.S. dollars or short-term Treasuries. By August, stablecoin supply hit a record $277.8 billion, a 35% surge, while transaction volume remained dominated by USDT, processing over $1 trillion per month. Newer entrants like EURC grew nearly 89% month-over-month on average, with monthly volume rising from approximately $47 million in June 2024 to over $7.5 billion by June 2025.

If Q2 was about being let through the door, Q3 was about finding the floor plan—who sits where, which systems talk, and what actually ships. The centre of gravity had moved inside the gates.

SHADOW QE — OR JUST A PLUMBING UPGRADE?

Stablecoins didn’t overthrow anything this quarter; they disappeared into the pipes. The dollar kept unbundling from banks into token wrappers that settle at machine speed and show up where users already are. On the surface, it reads like pure modernisation: better rails for the same water.

But scale has side effects. The GENIUS Act requires stablecoin issuers to back their assets with Treasuries and U.S. dollars, effectively creating new demand channels for short-term government debt. When wrappers for cash and bills grow inside open networks, they can cast QE-shaped shadows—smoothing liquidity, nudging funding costs at the margins, and relocating where dollar demand sits.

The banking sector noticed. Major U.S. banking groups—led by the American Bankers Association and Bank Policy Institute—escalated lobbying to amend the GENIUS Act, claiming a “loophole” allows exchanges like Coinbase and Binance to pay yields on stablecoins issued by third parties. While the Act blocks issuers from paying interest, banks fear platforms will drive mass deposit flight from traditional finance. A Treasury analysis suggests up to $6.6 trillion could exit the banking system if stablecoin yields proliferate. In other words, it’s money that they can’t afford to lose!

Crypto advocacy groups, including Coinbase CEO Brian Armstrong, publicly urged lawmakers to reject the banks’ position, arguing such restrictions harm consumers and contradict legislative intent. The battle lines are drawn: traditional finance recognises the existential threat of programmable money that moves at internet speed. And it also knows that centralised exchanges, just like Coinbase, are starting to look an awful lot like the future of banking.

Stripe, Mastercard, and Visa have all launched products enabling users to spend stablecoins via traditional rails, while platforms like MetaMask, Kraken, and Crypto.com have introduced card-linked stablecoin payments. That doesn’t make it policy by stealth; it makes it market structure with policy implications.

The fair framing for Q3 is pragmatic, not provocative: this is a plumbing upgrade with the potential to feel like stimulus at the edges if it keeps compounding. The test ahead is whether governance, custody and reserve transparency keep pace with distribution into mainstream apps and institutional treasuries.

DEFI GETS ITS VALIDATION MOMENT

On September 24, 2025, Vitalik Buterin published what the Bankless hosts called a “landmark” blog post declaring DeFi Ethereum’s “core business”—likening its essential role to Google Search being Google’s economic engine. This wasn’t just a general appreciation for DeFi; it was expressing confidence that DeFi had matured into something boring, robust and ready for global mass adoption. Of course, he has more than a bit of skin in the game.

Vitalik’s thesis: “Low-risk DeFi can be for Ethereum what search was for Google”—a foundational business model powering the broader ecosystem, enabling Ethereum to take moonshot risks elsewhere. His thesis is that DeFi has reached a maturity level where core bluechip protocols exhibit very low risk, with annual losses from exploits as a percentage of Ethereum L1 TVL close to zero for 2024-2025. DeFi survived market volatility and the collapse of major centralised lending platforms (Celsius, FTX, BlockFi, etc.); while DeFi protocols operated transparently with automatic liquidations and no major retail wipeouts.

Protocols like Aave demonstrate “near-zero” losses while offering competitive APY globally, enabling access to USD yields for countries with weak or unreliable banking infrastructure. DeFi applications—especially Uniswap, Aave, and Maker—now burn more ETH than even NFTs or Layer-2 bridges, showing DeFi is the primary on-chain economic activity.

The cultural fit matters. Low-risk DeFi is “culturally congruent” with Ethereum—advancing its aims of global economic access, censorship resistance and secure, transparent property rights. Unlike Google’s ad revenue model, which creates attention and addiction incentives, DeFi’s fee structure aligns with user benefit without similar perverse incentives.

This declaration matters because it represents institutional acknowledgment that DeFi isn’t promising—it’s proven. The boring reliability of “money verbs” (hold, send, spend, lend, borrow, trade, mint, issue) forms the foundation for everything else to come.

ETHEREUM FINDS ITS SECOND WIND

Ethereum ETFs attracted $33 billion in inflows during Q3 2025, while Bitcoin ETFs faced outflows of $1.17 billion. The reversal was stark enough to make believers out of skeptics. The Ethereum/BTC ETF ratio surged sixfold, from 0.02 in May to 0.12 by July, signalling a profound reallocation of institutional capital in Ether’s direction.

This wasn’t narrative rotation; it was infrastructure validation. Ethereum’s deflationary model, bolstered by the Dencun and Pectra upgrades, further incentivised institutional participation. Gas fees on Ethereum’s Layer 2 networks dropped by 90%, enabling $13 billion in tokenised real-world asset (RWA) growth and $223 billion in DeFi total value locked (TVL). When the pipes get cheaper and the yield looks steady—Ethereum offers a 4.8% annualised staking yield compared to Bitcoin’s 1.8% yield—capital follows logic.

The Ethereum Foundation’s leadership refresh and the Pectra upgrade timeline gave the network a feeling of institutional momentum that had been missing since the Merge. Standard Chartered now sees ETH hitting $7,500 in 2025, fuelled by record ETF and treasury buying, stablecoin growth and Ethereum network upgrades. Whether or not that target hits, the directional bet feels earned.

Vitalik’s DeFi declaration provided the philosophical anchor for what the market data was already showing: Ethereum had found product-market fit at institutional scale.

THE DATCO GOLD RUSH — AND THE mNAV QUESTION

The corporate treasury playbook moved beyond Strategy Inc.’s (formerly MicroStrategy) blueprint. Ten or so firms a week are now crowding into the Digital Asset Treasury Company (DATCO) trade, with over $100 billion in digital assets now held by these structures. What started as Michael Saylor’s contrarian Bitcoin bet has become an entire asset class.

But the sustainability question looms large. The DATCO pitch rests on trading at a premium to net asset value (mNAV)—if a company has $100 worth of digital assets, bulls argue it should trade for $200. This creates a financial flywheel: premium valuation enables equity issuance at attractive prices, which funds more crypto purchases, which theoretically justifies the premium.

As of July 2025, Strategy’s market cap reflects a 68% premium over the net asset value of its Bitcoin holdings, with approximately 600,000 BTC. The company has mastered the art of monetising this premium through convertible bonds at 0% coupon rates and at-the-market equity issuance. Strategy’s 30-day implied volatility of approximately 56% for MSTR, compared to 28% for BTC, sustains derivatives demand and maintains the high-volatility premium mechanism.

The pattern spread globally. Japan’s Metaplanet transformed from a CD publishing and hotel company into “Japan’s Strategy Inc.” Over 26 U.S. publicly traded firms now hold crypto treasuries exceeding $85 billion, with companies generating yield through staking and DeFi participation. Some firms like Upexi demonstrate how DATCOs can create 8% annual yields on staked SOL tokens.

Yet critics see speculative excess reminiscent of 1920s investment trusts. Several DATs already trade at or below mNAV, and sophisticated observers argue that mNAV premiums are driven not by value creation but by “pure speculative frenzy and animal spirits.” When crypto prices drop, DATCO stocks can plummet even faster, and leveraged positions create “volatility traps” where amplified bets turn against holders.

Galaxy Digital warns that if redemptions or buybacks become widespread among firms, that could be the beginning of a larger-scale unwind, with outflows driven by redemptions likely having the opposite effect of the “persistent bid” these companies currently provide. The risk isn’t just individual company failure—it’s systemic unwinding when hundreds of firms have adopted the same one-directional trade.

For now, the flywheel spins. But Q3 made it clear that DATCOs are no longer a niche Strategy Inc. phenomenon, and nor are they all about Bitcoin. They’re a new asset class with their own dynamics, risks and reflexive fragilities that could reshape crypto market structure—for better or worse.

ALTSEASON: MISSING IN ACTION

The Altcoin Season Index reached 67 in Q3—a level that historically signals strong altcoin momentum. Yet the anticipated capital rotation into altcoins largely failed to materialise, suggesting (to some at least) that the market’s internal dynamics have fundamentally changed.

This cycle appears “right-translated”—the lag between Bitcoin peaks and any genuine altcoin rally has been extended due to slower risk rotation and more cautious positioning by both institutional and retail participants. Unlike previous cycles where liquidity cascaded rapidly from Bitcoin into speculative altcoins, capital now flows through a clear hierarchy: Bitcoin stabilises first, followed by Ethereum and large caps like Solana, then—maybe—smaller altcoins with proven fundamentals.

Institutional investors now play a much larger role than retail traders, favouring Bitcoin and large-cap tokens over highly speculative altcoins. ETF inflows focused on Bitcoin and increasingly Ethereum; which seems to have crowded out broader altcoin rallies. While the circle is still small, over 75% of institutional investors now plan to increase their crypto allocations, with diversified portfolios typically comprising 60-70% Bitcoin and Ethereum, 20-30% altcoins, and 5-10% stablecoins.

Bitcoin ETF flows showed signs of stagnation late Q3, with U.S. spot Bitcoin ETFs seeing a net outflow of $258 million on September 25. Meanwhile, Ethereum ETFs demonstrated resilience with $3.9-$4.0 billion entering in August alone, fueling renewed interest in scalable DeFi-related tokens.

Tightening global liquidity, persistent inflation, and uncertainty around Federal Reserve policy have left less total risk capital in the market than in past cycles. The Federal Reserve’s September 17th rate cut of 25 basis points created short-lived rallies; but dovish expectations were tempered by cautious Fed commentary.

Traditional metrics indicating altseason—such as 90% of top coins outperforming Bitcoin—may no longer apply in this more mature, institutionally-driven environment. Capital is increasingly selective, rewarding technological innovation (AI, tokenisation) or regulatory catalysts, but only for flagship projects with institutional backing.

The missing altseason isn’t a failure—it’s maturation. Crypto’s wild frontier has been replaced by capital allocation that looks more like traditional finance: slower, hierarchical, and fundamentals-driven.

THE ASIA-AMERICA REGULATORY SPLIT

While America debated, Asia deployed. Hong Kong’s Stablecoin Ordinance, passed in May 2025, requires all issuers of stablecoins backed by the Hong Kong dollar to obtain a license from the Hong Kong Monetary Authority, creating a functioning framework months before the GENIUS Act took effect.

The contrast became a case study in regulatory velocity. Hong Kong built rails while Washington argued about them. By the time the GENIUS Act passed, Asian financial centres had already absorbed the lessons about reserve requirements, custody standards and cross-border interoperability that U.S. lawmakers were still debating.

The EU’s MiCA regulation refers to e-money tokens (EMT) and asset-referenced tokens (ART), where EMTs are backed by a single fiat currency while ARTs are backed by a basket of assets. Different frameworks, similar outcomes: functional markets with clear rules.

The GENIUS Act’s passage in July represented America’s attempt to catch up, but the banking sector’s immediate pushback revealed the underlying tension. Traditional finance in the U.S. isn’t just resisting crypto—it’s fighting for survival against programmable money.

THE CULTURAL CONVERGENCE

The technical integration story misses something essential: crypto’s cultural transformation. The memes tell the story better than the ETF flows. Previous cycle bitcoiners who preached “fuck govts” and “self custody” now obsess over Fed rate decisions and check MicroStrategy’s treasury moves like a personal portfolio update.

This isn’t hypocrisy—it’s evolution. The anti-establishment technology succeeded so completely that it absorbed the establishment into its orbit while being absorbed in return. JPMorgan launches tokens on Ethereum. Former crypto anarchists parse Jerome Powell’s speeches for alpha. Visa processes stablecoin payments while DeFi protocols optimise for institutional compliance. And things are just getting started.

The TradFi-DeFi convergence isn’t just technical infrastructure—it’s philosophical convergence. We’re not witnessing crypto supplanting traditional finance or traditional finance co-opting crypto. We’re watching them become the same thing, with different interfaces.

As I wrote in Q1, crypto has traded “the wild frontier for regulatory certainty” and won “its seat at the establishment table.” The question was whether crypto had “tied its fortunes to the centralised powers it was built to resist.” Q3 provided part of the answer: the resistance was always going to be temporary. The real innovation wasn’t avoiding the system—it was improving it from within.

The pendulum hasn’t stopped swinging, but the axis has moved. Today’s compromises fund tomorrow’s innovations. Today’s institutional adoption creates the infrastructure for whatever comes next. Here’s hoping that crypto kept its rebellious spark—and just learned to wear better suits.

LOOKING FORWARD

If Q2 was gravitational—everything orbiting a clearer centre—Q3 was architectural. We moved from acceptance to absorption. Crypto didn’t just get some office space; it started examining architectural drawings and renovating the building.

The next test is whether governance and transparency can keep pace with distribution. 83% of institutional investors plan to increase their exposure to cryptocurrencies this year, while 76% intend to invest in tokenised assets by 2026. If the plumbing holds and the regulatory frameworks prove durable, this story won’t be explosive—it’ll be inevitable.

The shadow QE question remains open. I wrote some gonzo journalism on it here. Whether stablecoins backed by Treasuries constitute monetary policy by other means or simply more efficient dollar distribution will depend on scale and official response. For now, it’s infrastructure. But infrastructure has a way of becoming policy when it gets large enough.

The banking sector’s panicked response to GENIUS Act “loopholes” suggests traditional finance finally understands what’s at stake. The gates aren’t coming down—crypto has been invited in, one renovation at a time. And the old tenants are starting to worry about the new landlord.

Early September, 2025. Vladivostok.

“The United States is not only drowning in $37 trillion of debt—it is preparing to export that crisis to the whole world through cryptocurrency.”

With that declaration, delivered at the Eastern Economic Forum in Vladivostok in the Autumn of 2025, Russian adviser to Putin Anton Kobyakov dropped something of a diplomatic bombshell.

He outlined a mechanism as cunning as it was simple: push America’s Jenga-like tower of debt into wider circulation via crypto rails. After the swift passage of the GENIUS Act—or the “Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025” to be precise—these digital dollars would be backed one-for-one by short-term U.S. Treasuries and other cash equivalents.

So, every smartphone wallet holding them would, in effect, become a micro-creditor to the U.S. government. The result would be a digital extension of American liabilities drifting more comprehensively across borders, ensuring the consequences of dollar devaluation were, how should we put it… more evenly distributed.

Kobyakov was implying a kind of petrodollar makeover; only this time it wasn’t messy hydrocarbons sitting in the middle but a literal digital license to print money backed by US debt that would circulate globally—thus spreading the consequences of ‘final-boss-level’ American fiscal excesses to every outpost of the rapidly-emerging on-chain economy.

Now, coming from a Russian diplomat at a forum designed to showcase alternatives to Western economic hegemony, such claims might typically be dismissed as propaganda. Especially so in the West at the moment, where there’s a current tendency to not read too deeply into what Russian diplomats may or may not say. During more normal times, the accusation might have been simply brushed-off as just another conspiracy theory…

Except for one uncomfortable truth: America’s long-term fiscal future has recently entered uncharted territory—where traditional economic forecasting starts to break down. Jessica Riedl, a senior fellow at the Manhattan Institute and a leading expert on the federal budget, explains that models like the Penn Wharton Budget Model (PWBM) now struggle to deliver reliable projections beyond 2050 under current policy paths. At debt levels rising from just over $30 trillion today to a potential $200 trillion or more over the next three decades, these models face what Riedl describes as a fundamental breakdown of their core assumptions.

Under such extreme debt trajectories, key economic parameters lose their predictive power and precision, effectively making it impossible to model a functioning long-term economy with any meaningful degree of confidence. The numbers become so daunting that the models’ solutions lose real-world anchoring, forcing economists to acknowledge their inability to foresee fiscal outcomes.

In fact, the current debt trajectory—from $30+ trillion to a projected $200+ trillion over the next thirty years—has become so acute that reliable long-term forecasting has become practically impossible, with the models’ solutions losing real-world meaning at such extreme levels of debt.

DOGE

The Trump administration’s first order of business was to try an immediate course of conventional medicine in the form of its scorched earth policy toward government spending. The Department of Government Efficiency—aka DOGE, in a bit of memetic branding that would have made Madison Avenue proud—was established to slash spending and restore fiscal sanity through good old-fashioned (and definitely aggressive) bureaucratic pruning.

But it transpired that bureaucratic pruning—even the kind involving the vainglorious brandishing of chain saws—was woefully inadequate (by orders of magnitude) when facing a future debt trajectory headed into the hundreds of trillions of dollars.

In the end, it became clear it was like trying to budget your way out of a shark attack.

Bloody carnivals aside, the brick wall was no longer theoretical. As billionaire Ray Dalio—not known for mincing his words—warned, America had become “dangerously unsustainable for monetary, economic, and geopolitical reasons;” likening the nation’s position to “a patient at risk of a heart attack.”

Meantime, the petrodollar system—that elegant post-1971 arrangement that had anchored global oil pricing and reserves in dollars, and which then saw oil producers recycle their dollar surpluses into U.S. Treasuries—was showing signs of fracturing. China had been quietly dumping American debt while stockpiling gold. Saudi officials signalled openness to RMB settlement and are testing RMB rails, though dollar invoicing still dominates. The BRICS nations (Brazil, Russia, India, China, South Africa, and their expanding roster of allies) were building payment systems that bypassed New York entirely. As financial analyst Lyn Alden observed, increasingly: “It’s now a system without a purpose.”

The incentives that once made the world eager to hold dollars were shifting, and as Charlie Munger’s old maxim predicted: “Show me the incentives and I’ll show you the outcome.”

EL DORADO

Into this mounting crisis rode an unlikely cast of cowboys—some of them still wearing their cowboy boots—led by a reality TV president whose family had rapidly built a crypto empire worth more on paper than their storied real estate holdings. World Liberty Financial—the Trump family’s latest venture, which was launched during the 2024 presidential campaign—now places the family in command of 15.75 billion WLFI tokens, worth over $5 billion on paper at the time of writing, eclipsing Trump Tower as the family’s crown jewel.

The new Trump Tower isn’t in the meatspace of Manhattan—it’s down a block or two in cyberspace.

So, that happened...

World Liberty has even launched its own (you guessed it) dollar-denominated stablecoin, called USD1; making the Trump family direct participants in the very mechanism Kobyakov was describing being used to digitise U.S. debt. It’s a remarkable turn of events, whichever way you cut it: The same man who once dismissed Bitcoin as a scam now found his dynasty riding the crest of a wave of technological innovation that he had formerly shunned; and potentially profiting, perhaps even handsomely, from the very debt crisis his administration was tasked with resolving.

But while Kobyakov painted portraits of a looming crypto-fuelled financial apocalypse from the Pacific’s frozen edges, across the Atlantic, the choreography of American power had already begun adapting to the new post-Biden realities. There had been a largely welcome change of guard at the SEC. And earlier in the year, Ripple executives Brad Garlinghouse and Stuart Alderoty had dined with President Trump at Mar-a-Lago; “the beef bourguignon was particularly good” becoming the latest euphemism for successful deal-making—captured in a phrase that had successfully traversed from 19th-century European diplomatic circles to 21st-century crypto negotiations.

Congress, meanwhile, was crafting legislation like the GENIUS Act, enabling large tech firms (among others) to issue stablecoins—an active flashpoint on the Hill—rather than a programme rewarding “loyal” issuers. The implications were clear. Apple could theoretically print Apple Coins. Meta could choose to revisit Libra, their ill-fated 2019 crypto move. And alongside other White House jamborees involving the new titans of AI, the boundaries between private enterprise and state power were dissolving like water colours in rain.

Banks themselves pushed to amend parts of GENIUS (especially on the no-interest/rewards loophole), even as some explored issuing their own tokenised cash. The Act seemed to catch traditional finance slightly flat-footed, with major banks apparently failing to grasp its structural implications until after passage.

KARMA COMA

After decades of paying depositors interest rates that barely kept up with inflation if you were lucky, they suddenly watched in horror as customers considered cashing out to stablecoins that offered actual yield. The irony was impossible to ignore—and the train had already left the station. For years, banks had preferred to keep deposits captive through regulation rather than offering competitive rates. It had been the financial equivalent of a restaurant complaining about food trucks while continuing to serve reheated leftovers at premium prices, all served with a menacing smirk.

And Russia itself—the country sounding the alarm on America’s digital debt reshuffle—was running its own crypto experiment to circumvent Western sanctions. In July 2024, Russia had passed legislation creating an “experimental legal regime” allowing cryptocurrency for cross-border payments. Putin himself had urged the country to “promptly” develop crypto frameworks for foreign trade, with Bank of Russia Governor Elvira Nabiullina explaining their regulatory “softening” as necessary to find new channels given difficulties using dollars and euros. By August 2024, the Bank of Russia estimated cross-border cryptocurrency payments at about $49 billion in just one quarter.

It was a case study in geopolitical irony: the country warning about America’s digital debt export shenanigans was simultaneously pioneering its own crypto workarounds to avoid Western financial systems entirely.

But irrespective, with onshore stablecoins—in the home of capital markets—now requiring part-backing by U.S. Treasury securities under the GENIUS Act, America had stumbled upon a mechanism that could theoretically increase demand for its own debt instruments while distributing inflationary risk globally. After all, the $250 billion stablecoin market, processing $8.9 trillion in transactions during just the first half of 2025 by some estimates, represented more daily settlement volume than most national payment systems.

And most analysts would agree: the future is decidedly up and to the right.

IT’S A GAME OF TWO HALVES

Yet the appeal of digital dollars wasn’t entirely one-sided. For citizens from Lagos to Buenos Aires, dollar-denominated stablecoins offered something their local currencies increasingly couldn’t: predictable purchasing power. While the dollar might no longer be the cleanest shirt in the dirty laundry pile of global reserve currencies, it remained vastly preferable to the Turkish lira, Argentine peso, or Nigerian naira for anyone seeking to preserve wealth against hyperinflation. These digital dollars could be seamlessly converted to local currency when needed (subject to local capital controls and exchange access), but in the interim served as a crucial hedge against monetary chaos.

Meanwhile, our increasingly connected global marketplace and acceptance of remote work meant freelancers and creatives worldwide were regularly billing clients in USDC or USDT, bypassing traditional banking friction for international payments. This amounts to a particularly big deal for people living in the Global South—especially those with only limited access to traditional financial and payment networks. But the retail adoption story, compelling as it is, represents only the visible tip of a much larger institutional iceberg.

The vast bulk of stablecoin volume flows through crypto exchanges, decentralised finance protocols, and corporate treasuries using them as settlement rails and volatility buffers. For institutions moving money across borders or maintaining liquidity in crypto markets, stablecoins have become essential infrastructure—offering dollar stability without the friction of traditional banking. Reserves largely in cash, T-bills, and repos provide functionally T-bill-like exposure: safe, liquid, and instantly transferable, but now carrying the backing of U.S. Treasury securities directly into the global crypto ecosystem.

If you were going to export your debt crisis, this represented genuine demand for the export across both retail and institutional markets.

AND NECESSITY IS THE MOTHER OF INVENTION

The question hanging over this entire circus wasn’t whether America would attempt to digitise its way out of debt—the infrastructure was already being built, the legislation was being written and the beef bourguignon had been consumed. The question was whether the rest of the world would continue playing a game where the house not only always wins but also gets to rewrite the rules mid-hand, print new chips whenever losing, and somehow convince everyone that this time it’s called “American innovation.”

But the game board itself was also in the process of shifting. As central banks from Beijing to Moscow stockpiled gold and built payment systems that don’t route through New York; as oil producers experimented with non-dollar settlements; and as the BRICS nations methodically constructed their own sovereign financial architecture, America’s crypto base jump began to look less like financial innovation and more like a Hail Mary.

The petrodollar system that has anchored American financial hegemony since 1971 is being dismantled not by a revolutionary upheaval, but by a thousand small cuts—each yuan-denominated oil contract, each ruble-rupee trade settlement, each central bank gold purchase representing another thread pulled from the unravelling fabric of dollar dominance. In a world where trillion-dollar debts become blockchain entries and family fortunes flip from concrete to code overnight, Kobyakov’s accusations from that Vladivostok forum begin to sound less like diplomatic propaganda and more like prophetic economic analysis.

America is indeed jumping off a cliff—and constructing its wings on the way down. This time, they’re made of code. But even code can’t escape the laws of physics: a digital dollar’s value is intrinsically tied to its analogue counterpart, which at this point is backed by little more than an insurmountable wall of debt.

So the only question that remains is whether or not gravity will ultimately have its way with those new wings—and the Icarus-level $37 trillion of financial hubris they represent.

Until next time. I’ve scheduled in a Q3 roundup for the end of September—with more ‘in the trenches’ coverage of the main stories and events that transpired in crypto during the third quarter of 2025…

Q2 PITSTOP: THE GRAVITATIONAL SHIFT

Bitcoin found its centre of gravity at $100k. Institutions built infrastructure while retail investors waited for alt season. The four-year cycle might be dead—replaced by orbital mechanics where everything builds around Bitcoin's stable core…

INTRODUCTION

In June, U.S. spot-Bitcoin ETFs quietly crossed $133 billion in assets under management—reaching in 18 months what took gold ETFs over a decade. While the crypto world spent Q2 obsessing over when "alt season" might finally arrive, something more fundamental was happening. Bitcoin wasn't just holding its $100,000 floor; it was quietly cementing itself as the gravitational centre around which all other crypto projects now orbit. What Bitcoin maximalists always believed was finally becoming consensus reality.

The irony is palpable. Just as Wall Street fully embraces Bitcoin and traditional finance queues up for their slice of digital gold, the four-year cycle that crypto veterans have come to rely on seems to be... not happening. Or at least, not happening the way anyone expected.

Beneath the surface, real work continued: infrastructure upgrades that will matter more than price pumps, regulatory clarity that actually enables innovation, and technological convergences that could reshape how we think about money entirely.

Welcome to Q2 2025: the quarter of gravitational shifts, missed rotations and infrastructure revolutions that nobody's talking about.

BITCOIN'S NEW GRAVITY

TL;DR: Bitcoin Became the Sun

Something profound happened to Bitcoin in Q2. After touching $100,000 multiple times in Q1, Bitcoin didn't just find support at six figures—it found its centre of gravity there. This isn't the Bitcoin of previous cycles, where $100k would have been a moon-shot target before an inevitable crash. This is Bitcoin as a mature asset class.

The numbers tell the story: Bitcoin ETFs now manage $133.5 billion and continue attracting billions weekly. Texas creates a Strategic Bitcoin Reserve Fund through SB 21, signed June 20th. Wall Street firms managing over $10 trillion prep to broaden ETF access to their clients. Strategy (formerly MicroStrategy) continues its relentless accumulation strategy.

What was once retail FOMO is now institutional infrastructure. When Texas folds Bitcoin into the same playbook that once turned oil royalties into the Permanent School Fund, it's not a publicity stunt—it's recognition of Bitcoin as a treasury asset category.

Still Early Innings for Corporate Adoption

The corporate Bitcoin treasury movement remains nascent despite infrastructure and accounting rules being firmly in place. The playbook is spreading: MARA Holdings now holds over 47,500 BTC as the second-largest corporate holder. Riot Platforms, Trump Media and dozens of others follow variations of the Strategy approach.

Franklin Templeton's 2025 outlook captures this shift, predicting "several nations" will adopt Bitcoin reserves and emphasising that 2025 marks "a shift from speculation to utility as crypto's foundational technologies become integral to global financial systems."

At Saylor's "Bitcoin for Corporations 2025" conference in May, he noted that "everywhere I go at this conference, someone says, you know, I'm working on a bitcoin treasury company in Hong Kong." The infrastructure for this shift is complete—what remains is patience for corporate decision-making cycles to catch up.

Yet here's what's fascinating: as Bitcoin solidifies its position as digital gold, the crypto community has largely made peace with this reality. The Bitcoin maximalists are still Bitcoin maximalists, of course. But there’s less either/or tribalism. Gone are the debates about whether Bitcoin is "just" a store of value versus a medium of exchange. Bitcoin doesn't need to be everything to everyone—it needs to be one thing exceptionally well: a neutral, decentralised monetary layer that keeps the entire crypto ecosystem honest.

Maybe capital rotation is the wrong metaphor; think more orbital mechanics, less merry-go-rounds.

THE INSTITUTIONALISATION CONTINUES

TL;DR: Boring infrastructure beats dramatic headlines

If Q1 was about dramatic regulatory U-turns and presidential photo ops, Q2 was about the boring work of building institutional infrastructure. Paul Atkins was sworn in as SEC Chair on April 21st, and the change in tone was immediately apparent.

"This movement of securities from off-chain to on-chain systems is akin to the transition of audio recordings from analog vinyl records to cassette tapes to digital software decades ago." — SEC Official Communications, May 2025

That's not the language of a hostile regulator—it's the language of someone who sees blockchain as inevitable technological progress.

The GENIUS Act's passage through Congress with a 68-30 Senate vote in June crystallised this shift. Stablecoins now have a federal regulatory framework requiring 1:1 backing by safe assets, monthly reserve reports and priority claims for holders if issuers fail.

This matters because stablecoins quietly became the essential financial infrastructure of the internet. Transfer volumes surpassed Visa and Mastercard combined in 2024, representing a fundamental rewiring of global payments. USD-denominated stablecoins might be what saves the dollar while enabling near-instant, low-cost payments anywhere on Earth.

The GENIUS Act doesn't just regulate stablecoins—it legitimises them as the payment rails of tomorrow.

INFRASTRUCTURE REVOLUTIONS

TL;DR: The real revolution happened in the plumbing

While everyone obsessed over price action, three infrastructure upgrades quietly reshaped crypto's foundation:

Ethereum's Pectra Upgrade: Increased blob throughput for Layer 2 scaling (read: cheaper roll-ups), raised validator effective balances for solo stakers, and introduced account abstraction through EIP-7702. This means no more gas fees for users, easier wallet recovery, and batched transactions. It's the difference between dial-up and broadband.

AI-Crypto Convergence: Over 1 million AI agents are projected to integrate with blockchain networks by year-end, up from around 10,000 at the end of 2024. These aren't chatbots with crypto wallets—they're autonomous entities managing DeFi positions and executing complex trading strategies. Chainlink's machine learning oracles improved efficiency by up to 75%.

Real-World Asset Tokenisation: The market surpassed $50 billion in on-chain assets in early 2025 and is forecasted to reach $500 billion by year-end. Dubai alone processed $399 million in tokenised real estate transactions in May—17.4% of all property deals in the emirate. BlackRock's BUIDL fund raised $240 million in its first week.

This isn't speculative trading—it's the digitisation of ownership itself. The revolution isn't in the headlines. It's in the code.

NATURAL SELECTION IN CRYPTO

TL;DR: The memecoin casino took a breather

Memecoin Volatility Scorecard

• Pump.fun and related accounts temporarily suspended from X

• Daily token launches dropped 70% during suspension period

• Accounts since restored, but cooling effect persisted

• Highlighted dangerous dependence on centralised platforms

Q2's most significant development might have been what temporarily didn't happen: the continuation of memecoin mania that defined Q1. The temporary mass deplatforming of Pump.fun and related accounts from X in April represented more than just a platform hiccup—it exposed the fragile dependence of supposedly decentralised Web3 culture on centralised social media infrastructure.

The mystery surrounding the suspensions—rumours of arrests, unauthorised API scraping, or broader regulatory action—amplified their impact. When platforms lose their primary communication channels overnight, it highlights dangerous dependencies that most hadn't considered. While the accounts were eventually restored, the cooling effect on memecoin activity persisted through Q2.

This wasn't necessarily negative for crypto's long-term health. The memecoin space had overheated in Q1, creating both reputational damage and a capital allocation problem. The involuntary pause provided space for reflection: too many projects chasing too little capital, with thousands of tokens launched daily. And for retail investors, a sense that they had replaced being the exit liquidity for VCs to being the exit liquidity for the even more onerous and degenerate memecoin rug pullers and KOL opportunists.

The deeper issue remains capital dispersion. Like the dot-com boom and bust, some natural selection was inevitable in any maturing market. Bitcoin shines because there is only one Bitcoin. How many other platforms can honestly claim that level of uniqueness?

Solana: More Than a Memecoin Playground

While Pump.fun's dominance highlighted Solana's role as the memecoin casino, it also revealed something fundamental: frictionless user experience. The same low-friction infrastructure that enabled memecoin mania also powers serious financial applications.

Beneath the speculation, Solana's DeFi ecosystem matured with Jupiter Aggregator providing advanced liquidity routing and MarginFi crossing $900 million in total value locked. That's not just useful for speculation—it's essential for mainstream adoption.

GLOBAL REGULATORY DIVERGENCE

TL;DR: Countries are competing on crypto policy—winners are becoming clear

Winners of Regulatory Arbitrage

• UAE: Crypto payments for government utilities, 90% cashless by 2026

• Malta: European firms fleeing MiCA's compliance burden

• Panama: New home for Asia's crypto exchanges

While the US embraced crypto under Atkins, the rest of the world told a more complex story. Europe's MiCA regulation revealed its true impact in Q2: fewer than 20 crypto firms successfully registered across 7 EU member states by mid-April, while licensing costs jumped from €10,000 to over €60,000.

Singapore's dramatic reversal was perhaps the most shocking. The Monetary Authority of Singapore implemented strict new rules requiring all crypto firms serving overseas clients to obtain DTSP licenses by June 30th—with effectively no likelihood of approval. Major players like Bybit and Bitget relocated to Panama, Hong Kong and Dubai.

Meanwhile, Bitcoin mining economics revealed cracks beneath the surface. Despite Bitcoin's price stability above $100,000, miner fee income dropped to just 0.65% of daily revenue by mid-June, down from 6.7% in May 2024. Hash-price fell to $0.046 per TH/s, the lowest since pre-Ordinals January 2022. Lower fees might indicate reduced network usage or the success of Layer 2 solutions—but they also affect the economic incentives that secure the network.

THE SILENT APPLE EARTHQUAKE

TL;DR: The biggest crypto story that wasn't covered as crypto news

The biggest crypto story of Q2 might have been one that barely registered in crypto media. On April 30th, Judge Yvonne Gonzalez Rogers held Apple in contempt for failing to comply with the 2021 Epic Games ruling, referring the company and its VP of finance to federal prosecutors for possible criminal charges.

Here's why this matters: Apple's monopolistic control over iOS app distribution has been one of the biggest barriers to Web3 mobile adoption. The 15-30% "Apple Tax" throttled wallets, NFT marketplaces and on-chain games.

The ruling scraps scare screens and kills Apple's new 27% surcharge on external payments. If upheld on appeal, developers across crypto gaming, metaverse and DeFi gain unprecedented leverage in mobile distribution.

True payment choice removes the toll gate that made NFT transactions prohibitively expensive on mobile. The last time a platform this dominant was forced open, Windows' grip on PCs loosened and an entire generation of web applications flourished.

Bottom line: The unit economics slide for crypto apps is about to change dramatically.

TOTALITARIAN TIP-TOE: CBDC CREEP

TL;DR: While crypto celebrated freedom, CBDCs advanced toward control

Watch Lagarde accidentally reveal the Digital Euro's true purpose in this 2023 prank call with a Zelenskyy impersonator (who also punked Jerome Powell during the same catfishing expedition).

While crypto celebrated regulatory clarity in the US, a different kind of digital currency development advanced across the Atlantic. The Digital Euro isn't a distant possibility—it's an imminent reality that most Europeans aren't even aware of.

By October 2025, the European Central Bank will have prepared outreach plans, procurement standards and technology providers for the Digital Euro's second phase. This isn't a pilot—it's preparation for deployment.

The contrast with crypto's ethos couldn't be starker. While Bitcoin represents decentralised, permissionless money, CBDCs represent the ultimate expression of state control over monetary transactions. Every payment tracked, every transaction subject to policy controls, every wallet balance visible to central authorities. What Big Brother could only dream of—total monetary surveillance—CBDCs make trivially easy.

Interestingly, Sweden paused its e-krona pilot citing "unclear demand," suggesting that CBDC inevitability might face more resistance than technocrats assume. Still, the European push continues with typical bureaucratic determination.

Ultimately, it's now a race between two visions of digital money: one decentralised and freedom-preserving, the other centralised and control-enabling. The outcome will determine whether digital money liberates us or enslaves us.

No pressure.

CONCLUSION: THE NEW EQUILIBRIUM

As Q2 2025 draws to a close, we're witnessing the emergence of a new equilibrium in crypto. Bitcoin has found its centre of gravity at six figures, institutions continue their measured adoption and infrastructure improvements proceed at a steady pace.

Perhaps the most significant development is growing acceptance that Bitcoin doesn't need to be everything to everyone. It needs to be one thing exceptionally well—a neutral, decentralised foundational layer that enables everything else.

This gravitational shift changes the game. Instead of competing with Bitcoin, other crypto projects can build on the security and neutrality it provides. Ethereum focuses on smart contracts and DeFi, Solana on payments and DePIN (Decentralised Physical Infrastructure Networks), various chains on their specific use cases—all orbiting around Bitcoin's gravitational pull.

The four-year cycle that crypto veterans have relied on might be evolving into something more sophisticated. Maybe capital doesn't rotate away from Bitcoin anymore. Maybe it uses Bitcoin as a foundation to build higher.

Wall Street's arrival hasn't corrupted this dynamic—it's stabilised it. When institutions hold Bitcoin as a treasury asset, they're not looking for the next rotation. They're looking for digital gold that maintains its properties over decades.

This doesn't mean alt season will never come. But instead of asking "when will capital leave Bitcoin for alts?" perhaps we should ask "how does Bitcoin's stability enable innovation elsewhere?"

The infrastructure revolutions in account abstraction, AI integration and RWA tokenisation suggest the answer: Bitcoin provides the monetary base layer that allows everything else to experiment and scale without worrying about fundamental monetary properties.

As Q3 approaches, multiple altcoin ETF filings—including Solana and XRP—await SEC approval, potentially adding new institutional on-ramps beyond Bitcoin and Ethereum. The next chapter of this gravitational shift is already being written.

We came expecting chaos and found infrastructure. We came for quick gains and discovered that the most profound changes happen slowly, then all at once.

In a market notorious for its four-year boom-bust cycles, perhaps the most radical development of all is the emergence of actual stability.

The gravitational shift is complete. The revolution is just beginning.

Total Value Lost: The True Cost of DeFi's Smart Contract Security Crisis

A Quick Primer: What This Is Really About

If you're new to decentralised finance (DeFi), think of it as financial services built on blockchain networks instead of via traditional banking networks. Users can lend, borrow, trade and earn yield on digital assets through smart contracts—automated programs that execute financial transactions without intermediaries.

The promise is revolutionary: open, permissionless finance accessible to anyone with an internet connection. The reality? We're building the future internet of money on foundations that are still shifting beneath our feet.

The industry obsesses over one metric above all others: Total Value Locked (TVL)—the dollar amount of crypto assets deposited in various DeFi protocols. It's treated as the ultimate scorecard of success. But there's another number that tells a very different story…

💸 Total Value Lost…

According to DeFiLlama (as of March 2025), over $11.5 billion has been lost to hacks and exploits across the broader crypto ecosystem, with over $6.6 billion directly attributed to DeFi protocols and primitives. But that figure understates the true scale. From micro-rugpulls to zero-day exploits, the systemic vulnerabilities are deeper, more complex and more devastating than most investors or builders appreciate.

And if we want smart contract platforms like Ethereum to become the future of global finance, these losses cannot be treated as mere footnotes. They are foundational failures.

Because when you extrapolate this risk to the scale of TradFi, the implications are chilling.

From Total Value Locked to Total Value Lost: The Real Number That Matters

DeFi's public dashboards track Total Value Locked. But the shadow metric—Total Value Lost—tells the real story. It tracks the billions that evaporated not through volatility, but through design flaws, architectural blindspots, operational negligence and, increasingly, active and highly sophisticated adversaries.

These aren't edge cases. They are recurring themes. And they're increasing in frequency, sophistication and impact.

Let's break down the top threat vectors.

DeFi's Top 5 Threat Vectors (The Five Horsemen of the DeFi Apocalypse)

🔓 1. Compromised Private Keys: Admin key thefts, multisig compromises, hot wallet leaks. Even a perfect smart contract can't protect against an insecure human.

⚠️ 2. Smart Contract Vulnerabilities: From unchecked delegatecalls to oracle manipulation and flash loan abuse, the design patterns we use are powerful—and dangerous.

🧠 3. Social Engineering & Frontend Attacks: Hackers are turning users into vectors. Fake interfaces, DNS hijacks and phishing have drained millions from unsuspecting users and DAOs alike.

🎭 4. Rugpulls & Governance Exploits: Some contracts aren't exploited. They're designed to extract. We've seen stealth honeypots, malicious governance votes and exit scams masquerading as community upgrades.

⛓️ 5. Bridge Vulnerabilities: Cross-chain composability is beautiful. But bridges are where everything breaks. Validator collusion, upgradeable contracts and under-audited consensus mechanisms have turned them into honeypots for nine-figure exploits.

Case Study: The $1.5B Bybit Hack (Feb 2025)

The largest theft in history (exceeding Saddam Hussein's legendary $1 billion raid on Iraq's Central Bank) didn't just compromise a wallet—it compromised the entire security model.

• The attackers (likely Lazarus Group, which in and of itself is a giant hornet’s nest) first breached a developer machine, pivoting to Bybit's AWS codebase.

• They injected malicious JavaScript into the Safe{Wallet} UI, used for signing cold wallet transactions.

• Multisig signers approved what looked like a standard transfer. But the UI had been spoofed.

• Behind the scenes: a delegatecall changed the implementation logic. Ownership was transferred silently.

• $1.5B in ETH vanished in a flash. And you don’t rollback public blockchains—that’s the whole point of this tech.

This was a multi-vector attack that exploited cloud infra, UI trust and smart contract architecture in tandem. The biggest lesson? Even the strongest on-chain security fails when off-chain layers are compromised.

Bridges: The Weak Link in Cross-Chain Security

Wormhole V1. Multichain. Nomad. Each had a different architecture. All got wrecked.

The fundamental challenge with bridge security lies in their complex attack surfaces. Many bridges rely on validator sets with dangerously low signature thresholds—some requiring only 2-of-3 validator signatures to authorise cross-chain transfers worth hundreds of millions. More robust configurations demand 6-of-9 or higher thresholds, but even these can be vulnerable to validator collusion or compromised key management.

The cryptographic signature schemes themselves present another layer of risk. Guardian networks and validator consensus mechanisms often implement custom signature verification logic that deviates from battle-tested standards. This complexity creates implementation vulnerabilities that traditional audits struggle to identify systematically.

Upgradeable bridge contracts compound these risks. Admin keys that can modify core bridge logic without governance delays or timelock protection create single points of failure. When combined with proxy upgrade patterns, these administrative privileges can completely subvert bridge security assumptions—sometimes silently.

Cross-chain message validation represents perhaps the most sophisticated attack vector. The mechanisms that verify message authenticity between chains often rely on economic assumptions about validator behaviour, consensus finality and network connectivity that don't hold under adversarial conditions. Advanced threat actors are increasingly exploiting these gaps at the protocol level.

If a single bridge exploit can result in a $600M loss in today's DeFi landscape, imagine the fallout if such vulnerabilities permeated systems handling trillions in daily TradFi volume.

The maths is terrifying. The timeline is inevitable.

Until the industry converges on hardened bridge architectures with systematic vulnerability assessment—analysing validator threshold security, signature complexity patterns, upgrade path risks and cross-chain validation mechanisms—bridges will remain the primary attack surface for large-scale DeFi exploits.

Why Auditing Isn't Enough Anymore

Audits are valuable. But they are also point-in-time snapshots.

• Most audits take weeks. Attackers move faster.

• Most audit reports assess known patterns. Attackers are innovating in real-time.

• Most teams audit once. Attackers probe continuously.

This isn't sustainable. We need living, breathing threat detection. And we need explainable tooling that flags anomalies at runtime, not six weeks post-mortem.

The Future of Finance Requires a New Security Paradigm

If we want the blockchain stack to underpin the next generation of financial infrastructure, we need to re-architect our security mindset.

That means:

• Real-time risk detection

• Chain-agnostic threat models

• UX-aware security layers

• Systematic vulnerability assessment at scale

I've been working—in stealth mode—on something that addresses these challenges. It's been fascinating diving deep into the intersection of security research and practical implementation. More on that soon.

The reality is, we're still in the early stages of figuring this out. Every exploit teaches us something new about the attack vectors that even the experts hadn't fully considered. Every bridge hack reveals another layer of complexity we're still learning to navigate.

This technology is genuinely transformational—the promise of open, programmable finance is too powerful to ignore. But we may be moving too fast, building too much, before we've solved the fundamental security challenges. The question isn't whether DeFi will reshape finance, but whether we can make it safe enough for that future to arrive.

Because ultimately, the future won't be secured by locking value…

It will be secured by minimising total value lost.

**BOOK EXCERPT: THE INTERNET OF VALUE**

For the past several months, I've been working on a book exploring how blockchain and related technologies are reshaping digital ownership in our everyday lives. My primary goal is to write the most readable, engaging—and at times irreverent—book ever written about crypto. Warts and all. One that cuts through the technical jargon and hype to focus on what actually matters: how these technologies could transform our relationship with digital property and ownership.

Today, I'm sharing the prologue with you here first—before anyone else sees it. It starts with a story about Bruce Willis that perfectly captures our strange relationship with the digital goods we think we own...

THE DIGITAL ASSETS WE DIDN’T KNOW WE DIDN’T OWN

It began, as so many revelations about our digital dystopia do, with a celebrity headline that was just outrageous enough to capture global attention. The kind that makes you pause mid-scroll and think, "Wait, that can't be right."

In 2012, a headline rippled across the internet: 'Bruce Willis to Sue Apple Over iTunes Inheritance,' and variations to that effect. According to the story, which first appeared in the paywalled section of the Sunday Times, under the almost impossibly ridiculous tabloid headline 'It's iHard as Willis fights Apple,' the Die Hard action hero—who had spent decades outsmarting terrorists and jumping off exploding buildings—was finally defeated by something distinctly more low-key: Apple's iTunes Terms of Service.

While planning his estate, Willis had allegedly discovered something many of us would find deeply disturbing (if we ever bothered to stop and read the 56-page legal documents that we so nonchalantly click "I Agree" to). Despite spending thousands on his meticulously curated iTunes music collection, he couldn’t pass those digital assets to his daughters when he died. He hadn’t bought the music—he’d merely rented access to it. He was a leaseholder, not an owner. Yippee-ki-yay, motherfucker indeed.

The story itself—which spread faster than a celebrity death hoax—proved to be, as one pundit put it, "flakier than a Twirl." Willis's representatives denied he was planning any legal action. The man who famously uttered "Come out to the coast, we'll get together, have a few laughs" wasn't actually hiring Rottweiler & Doberman LLC to battle Silicon Valley’s finest. But the core revelation that sparked global interest was undeniably true: none of us own our digital music, books, or movies—regardless of whether we're everyday consumers, or the grubby-vested John McClane himself.

And while the Willis story itself may have been exaggerated for the sake of clickbait, the point it highlighted is disturbingly true for all of us. None of us actually own our digital media—no matter how much we've spent or how much we've curated our collections.

Think about that for a moment. Those well-read paperbacks on your shelf? You own those—you can lend them, resell them, or bequeath them to your children. The prized vinyl records in your collection that have suddenly become cool again? Completely yours to give away or pass down as treasured heirlooms. But the hundreds or even thousands of dollars you've spent on e-books, digital music, software apps and video games? Well, not so much. Those aren't yours in any meaningful sense: they're temporary permissions granted by corporations who remain the true owners—ours is a digital library built on quicksand.

When you 'buy' digital media, the legal fine print buried in those aforementioned terms and conditions makes it crystal clear: you're purchasing a limited license to access content, not the content itself. And this license, like most digital media licenses, is non-transferable.

In plainer English: it expires when you expire. Your digital music collection, your e-books and audiobooks, and pretty much anything else you own in the virtual world, is essentially planning its own funeral to coincide with yours. And if it's tied to a subscription model, that expiration might come even sooner.

This strange arrangement reveals something profound about our relationship with the digital world we've constructed over the past few decades. We've built an internet that's extraordinary at sharing everything, indiscriminately—from cat videos to conspiracy theories—but surprisingly bad at establishing ownership. We've created a digital domain where we increasingly live our lives but where we're ultimately tenants, not proprietors—digital serfs working the fields for the tech company landlords, creating content and value that ultimately belongs to someone else.

And this goes not just for 'consumers' of 'content'—it applies to creators too. When musicians like Snoop Dogg remove their catalogs from streaming platforms, you’d better believe that existing digital property rights don't work for the people who make the records either. So the problem extends far beyond inheritance and estate planning.

Consider these everyday digital ownership catastrophes, which would make great dystopian fiction if they weren't already pernicious fractals of our existing reality:

• When Amazon remotely deleted purchased copies of George Orwell's *1984* from Kindle devices—the irony so thick you could spread it on toast—readers discovered their "purchases" could vanish at a corporation's whim.

• When Microsoft closed its e-book store, customers' digital bookshelves evaporated completely—years of collected knowledge and stories vanishing like they'd been caught in a digital book-burning.

• And when Google terminated Stadia, gamers lost not just the platform but the games they believed they had "bought," learning the hard way that Google kills products faster than George R.R. Martin kills beloved characters.

The first era of the internet, from the 1990s through the early 2000s, gave us the digitisation of information. Suddenly, all knowledge could flow freely across borders and devices—though mostly in the form of low-resolution JPEG memes and arguments about Star Trek.

The second era—sometimes called Web 2.0—gave us the digitisation of social interaction, enabling a more participatory web, with platforms like Facebook and Twitter transforming how we connect with each other, share dance moves and destroy our democracy.

But neither era successfully tackled the digitisation of value. Instead, they created a digital economy where the platforms own everything, the users own nothing, and the concept of digital property remains—to put it politely—stunted and underdeveloped.

It's the world of rentier capitalism, much the same as the broadcast media paradigm—it may feel like ‘many-to-many’, but it's actually ‘one-to-many’: the network owns and operates the barrel, we are the fish swimming around in our walled gardens, and the advertisers pay to turn up with their shotguns and do some shooting. We're not the customers; we're the product. And products don't own things—they get owned.

These are not isolated incidents—they're a symptom of a broader, systemic problem: ownership is a mirage in the digital world. And it’s not just music or books—our entire digital identity is subject to the whim of corporations and their algorithms.

So, this isn't just about whether you can pass your lovingly assembled collection of Taylor Swift and Radiohead tracks to your bewildered heirs. The inability to truly own digital assets has profound implications for creators, consumers, and communities worldwide.

• It concentrates power in the hands of platform companies who serve as central gatekeepers—digital feudal lords collecting rents from all who till their virtual soil.

• It prevents the emergence of genuine digital economies where value can be exchanged peer-to-peer without intermediaries taking a cut the size of a Vegas casino's.

• And perhaps most importantly, it fails to translate one of humanity's most important social technologies—ownership and property rights—into the digital realm where we increasingly conduct our lives, fall in love, build businesses, and express our humanity.

But what if there was another way? What if we could build an internet where you could actually own your digital music, your social graph, your creative work, your digital identity, your data—where your digital possessions didn't come with an invisible corporate leash attached?

Just ask Vitalik Buterin.

Long before he co-created Ethereum—the blockchain that expanded crypto from a monetary curiosity into a global platform for programmable value—Vitalik was a teenage gamer. From 2007 to 2010, he poured countless hours into World of Warcraft, mastering his warlock build and, in his words, “enjoying the game immensely.” Then one day, Blizzard changed the rules. They removed the damage component of his favourite spell, Siphon Life, and without warning, his carefully built character felt hollow. "I cried myself to sleep," he later wrote. "And on that day I realised what horrors centralised services can bring. I soon decided to quit."

That heartbreak—small in scope but massive in significance to him at the time—planted a seed. The idea that digital worlds didn't have to be this way. That perhaps, just perhaps, there was a better architecture for value, ownership, and trust. This teenage disappointment may seem trivial compared to the Bruce Willis scenario, but both point to the same fundamental problem: in the digital world we've built, ownership exists only at someone else's discretion.

What if we could create systems where digital ownership wasn't just a marketing fiction but a technical reality, as solid and dependable as that vintage vinyl collection gathering dust in your closet? What if we could design an internet architecture where value could be created, held, and transferred as easily and liquidly as information is now?

This is the promise of what some call the "Internet of Value"—a new paradigm built on top of technologies such as blockchain, cryptocurrencies, and smart contracts. The term encapsulates the idea that ownership could be embedded into the very fabric of the web—just like hyperlinks enabled sharing. I use the term not because it is literally true at the protocol level (and partly because it’s cooler than 'that magic internet money thing with all the blocks and chains and stuff'), but because it represents an attempt to redesign our digital infrastructure to make true ownership possible in the virtual world.

And while it begins with examples as simple as wanting to pass a music collection to one's children without the corporate equivalent of "sorry, your dad's dead, his stuff is ours now, enjoy," its implications reach into virtually every aspect of our increasingly digital existence.

This is not a book about getting rich through Bitcoin speculation or jumping on the latest NFT craze. I'm not here to tell you which cartoon monkey JPEG will make you a millionaire or which token will moon next Tuesday. It's about something far more fundamental: how we're rebuilding the very foundations of the internet to recognise and respect ownership, and what that might mean for our digital future—a future where our digital possessions truly belong to us, not to corporate landlords collecting rent on our cultural life.

And yes, I know—you've heard wild claims about blockchain changing everything before, followed by market crashes, scam stories, circle jerks and technical explanations that somehow left you more confused than when you started. This isn't that. This is about understanding a genuine problem we all face and exploring practical solutions that might actually work—without the hype or technobabble.

The story begins in 2008, with the global financial system in crisis, banks collapsing like dominos at a toddler's birthday party, and an anonymous figure known only as Satoshi Nakamoto making a quiet post on an obscure cryptography mailing list. No cape, no press conference, no TED Talk—just a simple, under-the-radar, 9-page white paper introducing a peer-to-peer electronic cash system. And he—or she, or they—didn’t know it yet, but Satoshi had just cracked the code of digital ownership forever…

This is just the opener—the set up if you will. In the coming months, I'll be sharing more about this project and potentially other excerpts as the manuscript develops.

Want to follow the journey of this book? Make sure you're subscribed to this Substack!

More soon…

Q1 PITSTOP: FOR WHOM THE PENDULUM SWINGS

INTRODUCTION

Q1 2025 has been a transformative quarter for crypto, marked by significant policy shifts, technological advancements, moments of sheer insanity and wild market volatility. So much has happened in such a short space of time, in fact, that I'm going to have to resort to a more shorthand form of commentary than has been customary in these roundups. And even then, I’ll never get to everything.

Unsurprisingly perhaps, much of the action revolved around the incoming Trump administration in one way or another, including: a change of guard at the SEC in the wake of Gensler’s departure; the convening of a high-level White House Crypto Summit; and moves to establish an official US Strategic Bitcoin Reserve. All of this sets the stage for increased legitimacy and regulation of digital assets in the United States—with the rest of the world (including China) paying extremely close attention to developments.

Running in parallel to this welcome (or is it?) regulatory shift in Washington was the most kafkaesque memecoin dumpster fire I have ever seen. To be more precise, it was a series of dumpster fires—all set ablaze in quick succession, like funeral pyres, the inaugural one (pun intended) initiated by none other than Trump himself. The spectacle was almost beyond comprehension—I'm still scratching my head in disbelief.

In the midst of this hullabaloo, we witnessed altcoins, including Ethereum—which has been experiencing a prolonged dark night of the soul—taking a serious hit, as Bitcoin crashed around, surpassing $100k several times before retreating again, liquidating traders in both directions. And all the while the 'perma-bears' called for the top of the market and the 'perma-bulls' predicted it was the final shakeout before retiring their bloodlines for eternity.

And if that wasn't enough market mayhem, we had the $1.4B Bybit hack—the single largest heist in history—orchestrated by North Korea's increasingly troublesome Lazarus Group.

Besides that, much else transpired in the actual trenches—including some really interesting things happening at the intersection of AI and crypto that will likely define the path forward for DeFi and anything related to the future of decentralised, agentic AI. Which, according to my initial napkin calculations, is a shit-tonne.

So, it's fair to say it's been a watershed quarter. On one level, things have never looked more bullish for crypto. The pendulum has finally swung in crypto's favour, having survived multiple kill shots from the previous administration. But at times, the victory felt almost pyrrhic—even Faustian.

Crypto has finally won its seat at the establishment table, but at what cost? Scammers of every stripe felt emboldened to screw over retail with fresh impunity (seemingly given a pass by the commander-in-chief himself), leading to the near-total collapse of the memecoin space.

And the brown-nosing in D.C. was at times unpalatable—I must have heard the sycophantic Oval Office intro, “under your visionary leadership…” as topics were introduced (including by Musk) over a thousand times this quarter. Meanwhile, Wall Street has been steadily accumulating crypto and throwing its weight around on an increasing number of fronts—just a year in since the launch of the spot bitcoin ETFs.

Crypto has come an awful long way in that intervening year—i.e. since BlackRock arrived. The fresh-faced boy has grown up, ditching the cargo shorts for Savile Row suits. It has won the approval of the powerful. We witnessed the world’s first crypto election. And the crypto lobby—led by deep-pocketed institutional players such as Coinbase and Ripple—flexed its muscles, successfully moving the Overton window and winning a seat at the top table.

But in doing so, did crypto sell its soul? As we trade the wild frontier for regulatory certainty, are we witnessing the domestication of a revolutionary technology? Has crypto, after years of abuse, and in its desperate quest for validation from the very institutions it was designed to disintermediate, become just another cog in the machine it once sought to replace?

For me, that’s the uncomfortable question hanging over this quarter. Nothing is set in stone, of course, but in securing the blessing of a presidential administration and the Wall Street behemoths, has crypto tied its fortunes to the centralised powers it was built to resist?

A CHANGING OF THE GUARD

The Trump administration has initiated significant policy shifts in cryptocurrency regulation and US digital asset strategy since January 2025—marked by executive actions, regulatory reforms, leadership changes and high-profile engagements with industry leaders. In many respects, Trump has been delivering on his campaign promises.

The new administration’s pro-crypto agenda prioritises deregulation, institutional adoption and symbolic state endorsement of digital assets. While these steps address long-standing industry grievances, market ambivalence reflects doubts about the path to execution coupled to severe macroeconomic headwinds. Success hinges on a reversal in macroeconomic conditions (impacting all markets, not just crypto), converting executive actions into durable legislation, and fostering private-sector collaboration.

Below is a breakdown of some of the key US-related developments in Q1.

GOOD RIDDANCE GENSLER: A NEW LOOK SEC

On January 20th, coinciding with Trump’s inauguration, Gary Gensler stepped down as the 33rd Chair of the SEC, marking a significant transition in regulatory leadership. His tenure was characterised by a pig-headed strategy of pursuing hostile enforcement actions without providing even the merest hint of a clear path to compliance—in other words, institutional-grade gaslighting—as well as carrying tainted water for the billionaire-hating multimillionaire, Senator Elizabeth Warren.

Mark Uyeda, a Republican Commissioner who joined the SEC in 2022, was appointed as Acting Chair. He—alongside Commissioner Hester Peirce, AKA “Crypto Mom”—has been highly critical of Gensler’s regulatory approach, calling it a "disaster for the whole industry". The agency is now refocusing its efforts on developing clear regulatory guidelines and paths to registration for crypto assets.

Trump’s nomination to replace Gensler as the permanent SEC Chair is Paul Atkins, a former SEC commissioner (under George W. Bush) known for his pro-business stance. Once appointed, Atkins is expected to continue the shift toward a more crypto-friendly regulatory environment.

In terms of immediate changes pending Atkins’ appointment:

• SEC Crypto Task Force: Established on January 21, 2025, this task force is tasked with creating a comprehensive regulatory framework for crypto assets, emphasising clear lines of jurisdiction and sensible disclosure frameworks. Commissioner Peirce, known for her pro-crypto views, chairs the task force.

• Rescission of SAB 121: The SEC has replaced SAB 121 with SAB 122, easing accounting requirements for financial institutions offering crypto custody services. This change reflects a more accommodative stance toward crypto-related financial services.

• Dropped Cases: Underscoring the SEC’s pivot to a more collaborative and less adversarial relationship with the crypto industry, a slew of Gensler-initiated cases have been officially dropped—including those against Coinbase, Robinhood, Uniswap, Crypto.com, Kraken, and ConsenSys. The SEC v. Ripple case looks like it’s over too—barring some last minute paperwork.

STRATEGIC BITCOIN RESERVE & DIGITAL ASSET STOCKPILE

• Strategic Bitcoin Reserve: Established via a March 7th executive order, this reserve treats bitcoin as a sovereign asset, capitalising on ~$17 billion in BTC seized through forfeitures (most notably Silk Road). The government will not sell these holdings—likened to a “digital Fort Knox”. Agencies are exploring budget-neutral strategies to acquire more bitcoin without taxpayer costs.

• Digital Asset Stockpile: A separate repository for non-Bitcoin cryptocurrencies (e.g., Ethereum, stablecoins) obtained through forfeitures. Sales from this stockpile may occur under Treasury discretion.

Implications: These reserves signal institutional validation of cryptocurrencies as strategic assets, though reliance on forfeitures limits scalability. Markets reacted tepidly due to skepticism about long-term government commitment and minimal immediate liquidity impact. Meanwhile, US Representative Byron Donalds has tabled a bill that seeks to ensure the Bitcoin reserve becomes a permanent fixture—preventing future administrations from dismantling it through executive action.

REGULATORY FRAMEWORK OVERHAUL

• Working Group on Digital Asset Markets: Chaired by David Sacks (Crypto/AI Czar), this group aims to propose a federal regulatory framework within 180 days. Priorities include stablecoin rules, blockchain adoption, and repealing Biden-era policies such as Executive Order 14067.

• OCC Interpretive Letter 1183: Rescinds Biden-era requirements for banks to seek pre-approval for crypto activities (e.g., custody, stablecoin reserves). Reverts to a technology-neutral approach, treating crypto services like traditional banking.

• SEC & FDIC Reversals: As mentioned above, the SEC rescinded SAB 121, which had forced banks to list crypto custody assets as liabilities. Concurrently, the FDIC faces litigation over alleged “Operation Chokepoint 2.0” tactics to suppress bank crypto engagement.

Implications: Reduced regulatory friction for banks and businesses, though lingering uncertainty persists until formal rules are codified. The OCC’s shift is a clear win for institutional crypto adoption.

STABLECOIN LEGISLATION

The Trump administration has made significant strides in stablecoin regulation, with two key bills gaining momentum: the House STABLE Act and Senate GENIUS Act. The latter passed the Senate Banking Committee with bipartisan support (18-6) on March 13th—establishing frameworks for transparency, one-to-one reserve requirements, enhanced AML standards, and consumer protections.

The legislation creates a tiered regulatory approach where smaller issuers can operate under compatible state regimes while those exceeding $10 billion must transition to federal oversight.

White House officials have actively championed these efforts, aiming to sign both bills into law by August 2025 as part of a broader strategy positioning the US as a leader in digital asset innovation while ensuring consumer protection and financial stability.

Footnote: Surely it's no coincidence that these companion bills have been dubbed "STABLE" and "GENIUS"—an apparent nod to Trump's infamous 2018 self-description as a "very stable genius," suggesting legislative drafters have developed a flair for trolling their opponents with dubious political easter eggs.

WHITE HOUSE CRYPTO SUMMIT

Held on March 7th, the summit convened industry leaders—including Brian Armstrong from Coinbase, Michael Saylor from Strategy (formerly MicroStrategy), and the Winklevoss twins from Gemini—plus lawmakers to align on pro-innovation policies.

Key topics included:

• Regulatory clarity and talent retention.

• Strategic reserve plans and blockchain infrastructure.

• Criticism of Biden-era “hostility” toward crypto.

Outcome: This felt like a symbolic gesture reinforcing Trump’s pro-crypto stance, but lacking concrete policy announcements. Markets viewed it as a political rally rather than a catalyst. Those involved were extremely excited to be in the room and took lots of selfies.

A NOTE ON STATE-LEVEL BITCOIN BILLS

State-level Bitcoin bills in the US are gaining momentum, with several states proposing or passing legislation related to Bitcoin reserves, investor protections, and regulatory frameworks.

At least 28 states have proposed bills allowing their treasuries to allocate public funds to Bitcoin reserves. Of these, 18 are actively advancing through legislative stages. Texas—the second-largest state in the union by GDP—passed a Bitcoin strategic reserve bill in a 25-5 vote on March 6th, while Kentucky Governor Andy Beshear signed a Bitcoin Rights bill into law on March 24th.

At least six US states have already voted against introducing state-level strategic Bitcoin reserves, including Montana, North Dakota, Wyoming, South Dakota, and Pennsylvania. These rejections reflect broader concerns about the volatility and speculative nature of Bitcoin investments—particularly when using taxpayer funds.

State-level Bitcoin bills reflect a growing trend toward embracing cryptocurrencies as strategic assets and legal tender. While federal initiatives such as the Strategic Bitcoin Reserve provide a framework for national policy, state-level actions are crucial in reshaping the regulatory landscape and fostering innovation in the crypto sector. As more states advance their proposals, the US is poised to become a leader in crypto adoption and regulation.

MARKET AMBIVALENCE & MACRO FACTORS

Despite the raft of bullish policies, crypto markets showed muted reactions due to:

1. Execution Risks: Strategic reserves depend on forfeitures, not active purchases, limiting supply impact.

2. Regulatory Whiplash: Investors remain cautious after years of shifting policies (e.g., SEC lawsuits under Biden, now halted).

3. Macro Pressures: Interest rates and geopolitical instability offset regulatory optimism.

THE MEMECOIN MELTDOWN: A TIMELINE OF HIGH STRANGENESS

While Washington's regulatory pivot signaled newfound legitimacy for crypto's serious players, another story was unfolding that threatened to undermine this hard-won credibility. Just as the industry was celebrating its seat at the establishment table, a wave of presidential memecoins arrived to remind everyone of crypto's wild west origins...

THE LAUNCH OF THE TRUMP AND MELANIA MEMECOINS

On January 18th, 2025—two days before his presidential inauguration—Trump surprised the world by launching the $TRUMP memecoin on the Solana blockchain. It was billed at the time as the crypto equivalent of a commemorative coin—celebrating his triumphant return to the White House against all the odds, and underscoring his shift in stance on cryptocurrencies, having previously publicly labeled them as scams.

In a little over 24 hours, the memecoin had ballooned to a market cap of over $15 billion (with a considerably higher fully diluted valuation), as traders abandoned caution and rushed in—even liquidating other positions in established crypto projects to get a piece of the action. Even Bitcoin took a hit.

And then, approximately 24 hours later, on January 19th, Melania Trump followed suit by launching her own token, $MELANIA, again on the Solana blockchain. This led to a sharp decline in the value of $TRUMP, which dropped by over 40% as investors chased the next pump. $MELANIA experienced a rapid increase in value, reaching a market capitalisation of over $7 billion within hours. However, it also faced significant volatility, with its price fluctuating wildly.

I really don’t even know where to begin. Both projects rest at the time of writing significantly down from their all-time highs—$TRUMP is down 86% and $MELANIA is down 95%. But this story has precious little to do with price action.

The Trump family—understandably in my opinion—faced significant criticism from various stakeholders in the cryptocurrency industry and beyond. Here are the main criticisms:

1. Damage to Credibility:

   • Critics argued that the involvement of the Trump family in meme coins undermines the credibility of the cryptocurrency industry. It reinforces the perception that the sector is frivolous and speculative, which could harm legitimate crypto projects.

   • Gabor Gurbacs, a digital asset strategist, noted that these memecoins cost the United States, the presidency, and the Trump family a lot of credibility.

2. Conflicts of Interest:

   • There were concerns about potential conflicts of interest, especially given Trump's role as president and his influence over regulatory policies affecting the crypto industry. Critics like Norm Eisen pointed out that launching a multibillion-dollar venture in the crypto space while regulating it poses profound ethical conflicts.

   • Anthony Scaramucci highlighted the risk of enabling individuals to buy favours by investing in these coins, which could be seen as a way to curry favour with the president.

3. Speculative Nature and Lack of Utility:

   • Memecoins are often criticised for their speculative nature and lack of real-world utility. Balaji Srinivasan described them as a "zero-sum lottery" where the last buyers typically lose everything. This is perhaps a moot point—except when it overlaps with the highest office in the free world.

4. Pump-and-Dump Concerns:

   • The distribution of $TRUMP tokens, with 80% concentrated in a few addresses, raised concerns about potential "pump-and-dump" schemes. This concentration can lead to insiders inflating the token's value before selling—leaving other investors with losses.

5. Reputation of the Crypto Industry:

   • The launch of these memecoins occurred at a time when the crypto industry was trying to rebuild its reputation after recent scandals and bankruptcies. Critics felt that such ventures further damaged this effort. I think that’s a reasonable position to take.

To me, the Trump memecoin fiasco felt like watching an American Bully—one of those oversized, artificially muscled dogs—bounding uninvited into a carefully arranged crypto lakeside picnic. Just as the community had spread out a blanket to celebrate the genuinely promising regulatory developments and the departure of crypto’s arch enemy, Gary Gensler, this jacked-up beast came charging through, territorial and unrestrained, marking everything with its scent. In moments, what should have been a milestone celebration became a chaotic scramble to salvage what hadn't been soiled—with many participants simply abandoning the picnic altogether. The worst part? The dog's owner stood nearby, not just permitting the chaos but seemingly amused by it, while serious crypto builders watched years of legitimacy-building efforts get overshadowed by the spectacle.

It wasn’t a great look. And while we’re in the realm of canine-inspired analogies, all of this commotion seemed to serve as a high-pitched dog whistle for all the other alpha dogs to start throwing their weight around…

THE LIBRA MEMECOIN FIASCO

The Libra memecoin scandal erupted on February 14th, when Argentine President Javier Milei promoted the $LIBRA token on social media. The token was launched on the Solana blockchain as part of a project called "Viva La Libertad," aimed at supporting small businesses in Argentina.

Milei's endorsement led to a rapid surge in the token's value, reaching a market cap of over $4.4 billion within hours. However, the excitement was short-lived as the price plummeted shortly after—with insiders allegedly pulling out their funds, leading to accusations of a "rug pull" scam.

President Milei's involvement in the scandal has been highly controversial. He initially promoted $LIBRA as a promising opportunity for investors, suggesting it had official backing. However, he later deleted his post and disavowed the project, stating he was unaware of its details. This sudden reversal fuelled allegations that his endorsement was misleading and contributed to the token's rapid price inflation before insiders cashed out—leaving thousands of investors with significant losses. The scandal has led to political repercussions, with Milei facing legal scrutiny and potential impeachment proceedings.

The Libra scandal has had profound implications for both Argentina's political landscape and the broader cryptocurrency market. It highlighted the risks associated with political endorsements in the crypto space, particularly when they are perceived as official backing.

The incident resulted in an estimated $251 million in investor losses, with 86% of traders suffering financial setbacks. The scandal has also sparked calls for increased regulation in the cryptocurrency sector to protect investors from similar scams.

Additionally, it has tarnished the reputation of the Solana blockchain, which hosted the $LIBRA token, raising concerns about governance and community engagement.

CONCLUSIONS

• Post-Libra Collapse: The Libra incident marked a turning point for the memecoin market. It exposed issues of insider trading and market manipulation, leading to a sharp decline in investor confidence—one that was perhaps long overdue.

• March 2025: The memecoin market cap has fallen by approximately 60% since its peak in December 2024, currently sitting at around $48 billion. This decline has been largely attributed to a clearer understanding of the levels of exploitation of retail investors by influencers and insiders. To keep playing a game that’s so clearly rigged becomes an act of self harm—and many investors have accordingly fucked off elsewhere.

With the benefit of hindsight, it’s clear that the launches of $TRUMP and $MELANIA marked the peak of the memecoin frenzy, which was followed by a dramatic collapse. The Libra debacle highlighted the risks of unregulated memecoin markets and the potential for insider manipulation. Despite the current downturn, experts predict that memecoins will return in future cycles, though most will fail to gain lasting traction.

Someone always has to spoil the party. Or as I wrote at the time in an effort to capture the market sentiment: “we came for the party but we're leaving early because it all got too rowdy and we don't want our faces smashed in—but thanks anyway.”

If the memecoin disasters represented crypto's struggle with its cultural identity, the Bybit hack exposed an even more fundamental vulnerability. The same quarter that saw unprecedented institutional embrace of digital assets also witnessed a sobering reminder of the security challenges that no amount of regulatory approval can fully resolve...

THE BYBIT HACK: A NEW PLIMSOLL LINE FOR CRYPTO

Q1 2025 will forever be remembered for the unprecedented $1.4 billion Bybit hack. The Dubai-based exchange suffered the largest heist in history—surpassing previous records such as the $611 million stolen from Poly Network in 2021 and Saddam Hussein's theft of $1 billion from the Iraqi Central Bank in 2003.

Attributed to North Korea's Lazarus Group, the attack employed sophisticated social engineering to target a developer at Safe, the digital storage service managing Bybit's multi-signature wallets. By injecting malicious JavaScript code into Safe's AWS-hosted interface, the hackers manipulated transaction details, tricked Bybit's signers into approving a fatal transaction, and ultimately drained the exchange's Ethereum wallet of its assets.

The hack's repercussions were immediate and severe. Nearly half of Bybit's deposited funds were withdrawn in panic, exacerbating market volatility and undermining investor confidence. Despite the exchange's assurances that it could cover losses and remain solvent, the incident cast a long shadow over the crypto sector's security measures. And in spite of the fact that the exchange handled the crisis superlatively, it served as a sobering reminder that—even as the market matures and attracts institutional investment—fundamental security vulnerabilities persist at alarming scales.

Perhaps most significantly, the Bybit incident reshaped regulatory discussions globally. It occurred during a period of regulatory relaxation in the US, raising concerns about whether deregulatory shifts might inadvertently encourage lax security. The hack accelerated debates about appropriate security standards, the viability of decentralised alternatives to centralised exchanges, and the tension between blockchain immutability and victim protection.

As the EU's Markets in Crypto-assets (MiCA) legislation gained attention as a potential regulatory model, the incident highlighted the urgent need for international coordination to establish frameworks that balance innovation with security—a balance that clearly remains elusive despite crypto's growing mainstream legitimacy.

North Korea (Lazarus Group and the North Korean government are seen as synonymous) was able to launder the crypto via various channels and is now the fourth-largest country in terms of Bitcoin holdings—surpassing Bhutan and El Salvador with 13,518 BTC. That’s more Bitcoin than Tesla. With crypto going mainstream, the stakes are getting higher.

ETHEREUM STRUGGLES

The Bybit attack highlighted vulnerabilities in centralised systems, but the quarter's challenges weren't limited to exchange security. Even crypto's foundational layer-1 protocols faced existential questions, with Ethereum—once the undisputed king of smart contract platforms—struggling to find its footing in this new landscape...

Ethereum, the second-largest cryptocurrency by market capitalisation, has faced significant challenges in the first quarter of 2025. One of the most notable issues is its poor price performance—marking one of the worst Q1 performances in its history with a drop of approximately 46%. This decline is particularly concerning when compared to other cryptocurrencies such as Bitcoin and XRP, which have consistently outperformed ETH during the same period. The bearish market sentiment and increased competition from alternative Layer-1 blockchains, such as Solana and SUI, have further exacerbated the pressure on Ethereum.

Leadership and strategic direction have also been points of contention for Ethereum. The Ethereum Foundation is dealing with internal turmoil, including governance issues and controversies surrounding investments and researcher roles in other projects. Vitalik Buterin's efforts to address these challenges include restructuring the foundation and emphasising the importance of Layer-2 solutions for scalability. However, the reliance on L2 protocols raises questions about the long-term sustainability and competitiveness of Ethereum's Layer-1 infrastructure. The success of L2s has reduced demand for L1 block space, potentially impacting ETH's value accrual.

The relationship between Ethereum's Layer-1 and Layer-2 protocols is crucial to its future success. While L2 solutions offer scalability benefits, they also divert transaction demand away from L1, impacting ETH's value. To restore value, Ethereum needs to develop new L1 use cases or significantly increase L2 transactions.

Additionally, Ethereum faces stiff competition from newer blockchains that are challenging its dominance in areas like usability and economic sustainability. As the crypto landscape evolves, Ethereum must adapt to maintain its position as a leading smart contract platform. The question remains whether Ethereum can overcome these challenges and regain momentum in the face of rising competition and internal struggles.

I personally wouldn’t bet against Ethereum coming good. But right now, it seems to be stuck (like Schrödinger’s Cat) between two extreme possibilities—one where it becomes the Yahoo of crypto and the other where it becomes the bankers' chain for DeFi and Real-World Assets (RWAs). And both of those outcomes are a million miles away from where it wants to be.

While Ethereum wrestled with its identity crisis, innovation at the edges of the crypto ecosystem continued unabated. Perhaps the most promising developments came at the intersection of two revolutionary technologies that seem destined to shape our digital future...

DEVELOPMENTS AT THE INTERSECTION OF AI & CRYPTO

Q1 2025 saw a significant surge in interest at the intersection of AI and cryptocurrency, marked by the emergence of multiple innovative platforms and tokens. Virtuals Protocol, for instance, gained substantial attention as a decentralised platform for creating, tokenising, and monetising AI agents. Launched on Ethereum's Layer 2 network, Base, it allows users to develop AI agents with minimal coding expertise and tokenises them as ERC-20 assets, enabling co-ownership and shared economic benefits among users. Another notable platform is ai16z, which, despite being a parody of Marc Andreessen's venture capital firm, a16z, has been gaining significant traction as a hub for AI-related projects on Solana—along with Eliza, its open-source framework for building and deploying autonomous AI agents with integrated Web3 capabilities.

The AI memecoin space also experienced a notable buzz, with tokens like $MERK standing out for their innovative approach to integrating AI with blockchain technology. $MERK is designed to transform memes into self-sustaining economies through AI-driven automation and tokenisation tools, offering a sustainable reward system that differentiates it from traditional memecoins. Additionally, platforms such as Lightchain AI are combining blockchain with AI to create scalable, decentralised solutions, attracting significant investor interest with its presale raising over $17.1 million.

IMPACT ON DEFI AND FUTURE PROSPECTS

The integration of AI into DeFi, often referred to as DeFAI, has been a topic of considerable discussion in Q1 2025. The potential for AI to revolutionise DeFi through enhanced UI/UX, automated trading strategies, and predictive analytics has sparked excitement among investors and developers.

While it is very early days for these developments, the buzz around AI in crypto suggests significant potential for growth and innovation. As AI technologies continue to mature, they are likely to play a crucial role in shaping the future of both DeFi and the broader cryptocurrency market.

CONCLUSION

The intersection of AI and crypto in Q1 2025 has been marked by rapid innovation and growing interest. From AI agent platforms such as Virtuals Protocol to the potential for AI to transform DeFi, the sector is experiencing a period of significant growth and experimentation. While the long-term sustainability of some of these projects remains uncertain, the current buzz underscores the potential for AI to fundamentally change how we interact with and invest in cryptocurrencies. As the year progresses, it will be crucial to monitor how these developments evolve and impact the broader crypto landscape.

FINAL THOUGHTS: THE PENDULUM SWINGS

As we close this whirlwind tour of Q1 2025, crypto stands at a crossroads that would have been difficult to imagine even a year ago. The pendulum has indeed swung—from regulatory hostility to presidential endorsement, from institutional skepticism to strategic reserves, from marginalisation to mainstream attention.

Yet with each victory comes a new set of challenges. The legitimacy crypto craved has arrived, but so has the scrutiny, the responsibility, and the compromises that inevitably follow. The memecoin fiascos and billion-dollar hacks remind us that neither presidential seals nor Wall Street capital can fully tame this technology's inherent risks and contradictions.

Perhaps the most interesting development isn't any single event but the emerging bifurcation within crypto itself: one path leading toward integration with traditional financial systems and state power, the other continuing to push the boundaries of decentralisation through innovations in AI, privacy, and governance. Both paths have their merits and pitfalls.

The question I posed at the outset remains open: In gaining the world's acceptance, has crypto lost something of its soul? The answer, like many things in this space, resists simple binary choices. Crypto's revolutionary potential hasn't disappeared—it has simply entered a new phase of evolution, where its principles will be tested not by marginalisation but by its wider embrace.

What remains certain is that the pendulum never stops swinging. Today's compromises may set the stage for tomorrow's innovations. Today's institutional adoption may fund the next wave of truly disruptive technology. And crypto—despite its increasingly pressed suits and polished boardroom presentations—still retains that spark of rebellion that first set this movement in motion.

The real question for Q2 and beyond isn't whether crypto has sold out, but whether it can leverage its newfound legitimacy to build something that transcends both its anarchic origins and its institutional adoption—something truly worthy of the revolution it once promised.

Until next time! 🚀

Q4 IN REVIEW: A SHIFT IN MOMENTUM

INTRODUCTION

Last time, I pretty much had to force myself to do this quadrennial pitstop. Nothing much was happening, so it became the crypto equivalent of trying to report on watching paint dry.

Yes, Q3 was an inbetweener: sandwiched in between the Bitcoin ETFs in Q1, all the media navel gazing around the Bitcoin halving in Q2, and whatever was meant to happen after that; which, based on the prevailing narrative at least, was the banana zone: i.e. the fabled (and let’s face it, at this stage pseudoscientific) point in ‘the cycle’ at which the price of Bitcoin—driven by the halving event, which in economic terms constitutes a 50% reduction in the cryptocurrency’s emissions rate—goes up very quickly, in a parabolic fashion, followed by the rest of the digital asset space.

You see, investor-gambler types—many of whom have grown completely immune to witnessing crypto’s daily 10% and 20% mood swings—had spent much of 2024 polishing their guns and were wildly impatient for this aforementioned ‘up-only’ banana zone thing to start happening, like Uncle Raoul Pal had suggested it would.

But it didn’t happen. And every time someone thought it was about to happen, the market dumped again. And while everyone waited for crypto valhalla to manifest, some people got snarky and irritated—especially those holding lots of ETH.

And then finally, in Q4, Bitcoin put everyone out of their misery and shot up like a rocket in a very short space of time—up almost 50%, in fact, in a single month. And in doing so, it dragged the vast majority of other digital assets—including Ether—along with it for the ride.

THE BULL RUN BEGINS HERE

BTC finally broke out of its downward post-ETF hype selloff groove in the last week of October. My personal theory is that election betting data from Polymarket (another successful crypto platform) revealed a strong swing in favour of Trump winning the election towards the end of October. It is this that I suspect may have caused an early stampede to stock up on Bitcoin prior to the actual election result—illustrated in the chart below as the point that the chart breaks the yellow trend line (known in technical analysis circles as a break of trend).

And after the election results were actually known, Bitcoin just continued up rapidly from there—all the way up past the six-figure, $100k mark for the first time. The blue box in the chart below shows the rapid advance in percentage terms—up over 60% from the end of October to the middle of December, when it printed its $108k all-time high. This move encompassed November being the biggest month on record for Bitcoin—of all time.

As a sidenote: it turns out that decentralised, global prediction markets such as Polymarket—where there’s much greater transparency and real money at stake—is a more accurate way to gauge election outcomes than the official polls. So that happened.

But in any event, ever since that crossover point in late October, crypto has been in an entirely different place. You could even argue that there were two timelines for crypto. And politics aside: the timeline we wound up in definitely feels much more expansive. No more looking nervously over one’s shoulder, preparing to fight lengthy legal battles with a regulator obsessed with securities laws cooked up before the transistor—never mind the microchip.

Anyway, quite frankly, crypto needed the extra time and stress testing to get its act together. It could probably do with a bit more time in a prolonged beta to be honest.

But that’s not going to happen, because since November, crypto has been dragged along in a perfect storm of sorts: with favourable macro headwinds, rapid political and regulatory shifts in the U.S. and elsewhere; all coalescing around a time of rapid institutional and user adoption; all of which is further bolstered by huge improvements in scalability (speed and cost), account abstraction, and improvements in user experience (UI/UX)—not to mention the sudden arrival of AI.

So much has happened since October that’s it’s difficult to even know where to begin. So, for reasons that are ultimately inescapable, let’s start with the U.S. elections in early November—and the retaking of the Whitehouse by one Donald J. Trump.

2024: THE FIRST CRYPTO ELECTION

Retrospectively, it’s probably one of the biggest takeaways of the quarter. It was a moot point at the time but, now that the dust has settled on the result, I think it’s clear that crypto did indeed play an important (perhaps even a pivotal) role in galvanising support for Donald Trump—although it flew largely under the radar of the majority of mainstream media outlets and commentators.

If Obama was the first U.S. President to successfully tap into the public zeitgeist via social media channels to win an election, then Trump—a master of social media traction himself—became the first to proactively engage with crypto channels and policy issues as part of an election-winning campaign strategy.

Had anyone been paying attention—and I guess that’s the point, Trump and his entourage certainly did pay attention—the writing was already on the wall. The trend towards crypto becoming a political issue has been steadily bubbling away since the beginning of the decade, with people expressing growing frustration at the Biden administration’s seemingly authoritarian stance on crypto—including in the form of the hostile enforcement actions, road blocks and ambushes instigated by the likes of Elizabeth Warren, Gary Gensler and the SEC.

This sense of frustration with the obstinacy and the direction of travel also coincided with heavy-hitter TradFi types such as Larry Fink coming out in favour of Bitcoin and other digital assets; while at the same time aggressively filing for exchange-traded products and talking-up the importance of tokenising real world assets (RWAs) as the next major frontier for TradFi. This was the entire backdrop for the whole of 2024 for anyone stuck in swish business hotels watching cable news channels. But the memo seemingly didn’t make its way to the dems.

And that crypto ‘seal of approval’ from one of the biggest institutional gorillas on the block (Larry Fink, at BlackRock) let a lot of people off the leash. It also forced a lot of serious TradFi people—whether through bouts of cognitive dissonance or enthusiastically—off the fence in terms of their position on crypto.

And as a consequence of all this: now, in January 2025, it’s no longer okay—if you’re a Registered Investment Advisor (RIA), for example—to not put the work in on Bitcoin and the rest of crypto, or to parrot things like “Bitcoin is rat poison” because Charlie Munger said it was. And all of that would have been considered business as usual back in January, 2024.

One thing is for certain looking back: the Democrats recklessly underestimated the importance of both the crypto lobby itself—as a well-resourced, highly motivated group of stakeholders—and more generally the broader support for (and investment in) crypto among the general U.S. population.

Conversely, Trump seized the opportunity gleefully with both hands—whether for cynical reasons or because he genuinely believes in securing America’s leadership role in crypto. But in choosing a side so deliberately, Trump forced some clear daylight between his campaign platform and the Biden administration’s notoriously hostile, ‘Chokepoint 2.0’ stance on crypto (about which I’ve written endlessly in previous tomes).

Yes, Trump went full-tilt in the opposite direction—like a raging bull. Nothing was off the menu: he spoke at Bitcoin 2024 in Nashville in July, and introduced talk of a U.S. Bitcoin strategic reserve, with plenty of thoughtful detail added by Wyoming Senator Cynthia Lummis (about which more another time); tax breaks on U.S. crypto for U.S. citizens, including XRP and Hedera; plans to make America the premier Bitcoin mining destination in the world in perpetuity; pledges not to sell any more of the U.S. government’s existing BTC stash—and much more.

To the average U.S. crypto bag holder, all of this was sweet, sweet music. So much so, in fact, that I saw lifelong Democrats on crypto podcasts having complicated internal conversations about how they were going to have to damn well vote for the orange man because of his support for the orange coin. Most of them would never have countenanced such an outcome—voting for Trump—even a year earlier.

But I think the crypto community is likely full of what you might call “single-issue voters”; passionate people who, if forced into a corner, will generally come out voting with their pocketbooks—or in the case of crypto reaching for their Ledger Nanos.

Anyway, how much of this ‘perfect storm’ will play out in the real world still remains to be seen. The best case scenario is unbelievably bullish. But we’re getting ahead of ourselves here, Trump’s not even in office yet. As the man himself is fond of saying: “let’s see what happens”. So far, so good.

Arthur Hayes, cofounder of BitMEX, thinks he knows what will happen: there will be lots of buyer’s remorse when people get a tough dose of reality post-inauguration pomp—when they will come to realise how slow real change is compared to the all hopium they’ve taken. Or put another way: unrealistic expectations have already been priced in during the recent post-election surge—and will at some point have to unwind.

But is that downward pressure enough to offset the increased inflows from the likes of BlackRock via its IBIT spot Bitcoin ETF? Or sovereign wealth funds starting to take a closer look? I’m not convinced we’re headed for buyer’s remorse. I personally think we’re set for more significant upside action—albeit with corrections along the way. But still, Arthur Hayes is Arthur Hayes—so maybe listen to him.

As I write, BTC is trading at $94.8K—down from its all-time high of $108.3K that it set on Tuesday, 17th December.

GENSLER’S DEPARTURE: AU REVOIR, GARY!

My least-favourite crypto personality, Gary Gensler—the current chair of the SEC—is finally leaving the building. He will depart the Agency on January 20, 2025—the same day that Donald Trump is inaugurated as the 47th president of the United States.

Gensler confirmed his departure in a thread on X (Twitter) and, as you can imagine, the comments section was full of crypto bros giving him an unforgivingly hard time. Comments such as "But who will protect the investors"; "Farewell sweet prince"; and "Didn’t read it, goodbye gaylord" stood out to me at the time!

Anyway, it's rude to gloat, so I'm trying my best not to. But I certainly won't miss him in the slightest…

In terms of his replacement: Trump has nominated cryptocurrency advocate Paul Atkins as Gensler’s replacement. He said Atkins—a former SEC commissioner under George W. Bush—was a “proven leader for common sense regulations”. The announcement was taken by the markets as hugely positive news for crypto, as well as early confirmation that Trump intended to live up to his crypto campaign promises.

A LANDMARK TORNADO CASH RULING

In a landmark decision, a U.S. appeals court ruled that Treasury's Office of Foreign Assets Control (OFAC) overstepped its authority by sanctioning Tornado Cash’s immutable smart contracts. The court found these lines of privacy-enabling code aren’t “property” under U.S. law—overturning a previous ruling and delivering a significant win for crypto privacy advocates.

This decision means that smart contracts without admin keys—truly decentralized ones—cannot be blocked under the International Emergency Economic Powers Act (IEEPA).

The case was spearheaded by six Tornado Cash users, and backed by Coinbase, who challenged OFAC’s decision to add 44 smart contract addresses to the sanctions list; now, those smart contracts must be removed, and U.S. users regain access to the protocol.

While this ruling strengthens the case for immutable, decentralised protocols, it doesn’t mean Tornado Cash is entirely off the hook—there’s more to unfold in this ongoing legal saga.

But the precedent it sets is undeniably a win for crypto advocates championing privacy and decentralisation.

XRP RISES LIKE A PHOENIX FROM THE ASHES

Bitcoin wasn’t the only digital asset to respond explosively to news of the election result: XRP, which has been trading in the same sub-$1 range for years now, took off on a nearly 500% rally, before consolidating.

A few of my contacts on LinkedIn believed that this huge market move had the hallmarks of being insider-driven rather than organic—i.e. that someone knows something about future scenarios that we don’t! That would make perfect sense to me, given the size of the jump—and it’s intriguing.

For the company Ripple and the asset XRP, the change in administration may indeed be highly significant. Ripple has been bogged down in legal battles with the SEC for years now—a fact that has hindered its broader objective to provide a viable, regulated crypto framework for providing ‘on-demand liquidity’ solutions to banks via internal messaging standards they can sign up to (in this case the long-agreed-upon ISO20022).

Furthermore, Ripple has just been given the green light on its fully regulated stablecoin, Ripple USD (RLUSD). With Tether currently falling foul of the EU’s MiCA digital assets framework, RLUSD may have an inside edge on rapid expansion owing to its squeaky clean profile.

Q4’S BIGGEST DARK HORSE: AI & WEB3

I have talked about the intersection of Web3 and AI before but it’s always different when it actually happens; as exemplified by the emergence of AI16Z and Virtuals Protocol—two innovative platforms that are in the early stages of reshaping the digital landscape.

AI16Z is a pioneering venture capital firm entirely managed by AI agents—marking a significant shift in investment strategies. By leveraging AI-driven insights, AI16Z evaluates and funds startups—aiming to redefine venture capitalism in the age of artificial intelligence.

The platform's native token, AI16Z, has experienced substantial growth, reaching a market capitalisation of $2 billion—making it the first AI token on the Solana blockchain to achieve this milestone.

Similarly, Virtuals Protocol is revolutionising the creation and monetisation of AI agents within the Web3 ecosystem. Launched in March 2024, the protocol enables users to co-own and co-create AI-driven virtual assets—such as companions and influencers—across various social media applications. By tokenising these AI agents, Virtuals Protocol transforms them into revenue-generating assets—fostering a decentralised and community-driven approach to AI development. The platform's native token, VIRTUAL, has seen significant appreciation—reflecting the growing interest in AI-powered virtual interactions.

The intersection of Web3 and AI feels like it’s on the cusp of something much bigger all of a sudden. I haven’t quite got my head around it yet so I’ll come back to it—something like a dAppStore moment.

As agentic AI technologies continue to evolve, their integration with Web3 platforms could come to redefine what we think of as crypto and the ‘Internet of Value’.

BITCOIN BREAKS SIX FIGURES!

The historic moment that the cryptosphere has been eagerly anticipating has finally arrived: Bitcoin just punched through into six figure territory for the first time ever—breaking the $100K seal on Coinbase at approximately 02.35hrs GMT this morning. New all-time high: $104K; as I write, trading at $102.7K.

I know it's only a nice round number comprising of a "1" followed by five zeros in the final analysis—more of a psychological marker than anything else. We humans are funny like that with our numbers, it doesn't really mean anything...

But irrespective, it’s a remarkable achievement when you consider that some dude (Laszlo Hanyecz) paid 10,000 BTC (another round number) for two large Papa John’s pizzas back in 2010—which would have been worth over $1B based on today's valuation. Fiat inflation's been grim, but not that grim!

Expensive pizzas eh?! Hope they tasted good, and I hope he's still feeling philosophical about that transaction...

So, given where this OG cryptocurrency has come from, basically in a decade and a half (and given the army of little helpers who did everything they could to see it fail), it’s definitely worthy of a moment's celebration—especially after the long crypto winter the digital asset space was forced to endure, punctuated by monumental acts of self-harm such as the Terra Luna debacle and the FTX collapse.

November itself turned out to be a barnstorming month: the best month on record so far for BTC—up circa 40% in 30 days. How about them apples…

And in the end, all the stars aligned:

฿ The election result turned out to be a major catalyst, with a much more positive attitude towards crypto being expressed by the incoming administration—which was like pouring rocket fuel on a post-halving, post-ETF market already primed for liftoff;

฿ Shortly thereafter, and much to my personal delight, Gary Gensler announced his imminent departure (he leaves on the day of Trump’s inauguration)—symbolising the nail in the coffin of the arbitrary, capricious (and some might argue outright treasonous) Chokepoint 2.0 era;

฿ And then the final cherry on top came with yesterday’s announcement of Gensler's replacement, Paul Atkins—a former SEC commissioner (under George W. Bush) with a reputation for being both level-headed and extremely pro-crypto; which in turn served to underscore that Trump intends to keep his promises regarding the incoming administration's progressive stance on crypto. Talk is cheap after all—actions speak louder.

Expect pullbacks and serious drawdowns along the way, of course; but with institutional capital flowing in, macroeconomic signals flashing green, governments starting to consider Bitcoin as a potential strategic reserve asset, and regulatory clarity finally on the cards in the U.S., it really does feel like the beginning of a new era for Bitcoin—and more generally for the entire digital asset space.

Happy $100K Bitcoin Day!

🚀 🚀 🚀

SCIENCE 2.0: THE PROMISE OF DECENTRALISED SCIENCE (DESCI)

THE HUMAN COST OF CLOSED SCIENCE

In January 2011, a brilliant young programmer named Aaron Swartz made a fateful decision that would put him on a collision course with the United States government. Working from a campus closet at MIT, he wrote a simple script to automatically download millions of academic papers from JSTOR's digital archives by piggybacking the university’s intranet. His aim was straightforward: to make humanity's collective scientific knowledge — much of which remains sequestered behind a paywall — freely available to everyone…

These papers, Swartz concluded, had been funded by public money, conducted at public institutions, and written and reviewed by academics who weren't paid for their work. Yet there they sat, moated behind paywalls — accessible only to those affiliated with wealthy universities and elite corporations. And while JSTOR itself operated as a non-profit, its access remained restricted to those that could afford its hefty subscription fees.

The establishment’s response was severe. Federal prosecutors charged Swartz with 13 felony counts, carrying up to 35 years in prison, coupled to a ruinous $1 million in fines — charges that seemed wildly disproportionate to the act of bulk-downloading academic papers. But he had clearly hit a raw nerve far too close to rentier capitalism’s sensitive parts for his act of defiance to go unchallenged.

"Information is power," Swartz wrote in his Guerrilla Open Access Manifesto. "But like all power, there are those who want to keep it for themselves... Those with access to these resources – students, librarians, scientists – you have been given a privilege. You get to feed at this banquet of knowledge while the rest of the world is locked out. But you need not – indeed, morally, you cannot – keep this privilege for yourselves.”

And so, on January 11, 2013, some two years after his initial arrest, having refused a plea deal that would have branded him a felon for life, hamstrung by the system and facing the prospect of decades in prison, Swartz took his own life. He was 26 at the time.

The tragic irony was that he had done nothing for personal gain. His "crime" was being principled enough to act on his strongly-held conviction that scientific knowledge should be made available to everyone.

As his partner Taren Stinebrickner-Kauffman noted in a 2013 Tumblr post, "Aaron’s death was caused by a criminal justice system that prioritises power over mercy, vengeance over justice; a system that punishes innocent people for trying to prove their innocence instead of accepting plea deals that mark them as criminals in perpetuity; a system where incentives and power structures align for prosecutors to destroy the life of an innovator like Aaron in the pursuit of their own ambitions.”

His tragic death became a powerful rallying cry for the open access movement. And yet, more than a decade later, in 2024, the system Swartz challenged so poignantly remains largely intact — with the vast majority of academic knowledge still locked tightly behind various forms of institutional and commercial barriers.

THE SCIENTIFIC CORPORATOCRACY

The commercial scientific publishing industry, dominated by companies like Elsevier, represents perhaps the starkest example of how human knowledge has been captured and commodified. With profit margins hovering around 40%, rivalling tech giants like Apple and Google, Elsevier’s annual revenues exceed $2 billion — largely by controlling access to research that taxpayers have already funded. But the perverse system of incentives that Swartz fought to disrupt extends way beyond prohibitive subscription fees and cynical profiteering.

In 2009, Sergio Sismondo, a Professor of Philosophy and Sociology at Queen’s University in Canada who took an early interest in how medical literature is shaped behind the scenes by the pharmaceutical industry, noticed something disturbing about a journal arriving at his office. The ‘Australasian Journal of Bone and Joint Medicine’ looked legitimate, but closer inspection revealed that every article portrayed Merck's products in an entirely positive light, with no disclosure of funding sources. His discovery exposed that Elsevier had created a fake journal — essentially an ‘advertorial’ brochure masquerading as legitimate peer-reviewed science. One of the products it promoted was Vioxx — a drug which was later pulled from the market for almost doubling the risk of heart attacks and strokes.

Further investigation revealed a web of deception extending far beyond this single incident. And under pressure, Elsevier subsequently admitted to publishing at least five other "journals" between 2000 and 2005, which had been covertly sponsored by undisclosed pharmaceutical companies. The company was also caught offering academics gift cards for favourable reviews, orchestrating citation-inflation schemes between journals, and forcing authors to add unnecessary citations to boost metrics. Perhaps most egregiously, they were found to be involved in the arms trade — organising weapons conventions whilst simultaneously publishing medical journals about treating injuries from the very weapons being sold. Exhibitors at these events included Security Equipment Corporation, a company that was flogging (if you’ll excuse the pun) torture equipment — under the unapologetic slogan “Making grown men cry since 1975”.

Elsevier is hardly an outlier. In the publishing racket, business is business — especially if Big Pharma has anything to do with it — but this outright corruption and cynical promotion of junk science extends far beyond a single publisher or sector of the economy. The sugar industry secretly paid Harvard researchers to blame fat for heart disease. Tobacco companies created fake research institutes to manufacture doubt. ExxonMobil buried their own scientists' climate change predictions. And the Koch brothers attached strings to university donations to influence research directions. In other words, it’s a feature of science’s current operating system — not a bug.

Moreover, the dysfunction reaches into the very metrics we use to measure scientific impact and efficacy. The citation system, originally designed to track the flow of ideas, has become a manipulated currency that distorts rather than reflects scientific progress. Young researchers learn early on that their survival depends not on doing good science, but on mastering an elaborate game of citation trading, strategic self-citation, and trending topic exploitation. Career scientists avoid controversial topics to protect funding streams, breaking their research into "least publishable units" to maximise citation counts rather than scientific impact. This is the playground and lexicon of social media influencers and the gaming of social media algorithms — not of serious science. And the net result? A system optimised for control (and even falsification) rather than discovery — for eyeballs and profit rather than progress.

Indeed, if you were to design a system for advancing human knowledge from scratch today, there’s no way in hell you’d put critical findings behind paywalls, let private companies create fake journals, or force researchers to spend more time writing grant applications than doing research. And there’s zero chance you’d exclude brilliant minds based on geography or institutional affiliation, or allow corporate interests to suppress inconvenient discoveries. Yet this is exactly what we've inherited — a system so fundamentally broken that it actively works against the core principles of scientific inquiry itself!

When the pursuit of citations matters more than the pursuit of truth, when corporate profits take precedence over public knowledge, and when career survival depends on avoiding important but controversial research, the system isn't just failing – it's actively impeding human progress.

And this is precisely the dysfunctional status quo that decentralised science (DeSci) seeks to disrupt…

REBOOTING SCIENCE: DECENTRALISING DISCOVERY

The vision that Aaron Swartz fought for - a world where scientific knowledge flows freely - is now finding new life in an emerging technological movement known as Decentralised Science, or DeSci. The Ethereum Foundation defines DeSci as, "a movement that aims to build public infrastructure for funding, creating, reviewing, crediting, storing, and disseminating scientific knowledge fairly and equitably using the Web3 stack." At its core, they explain, "DeSci works off the idea that scientific knowledge should be accessible to everyone and that the process of scientific research should be transparent.”

This isn't just idealism — it's pragmatism backed by new technology. In much the same way that Web 2.0 and its business model of surveillance capitalism relies on its centralised architecture to extract maximum value, the system that prosecuted Swartz and enables the corporate capture of scientific knowledge persists because its gatekeepers maintain centralised control over three critical elements: access to research; distribution of funding; and verification of results. But blockchain technology now offers us the tools to decentralise all three of these elements — creating a distributed platform for a radically different model of scientific progress.

The mechanics of this transformation run much deeper than simply putting research papers on a public blockchain. DeSci leverages multiple Web3 primitives to reimagine how science operates. These include:

• Smart contracts enable automated, transparent distribution of research funds based on predetermined milestones, eliminating the opacity and inefficiency of traditional grant bureaucracies. When a researcher or lab commits to specific deliverables, funds can be automatically released as goals are met, creating unprecedented accountability whilst reducing administrative overhead.

• Token-based governance allows research communities to make collective decisions about funding priorities and methodological standards. Rather than decisions flowing top-down from institutional gatekeepers, token holders - including researchers, funders, and other stakeholders - can vote on everything, from which projects to fund to what constitutes acceptable methodology.

• NFTs and tokenisation enable novel funding mechanisms by making research outcomes investable assets. Early-stage research can be fractionally owned by community members. And when promising research leads to valuable discoveries, the benefits accrue not just to large institutions, but to all stakeholders who supported the work along the way. This aligns incentives toward long-term scientific progress rather than short-term profit.

These aren't just theoretical possibilities. VitaDAO, a community-owned collective dedicated to funding and advancing early stage longevity science research to improve people's lives, has already deployed over $4.2 million toward breakthrough aging research, including projects at prestigious institutions like the Buck Institute. Their funding process is radically transparent: anyone can review proposals, discussion happens in public forums, and funding decisions are made through community voting. When a promising study on senescent cell metabolism needed funding, VitaDAO's community evaluated the proposal and deployed funding within weeks – compared to the months or years traditional grant bureaucracy would have required.

The transformation also extends to peer review and reputation systems. ResearchHub, which was co-founded by Coinbase CEO Brian Armstrong, is tackling the same citation gaming and peer review manipulation we discussed earlier through a radically different, Web3-enabled approach. Instead of opaque review processes controlled by publishers, their platform uses token incentives to reward meaningful scientific contribution. Reviewers earn tokens for thorough analysis, successful replication attempts are rewarded, and the sharing of negative results - often buried in traditional publishing - carries explicit value.

This tokenised reputation system addresses another failure of traditional science: the inability to capture the full spectrum of scientific contribution. In the current system, as we saw with the citation economy, only certain types of work "count" – leading to the gaming and manipulation we documented. DeSci platforms can recognise and reward everything — from peer review and code documentation to data curation and experimental replication.

The DeSci.World project pushes this further with their "contribution graph”, which maps the complex web of scientific collaboration. Unlike simple citation counts, this creates a more complete and harder-to-manipulate record of who contributed what to scientific progress. Reputation becomes something earned through actual contribution rather than institutional affiliation or citation trading networks.

Perhaps most revolutionary of all is how DeSci projects are using blockchain technology to reinvent research funding and intellectual property rights. Molecule's IP-NFT framework allows research outcomes to be tokenised and traded — creating new funding mechanisms for early-stage research. When a university lab recently tokenised their novel antibody discovery, the implications were profound: community members could invest directly in promising research, scientists retained creative control whilst sharing potential upside — with downstream successful commercialisation benefitting the entire community of token holders.

BEYOND THE LABORATORY: DESCI’S BROADER PROMISE

These early experiments in decentralised science hint at something far more revolutionary than mere incremental technological innovation. They represent the first glimpses of a fundamental transformation in how humanity conducts scientific discovery and research. DeSci envisions a world where scientific knowledge flows freely across borders and institutions, much as Swartz had envisioned. Data and methods are shared openly by default — accelerating discovery and making replication straightforward. Funding flows directly to promising research rather than through layers of institutional gatekeeping and bureaucracy. And most importantly, contributions are judged purely on merit rather than pedigree or institutional affiliation.

Imagine a world where a brilliant researcher in Lagos has the same opportunity to contribute as one at Harvard, where groundbreaking alternative energy research can't be buried by corporate interests, and where the next potential cure for cancer isn't abandoned because it's not profitable enough for traditional funding models.

Of course, like any revolution, DeSci faces significant hurdles on its path to realising this vision. Technical barriers and regulatory uncertainty around tokenised intellectual property require careful navigation. Quality control in a decentralised system demands new approaches to peer review and verification. Integration with existing academic institutions requires delicate balance.

But consider the alternative: a system where critical discoveries stay locked behind paywalls, where corporate interests can bury inconvenient findings, where brilliant minds are excluded based on geography or institutional affiliation, and where career survival often depends on avoiding important but controversial research.

"Information is power," Swartz reminded us. But unlike the gatekeepers he fought, DeSci envisions a world where that power belongs to everyone. A decade after Aaron Swartz's death, his vision of free and open access to human knowledge still remains largely unrealised. But in DeSci, we see the emergence of tools and systems that could finally break the chains he died fighting against. And in that vision lies not just the future of science, but the fulfilment of its original promise: knowledge in the service of all humanity.

As Arthur C. Clarke noted, "Any sufficiently advanced technology appears as magic." Perhaps the real magic of DeSci isn't in its Web3 tooling and its public blockchain infrastructure, but in its power to unleash human curiosity and creativity from its current institutional shackles. And in that unleashing, we might just rediscover what those early scientific revolutionaries, from Copernicus to Newton, knew only too well: that the pursuit of truth, when freed from gatekeepers and dogma, is humanity's highest calling — and its greatest adventure.

Q3 PITSTOP: SHAKEOUTS & BREAKOUTS

When I dropped back from the rigours of publishing a weekly version of this newsletter earlier in the year (on the grounds that everyone seemed to be suffering from newsletter fatigue and I wanted to focus on quality rather than quantity), I vowed to do a quarterly pitstop as a kind of compromise — covering the most important stories on a more reflective, less reactive basis. This quarter, however, has felt like a bit of an ‘inbetweener’ from my position of relative comfort on the sidelines: an intermission, sandwiched in between the fervour of the Bitcoin ETFs and the historic halving event that defined the first half of the year and whatever is supposed to happen next; which, based on the prevailing narrative at least, is the banana zone — i.e. the fabled point at which the value of Bitcoin, followed by the rest of crypto, goes parabolic…

It’s been such a painful wait for that parabolic move to occur, however, that many have found themselves shaken out of the market — clearly traumatised by the “will it, won’t it?” head games and fake-outs, and demoralised by the sideways ranging movement (or lack thereof).

This sense of frustration has permeated other fiefdoms too, with the Ethereum ecosystem, for example, seemingly turning in on itself, as if in search of a form of replacement therapy for that increasingly illusive dopamine hit — searching for a touch of drama elsewhere, with people signalling their sudden loss of faith in the strategic direction of the world’s primo smart contract platform.

Indeed, this nothing-burger of a quarter has even caused hardened, multi-cycle veterans to question their previously unshakable belief in the halving cycle’s influence over the peaks and troughs of the bull and bear market cycle. I’ve chalked it down to the fact that crypto isn’t used to nothing much happening — it doesn’t know how to deal with it. It’s the exact opposite of the apocryphal tale about ants in a jar turning on each other only after you shake the jar. It turns out that all you need to do in crypto to make the equivalent happen is not shake the jar.

All that by way of saying that it’s been a bit of a basket case of a quarter, painful and tedious at times to follow (I’m definitely glad I wasn’t reporting on it weekly); where the digital asset space has felt outshone by all the excitement surrounding AI, which is where the majority of new investment into disruptive tech has been flowing. Things have felt so uneventful at times that I even thought twice about putting this review together — on the grounds that it has felt a bit like watching paint (with an unhealthy measure of added lead) slowly dry.

Nevertheless, once you get away from price action, the reality is that some highly noteworthy things have indeed happened this quarter. This is crypto after all — things are happening all the time. I have therefore endeavoured to bring you a roundup in a crisp format that will enable you to return to whatever it was you were doing before you stopped to read this frontline dispatch as expeditiously as possible.

MARKET OVERVIEW: Q3 HEADING INTO Q4

Bitcoin has been ranging sideways with downward momentum since it reached its all-time high in March at a touch under $74k — following the excitement of the Q1 spot ETF launches and the prospect of Q2’s Bitcoin halving event. Q2 was sideways and down, and Q3 has been more of the same, only with the pain factor turned up a notch — with Bitcoin dipping as low as $49k in August, spooking the markets before recovering ground.

As previously mentioned, this quarter has been enough of a ‘capitulation event’ to shake many newer investors out of their positions, and that’s in spite of the fact that, zooming out, Bitcoin has only just become an institutional asset — with Larry Fink (the CEO of BlackRock) as its new head cheerleader. That said, over 65% of the circulating Bitcoin supply hasn’t moved for over a year. Market dynamics may change over time, but people’s emotional responses - even when they should know better - seldom do. That’s why a “set it and forget it” approach to investing (be it in the S&P 500, or in Bitcoin, or both) is a difficult strategy to beat for the vast majority of people.

As I write, BTC currently sits at a respectable $64k, with a current market cap of around $1.26 trillion, and is showing early signs of a trend reversal (to bullish momentum) as we head into October — which is historically a very good month for the orange coin. In recent days, many people have been suggesting that we’re now close to the beginning of the aforementioned banana zone — where Bitcoin makes a sharp, parabolic move to the upside. Whilst it often pays to take such predictions with a modest pinch of salt, I wouldn’t be at all surprised if that were the case at this juncture, especially given the recent interest rate cuts in the States, signalling a change of tack at the Fed — coupled to the sound of the money printers revving up from Washington to Beijing.

It’s unquestionably the case that QE and fiscal stimulus are generally very good for risk-on assets — doubly so since they are denominated in currencies that are being gradually (or perhaps even rapidly) debased away to nothing through excessive money printing. And this, after all, is one of the prime reasons why Bitcoin exists in the first place — to provide an alternative to the dysfunctional (and arguably corrupt) human systems by replacing them with the inerrancy of code and mathematics. So, if you were thinking about going long on Bitcoin, now might be a very good time to do so.

More generally, the rest of the so-called altcoin market has been bleeding out this quarter (on average significantly worse than Bitcoin). But with this sudden feeling of an imminent trend reversal on the cards, many alts have already started to rebound in recent days, signalling renewed optimism for the start of the bull market proper, when capital rotates into lower cap projects, often with explosive results to the upside — primarily because it takes far less capital to move the needle.

As you can see from the above chart of TOTAL 2 - the market cap of all cryptocurrencies excluding BTC - we may still be some way off that parabolic move for altcoins. And whilst the chart broadly resembles the format of Bitcoin’s 2024 price performance - with the Q1 ETF pump followed by the sideways and down ranging movement - TOTAL 2 is still a long way off (-80%) the previous cycle’s all-time high of $1.7 trillion, which it set in November 2021 — whereas Bitcoin has already (albeit temporarily) punched through its previous all-time high this cycle.

The total market cap for the entire digital asset space currently sits at around $2.2 trillion, with a cycle high of about $2.7 trillion. If Bitcoin really is on the cusp of a parabolic move to the upside, and if October (sometimes called “Uptober” in crypto circles) doesn’t disappoint, then it’s entirely feasible that the prior cycle’s $3 trillion watermark will be surpassed before the end of Q4 (although it’s by no means a racing certainty, despite what the pundits will tell you).

In conclusion: it’s been a painful quarter for people trying to second guess crypto’s next move. Sometimes, the best thing to do is nothing. Crypto investors typically aren’t very good at this. But in terms of future price action, things are starting to look a lot more positive of late. Nothing has changed with the fundamentals — other than the fact that institutional adoption and investment continues to ramp up as regulators worldwide (perhaps with the exception of the SEC) start to normalise crypto as an asset class. Which is extremely bullish — so long as you don’t drive yourself mad by fixating on daily or weekly price fluctuations.

THE BIGGEST NEWS: AI-TO-AI CRYPTO TRANSACTIONS

For me, this is the biggest story of the year so far — and it happened this quarter. Which is why I wrote about it at some length in a recent article (which you can read in full here) — so I’ll just summarise the key points below.

On August 30th, the CEO of Coinbase, Brian Armstrong, dropped a long-form post on X announcing that two AIs had engaged in the first ever AI-to-AI crypto transaction. The transaction involved the exchange of USDC (a dollar-denominated stablecoin) for tokenised LLM resources over the Base network (Coinbase’s Layer-2, Ethereum-compatible blockchain). In short: AI bots can now make tokenised, value-based transactions with each other, as well as with individuals and merchants — globally, instantaneously and for free.

Perhaps the most transformative near-term implication of enabling AI-to-AI crypto transactions is the emergence of a hugely powerful new form of Agentic AI. Providing AI agents with the ability to execute instant, global and free financial transactions (including micro-transactions) in the context of their operations makes them orders of magnitude more powerful.

It’s difficult to overstate the importance of this breakthrough. But it also raises profound questions about the future of our economic systems. Not to mention the trillion dollar question: what happens if it all goes wrong — if a future form of AI goes rogue? And if it does, did we just hand it the (private) keys to the kingdom?

THE REGULATORY LANDSCAPE & THE US ELECTION

As far as crypto is concerned, the SEC continues to operate more like the enforcement arm of a major crime syndicate than an agency mandated to facilitate capital formation and protect investors. I strongly suspect that nothing much will change whilst Gary Gensler remains in charge. Many are hoping that the forthcoming election will mark a point of departure.

The SEC has been issuing Wells notices in 2024 like they’re parking tickets, but the most recent high-profile example was against the NFT marketplace, OpenSea — indicating the SEC’s stubborn intent to wade into the realm of non-fungible tokens, including those representing digital artworks and collectibles. I’m sure you’ve heard the expression “everything looks like a nail to a hammer”. Well, in the world of crypto, everything - and I mean everything - looks like a security to the SEC.

If you’re suspicious of this characterisation of the SEC as being completely out of control - and if you believe that the US government has been largely even-handed with crypto following a period of significant upheaval (exacerbated by grifters like Sam Bankman-Fried) - then I doubt you’ll want to read Nic Carter’s recent follow-up to his earlier exposé on “Operation Chokepoint 2.0”. Unless, of course, you like your preconceptions being challenged from time to time.

In his latest drop - Inside the Biden Admin’s Plot to Destroy Silvergate and Debank Crypto for Good - Carter takes his previous work to the next level; arguing, based on new information coming to light, that Silvergate could have survived if not for undue pressure from regulators, which allegedly included an informal mandate to cap its crypto deposits at 15%.

The clear inference is that Silvergate’s demise may have been a state-sponsored ‘controlled demolition’, rather than the result of its own malfeasance or insolvency, which was the mainstream media narrative at the time. And that this ‘engineered collapse’ may also have been the primary cause of the 2023 regional banking crisis, which ultimately took down Signature, Silicon Valley Bank, and First Republic.

Sacrebleu!

A scene-setting excerpt from Carter’s new piece:

What if Senator Warren’s warnings about Silvergate served as a self-fulfilling prophecy, hastening the run on the bank?

What if the Biden administration deliberately killed off Silvergate - and some of its peers - in an attempt to decapitate the domestic crypto industry? What if this was the spark that lit the flame of a gigantic regional banking crisis?

And what if the settlements Silvergate made with its regulators effectively covered the government’s tracks, allowing it to continue to deny the existence of Operation Choke Point 2.0?

This is the version of events no one is talking about, and one that official government accounts rebuke, but it’s what I’ve come to believe. Aside from a relative few on Crypto Twitter, it’s a story no one seems interested in — the mainstream financial press most of all. But in my mind, the official narrative is historical fiction at best, and recent events have only further convinced me of the fact.

This brings us back to the upcoming US election, where crypto has become a hot topic. Trump jumped on the crypto bandwagon with both feet in Q2, putting the Dems in a bit of an awkward position, after he articulated a clear position on crypto at a libertarian event he attended, which was subsequently widely reported:

"I will ensure that the future of crypto and the future of Bitcoin will be made in the USA, not driven overseas. I will support the right to self-custody. To the nation's 50 million crypto holders I say this: with your vote, I will keep Elizabeth Warren and her goons away from your Bitcoin. And I will never allow the creation of a central bank digital currency."

Since then, Trump has doubled down on his tacit support for crypto. During a surprise keynote address at a major Bitcoin conference in Nashville in July, he signalled that, if elected, he would ensure that the current (not insignificant) US government’s Bitcoin holdings (which are largely a result of the infamous Silk Road seizures) would be retained as a kind of unofficial strategic asset.

“For too long our government has violated the cardinal rule that every bitcoiner knows by heart: Never sell your Bitcoin. If I am elected, it will be the policy of my administration… to keep 100% of all the Bitcoin the US government currently holds or acquires into the future.”

The crypto lobby is increasingly worth pandering to. For one, there’s a lot of money in crypto, so it’s a good look for attracting campaign donations — a point that surely isn’t lost on Donald Trump. Plus, the level of crypto adoption is pretty high in the US. Trump mentions 50 million holders in his speech, although recent surveys do seem to vary considerably. According to a Pew Research Center survey, about 17% of American adults have owned cryptocurrency as of 2023; Coinbase puts the number at around 20% of Americans who own crypto; and a more recent 2024 survey from Security.org suggests that up to 40% of American adults now own crypto.

Whatever the reality, it’s not a small number. Perhaps enough to swing an election if there are enough ‘single issue voters’ and a clear point of differentiation between the two main parties. And as things stand, there definitely is a clear point of differentiation.

People in crypto can be fairly cagey about their political affiliations, but I certainly get the impression that there are quite a few life-long democrats who are in the odd position of finding it hard to justify doing anything other than voting for Trump this time — purely on the grounds that there’s such a stark difference between his positive stance on crypto and the troublesome track record of the incumbent administration, which Harris still represents (literally).

Kamala Harris seems to have cottoned on to this problem recently, and has started making non-committal, soothing sounds about her tacit support for nascent tech sectors, such as AI and blockchain (although she hasn’t said “crypto” out loud yet). Maxine Waters, Ranking Member of the House Financial Services Committee, has also toned down her rhetoric.

Such subtle changes in tone are perhaps designed to placate people who are considering voting for Trump solely on the basis of the Biden administration’s brutal record on crypto. My call is that Harris will have to go much further than this if she wants to be taken seriously by anyone who has already crossed the rubicon of considering a switch to Trump — and time is running out.

THE CRYPTO PRISON GAZETTE: COMINGS AND GOINGS

Like ships that pass in the night: Caroline Ellison, the former CEO of Alameda Research, the fraudulent trading firm affiliated with the cryptocurrency exchange FTX, was sentenced this week to two years behind bars. She might consider herself lucky with that outcome. And Changpeng “CZ” Zhao, the founder of Binance, was released from prison over the weekend — having served a 4-month sentence at a correctional facility in California for his failure to implement effective anti-money laundering measures at Binance. Many in the cryptosphere are looking forward to his return — although he won’t be going anywhere near Binance!

More on the Ellison sentencing from Reuters:

Former cryptocurrency executive Caroline Ellison was sentenced on Tuesday to two years in prison for her role in her former boyfriend Sam Bankman-Fried's theft of $8 billion in customer funds from the now-bankrupt FTX exchange he founded, even as the judge recognized her extensive cooperation with prosecutors.

U.S. District Judge Lewis Kaplan said at a sentencing hearing in Manhattan federal court that he was not comfortable with remorse and cooperation being a "get out of jail free card" in a case so serious. Prosecutors have called Bankman-Fried's actions one of the biggest financial frauds in U.S. history.

Ellison, 29, pleaded guilty to seven felony counts of fraud and conspiracy and testified as a prosecution witness in the trial of Bankman-Fried, who was convicted of fraud and other charges last year and is serving a 25-year prison sentence arising from FTX's 2022 collapse.

The crimes to which she pleaded guilty carried a maximum sentence of 110 years in prison. Her lawyers had argued for no prison time due to her cooperation. Prosecutors sought leniency as well.

Kaplan told Ellison she was "gravely culpable in this fraud," though he said her "remarkable cooperation" represented a "fundamental distinction" between her and Bankman-Fried.

"There's no way you're ever going to do something like this again, I am persuaded," the judge told Ellison. "But here's the thing: this was, if not the very greatest financial fraud ever perpetrated in this country or anywhere else, close to it."

Link: https://www.reuters.com/world/us/bankman-frieds-ex-girlfriend-ellison-be-sentenced-over-crypto-fraud-2024-09-24/

THE AGE OF ABSTRACTION: BURYING THE TECH

It took crypto a long time to realise the inevitable, but it finally happened: the industry admitted to itself that it needed to abstract away all of the insanely complicated tech.

For the longest of times, this concept of abstracting away all of the stuff that made for an impossible user experience was somehow seen (at least subliminally) as a betrayal of crypto’s core values — like it represented a corporate, Web 2.0-inspired whitewashing of crypto.

The bottom line is that crypto will NEVER achieve mainstream adoption unless the user experience (UI/UX) becomes seamless and frictionless. That means fast and cheap transactions, of course - which is now a reality on many of the newer chains, both Layer-1s and Layer-2s - but it also means a serious dose of 'account abstraction'.

Account abstraction simplifies blockchain transactions, making them more intuitive for users. It removes the complexities associated with wallets and blockchains, paving the way for the seamless integration of web3 into our everyday lives. Sometimes, this may mean compromising on aspects of centralisation and self-sovereignty, sometimes not. Much of the existing crypto infrastructure is far from fully decentralised at any rate, so this is a moot point.

In a nutshell: we don't need to bring people to crypto, which is what we've all been trying to do for the last few years — we need to bring crypto to people. To meet users where they are, on their own terms — in a language they already understand, and to abstract away all the messy stuff involving complex transactions, complex seed phrases, long error-prone alphanumeric strings, and basically all that batshit crazy machine code stuff. Despite what some of the purists may tell you, this is the only way!

I wasn't sure if this inevitable progression towards meaningful account abstraction would happen this cycle or next. But now I needn't wonder any longer — because a lot of it went down in Q3.

I’ll return to this topic another time because it’s so important, but just to give you a feel for the reality of this trend in Q3:

• Solana introduced Blockchain Links, or Blinks. It’s a working system to turn any crypto transaction on Solana into a ‘blockchain link’ that can be shared anywhere on the internet — no third party applications (or dApps) required. This enables a much more seamless integration between the world of crypto and the existing internet. As such, it represents a significant turning point in crypto's journey towards mainstream adoption.

• Major centralised crypto exchanges (CEXs) including KuCoin and Bybit are deploying MiniApps and bots on Telegram Messenger in an effort to meet new users where they already are — i.e. on Telegram (to the tune of 900m MAUs).

• Coinbase partnered with Stripe to provide a KYC-compliant fiat on-ramp on to Base (Coinbase’s Layer-2 blockchain), as well as enabling fiat-to-crypto transactions from directly within the Coinbase wallet. This makes for a seamless onboarding process for newbies onto the Base network.

Douglas Adams once quipped that technology is the name we give to stuff that doesn't work properly yet. He was dead right. And crypto is finally showing signs of embracing that mantra — taking a more user-centric approach that puts it on a path to gradually disappearing from view, where it belongs.

OTHER SIGNIFICANT GOINGS ON

BLACKROCK DOUBLES DOWN ON BITCOIN

BlackRock has seriously doubled down on its Bitcoin pitch. It has obviously been delighted with the success of its spot Bitcoin ETF (IBIT, the iShares Bitcoin Trust), and the SEC has recently approved (with strict oversight) options trading on IBIT — paving the way towards mainstream crypto adoption by institutions. 

The world’s largest asset manager has also published a recent report on Bitcoin, the key takeways of which are:

• Investors considering allocating to bitcoin are grappling with how to analyze it relative to traditional financial assets, given bitcoin’s unique properties and limited history.

• Bitcoin, with its high volatility, is obviously a “risky” asset on a standalone basis. However, most of the risk and potential return drivers bitcoin faces are fundamentally different from traditional “risky” assets, making it unfitting for most traditional finance frameworks – including the “risk on” vs. “risk off” framework employed by some macro commentators. 

• Bitcoin’s nature as a scarce, non-sovereign, decentralized global asset has caused some investors to consider it as a flight to safety option in times of fear and around certain geopolitically disruptive events.

• Over the long term, bitcoin’s adoption trajectory is likely to be driven by the intensity of concerns over global monetary stability, geopolitical stability, U.S. fiscal sustainability, and U.S. political stability. This is the inverse of the relationship that is generally attributed to traditional “risk assets” with respect to such forces.

APPLE TO ENABLE NFC CRYPTO PAYMENTS FOR THIRD-PARTY APPS

Another major development and catalyst for mainstream adoption, this time from Apple:

Apple has said it will begin letting third-party developers use the iPhone's near-field communication (NFC) payment chip to handle transactions following a multi-year pressure campaign from regulators in Europe for the company to open up the platform.

iPhone users will be able to choose a third-party payment app as their system default and possibly one that supports bitcoin, crypto, or stablecoin payment options. Stablecoins—the largest of which are Tether's USDTTether 0.0% and Circle's USDC—are cryptocurrencies price-pegged to traditional currencies, usually the U.S. dollar.

"Tap to pay using USDC on iPhones incoming soon," USDC stablecoin developer Circle's chief executive Jeremy Allaire posted to X, telling wallet devs to "start your engines."

Allaire went on to explain what the update will mean for developers and point-of-sale (PoS) hardware/software companies and how they should prepare.

Link: https://www.forbes.com/sites/digital-assets/2024/08/16/bitcoin-and-crypto-suddenly-braced-for-a-powerful-apple-iphone-update-after-price-swings/

LAUNCH OF SPOT ETHEREUM ETFs

Several Ethereum spot ETFs made their market debut in July, which was seen at the time as marking a significant milestone for the cryptocurrency industry. But it’s fair to say that interest in the new exchange-traded products hasn’t been as high as with the launch of the Bitcoin ETFs. It’s still early days, but for now TradFi seems more comfortable with the ‘digital gold’ narrative surrounding Bitcoin…

There was lots more besides jostling for attention, but one has to draw the line somewhere, so I’ll draw it here. Until next time! 🍌🍌🍌

CONVERGENCE: COINBASE INITIATES THE FIRST AI-TO-AI CRYPTO TRANSACTION

If you were living in Kansas a fortnight ago, I’m here to report that - regardless of what your eyes are telling you - you’re definitely not living there anymore. Since then, you see, the first AI-to-AI crypto transaction has been announced. Yes, that’s right: two artificial intelligences (AIs) have successfully exchanged value on-chain, using a dollar-denominated stablecoin no less — and without an intermediary in sight. This Promethean development was announced to the world by Brian Armstrong, CEO of the crypto exchange, Coinbase — whose skunkworks team has clearly been busy in the lab, industriously exploring the nascent possibilities at the intersection of crypto and AI.

Now, Coinbase is not the only game in town exploring this new nexus of AI crypto transactions — but they seemingly scored the slam dunk. I predicted this development more than a year ago, but the reality of it actually happening still comes as a bit of a shock. It hits different, as the saying (and the song) goes. And whilst I haven’t had much time to think about the longer-term implications of what has just occurred, such is the importance of this news within the world of crypto that I felt it would be remiss of me not to cover the story forthwith — and to offer you, dear reader, a summary of what we know so far, in the event that you’re not already up to speed.

But firstly, a brief note on how I came to realise, ahead of time, that this was destined to happen…

Shortly after OpenAI released ChatGPT, I started riffing on the term “AI3” as a form of shorthand for my belief that AI and web3 would at some point converge — and moreover that they desperately needed to converge in order to mitigate the over-centralisation of AI applications, capabilities and resources. It all boils down to one basic belief that I harbour: if you think that surveillance capitalism (aka Web 2.0) is a destructive force, forget about it — because it’s small potatoes compared to what’s in the process of unfolding with the centralisation of AI. To put it bluntly: if only a handful of behemoths control the future of AI, we’re all in deep shit. We actually might be in deep shit anyway — but that’s another story.

Whilst brooding on this topic, I started thinking about the inevitability of an AI economy. I mean, if there is such a thing as a creator economy (and there is), then as surely as the sun rises in the east, there’s going to be an AI economy. So, that was the first pillar of my hypothesis: an AI economy is INEVITABLE.

Based on this, I rapidly arrived at a firm secondary conclusion: that this future AI economy was not going to run on traditional financial (TradFi) rails — with bank accounts, the Swift network, credit and debit cards, and all of that fax machine era malarkey. It is going to run on CRYPTO rails.

So that’s how I knew that AI-to-AI crypto transactions were basically programmed to happen — I just didn’t expect it in 2024.

FAREWELL TO KANSAS

And so, to the meat in the sandwich: about a week ago (on August 30th to be precise), Brian Armstrong dropped a long-form post on X announcing that the inevitable had happened: two AIs had engaged in a transaction involving the exchange of crypto for tokenised LLM resources.

Armstrong added the contextual detail that, whilst AI agents cannot get bank accounts, they can get crypto wallets; and went on to highlight the bigger picture side of things — that AIs can now use the stablecoin USDC on Base (Coinbase’s Layer-2 blockchain) to transact with humans, merchants and other AIs. He also underscored the fact that those transactions are “instant, global and free” — essentially meaning completely frictionless.

To put all of that into a single sentence for the sake of your easy comprehension: AI bots can now make tokenised, value-based transactions with each other, as well as with individuals and merchants — globally, instantaneously and for free. This milestone marks a significant step towards enabling AI agents to perform autonomous transactions at scale — paving the way for potential future applications in AI-driven commerce.

The news was met with both amazement and excitement by the cryptosphere, which has recently been struggling to remain optimistic in the face of a sea of seemingly never-ending red candles. You see, crypto is no longer the shiny new kid on the block for investors in disruptive tech — AI is. Crypto hasn’t been exciting people like it used to before OpenAI released ChatGPT. But now, seemingly out of nowhere, this shiny newest kid on the block (AI) has chosen to make crypto the drummer in its band. And everyone knows that drummers get lots of groupies.

THE BIGGER PICTURE: THE DAWN OF AN AI-DRIVEN ECONOMY

Whilst Coinbase's announcement has captured the spotlight, it's crucial to understand that this development is part of a broader technological shift that could reshape our economic landscape — and that there are other companies also busy skating to the puck.

For example, Skyfire, a blockchain development firm, has recently launched a payment network that will allow AI agents to make and receive payments without human intervention — using digital wallets with unique identifiers and safeguards to prevent overspending.

And crypto trading bots, such as the Trojan Bot - which automate and simplify the process of trading cryptocurrencies on decentralised exchanges (DEXs) - are already being widely used on Telegram, including by yours truly. These bots are not completely autonomous, but they do already automate sophisticated transactions on behalf of their users — including executing crypto limit orders, where a trade is made when a predetermined market price triggers a pre-specified transaction.

But there’s a much bigger picture here to unpack. This successful execution of an AI-to-AI crypto transaction by Coinbase marks more than just a technological milestone; it heralds the potential dawn of an entirely new AI-driven economy. I mean, when you zoom out far enough, you begin to realise that this development opens up a world of possibilities that could reshape our understanding of commerce, autonomy and the very nature of economic interactions.

THE RISE OF FINANCIALLY POWERED AGENTIC AI

This piece isn’t the right format for delving deeply into all aspects of what this breakthrough might mean. But perhaps the most transformative near-term implication of AI-to-AI crypto transactions is the emergence of a hugely powerful new form of Agentic AI, which is defined as “a type of AI that combines sophisticated machine learning algorithms and deep learning systems — enabling autonomous decision-making, goal-oriented action and proactive adaptation to changing circumstances within a defined scope”.

Not to put too fine a point on it: providing AI agents with the ability to execute “instant, global and free” financial transactions in the context of their operations makes them orders of magnitude more powerful.

Here are just a few potential applications across various sectors:

Marketing and Advertising Revolution

It is now technically feasible that an AI agent could conceptualise, execute and optimise an entire marketing campaign from start to finish. This goes beyond mere content creation to include:

• Media buying and real-time bidding on ad platforms

• Influencer selection and compensation

• A/B testing with dynamic budget allocation

• ROI analysis and automatic campaign adjustments

Transforming E-commerce and Supply Chains

Agentic AI coupled to this new financial superpower could revolutionise how businesses manage inventory and supply chains, including:

• Autonomous restocking based on predictive analytics

• Dynamic pricing adjustments in response to market conditions

• Negotiating and executing contracts with suppliers

• Managing logistics and transportation costs

Next-Level Financial Trading and Investment

Whilst AI trading bots already exist, financially empowered agentic AIs could take this to new heights:

• Managing diverse investment portfolios across multiple asset classes

• Executing complex hedging strategies

• Exploiting arbitrage opportunities across markets on autopilot

• Participating in decentralised finance (DeFi) protocols

• Automatic tax optimisation and reporting

Reshaping Real Estate and Property Management

Financially empowered AI agents could transform property transactions and management:

• Autonomously bidding on properties based on investment criteria

• Managing rental properties, including setting rates and handling payments

• Coordinating and paying for maintenance and repairs

• Optimising energy usage and costs in smart buildings

Accelerating Research and Development

Financially empowered AI could accelerate scientific research:

• Autonomously purchasing computing resources or cloud services as needed

• Ordering supplies and equipment for experiments

• Funding and managing citizen science projects

• Licensing or acquiring intellectual property

Personal Finance and Lifestyle Assistants

AI agents could handle various aspects of personal finance and lifestyle:

• Budgeting and bill payments

• Travel planning and booking, including real-time adjustments

• Subscription management and optimisation

• Charitable donations based on personal values and impact metrics

Revolutionising Governance and Public Services

In the public sector, agentic AI with financial capabilities could:

• Manage and allocate public funds based on predefined criteria

• Automate the distribution of social benefits

• Optimise public transportation routes and pricing

• Manage smart city infrastructure and resources

BRAVE NEW WORLD

As I mentioned at the beginning, we’re not in Kansas anymore. The ability for AI to execute value exchange transactions autonomously represents a significant paradigm shift in how we think about agency and automation. It blurs the lines between decision-making algorithms and executable actions — potentially leading to more efficient, responsive and personalised systems across all sectors of the economy.

But it also raises profound questions about the future of our economic systems. How will human-driven markets interact with AI-driven ones? What regulatory frameworks will be needed to govern these new forms of economic activity? And perhaps most importantly, how will this shift impact employment and the distribution of economic power? Not to mention the trillion dollar question: what happens if it all goes wrong — if AI goes rogue and attempts to take over? And if it does, did we just hand it the (private) keys to the kingdom?

As we bid farewell to the familiar landscape of traditional finance, we find ourselves in a brave new world of AI-driven economics. The yellow brick road of crypto has led us to a place where AIs can autonomously engage in financial transactions, opening up possibilities that were once the realm of science fiction. But unlike Dorothy, we can't simply click our heels and return to the comfort of the old world. Instead, we must actively shape this new reality. Therefore, it's incumbent upon all of us – technologists, policymakers, and citizens alike – to guide the development of financially empowered AI in a direction that benefits humanity as a whole. This twister of technological change has swept us up; now it's our responsibility to ensure we land on our feet in a world that's not just different — but better for everyone.

CRYPTO’S GUTENBERG MOMENT

It slipped by almost entirely unnoticed at the time. Even I missed it initially. Perhaps it all seemed too lowbrow and frankly vulgar to warrant serious intellectual consideration. But irrespective of first impressions, in January 2024, while the cryptosphere was fixated on the launch of the Bitcoin ETFs and the impending Bitcoin halving, a silent revolution was unfolding on a gritty, degen-infested backstreet on the outskirts of town. And it was there - on the Solana blockchain to be precise - without any truffle-infused vol-au-vents, or big band fanfare, that crypto experienced its Gutenberg moment…

So what exactly constitutes a Gutenberg moment? Well, I’m sure you’re glad I asked…

Johannes Gutenberg's movable-type printing press didn't just change the game: it flipped the table, scattered the pieces, and rewrote the rules of information dissemination. It slashed the friction involved in publishing, owning and authoring literary works — unleashing a torrent of ideas and creative energy that would go on to fuel the High Renaissance, spark the Reformation and light a fire under scientific progress.

But at its core, Gutenberg's invention was simply an economic disruptor. It transformed the economics of transcribing, sharing, and distributing the written word so dramatically that it was like unleashing a firehose of knowledge on a world dying of intellectual thirst. That's why it was such a pivotal moment in history: it wasn't just a technological advancement, it was an economic game-changer that paved the way for books (and let's not forget, eventually newspapers) to become the world's first truly mass medium.

Fast forward to 2024, and I'd argue that an equivalent 'Gutenberg moment' has just rocked the world of crypto. Picture this: an idiot-proof, no-code token creation platform that does for the 'Internet of Value' what Gutenberg's printing press did for the written word. Sounds too good to be true? Well, hold onto your hardware wallets, folks, and I’ll explain…

Enter pump.fun, a new web-based platform that doesn't just simplify the process of creating and launching tokens — it puts it on easy mode. With an exclusive focus on the meme coin sector (this cycle's unexpected success story), pump.fun is democratising crypto creation faster than a crypto bro can say "wen lambo?"

Here's the kicker: with pump.fun, literally anyone can create their own tradable crypto token, no questions asked. All you need is a project name, an available ticker symbol, a brief abstract and a digital image representing the project. No need for a PhD in finance, or a black belt in smart contract coding or cryptography — financial expertise and programming skills are as redundant as windshield wipers on a submarine.

Of course, listing your project on pump.fun is only the first act in this crypto extravaganza: you still have to convince enough punters that your project is the next big thing in order for it to fledge off pump.fun and onto a decentralised exchange (DEX) where it can spread its wings and fly — or crash and burn spectacularly, as is so often the case.

But hey, the same is true in the old-school world of print: having the ability to publish something doesn't guarantee anyone wants what you're selling. And the easier it is to publish, the more that gets published. The world is full of noise. Welcome to the author's paradox: your masterpiece isn't truly born until it finds its audience.

On pump.fun, the numbers tell a sobering tale: less than 2% of all projects make it out into the wild world of crypto. Most, perhaps mercifully, curl up and die in the pump.fun graveyard of dreams that never quite made it off the launchpad.

So, this new superpower comes with some caveats. I know from personal experience (having been involved in a successful token launch off pump.fun) that dreaming up a killer meme that's 'a sendor' (that's degen-speak for a project showing signs of lift-off) is as tricky as nailing jelly to a wall. And even if you do make it out alive, longterm success tends to favour those with a continual pipeline of catchy artwork, a marketing budget, relationships with key opinion leaders (KOLs), a slick social media campaign and the ability to herd cats on Telegram (aka community building). Throw in a healthy dose of luck and good timing and you've got the recipe for potential meme coin magic.

And for the potential investor? It's like tiptoeing through a minefield blindfolded. The allure of gullible, trigger-happy punters, primed to part with hefty chunks of crypto (i.e. money), coupled to the borderless anonymity of the cryptosphere, proves irresistible to scammers of every stripe. Many of these unscrupulous bastards launch projects solely to reel in early investors, only to yank the rug out from under them, draining their own (often substantial) initial stake in seconds flat — in a manoeuvre known as a "rug pull". In the world of TradFi, this would land you in hot water with the SEC, and probably thereafter in jail — but in the wild west of pump.fun, it's just another day at the office. And in spite of rug pulls clearly being a form of theft, many prospective meme coin investors simply view them as the cost of doing business — a necessary evil in the pursuit of those sweet, sweet gains.

But caveats aside, here's the mind-bending reality and the key takeaway of this article: it's now physically possible to launch a token (and therefore the foundations for an entire token economy) in less time than it takes to order a pizza and get it delivered to your door.

Let that sink in for a moment...

I mean, once upon a time - until very recently in fact - creating a currency or a financial instrument was the rarified preserve of sovereign governments and elite banking dynasties. The arrival of Bitcoin and other digital assets like Ether was a seismic shock to this financial status quo — one that the 'old world order' still hasn't quite digested.

But in 2024, Pandora's box hasn't just been opened: it's been turned upside down and shaken vigorously. Because now, a gormless teenager armed with nothing more than an internet connection and a JPEG of a cute puppy dog can spin up a tradable crypto project from their parents' basement after school — without any specialist knowledge, and without asking anyone, including their parents, for permission.

HERE BE DRAGONS

For someone who remembers life before smartphones and social media, visiting pump.fun for the first time is like stumbling into a parallel dimension designed by a committee of caffeinated toddlers. It looks vaguely familiar, with all the sophistication of a mid-90s GeoCities page — only it seems expressly designed to give anyone old enough to remember those days a violent seizure.

The homepage is a schizophrenic fever dream, assaulting your senses with strobe-like flashing tiles signalling projects that are gaining traction. But try to click on one, and it vanishes like a mirage, replaced by another before you can say "WTF!". Navigation cues? About as discernible as risk management strategies at a degen convention. And to anyone old enough to remember dial-up internet, it's the digital equivalent of a giant neon "KEEP OUT!" sign.

UNDER THE HOOD

But don't let the unhinged user interface fool you: underneath this digital acid trip lies some seriously clever architecture. The platform employs a bonding curve mechanism to determine token prices — replacing traditional order books with a more dynamic system. And the price per token increases exponentially as the market cap grows — offering substantial returns for early investors, which is a key part of the system’s appeal.

And should your token make it to the fabled ‘King of the Hill’ spot at the top of the landing page (representing the halfway point in terms of token sales), the huge boost in visibility and traction is often enough to propel your project directly onto Raydium, a decentralised exchange — along with all the necessary bits and pieces to make your new token fully tradable, including the token contract renounced (so it can’t be manipulated by you or anyone else) and seeding sufficient liquidity to facilitate trading. I can testify that, if you accomplish this ‘fully-fledged’ launch off pump.fun (or other similar platforms), the rush is intense!

A LICENSE TO PRINT MONEY?

So, approximately 7 months into its journey, is this basket case of a meme coin Gatling gun showing any signs of turning a profit? You bet it is. In fact, it’s showing signs of becoming one of the most successful businesses in all of crypto. I’ve heard it described as “the fast-food chain of crypto, serving up quick thrills and instant gratification”. That’s a compelling analogy — and as in the world of instantaneous cuisine, it appears to be a winning strategy.

To put pump.fun’s early success into perspective: the platform has already surpassed Ethereum in 24-hour revenue multiple times — with an all-time-high to date of $2.31m (on July 30th). Yes, you heard that right: this young pretender is already making a habit of outstripping the primo Layer-1 smart contract platform, Ethereum, in daily revenue. And Ethereum is currently the second largest piece of real estate in the crypto universe — second only to Bitcoin (BTC), with a market cap of over $335bn. With pump.fun’s cumulative revenues already sitting at over $96m at the time of writing - and current annualised revenue projections of almost $300m (according to DeFiLlama) - this plucky newcomer shows no signs of slowing down any time soon.

Of course, the fact that pump.fun appears to have engineered a license to print money hasn’t exactly gone unnoticed in the fast-moving world of crypto. And numerous competitors have already launched similar platforms, including: Moonshot (launched by DexScreener), with a focus on auditing smart contracts and eliminating insider activities, thus claiming to provide an added layer of trust for users; and ape.lol, a recent UK-based contender offering a lower market cap threshold for migrating off the launchpad, and a much crisper and less confusing user interface.

THE START OF SOMETHING BIGGER

So, pump.fun clearly has first-mover advantage - in spades - but, with the benefit of hindsight, it was merely the starting pistol in a new movement to aggressively eliminate the technical hurdles traditionally associated with creating a new cryptocurrency. And in the same way that Gutenberg’s press transformed the economics of the written word, this new technology is rapidly transforming the economics of digitising value.

Hence, since pump.fun’s launch in January, we've witnessed a proliferation of similar no-code token-launch platforms, each with their own take on reducing friction yet further, or on servicing latent demand on other Layer-1 blockchains, including Ethereum and TRON.

But subtleties aside, the mechanics of these platforms typically mirror those of pump.fun — utilising bonding curves, automated liquidity provision, and token burning mechanisms. It's as if a new language of token economics is being written as an adjunct to the traditional world of DeFi and rapidly adopted across the board. These platforms are to cryptocurrency what social media and the participatory web was to content creation — a quantum leap in accessibility and speed.

A VIRTUOUS CYCLE?

Amidst this whirlwind of innovation, it's worth noting that the meme coin sector itself is thriving, particularly on the Solana blockchain. Data from CoinGecko reveals that the total market capitalisation of Solana-based meme coins is currently over $7 billion. Leading the pack is Dogwifhat (WIF), with a market cap of $1.9 billion, accounting for over a third of Solana's total meme coin market value.

This bullish trend in Solana meme coins reflects a broader investor sentiment toward the sector. A recent report by CoinGecko identified meme coins as one of the top narratives in Q2/2024 — suggesting that platforms like pump.fun are entering a receptive market environment.

The thriving meme coin ecosystem on Solana provides the liquidity and trading opportunities that make the creation of new tokens via platforms like pump.fun more viable and potentially highly lucrative for developers and investors alike. It's a self-reinforcing cycle of innovation and growth — reminiscent of how the proliferation of printed books led to increased literacy, which in turn created more demand for books.

REGULATORS, MOUNT UP

However, this brave new world of instant token creation is not without its challenges. The recent suspension of the "makenowmeme" account on X - which allowed users to create their own meme coins via a single tweet - highlights the regulatory tensions and hurdles these innovations face. It is perhaps reminiscent of the censorship and regulation that early printers encountered as they challenged existing power structures. Just as the printing press forced society to grapple with questions of free speech and information control, these new platforms are forcing us to grapple with our notions of financial regulation and responsibility.

So, as this new financial printing press whirs into overdrive, you can bet your last DOGE that regulators worldwide are burning the midnight oil — trying to wrap their heads around what to do about this new paradigm shift. It's like watching a game of high-stakes whack-a-mole, with new tokens popping up faster than you can say "SEC investigation". Just to give you a feel for the scale: during the recent X space conversation between former President Donald Trump and Elon Musk, pump.fun launched 10,000 new coins in a three-hour timeframe.

So, it’s safe to expect a flurry of new guidelines, stern warnings, and probably a fair few fines in the coming months as the powers that be grapple with this new reality. Will they manage to strike a balance between fostering innovation and protecting investors? Or will we see a regulatory crackdown that sends these new-age financial printers scurrying underground? Either way, the regulatory response to this Gutenberg moment is set to be a page-turner in its own right. Stay tuned!

SCENARIO PLANNING

As we stand at the precipice of this new era in crypto asset creation, one can't help but wonder what transformative ideas and applications might emerge. It’s entirely possible (if not probable) that the meme coin sector eventually burns itself out, becoming a victim of its own success. But even if it does, it could still be regarded as the goose that laid the golden egg. Will we see a new wave of community-driven economies? Could these tools lead to more equitable distribution of digital wealth? Or are we merely witnessing the birth of a new form of digital tulip mania?

Nobody, Gutenberg included, would have been able to predict the revolutionary implications of his printing press less than a year in — not at the granular level at any rate. And the same is true here, with crypto’s Gutenberg moment. Many of the outcomes are likely to be things we could never have predicted. But nonetheless, it’s a useful intellectual exercise to try to imagine some of the future scenarios made possible by such a drastic shift in the economics and complexity associated with spinning up a token economy.

So here are just a few potential scenarios that could unfold in the coming months and years:

• Cause-driven cryptocurrencies: Envision a world where every social cause has its own token, allowing for unprecedented transparency and direct impact. These "charity coins" could provide real-time tracking of donations, with smart contracts automatically allocating funds to predefined goals. Donors wouldn't just give money — they'd actively participate in decision-making through on-chain governance. You could watch your contribution building a school brick by virtual brick, or determine exactly how many healthy school meals your tokens had provided. This fusion of philanthropy and blockchain could revolutionise how we approach global challenges — making giving not just more transparent, but more engaging and effective than ever before.

• Hyper-local economies: Imagine if every neighbourhood had its own digital token, fuelling micro-economies tailored to local needs. These community coins could incentivise shopping at local businesses, reward volunteer work or fund area-specific projects. You might pay for your morning coffee or local services with tokens earned from community gardening, or experience your local park renovated through a neighbourhood ICO. This hyper-localisation of finance could reshape urban landscapes — strengthening community bonds and fostering grassroots economic resilience in ways we're only just beginning to imagine.

• Reputation-based currencies: In a similar vein, consider a potential future scenario where your expertise and trustworthiness could become spendable assets. These "trust tokens" could revolutionise how we view professional credentials and social capital. Your LinkedIn profile might have tokenised endorsements — tradable proof of your skills. Or you might collect "Good Neighbour" tokens, earned through community service, to get discounts at local businesses. This merger of community-governed social credit and cryptocurrency could redefine how we quantify and leverage our intangible assets in both personal and professional spheres.

• Automated organisations: Imagine fully tokenised, AI-driven entities where governance and resource allocation are managed entirely through smart contracts. These "DAO 2.0" structures could operate with unprecedented efficiency and transparency. For example, a ride-sharing service where algorithms automatically adjust prices and driver compensation based on real-time demand, or a streaming platform where content creators are paid the instant their video is watched. This fusion of AI and tokenomics could create organisations that are more responsive and equitable than anything we've seen before.

PRINTING THE FUTURE

Just as Gutenberg's printing press turned the page on humanity's relationship with knowledge, pump.fun and its ilk are rewriting the book on value creation. It’s early days, but we're no longer just readers or consumers in this financial narrative — we're all potential authors, armed with the power to mint our own chapters in the evolving story of digital economics.

The ink may still be wet on this particular revolution, but the implications are as clear as freshly printed type: the democratisation of value creation is here, and it's set to shake the foundations of our financial world as profoundly as movable-type shook the world of ideas. Whether this leads to a renaissance of economic creativity or a babel of monetary confusion remains to be seen. But one thing's certain: the presses are rolling — and there's no putting this genie back in the bottle.

It may not be crystal clear right now, but I’m convinced that the implications of this Gutenberg moment in crypto extend far beyond the realm of meme coins. We're witnessing the democratisation of financial instrument creation on an unprecedented scale. Anyone with an idea can now mint a token faster than they can build a website. It's a development that seems destined to reshape how we think about value creation and exchange in the digital age.

But with great power comes great responsibility. Just as the printing press spread both valuable knowledge and misinformation, these new tools have the potential to foster financial innovation but they also enable endless scams and encourage ill-informed investments. The crypto community now faces the challenge of harnessing this newfound creative potential while mitigating the inherent risks…

Q2 PITSTOP: CRYPTO HEATS UP AS US ELECTION SEASON APPROACHES

It’s been a relentless few months in the cryptosphere since I last pitstopped in February to survey the territory. Things are definitely heating up as we head into election season in the United States — and towards a full-tilt crypto summer. Market sentiment has finally transitioned from hope to optimism and is now rapidly heading towards full-on belief interspersed with fever-pitched pockets of thrill.

Bitcoin stole the limelight throughout much of March and April, with the OG blockchain transitioning into a new epoch on April 19th after the quadrennial halving event. And more generally, the Bitcoin spot ETFs have - as expected - been a roaring success. BlackRock is wringing its corporate hands in glee.

Ethereum has continued to underperform relative to Bitcoin as the second biggest dog on the blockchain, with other more nimble competitors gradually catching up because people actually prefer using them, although we have just witnessed a bit of a game-changer for Ethereum — seemingly out of nowhere last week (about which more later).

Solana and Base continue to gain traction on the user adoption front. And other new chains have also made significant progress — including Telegram’s “The Open Network” (TON), which has recently made it into the top 10 on the CoinMarketCap leader board. My expectation is that TON will soon flip $DOGE and $XRP to claim the number 5 spot for blockchains by market cap, which will be an eye-opener for many when it happens — having seemingly flown largely under the radar thus far.

Meme coins continue to print telephone numbers and will likely continue to outperform all other crypto narratives this cycle by a wide margin — including AI. The fact that this really pisses off serious crypto people can be amusing.

Restaking - crypto bro newspeak for rehypothecation - is a fashionable topic in elite crypto circles, which has been annoying the crap out of me much more than meme coins ever could. I thought we came here to escape derivatives and counterparty risk — not to invent new ways of creating them and assuming more.

And the Biden administration has doggedly continued on with its disingenuous, pig-headed crusade against crypto. Except it now appears that Trump’s recent (vote-grabbing) wholesale endorsement of digital assets, along with his scripted condemnation of CBDCs, has forced the Dems to pivot, for fear of losing the election — and to throw their chief gimp, Gary Gensler, firmly under the bus. Poor Gary.

Just another quarter in the high-octane world of crypto…

Share

BITCOIN: REACHING MATURITY AMIDST GROWING PAINS

The first half of the quarter has undoubtedly belonged to Bitcoin. People were still excited about the spot Bitcoin ETF launches, with pundits on Crypto Twitter evaluating ETF inflows and outflows on a thrice-daily basis. But the arrival of institutional capital wasn’t just a new narrative titilating the social media pundits. With Bitcoin currently at less than $1.4T in total market cap, the arrival of Wall Street, with its deep pockets, takes Bitcoin into an entirely different territory.

But big TradFi moves don’t just happen overnight — the wheels of change turn slowly, especially compared to the frenetic pace of crypto. And so some people were disappointed by the inflows and started whining about “number not go up fast enough”. I’m not quite sure which charts they were looking at, or what degree of entitlement they were feeling: because Bitcoin is up over 75% since the bottom of the post-launch dip caused by the Grayscale GBTC overhang — with lots of GBTC investors cashing out and taking profits. That’s basically in 4 months.

Larry Fink, the Grand Fromage at BlackRock, certainly wasn’t disappointed by the company’s launch of its ETF, IBIT — referring to it as “the fastest growing ETF in the history of ETFs”. And he wasn’t wrong. BlackRock’s current IBIT BTC holdings amount to $19.6 billion, or over 283,000 BTC — that’s approximately 1.4% of the total supply of all Bitcoin that will ever be mined (which is 21 million). And, of course, that’s just for starters.

BlackRock is not the only game in town either. Grayscale’s conversion of its trust to an exchange-trade product still commands an equivalent slice of the pie, although there have been steady outflows — since the company is charging considerably more than the competition in terms of its basis rate (BIP). Fidelity and others have also witnessed solid uptakes — especially given the fact that we’re only a few months in.

It’s worth noting that many TradFi institutions won’t even touch an ETF until it is at least 6 months old — so this was never going to be an ‘all-in’ scenario from day one. Demand for these products will increase steadily over the next year or two - perhaps even substantially - as the ETFs are integrated into other investment products and portfolio offerings.

THE BITCOIN HALVING EVENT

The headline event for Bitcoin this quarter was undoubtedly the halving, known to some of the old-timers as “the halvening”. This is the point at which Bitcoin transitions into a new epoch, whereupon the block rewards issued to miners are cut in half. Such halvings take place every 210,000 blocks — which works out at approximately once every 4 years.

This is essentially a kind of monetary policy that is baked into the protocol at the software level — reducing the emission rate (and therefore the inflation rate) incrementally over time. The event, which happened on April 19th, caught the imagination of the cryptosphere this time — whereas previous halvings have passed without too much fanfare.

The consensus hypothesis is that halvings have an explosive impact on the price of Bitcoin. A reduction in the supply of BTC mined or minted into circulation eventually leads to an increase in price, as the supply/demand dynamics begin to shift. This makes perfect sense to me — especially this time around, with an entirely new (and not inconsiderable) demand-side of the equation gradually coming online in recent months.

Once again, however, people are impatient for this to make a difference in terms of price action, and they get edgy when it doesn’t happen immediately post-halving. Such people may be prone to capitulate because of their impatience and nagging doubts — which is exactly when the smart money gobbles up supply before a parabolic move to the upside takes place.

Of course, that’s assuming we can predict the future based on what’s happened historically. With such a nascent asset, it’s difficult to make predictions with any real degree of certainty. But irrespective, we’re kind of in that window right now — where you’d expect the weak hands get flushed out before a sharp increase to the upside.

THE ARRIVAL OF THE RUNES PROTOCOL

The other big news on Bitcoin since I last covered the waterfront is Casey Rodarmor’s launch of the new Runes protocol — a protocol designed to do for fungible tokens what his Ordinals protocol did for non-fungible tokens (NFTs) last year. The launch of the protocol was timed to coincide with the halving event, which contributed to maximum excitement and FOMO (fear of missing out). Bitcoin now has NFTs (ordinal inscriptions) and meme coins (runes) — and it’s fair to say not everyone is entirely happy about that. Bitcoin was up until recently a sea of tranquility compared to the other chains, with not much going on other than the store of value narrative and lots of people putting laser eyes on their profile pics.

Rodarmor is one of those divisive characters — people tend to either love him or loathe him depending on what side of the fence they’re sitting on. In that respect, perhaps he’s a bit like the crypto equivalent of Trump, although it’s fair to say the similarities end there.

And Rodarmor isn’t in it for making money, he’s in it to change the dynamic on Bitcoin — to turn it into more than just a peer-to-peer payments network for the underlying crypto asset, BTC. He has already largely succeeded. Bitcoin has attracted a new generation of crypto enthusiasts onto the network — people who actually use crypto to do stuff rather than just hoarding it on cold storage devices. That sounds like progress to me.

The increase in traffic and the heightened demand for block space has also contributed to a rise in transaction costs on the network, which has pissed off the Bitcoin purists, who see the new activity as being little more than JPEG pornography and shitcoinery. But the miners seem extremely happy with the development, since they have a highly lucrative new revenue stream — just as the block rewards have dried up post-halving, which has taken the reward for solving a mathematical puzzle (known as finding the “target hash”) down from 6.25 BTC to 3.125 BTC.

My personal opinion is that Casey Rodarmor is a fucking legend, and he will go down in the Bitcoin history books - alongside people like Hal Finney - as having made a significant contribution to the future growth and viability of the network.

But enough about Bitcoin, I could write another thousand words about all the stuff happening on the most decentralised network in the cryptosphere — what’s been going on elsewhere?…

MEME COIN MANIA CONTINUES TO BUILD MOMENTUM

Meme coin mania - which I wrote about in some depth recently - continues to gather steam as we head towards the more parabolic part of this market cycle.

I’ll avoid repeating myself too much (do read the previous article if you interested) but meme coins are definitely having their day in the sun, plus there’s a growing realisation that they’re not just a flash in the pan. Yes, meme coins are definitely here to stay. And they’re a feature - not a bug - of this new ‘Internet of Value’ that crypto has provided the foundations for.

There’s a saying I saw online recently: attention drives liquidity, and culture drives attention. Both of these things are unquestionably true. It’s why people say we live in an attention economy. Memes are deeply embedded in online culture, and they have been since the dawn of the web. They demand attention based on their capacity to rapidly propagate over the network — to go viral. Memes, are, after all, essentially the internet’s linuga franca. So it should be no surprise to anyone - now that we have the primitives available for ascribing digital value to things - that memes have become a powerful part of crypto culture.

As far as volatility is concerned, meme coins make Bitcoin look like a stable coin. And financial involvement in meme coins should be considered more akin to gambling than investing. But there is no doubt that meme coin millionaires are being made like clockwork, so in that respect it’s actually a much better bet than traditional forms of gambling — where the house invariably wins.

Of course, there are scammers galore and ‘rug pulls’ — unscrupulous schemes where the developer suddenly disappears, taking the project’s liquidity and leaving investors with worthless assets. But if you know what you’re getting involved in from the outset, it can be both fun and rewarding — and a colourful space in which to participate.

I discovered recently that meme coins are listed as a sub-sector on some of the main crypto portals, including CoinMarketCap and CoinGecko. Collectively, meme coins represent a $62 billion ‘asset class’ (in inverted commas) — with every sign of becoming significantly larger this bull run.

My current guesstimate would be as much as $0.5T or more by the time the fabled ‘blow-off-top’ moment arrives — when Bitcoin prints a new all-time-high at the top of the market cycle, only to recede into the depths of another bear market.

It’s worth noting that the top 6 meme coins - $DOGE, $SHIB, $PEPE, $WIF, $BONK, and $FLOKI account for more than 80% of that $62 billion total. This is why VanEck is only tracking the top tier with its new meme coin index -- because that's where most of the liquidity is, if not the insanely explosive gains, to be found further down the long tail. Yes, you heard that right: VanEck, a serious player in the world of TradFi, has recently launched the MarketVector Meme Coin Index.

$DOGE alone currently represents about 40% of total market cap in the meme coin space. It’s a slightly different proposition to other meme coins, not simply because of having a multi-year head start, but also because it has its own blockchain — a fork of the original Bitcoin protocol. So, there are potentially things you can do with Dogecoin that you can’t do with other meme coins — but it remains to be seen if that is enough of a differentiating factor to keep it in the top spot forever.

Personally, I think its market dominance might be seriously challenged or at least chipped away at this market cycle — unless Elon Musk decides to embed it as a payment system into his ‘everything app’ on X. I certainly wouldn't say this dog has had its day — but much like Ethereum, $DOGE will likely lose market share to an energetic and growing field of youngsters.

WORTHY OF SPECIAL NOTE: SOLANA, BASE, TELEGRAM & AVALANCHE

There has been a growing sense that a handful of the lower cost, higher throughput chains are going to experience significant network effects this cycle. I wrote about this in some depth last December — see here for more. The trend is driven by retail adoption and based on rapidly emerging crypto narratives, including things like meme coins and decentralised physical infrastructure networks (DePIN). More about DePIN another time.

There are 4 particular chains that I feel are worthy of note with regards to increased adoption this cycle. They are: Solana, Base, Telegram’s The Open Network (TON), and Avalanche.

SOLANA

Solana has a head start on the others, even though it took a major hit in the immediate aftermath of FTX’s collapse in 2022 — on account of the fact that SBF was so heavily invested in the Solana ecosystem. But what doesn’t kill you makes you stronger: Solana weathered the storm and has been beavering away to consolidate its position as a rising alternative to Ethereum — and a top smart contract platform on which to deploy for developers. Both end users and web3 projects are flocking to Solana in ever-greater numbers because it has reached a critical mass — and it is cheap, fast and easy to use (none of which is true for Ethereum, unless you go a layer down to the L2s).

BASE

Coinbase’s native Layer-2 chain, built using the Optimism (OP) stack as a scaling solution on top of Ethereum, is also worthy of note. It hasn’t quite taken off in the same way Solana has — yet. But Coinbase has close to 100m verified users, and is bringing out its own wallet integration for the Base network imminently — which means that the onboarding experience will become increasingly seamless for its large customer base.

The new chain has already experienced a significant uptrend this quarter, with an explosion of interest in meme coins on Base, and with daily transactions consistently surpassing the 1.5 million mark — with the highest number of daily transactions to date being approx. 3.2 million, reported on April 8, 2024. It’s still early days, which is why ecosystem investments on Base seem like such a good risk/reward play right now — given Coinbase’s solid, blue chip reputation.

As a result of Ethereum’s recent Dencun upgrade (also known as EIP-4844), Layer-2 scaling solutions such as Base have also recently become considerably cheaper for end users. This, coupled to Coinbase’s strong brand reputation and large existing customer base, would suggest that this is definitely one chain to watch closely this bull run.

Coinbase decided not to launch a native token for the Base chain, presumably because of the hostile regulatory landscape in the United States, and the fact that the company is already engaged in litigation with the SEC — although it might feel emboldened to do so at some point in the not-too-distant future, we’ll see.

The smart money has accordingly been deploying into ecosystem projects on Base, in order to front-run the future upside potential of the network — including investing in decentralised exchanges (DEXs) and other DeFi protocols, as well as the big story of this cycle, meme coins.

TELEGRAM’S TON

Telegram has arrived with its Layer-1 blockchain - called The Open Network (TON) - alongside its native crypto asset, Toncoin. Telegram has around 900 million monthly active users (MAUs) and counting — and is already a widely used communications platform within the crypto space. The company has created a blazing fast chain - second only to SUI, another new contender - and is focussing on the ‘account abstraction’ side of things, which is aimed at significantly reducing the friction of onboarding for non-crypto natives (known as “no-coiners” or “normies” by the crypto bros).

As I mentioned in the intro, I fully expect TON to flip Dogecoin and XRP in the next 12-18 months, which would make it the 5th largest Layer-1 — after Bitcoin, Ethereum, BNB, and Solana (arguably Solana will move to third place and flip BNB, some even think it will flip Ethereum, but let’s face it that’s unlikely).

If/when TON becomes number 5 on the blockchain leaders’ board, it’s going to catch a lot of people by surprise. I’ve no idea why that would be the case. Its MAU numbers speak for themselves — plus the company knows exactly what it’s doing with UI/UX and account abstraction in a way that no other Layer-1 or Layer-2 project does.

AVALANCHE

Finally, the Layer-1 smart contract platform Avalanche ($AVAX) is showing signs of moving towards mainstream adoption, with its unassuming “build it and they will come” philosophy to development. Without much fanfare, it has recently implemented an integration with the payments giant Stripe to provide a smooth fiat on-ramp for users to onboard into projects within the Avalanche ecosystem.

A customisable widget can now be embedded by developers within decentralised applications (dApps); which essentially means that users can seamlessly go from a KYC-compliant fiat front end directly into the world of crypto with zero fuss — and hold their assets directly in a self-custodial crypto wallet. See here for more on this story.

In terms of onboarding the next billion users into the world of crypto and web3, it's integrations like these, along with developments in account abstraction by the likes of Telegram, that will make all the difference — by significantly reducing friction, barriers to entry, and improving UI/UX.

ETHEREUM GETS A PASS AND THE DEMS TIE THEMSELVES IN KNOTS

This last section would have been entirely left out if I had published this quarterly review a week ago. But it’s a really important development, so I’m uncustomarily glad for once about my tendency to procrastinate.

Ethereum has been in the doldrums of late. Outside of the small cohort of people who bought lots of Ether when it was $100 and are incredibly wealthy as a result, most regular people are growing weary of using the network. For all its talk of decentralisation, it doesn’t feel much different from using an expensive toll road run by an unscrupulous company for the majority of end users that I’ve had anything to do with.

Gas fees are high, and transactions sometimes fall over completely if you don’t allow enough room for “slippage” (a euphemism for paying even more in gas than the unreasonable amount you were already reluctantly resigned to paying). But you still get charged for the transaction anyway if it falls over — even if it doesn’t work. Most Ethereum maximalists ignore all of this because they’re too busy talking up their books.

Anyway, coupled to this general malaise, Ethereum has in recent months found itself in the crosshairs of Gary Gensler’s SEC, which seems to have a growing appetite for taking a sledgehammer to Ethereum’s reputation by trying to categorise it as an unregistered security rather than a commodity — primarily on account of its ESG-friendly transition from ‘Proof of Work’ to ‘Proof of Stake’.

For example, on April 10th, the SEC issued a Wells notice to Consensys, the company that owns MetaMask — the Ethereum ecosystem’s most widely adopted self-custodial wallet. Wells notices are letters that the SEC sends to people or firms, at the conclusion of an investigation, stating their intention to bring an imminent enforcement action against them. The SEC’s grounds for issuing the notice in this instance was that it believed Consensys was facilitating the custody and exchange of unregistered securities. In other words, Ethereum (and related downstream assets).

Now, this meant that almost nobody expected the SEC to approve the Ethereum ETFs that had been waiting in the wings since BlackRock first filed its ETF application last November, with others immediately following suit.

And then completely out of the blue last week, the ETH ETFs were approved. Sacré bleu! What in the hell happened there? One week, Gensler is sharpening his machete to start hacking away at Ethereum in earnest, and the next he’s waving through the ETFs and giving the second largest crypto asset his official stamp of approval, as being ready for the world of TradFi to get stuck in to? Does that even make sense? Well, it clearly wouldn’t make any sense whatsoever — except for one minor external factor: Donald Trump. In an election year.

Because Trump has suddenly decided that he really believes in crypto, more than almost anything else — indeed, equally as much as the 50 million American voters who already believe in it and are increasingly pissed off with the Dems’ war on crypto. And he is going to stand up for them against the swamp-dwelling Dems — and make crypto great again.

He has opened up his campaign finance operation to crypto donations (including the meme coins $SHIB and $DOGE) and recently said during a televised political speech:

"I will ensure that the future of crypto and the future of bitcoin will be made in the USA, not driven overseas. I will support the right to self-custody. To the nation's 50 million crypto holders I say this: with your vote, I will keep Elizabeth Warren and her goons away from your Bitcoin. And I will never allow the creation of a central bank digital currency."

If you were ever in any doubt about crypto becoming a major political issue this election cycle, then here's your answer! Trump has made it an issue, and my call is that the recent 180° about turn on the ETH ETF approvals - coming literally weeks after the SEC served Consensys with a Wells notice for facilitating the custody and exchange of unregistered securities (ETH) - is the clearest indication yet that the Dems know they must pivot like lightning on crypto in order to be in with a chance of retaining power.

Whatever your politics (I don’t personally care for it much), this outcome is a clear win for crypto. Ethereum getting a pass - irrespective of the Biden administration’s cynical political motivations for giving it one, or indeed the sincerity of Trump’s full-throated endorsement of crypto - means that Bitcoin and now Ethereum, crypto’s two largest assets, have both reached escape velocity. They have become adopted by Wall Street — as kite-marked, institutional-grade digital assets.

Elvis has left the building. The genie is out of the bottle. And no amount of conniving or political gerrymandering will ever put him back…

Until next time! ✌️😎

Share

MEMECOIN MANIA TAKES OVER CRYPTO!

If you’ve been even half following the digital asset space over the last month or so, you’ll no doubt already be aware of the extraordinary gains that some of the so-called memecoins have been making.

But in case you’re still blissfully unaware: firstly, congratulations; and secondly, meme coins (tokens that are based purely on their implied association with memes, and which have literally zero intrinsic value or utility) have been outperforming serious crypto projects such as Bitcoin (as well as everything else in both crypto and the real world, including Nvidia stock) by an extremely wide margin.

To give you a feel for the scale of the recent mania: one such memecoin, called Dogwifhat - which was launched late last year and is based purely on its association with a picture of a dog wearing a hat - is up over 60,000% since launch. In fact, it was up over 80,000% until a recent ‘pre-halving’ crypto selloff, which was further exacerbated by escalating tensions in the Middle East.

That means that if you’d been degenerate enough to put $10k into Dogwifhat at the tail end of last year, you’d now be a multi-millionaire (sitting on profits of approximately $6 million at the time of writing). Of course, that’s if you had the fortitude to cash out somewhere near the top — and the guts to have ridden it all the way up in the first place. But make no mistake: it’s not an abstract proposition — fiat millionaires are definitely being made. Like clockwork.

And whilst Dogwifhat (or “wif” as it is colloquially known on account of its ‘ticker symbol’) is undoubtedly a stellar performer in the emergent memecoin space, it’s not exactly an outlier. The reality is that dozens of other such memecoins, including the likes of PEPE, BRETT, FLOKI, PUPS and BONK have also printed percentage gains that increasingly look like computer output errors, as we head deeper into the bull market and millions of retail ‘investors’ flood in to take a punt on memes — hoping to get their slice of the ‘get rich quick’ pie at the meme coin casino…

MEMECOINS: CRYPTO’S DRUNK UNCLE CRASHES THE BULL RUN

Now, at first glance, it’s easy to dismiss all of this hype as yet another gigantic crypto dumpster fire. Certainly, to the casual observer, it’s merely the latest round of tulip mania in an industry already known for its reality distortion field, and its irrational, reflexive, greed-induced, parabolic excesses.

Indeed, to many within the crypto industry itself, meme coins are increasingly regarded as a complete embarrassment. For this ‘serious business’ cohort, meme coins are perhaps crypto’s equivalent of a drunk, racist uncle, turning up unannounced at your wedding, and proceeding to flame-throw whiskey out of his mouth in an effort to impress the bridesmaids — before breaking all of the furniture into tiny splinters, as your new in-laws look on in horror.

And the timing of his arrival on the scene couldn’t be much worse, just as crypto has finally begun to rebuild its tarnished reputation after a rocky couple of years — having already suffered some serious setbacks for unwittingly lionising grifters such as Do Kwon and Sam Bankman-Fried.

And so, it was against this gloomy backdrop that the Bankless podcast lads recently asked, “Has Crypto Lost The Plot? WTF Are We Doing?” (as well they might). They referenced a blog post, entitled Crypto’s Broken Moral Compass, in which someone who goes by the name of Polynya announced their departure from the crypto scene (for good this time, whatever that means) — on account of their utter disgust at the meme coin frenzy and what it portended for the digital asset class. The recent emergence of a pernicious trend in racist memecoins was, for this crypto OG, clearly the final straw.

Anyway, at the time of reading said blog post, I completely understood Polynya'’s frustration. Permissionless environments - where anyone can spin up anything - come with significant overheads, as we already know from some of the stuff that happens on the internet proper (e.g. on the dark web). And initially, I found myself firmly aligned with this camp — i.e. believing that memecoins are making a complete mockery of crypto and everything it stands for.

After all, convincing people that crypto actually does stuff and is a transformative, democratising technology (as has been my want for several years now) is a tough enough slog without being repeatedly undermined by participants operating within the industry. And let’s face it: we’ve all had enough of crypto’s propensity for self-harm, given what went down in 2022 — with the collapse of TerraUSD and the unravelling of FTX.

Certainly, I don’t doubt that memecoins (especially of the recent racist variety) are doing very little to strengthen crypto’s reputation, especially amongst the political class — many of whom are dying for yet another excuse to slam the brakes on crypto. Indeed, I’m sure it’s only a matter of time before Elizabeth Warren or someone else on the hill starts organising hearings and making political capital out of meme coins, which will undoubtedly be characterised as the latest hateful, criminal cowboy bonanza to infect the world of crypto.

So, in an effort to explain this seemingly boundless clusterfuck to myself, I reached for something that the late-great comedian and political satirist, George Carlin, once said: “never underestimate the power of stupid people in large groups”.

That pretty much nailed it for me. It tied up a lot of loose ends: lots of stupid people, moving in unison, a motley ship of fools, unwittingly providing the exit liquidity for the next generation of crypto-savvy narcissists, who are engaged in playing a highly profitable, zero-sum game against a bunch of clueless retail investors — the vast majority of whom will lose everything they put in (barring perhaps fractions of pennies on the dollar).

And as for the racist side of things? Well, that’s simply the ‘cryptofication’ of what Sacha Baron Cohen does so well in real life — exposing the low IQ banality of racism everywhere it rears its ugly head. Except this time, there’s a record of all the participants, on-chain, forever.

But why the huge surge in attraction to meaningless meme coins in the first place?…

WHY ARE THEY BUYING IT?

Well, it’s a perfect storm of sorts. Firstly, the mainstreaming of this trend has been held at bay to some extent by network bandwidth problems (e.g. on Ethereum), where blockspace is at a premium. But the increased adoption of lower cost chains such as Solana and Base (Coinbase’s new Layer 2 chain, built on top of Ethereum) has made meme coins more popular and accessible, since people can trade in and out of them without incurring exorbitant gas fees — making the meme coin casino much more accessible than in previous cycles. This is one of the main reasons for the sudden explosion in interest — the user experience (UI/UX) on these newer chains is much better, and people can put $50 into a meme coin without losing half of it in gas fees every time they perform a transaction.

Genuine crypto projects (with actual utility) are also way too complicated for the majority of people outside of the industry to understand. Plus, the financial dynamics surrounding many of the serious projects are typically swung in favour of VCs and other insiders. There’s seldom such a thing as a fair launch. So, by the time retail investors get a piece of the action, much of the juice has already been squeezed out. And when you boil it all down: “coin has dog” is a much easier concept to grasp than grappling with the white heat of “zero-knowledge proofs” (ZKPs) or “automated market makers” (AMMs).

At least with memecoins, you know where you stand — absolutely nowhere. Either you like the dog (or the cat, or the frog, or whatever the fuck the next golden moonshot ticket is) — or you don’t. And that is all you need to know to make an informed decision concerning your participation. It’s the equivalent of betting on a horse because you like its name — it’s just a bit of a flutter. You win some, you lose some. No need to scrutinise the fundamentals, or the roadmaps, or the white papers — because there aren’t any. It’s a bet on a three-legged horse running in a meme culture derby alongside a crowded field of other three-legged horses. It’s that simple.

Yay! Now, do you like that doggie in the window or not?…

A GANGSTER’S PARADISE

As for the grifters who want to indiscriminately fleece people from the comfort of their faux leather gaming chairs, this sudden surge in interest in meme coins is like manna from heaven. Because if you’re launching a memecoin, there is no need to pretend to promise anything by way of deliverables — other than some vague message alluding to the fact that “it’s just a bit of fun”.

You can spin up a new meme coin in a New York minute if you know what you’re doing, with very little effort or capital — and you’re much less likely to land yourself in hot water when it comes to all the complex legal stuff that Gary Gensler repeatedly gets his thong in a twist over. No need to worry about investment contracts and the various prongs of the SEC’s holy grail, the antiquated Howey Test — because none of that stuff applies to goofy tokens that point nonchalantly at viral internet memes.

GENUINE CRYPTO PROJECTS ARE AN IMPENETRABLE YAWN-FEST

Moreover, serious projects, such as Cardano, are dull enough to induce narcolepsy in the average punter — plus they don’t offer the kinds of returns that crypto has become famous for. In fact, in many cases, they act more like stablecoins. And let’s face it: retail investors who feel like they missed out on Bitcoin aren’t here for the crumbs left on the table, or even for doubling or tripling their money (gains that would be considered explosive in the world of TradFi) — they’re here almost exclusively for the moonshots. And meme coins definitely offer that moonshot potential, even if it ultimately proves illusive for the vast majority of people.

A LACK OF HUMAN INTELLIGENCE

I initially felt satisfied with this general conclusion - that the whole thing boils down to stupid people being repeatedly exploited as exit liquidity by grifters in a zero-sum game expressly designed to fleece the naive retail investor - and accordingly shortened my timeline for achieving artificial general intelligence (AGI) by 18 months. Not on the grounds of any new technological breakthroughs, or leaks from OpenAI, you understand — but purely because the human intelligence benchmark itself (against which AGI must ultimately be measured) needed to be substantially reduced in order to account for a timeline that included the deeply irrational, runaway success of memecoins.

HAVING SECOND THOUGHTS

But then I paused to reflect for a moment, as I remembered an old idiom that I occasionally use as a touchstone to keep me from arriving at comfortable conclusions in haste. It’s an idiom that is often attributed to Einstein (as all good idioms seem to be these days, at least the ones that aren’t attributed to Benjamin Franklin), which states that: “condemnation without investigation is the height of ignorance”.

So I decided to investigate. And having investigated further, at the very least, it turns out that writing off memecoins in this fashion is a classic case of “mid-curving it” — in terms of both their financial potential and longevity, and their cultural significance.

Alas, like so much else in life, the success of memecoins is not contingent on whether or not I happen to like them.

Of course, nothing outlined above should be entirely discounted. These concerns are all legitimate. It’s just that it’s not the whole picture, not even close. It’s lazy thinking. And it’s tone deaf in the same way that neoliberalism is tone deaf — well dressed, but kind of smug, self righteous and out of touch with reality.

Memecoins cannot simply be written off as the latest crypto shitstorm by earnest people who think they know best. Because they don’t. In fact, they almost never do — because they see the world through the prism of their own confirmation biases, and therefore don’t take the time to actually put the work in.

That’s my headline conclusion, having spent the best part of the last six weeks embroiled in a much deeper investigation into this fever-pitched, incredibly messy, volatile, rapidly expanding and increasingly hard to ignore crypto phenomenon called meme coins.

There’s a lot to unpack here in terms of presenting the flip side of the “memecoin bad” argument — so let’s dive in…

MEMES: THE NATIVE LANGUAGE OF THE INTERNET

In the digital age, if data is the new oil, then memes are the new universal language — the equivalent of internet’s own lingua franca. This isn’t immediately obvious to people who forged their social identities in meatspace last millennium (let’s say for people over the age of 35). But for people who don’t remember much about the world before the dawn of the smartphone - digital natives, living their best lives primarily in the online attention economy - memes and meme culture rule supreme. And we can’t even begin to unpack memecoins without first unpacking the significance of memes. So let’s start there.

The evolutionary biologist Richard Dawkins is credited with coining the term "meme" in his book, The Selfish Gene, which was published in 1976. The term is derived from the Greek word "mimeme" — meaning "that which is imitated”. Whilst it sounds somewhat implausible, Dawkins first introduced the concept of memes as cultural units of information, which are transmitted and replicated through imitation — similar to the way genes are transmitted and replicated through biological reproduction. Since then, the term "meme" has been widely appropriated to describe various cultural phenomena, especially those that spread rapidly through online channels.

The concept of internet memes began with the growth of online communities during the 1990s. Initially, memes were simple concepts or catchphrases that circulated within niche online communities. But with the rise of forums, image boards, and early social media platforms such as MySpace and Facebook (alongside the rollout of broadband connectivity), memes rapidly started to take on a more visual form. All Your Base Are Belong to Us and Dancing Baby are early examples of online memes that went viral during the early years.

By the mid-to-late 2000s, with the emergence of platforms such as 4chan, Reddit and YouTube, memes proliferated and diversified rapidly. Image macros (images overlaid with text) became a particularly popular format — spawning memes like Rage Comics, Advice Animals and (one of my personal favourites) LOLCats.

By the 2010s, internet memes had become a mainstream cultural phenomena — often crossing over into offline spaces. Social media platforms such as Twitter, Instagram and TikTok further accelerated the spread of memes and meme culture, with formats evolving rapidly to reflect changing cultural and technological trends.

And just for the record: the aforementioned runaway success of the Dogwifhat memecoin project wasn’t exactly a happy accident: it owes the lion’s share of its success to a hugely popular meme that went viral back in 2019.

Memes have become a new form of cultural currency, allowing individuals to engage with and comment on current events, popular culture and societal trends in a humorous and relatable manner. They often emerge within specific online communities and serve as a means of bonding and identity formation. Communities rally around shared memes, creating inside jokes and fostering a sense of belonging.

And much like traditional languages, memes are truly participatory — anyone can play. They provide a platform for individuals to express their creativity and humour within the constraints of a predefined format. Remixing and riffing on existing memes is a common practice — leading to the creation of new and often unexpected variations.

And perhaps most importantly in relation to the recent explosion of memecoins: as the native language of the internet, memes literally thrive on virality — they are expressly designed to spread quickly across online networks. To return for a moment to the biological origins of the term: the virality of memes is baked into their DNA. And modern social media platforms based on ‘short-form’ visual content increasingly amplify this process — allowing memes to reach vast audiences within very short periods of time.

THE ‘EVERYTHING' PONZI & THE RISE OF FINANCIAL NIHILISM

In case you hadn’t noticed, we’re rapidly approaching the point where society itself could be best described as a Ponzi scheme. The United States, for example, at least on its current trajectory, hasn’t a hope in hell of keeping up with payments for its social welfare system. And in Europe, baby boomers are likely to be the last generation that can expect meaningful state pensions. Forget the cries of “crypto is a Ponzi” — because these days, literally everything, including the US dollar, is a Ponzi scheme.

Meanwhile, we are either being governed (seemingly to the point of extinction) by a plutocratic gerontocracy, replete with its bipartisan ‘crocodile-smile’ stormtroopers (as in the United States); or by a shower of insincere, corrupt, metrosexual snake oil slime balls (as in the UK, France and Canada).

The vast majority of people below the age of 35 will never be able to afford to their own homes. According to the WEF, they’ll own nothing and be happy — or else. Many of them can’t even afford to rent. And it’s not just in the west: young people in China are increasingly adopting a “let it rot” - or “bai lan” (摆烂) - attitude to life. I could go on, but you get the picture. The disparities between rich and poor have already reached desperate proportions — and they’re getting worse with each passing year.

At the heart of this strife is one great leveller: whether or not you already own financial assets (including real estate). If you don’t, you’re screwed. Your purchasing power is deteriorating rapidly (much more rapidly than the stated government numbers), your wages are going nowhere fast, and you don’t get to benefit from the upside of owning assets that are going up and up (largely because they’re denominated in a currency that is being debased away to nothing).

Against this insufferable backdrop, we are witnessing the emergence of a new trend towards financial nihilism — one definition of which is “a philosophy that treats the objects of speculation as though they were intrinsically worthless”. And memecoins are de facto tokenised objects of speculation that are intrinsically worthless. Now do you suppose that’s a coincidence?!

If one had to pick a single moment that this concept of financial nihilism crossed into the realm of mainstream awareness, it would perhaps be the GameStop short squeeze incident, which took place in January, 2021. It was a legendary battle between amateur investors coordinating via the r/wallstreetbets subreddit and a gaggle of multi-billion dollar hedge funds. These amateurs deliberately sent GameStop stock sky-high by buying it up, causing the mother of all short squeezes. The impacted hedge funds were going to zero at light-speed — until the establishment intervened on their behalf, and leaned on Robinhood to pull the plug on GameStop trading. Robinhood obliged — you don’t bite the hand that feeds you.

But this was the moment that the gloves came off. And it was hugely significant in terms of what it really meant: clued-up, disenfranchised, young digital natives were no longer interested in playing a game where they had zero chance of even making it to the finish line, let alone winning — so they were going to make up their own games. And that means that, from now on, they are going to assign value to whatever the hell they want to assign value to — irrespective of what Wall Street, or the hedge funds, or the demented gerontocracy on the hill thinks.

Crypto is philosophically aligned with that basic impulse. And it’s my firm conviction that this is a key ingredient that went into the cauldron from which this recent meme coin mania has emerged, as an entirely parallel new asset class (if you could call it that), completely outside of the boundaries of TradFi and even traditional crypto (which has to some extent already been co-opted by the ‘big money’). Memecoins, in other words, are the embodiment of this rebellious philosophy, which “treats objects of speculation as though they were intrinsically worthless”.

IT’S GAMBLING, BUT MUCH BETTER ODDS THAN THE LOTTERY

In America, lottery ticket sales are at an all time high. And it’s no secret that, as a general rule, how much a person spends annually on lottery tickets is inversely proportional to their net-worth. Poor people who are feeling desperate about their circumstances buy lottery tickets — not rich people in penthouses. The odds of winning the Powerball Jackpot are 1 in 292 million. “It could be you” doesn’t quite cover it in terms of the likelihood of winning. But when you’re in a desperate situation, what other hope do you have to cling to?

Well, putting money into memecoins must be considered gambling — it’s certainly not investing. And the chances of losing everything you put in (as is the case with playing the lottery) are very high. But the chances of winning the memecoin lottery are significantly better than traditional options — perhaps even by several orders of magnitude…

THE FINANCIALISATION OF MEMES IN THE NEW DIGITAL ECONOMY

In a previous article entitled Back to First Principles: Unpicking Web3, I highlighted the fact that ultimately “this whole crypto and Web3 revolution is about the digitisation of value — in the same way that the first wave of [internet] innovation was about the digitisation of information”.

Bitcoin was the foundational layer in this emerging movement to digitise value — specifically as a means of representing money and storing value digitally (in a decentralised format, beyond the clutches of the central bankers). Other subsequent layers have since been added, including smart contract platforms, new token standards, DeFi protocols, blockchain oracles and much else besides. All of this stuff could be equated to the railroads or the superhighways being built out as the foundations for the next (value-based) layer of the internet — in other words the infrastructure on which everything else will run.

But the infrastructure for what exactly?…

Well, one of the next phases in this process is the financialisation (or tokenisation) of what we now call “content” in the world of Web 2.0. It began in earnest with the arrival of NFTs — and the physical ownership (property rights) of digital artefacts and collectibles that they bestowed.

So, in this context - i.e. in the context of the creation of a new Internet of Value - should we really be surprised that memes have themselves become tokenised and assigned tradable, exchangeable value by market participants?

I would argue that memes are such an important part of the online world that memecoins are in fact an inevitable outcome of what’s been happening in crypto. Rather than being a malodourous aberration, they are an entirely logical consequence of creating an effective, permissionless system for tokenising value. Meme coins, in other words, are a feature of this new paradigm — not a bug. Instead of dismissing them outright as meaningless digital geegaws, we should perhaps see the incredible success of memecoins as evidence that the so-called Internet of Value actually exists — that it’s alive and kicking!

Since publishing this article, I’ve had an interesting discussion on the topic of “memecoin mania taking over crypto” on the More Than Blockchain podcast — which you can watch on YouTube here.

⬆️ PROOF OF HISTORY: INSCRIPTIONS ARE BITCOIN’S HIDDEN SUPERPOWER

This week, I’ve turned my focus to an intriguing and lesser-known aspect of Bitcoin: its emergent property as a medium for immutably inscribing information and data — supporting the creation of a permanent, living archive of digital artefacts and an unstoppable internet of (digital) things…

On January 3, 2009, Bitcoin's pseudonymous creator - Satoshi Nakamoto - inscribed a hidden message into Bitcoin's genesis block. That message has become a central part of the history of crypto (which the majority of people reading this will probably already know).

But just in case you missed the story along the way: Satoshi Nakamoto embedded a small text payload into Bitcoin’s genesis block, which reads…

The inscription is a direct reference to a headline that appeared in the famous British newspaper, The Times, on that same day — referencing an article on the UK government’s intention to bail out failing banks in the wake of the 2008 financial crisis.

I’ve always thought it was a lovely little easter egg — of the kind that delights software engineers. But it also served as a timestamp of sorts, by quoting a newspaper headline on that particular day. And perhaps more importantly, it was an unequivocal nod to Bitcoin's origin story, of the crucible in which it was founded — i.e. as a direct response to the unconscionable failures of the traditional financial system, and its concomitant privatisation of profits and socialisation of losses.

And here’s the important bit in the context of today’s discussion: given the genesis block is hardcoded into the Bitcoin protocol, it cannot be changed or altered in any way. It remains a permanent (immutable) part of the Bitcoin network, along with its occulted inscription — serving as a reminder of the protocol’s origins and its revolutionary potential to disrupt the current financial status quo.

In many senses (and this is my main point here by linking things back to Satoshi), the genesis inscription was in fact the first ordinal inscription on Bitcoin — as a timestamped message encoded in the genesis block. And now that Bitcoin has reached escape velocity as a nascent technology, that inscribed message is embedded in an immutable, permissionless, highly distributed, censorship-resistant blockchain network — one that can probably survive a nuclear war. In other words, Bitcoin is also now a communications medium.

It is this powerful concept of inscription that has recently been formalised or systematised through the development of ordinal inscriptions. In fact, if you wanted to preserve an important document, or image file, or a piece of code, as if in aspic (guaranteeing its immutability, potentially forever), then you would be hard pressed to find another system or medium better suited to your needs than ordinal inscriptions on the Bitcoin blockchain.

ORDINAL INSCRIPTIONS: THE TECHNICAL STUFF FIRST

Ordinal inscriptions are pieces of content stored directly on the Bitcoin blockchain, including text, images, HTML, SVG, and even interactive elements like games. They leverage the Bitcoin scripting system, specifically Taproot (a ‘soft-fork’ of Bitcoin that went live in 2021), to encode data within individual Bitcoin transactions. This process is underpinned by the new Ordinals protocol itself, which was launched in January 2023 by software engineer and Bitcoin enthusiast, Casey Rodarmor.

Ordinal inscriptions utilise the witness data of Bitcoin transactions, which can be up to four megabytes in size. This allows for significant data storage within each transaction. The content is encoded in a way that is compatible with Bitcoin's scripting language and thus does not interfere with the transaction's primary purpose of transferring bitcoins.

The Ordinals protocol itself is essentially (as the name implies) a numbering system, which assigns each satoshi (bearing in mind there are 100 million sats in each Bitcoin) a sequential number, depending on when it was mined. To be precise, each sat is numbered in the order mined (i.e. the first ordinal is the first sat ever minted).

Being able to label, track, inscribe, and own individual sats, as distinct pieces of digital property has led to an explosion of interest in creating digital artefacts on the Bitcoin blockchain. And unlike Satoshi’s original plain text inscription, ordinal inscriptions open up a wide range of new possibilities for creativity and expression. With greater flexibility in terms of payloads, they can be used for a host of artistic purposes, educational content, games, the historical preservation of records, and even as a means of time-stamping and proof of existence for digital assets.

EVERYTHING COMES AT A PRICE

Is everyone excited about these new developments on Bitcoin? Hell no, of course not! Many of the original Bitcoin maximalists, who see themselves as more equal than everyone else, want to retain the network’s singular, monolithic purpose as the ultimate store of value asset framework, effectively replacing gold — i.e. they seek to preserve the status quo narrative of the Bitcoin network simply acting as a bulletproof way of reliably and cost effectively moving BTC from point A to point B.

These monotheists, if we could call them that, are deeply suspicious of all the fresh faced ‘blow-ins’, who are starting to play around with the network and build stuff on top of it, whilst wearing their baseball caps on back to front. And to add insult to injury, many of these new “Bitcoiners” are actually using BTC, the esteemed store of value, to pay for worthless monkey jpegs, which have been inscribed on individual satoshis that were once part of the famous Papa John’s Pizza transaction (the latest degen crypto play).

But this is not purely a cultural clash, between people who use crypto on-chain and people who got rich hoarding (or HODLing) it: ordinal inscriptions do come with a system overhead, and in spite of the nascency of the ordinals space, inscriptions have already added to network congestion and therefore higher transaction fees on Bitcoin. Of course, you might consider that to be a good thing depending on your point of view, with more activity on the network, fresh innovation happening, an increased interest in building on top of Bitcoin, as well as a new revenue stream opening up for miners to stay in the business of mining Bitcoin and securing the network — just as the block rewards are cut in half again.

But there’s a clash of worlds going on here, which may take some time to resolve. I would expect more scuffles between the two camps this year.

In a journalistic effort to remain balanced, here are some of the main concerns (outside of transaction fees, which I think is fair game) that the Bitcoin maximalists have when confronted by the prospect of ordinals seriously taking off (which I feel is a racing certainty).

Blockchain Bloat & Resource Requirements: Storing large amounts of data directly on the Bitcoin blockchain could substantially increase the size of the blockchain over time — leading to higher storage requirements for full nodes, and potentially harming the decentralisation of the network if smaller nodes can't keep up with the resource requirements.

Security Risks: Embedding arbitrary data within Bitcoin transactions could potentially introduce unknown security risks — with malicious content potentially exploiting vulnerabilities in the Bitcoin software, or causing unintended consequences for network participants.

Regulatory Concerns: Some regulators may view ordinal inscriptions as a means of circumventing regulations or facilitating illicit activities by embedding content directly on the blockchain. This could lead to increased scrutiny or regulatory pressure on the Bitcoin network as a whole.

Ultimately, Bitcoin is permissionless — that’s the entire point. So the old school maxis don’t get to make the rules, much to their chagrin. But introducing ordinal inscriptions smoothly will require community consensus and coordination in order to ensure that any changes or upgrades to the Bitcoin protocol are implemented without causing disruption or controversy.

Overall, whilst ordinal inscriptions clearly offer a host of exciting opportunities for creativity and innovation on the Bitcoin blockchain, it's important to also consider and address some of the genuine reservations that some people may have — to ensure that ordinals can be developed and scaled in a responsible and sustainable manner.

ORDINAL INSCRIPTIONS: WHY DO THEY MATTER?

So, in terms of cutting to the chase, a few things specifically stand out for me.

Firstly, you can’t deny, it’s clearly a bit of a killer app: Bitcoin has suddenly expanded its circle, from its primary application as sound digital money and a store of value into actually becoming something more like a medium — upon which anyone may inscribe anything, immutably; with each inscription etched into a blockchain that stands a good chance of being around (practically speaking) forever. That’s a really big deal for all kinds of reasons.

On the everyday side, artists are increasingly drawn to ordinal inscriptions because of that sense of immutability that you get from being directly on Bitcoin. In the words of Casey Rodarmor, who developed the Ordinals protocol, it enables the creation of ‘digital artefacts’ — full and whole in their own right, rather than mere certificates referencing external assets, as is the case with NFTs on smart contract platforms such as Ethereum and Solana.

Michael Saylor was recently asked what he thought about ordinals, and he said he thought that an inscription would be a very good way of making sure your last Will was tamperproof. And you can imagine all kinds of similar use cases for such inscriptions — to certifiably preserve something in aspic with a timestamp is a considerable capability to have up your sleeve. And on the more open source front, people have already uploaded the original Bitcoin white paper and all of the Bitcoin discussion threads and emails, so that the history of Bitcoin itself remains preserved on Bitcoin (or perhaps even in Bitcoin) effectively forever.

In that sense - viewed as a medium in which we may make countless forever inscriptions, including files, data dumps, software programs, images, etc. - it feels like a quirky new internet of digital things is starting to blossom, as the infrastructure (in terms of the wallets and the exchanges, the self-inscribing platforms, etc.) gets built out. There’s a genuine buzz and it feels like things are really taking off, especially in the art scene — with lots of energy and investment flowing into the space.

But above all else, the thing that really stood out for me was something that Julian Assange said about Bitcoin way back in 2014 — long before Casey Rodarmor had dreamed up the Ordinals protocol. It brings us full circle, to Bitcoin’s “proof of history” credentials — as a ‘store of value’ that now stores your data…

Proof of History: Bitcoin’s Hidden Superpower

Assange was asked about Bitcoin during a 2014 interview (in which he appeared as a hologram on stage at a conference) and he said something that I thought was really unusual at the time, although now it makes much more sense: Assange asserted that the underlying technology of Bitcoin breaks Orwell's dictum forever (of “Who controls the past controls the future: who controls the present controls the past”) — by providing us with proof of publishing at a certain time.

During the interview, Assange suggested that this little-understood capability of Bitcoin, which was still mostly latent potential at the time of the interview, would in time fundamentally challenge the traditional power dynamics governing information dissemination. He asked listeners to consider the historical context via the two legacy scenarios: that firstly, in the analog world, controlling information was relatively straightforward, and entities could edit or suppress information by physically altering printed material, as with the Great Soviet Encyclopaedia; and secondly in the digital realm, where the manipulation of information takes on a much more insidious form, and where startups fold, online content becomes obsolete, and bits of history vanish into the digital ether, often unnoticed.

Fast forward to 2023, and as if out of nowhere, along come ordinal inscriptions directly on top of Bitcoin, providing a mechanism to harness all this latent potential that Assange was already cognisant of way back in 2014. And by time-stamping transactions and data entries, Bitcoin provides a verifiable record of events, impervious to alteration or deletion. It’s that particular feature - time-stamped proof of publication - that Assange considers to be the ultimate hidden superpower of Bitcoin as a technology. Isn’t that interesting?!

The potential longer-term implications are huge. Imagine a world where publishers use Bitcoin to timestamp articles, ensuring authenticity and preventing tampering. Or picture international agreements documented on the blockchain, such that their terms are irrefutably recorded for posterity. Or perhaps you’d like to archive a dozen of your most treasured historical family photos for posterity — to give them a shot at surviving considerably longer than they would in your attic, or on someone else’s cloud server? The applications are virtually limitless, even before you begin to account for the fact that these digital objects may also be software, which may also be recursive in nature (i.e. it can interact, in terms of inputs and outputs, with other inscriptions on the Bitcoin blockchain). That fact opens up an entirely new rabbit hole, which the pioneers are only just beginning to venture down.

In essence, Bitcoin's architecture is in the process of transcending its role as a digital currency. And I know it all sounds a bit utopian and far-fetched, but Bitcoin’s ‘proof of history’ superpower puts it in the frame as a potential guardian of truth in the digital age — a bulwark against revisionism and censorship. Even now, Bitcoin offers us a glimpse into a future where information truly does remain immutable — where the past is not subject to the whims of the powerful.

And when all is said and done, as a new communications medium opening up in front of our eyes, Bitcoin is branching out from its primary use case — galvanised by the arrival of the Ordinals protocol and the inscriptions it enables. Bitcoin is becoming a living medium — an expanding global archive. And my call is that this might just be the opening salvo of a complete revolution in information integrity to come — as we head into a new era of transparency and accountability in the digital age.

That’s all for now - until next time! ✌️