Narrative violations
Cycles of narratives within the crypto world are not so different than those within the physical world. Its especially obvious if we are to compare crypto narratives to political campaigns. As I write the world's 5th populous country, Pakistan, has just had its Prime Minister dethroned. His position became untenable as soon as he was unable to control inflation. The opposition had been clamouring to oust him since the day he took office nearly 4 years ago and repeatedly failed until now.
Why now? The general population doesn't have the will to take up protests or conduct any campaigns because the narrative has changed from anti-corruption to price controls. This is indeed weirdly opposite to what's occurring in Sri Lanka where population is willing to expend further energy to demand a change. This passive/aggressive ways of fighting for the narrative is very much visible in crypto land albeit virtually.
Bitcoin (BTC) came to the world as an answer for trust-less electronic cash (in 2008) with a concrete supply limit; and then led its adherents through
- peer-to-peer payment settlement system
- censorship resistance
- anonymous uses
- reserve currency for crypto ecosystem
- programmable layer
- uncorrelated asset with a concrete finite supply limit
Whilst, Ethereum (ETH) entered as Bitcoin 2.0 (with a parameterised supply mechanism; theoretically infinite supply), yet it also evolved
- programmable world computer
- decentralised autonomous organisations
- crowd funding platform
- tokenisation
- open finance
This year, as mentioned in previous note of 10 December 2021, we are slowly and repeatedly being introduced to the politically charged subject of ESG with a hint to ETH becoming the poster child of traditional finance. Currently, blocking its transition to the world of ESG-ticked (or tickled...) funds is the merge event that moves it from proof-of-work system to proof-of-stake. Of course, in true ETH fashion, we are now being hinted to potential of the merge being delayed from 02 to Q3. Given the complexity involved & murmurs of ETH researchers & developers having differences of opinion on path being followed it does logically makes sense to put some brakes on to ensure stability. Moreover, the narrative adjustment requires there to be a sign of rekindling of the crypto bull market; for ETH on its own cannot continue upwards without BTC stabilising. Albeit, indeed multiples gained during last month does show a bigger push on ETH (+4% BTC vs +21% in last 30 days).
Now, coming back to narrative thoughts. The ESG narrative is indeed a strong one however it simply shifts the burden of environmental costs away from mining rigs to validators who will essentially be building out real estate on cloud computing platforms like Amazon's AWS or buying up ultra-expensive mission critical hardware since they will need to be up 24/7 to avoid having their 32-ETH stakes being eaten by various slashing events (for not servicing their clients etc).
food for thought: was buying DVDs from shops more energy efficient or subscribing to Netflix, HBO & Disney today is?
Gist of today's thoughts are simply to state that cults that we create whether within political, social or virtual worlds all run on narratives and our perceived biases push us into one corner or another. Of course at the end of day I just wish to accumulate more wealth however I rather do it with eyes wide open to narrative violations.
- Bitcoin's proof-of-work is bad for environment - skewed comparisons like below lead to bad policies (who knows how many legislators in Europe read such stats thus there is a push to ban proof-of-work mining)
Raynor de Best
- Ethereum's proof-of-stake will be greener for environment - aka no more like Bitcoin + supposedly controllable as legislation can target DeFi teams. Yet. I wonder what did Vitalik mean with this article on 1st of April - https://vitalik.ca/general/2022/04/01/maximalist.html
In other news:
- After Luna's UST now other algorithmic stable coins are planning to mimic the same strategy of buying "exogenous" crypto assets into their treasuries in order to help them stay stable. I feel crypto world is looking for its own 2008
- Secretary Yellen seemed to have made some crypto lobbying groups happy with her remarks and "nuanced understanding" - https://home.treasury.gov/news/press-releases/jy0706
- USD Coin & Tether apparently were worst performing cryptocurrencies according to researchers at Citil!!! Given they are pegged to the $, I do hope that's a good thing.
