Introduction

At its core, crypto represents an unprecedented systemic overhaul — an attempt to restore credibility to the global financial system, to correct the broken economic models underpinning human commerce and ultimately, to reverse the trend of centralization that has played out over the last 10 millennia.

The technologies underpinning the crypto revolution are very much 21st century, but its ideological building blocks can be traced back thousands of years. Crypto is more than yields and PFPs: it is a movement built on the belief that you can empower people and unlock limitless creativity using composable, open networks and censor-resistant code.

For those who don’t fully appreciate the gravity of what is playing out, it is imperative we demonstrate why crypto is neither a temporary fad nor the latest form of counterculture — rather, it is the natural point of evolution in a long and linear journey of human connectivity.

The point here is not only to demonstrate the continuity of human innovation, but also to show how crypto is very intentionally a multi-cultural, cross-discipline movement that aims to address the shortfalls of the existing global economic and technological orders.

The biggest misconception concerning the space is that it is simply a collection of cryptocurrencies. The use of cryptography and blockchains to create peer-to-peer digital currencies was just one early application of a groundbreaking technology. The real potential lies in an endgame where entire industries leverage the power of blockchains to create new user behavior and models that unlock infinitely more efficient value creation and capture.

But first, let’s rewind…

Early Numbers — 3000 B.C. to 1500 B.C.

Five thousand years ago, early Sumerians laid the groundwork for the first written language by developing a ledger-based system to record transactions, contracts, and inventories. These early thinkers pioneered concepts like compound interest, deposits, and interest rates using a clay tokens to communicate and store economic information. Early forms of writing would also later emerge independently in Egypt, China, and Mexico.

The Babylonians inherited and expanded on the Sumerian’s base-60 numerical system, building the first positional numeral structure. To promote transparency and impartiality, they eventually codified their principles through texts like the Code of Hammurabi which standardized the laws governing money in society.

These early efforts saw the first attempts in human history to create an impartial, ledger-based monetary system similar to what is being built using today’s blockchains. It’s relatively well known that Web3 is an attempt to revive the internet’s original tenets: unrestricted, borderless collaboration and user-first business models.

But beyond that, crypto represents a reversion to the earliest principles underpinning human commerce.

Democratic Governance — 700 B.C.

Centuries later, the ancient Greeks expanded on these ideas by pioneering an early version of democratic institutions that governed cross-border commerce. The Athenians developed a network of merchant courts that could oversee and arbitrate agreements between third parties using voluntary juries, fixed speaking times, and a legal code inscribed on large blocks in public areas.

Rather than having lawyers or judges represent each side, individuals were allowed to represent themselves in arguing their cases in what was one of the first examples of self-sovereignty and control over one’s public identity.

The use of public forums to display laws, intended to foster trust in the regulatory system, was highly successful in encouraging citizens to voluntarily partake in juries and deliberations.

Universal Currency — 600 B.C.

It was not long after this that the first coins began to circulate, having been developed independently in Ancient Greece, China, and India. Importantly, although early mediums of exchange were previously created using a variety of commodities, the first true coins were formed using metal as the preferred base, demonstrating the importance of durability, divisibility, fungibility, and portability in currency.

It was around this time that Aristotle first contemplated the problem of commensurability, or how to create standard methods of measurement across very different things. Aristotle concluded that Money can be used as a standard medium of measurement across non-equal things, while he also theorized the core principles and functions of money: a unit of account, a medium of exchange, and a store of value.

In the centuries that followed, the Roman Empire would introduce a standard coinage system (the silver Denarius) that spread throughout much of the world, inspiring the creation of many similar currencies as well as the adoption of the word to represent money across a range of cultures, even today.

For those focused on the value of crypto assets as currencies, much of that value is derived from cryptocurrencies’ ability to satisfy these early traits: durability through decentralization, fungibility through open standards, and portability powered by P2P software and the internet.

Equally important, it was the Romans who first demonstrated the problems associated with coins minted and controlled by a powerful centralized authority: in particular, inflation-driven debasement as a form of reckless taxation. As a modern example, the real value of the US Dollar has dropped by an incredible 92% since 1933.

Identity — Bronze Age

Across a variety of bronze age civilizations, gold served as both a form of currency and a form of jewelry, adorned to display wealth or status. Not long after coins were first introduced to the world did mints begin incorporating designs reflecting artistic and cultural symbolism as represented by animals, deities, and emperors.

The emergence of this fixation represented an early example of how finance, art, and culture would begin to collide over the coming centuries, leading to much of what we see in crypto today — for example, the marriage of DeFi and NFTs, or the vibrant communities and imagery that make up the ecosystem.

The Silk Road & Global Trade — 500 B.C. Onwards

The Persian Royal Road, built by Persian King Darius the Great and later expanded by the Romans, served as one of history’s first high-speed global networks designed to disseminate trade and messages across long distances. When Alexander the Great conquered the Persians and spread his empire deep into Asia, he leveraged the Persian roads to establish cities across Asia, including Alexandria Eschate, also known as Alexandria Farthest.

Centuries later, when the Han Emperor Wu sent his emissary Zhang Qian to repair relations with the nomads of Central Asia, the envoy came across Alexander’s descendants, who the Chinese termed Da Yuan (Great Ionians), taking note of their particularly powerful horses.

The early exchanges between these two cultures, as well as the resurgence of the Persian Roads, saw the formation of the Silk Road and the export of commodities like paper, gunpowder, and silk. The Silk Road supercharged the exchange of goods and ideas around much of the world until the Ottomans, following their conquest of the Byzantines, closed off the routes. Crucially, the Ottoman closure of the Silk Road routes encouraged merchants to turn to the oceans for trade, leading to the Age of Exploration.

The free exchange of ideas and technology across the Silk Road saw the best pieces of different cultures and technologies adopted by people around the world. As we see time and again, open collaboration is an infinitely more effective engine for positive evolution than building behind closed doors. Applying this framework to Web3, we begin to understand why the pace of development in crypto’s first decade has been so tremendous.

China & Paper Money — 700 A.D.

Having invented the first true paper as well as an early example of movable type, China’s Song Dynasty later developed an early form of paper money, initially as a form of promissory notes that holders could redeem for coins. A few hundred years later, the Song created the world’s first formal paper money system as we know it today, printing bills known as jiaozi.

Though a revolutionary step, the transition to paper money, as opposed to coins minted from tangible metal with perceived intrinsic value, was not without issue.

Several centuries after the introduction of paper money backed by the full faith and credit of the issuing government, the Ming dynasty ceased printing paper money and reverted to the system of coinage after runaway inflation devalued the monetary system.

Though not immediately successful, the introduction of paper money represented a historically significant step forward: namely, the acceptance of money as an intangible, faith-based representation of value.

Islamic Golden Age — 800 A.D to 1300 A.D.

In the early medieval period, the Islamic world led a golden age in mathematics and science, translating and consolidating early innovations by the Greeks, Romans, Persians, Indians, and others that would likely have been lost as much of the world underwent a period of decline.

The spread of paper from China saw information become democratized, allowing people from all professions to build on one another’s work in another early example of the incredible value that comes from open-source knowledge and composability.

The region saw many important developments across a range of disciplines, but perhaps most important was the Islamic world’s contribution to mathematics. Numeral systems around the world had famously struggled with the calculation of large numbers until the development of the Hindu-Arabic system in the first and fourth centuries by Indian mathematicians. Persian mathematician al-Khwarizmi was principally responsible for the introduction and adoption of the system in the Middle East before Fibonacci’s Liber Abaci helped popularize the system in Europe where it eventually replaced the Roman Numeral system.

Al-Khwarizmi also pioneered trigonometry and algebra, with his name giving us the word for algorithm. Other achievements during this period centered on advancements in geometry, astronomy, and medicine, largely fueled by one of the most significant scholarship movements in history.

Not only is this era responsible for a lot of what our modern world is built on today, it is also perhaps the best example in history of what can happen when walled gardens are torn down and unrestricted creativity is allowed to flourish. The most important developments in crypto’s relatively brief history have almost all been built by groups of cross-discipline individuals leveraging and expanding on existing achievements across technology and finance.

In fact, one could credibly argue that the pace of innovation seen in crypto materially exceeds that seen in almost any other industry precisely because of its open-source nature.

History is full of valuable case studies that allow us to explore this concept by examining the parallel growth and decline of major civilizations — the rise of the Ottomans as Europe (confined by the Church) fell into the dark ages; the decline of the Ottomans as they consolidated while Europe opened up and entered the Renaissance; the fall of the Ming who went from the world’s naval superpower to burning ships and effectively outlawing foreign ideas and commerce.

Medieval Europe — 1300 A.D.

In the late Middle Ages, cross border trade saw the center of financial innovation shift to Northern Italy where sophisticated financial institutions began to emerge. Europe’s first university was founded, and the seeds of the modern financial system were planted. In particular, cities like Venice, Genoa, and Florence began their rise due to their extensive trade with the Middle East and Asia, who exported not only their products but also their ideas.

To service this trade, successful merchants and traders began to engage in structured financial practices, eventually forming the first modern banks known as Merchant Banks. Fibonacci’s Liber Abaci didn’t just popularize a system of numbers; it helped lay the foundation for innovations like double-entry bookkeeping and the bill of exchange, as well as present value, profit distribution, and interest rate calculations.

With their primary activity foreign exchange, the early financiers of Tuscany conducted their business on benches (bancu), lending us the word for bank. Meanwhile, Genoa developed a system for trading currencies using a forum structure that governed rates by vote, in an early example of a consensus-based financial marketplace. The city also launched the first form of European public debt in the form of compere, that was eventually fractionalized into standardized, transferable shares.

The Medici dynasty would soon rise to power in Florence, first as a banking dynasty and then as the most significant patron of the arts during the Renaissance — another example of how art and finance have long represented two sides of the same coin.

Around this time, Nicolas Oresme released his Treatise on the Origin, Nature, Law, and Alterations of Monies, one of the earliest publications on monetary theory, in which he argued that regulation of coinage and minting should belong not to the state but to the people under communal governance.

In particular, the shift away from the Roman Numeral system serves as an invaluable case study in what can be accomplished when people prioritize efficient design and objective value over tradition.

The regulatory battle surrounding crypto is falsely made out to be about protecting people, when in reality it is more a crusade designed to protect existing systems and powers.

Moving North — 1500 A.D.

Italian merchants began to shift their trade north to cities like Bruges and Antwerp, where they could conduct business with counterparts from all over the region. As the blossoming financial industry made its way north, a major milestone in the history of technology took place in Germany: the invention of Gutenberg’s printing press, marking a monumental step forward in the realm of global interconnectivity.

In parallel, Bruges became one of the early homes of commerce in northern Europe, hosting consulates also known as nation houses on behalf of the major trading houses. The most prominent host of such houses was the Van der Buerse family who helped lay the seeds for the first modern stock exchanges as platforms for trade and discourse. It is believed that the Van der Beurse name lent itself to the word “beurs” and its variations used throughout Europe to describe stock exchanges to this day.

As the Age of Exploration began to take off (spurred by the previously noted closure of the Silk Road by the Ottomans), Antwerp emerged as a powerhouse in global commerce, giving birth to new dynasties that would shape much of the next few centuries, including the Hochstetters, Fuggers, and Welsers.

Initially fueled by Portuguese naval commerce, Antwerp’s rise also benefitted massively from Spanish expeditions by conquistadors like Francisco Pizarro, who uncovered the seemingly incalculable wealth stored in the silver mines of Potosi, Peru. The Spanish Dollar (Piece of Eight), modeled after the German Thaler (Dollar), was minted on the backs of slaves working in unimaginably cruel conditions and became the world’s first global currency, circulating from Peru to the Philippines.

Antwerp heavily promoted the bill of exchange as an instrument, and built a commodity exchange as a predecessor to the world’s stock exchanges. In doing so, Antwerp facilitated an explosion in global commodities trading, the creation of the modern derivatives market, and the launch of an international money market for sovereign debt.

Despite having uncovered a well of apparently infinite fortune, the Spanish empire began to decline within just a few centuries as a result of continent-wide runaway inflation caused (in part) by the massive oversupply of precious metals. The Spanish regression and prolonged seaborne wars irreversibly hindered Antwerp but opened the door for a new city: Amsterdam.

The Dutch Golden Age, Tulips, and the First Stable Coin — 1600 A.D.

As the Spanish kingdom fell in power, its former subjects in the Netherlands rose to dominate the seas and the markets. The Dutch Empire established the Dutch East India Company (the VOC) in 1602, generally recognized as the first joint-stock company in history, formed on the world’s oldest stock market, the Dutch Stock Exchange. The VOC introduced concepts like limited liability and permanent capital, and would go on to become the largest company in history with an army of its own.

As the center of trade conducted using a wide range of currencies, Amsterdam had to contest with the challenge of inconsistent coinage quality caused by people hording coins of higher purity — a phenomenon described by Gresham’s Law. To combat this, the city founded the world’s first formal Central Bank ­- the Bank of Amsterdam — designed to standardize the value of currency.

The Dutch Guilder, modeled after the Florin in Florence, was built using a novel system of debits and credits represented by a centralized ledger, and eventually became the world’s reserve currency, in part thanks to the comfort derived from the 100% reserve ratio the Central Bank maintained.

The Bank also introduced tradable receipts for use by merchants in their daily activities — an early predecessor to modern fiat currencies. Sweden would soon launch its own central bank — the first in Europe to print banknotes and still the world’s oldest central bank.

Famously, tulips also began to arrive in Amsterdam via the spice trade and were immediately sought after for their exotic origins, leading to massive speculation and trading. The bubble and subsequent collapse in prices represented one of the most famous asset bubbles in history.

Though prohibited from doing so by charter, the Bank of Amsterdam began to lend heavily to the Dutch East India Company, whose board members held intimate relations with those governing the Bank*.* As the Dutch Empire began to see its share of global trade decline in favor of the British following the Napoleonic Wars, the Dutch East India Company was no longer able to service its debt obligations to the Bank, whose own irresponsible lending practices left it critically overextended. As a result, the world’s first Central Bank collapsed.

The Dutch played an invaluable role in building the first stock market, joint-stock company, modern global reserve currency, and even central bank, but their reckless lending practices and neglect of their original mandate led to their downfall.

One of the crypto’s most important contributions is the introduction of systems with programmable guarantees built into publicly visible code. This means that we can now build systems where the original mandate is codified and unalterable behind closed doors.

Collective governance isn’t just about building a more equitable system; it also offers a much better business model. For the first time, a direct line of discovery can be built between users’ interests and the way commercial organizations are governed via an infinitely more efficient set of relationships.

London Rises — 1688 A.D.

When tensions with the French reached a critical point in 1688, the Dutch made the decision to forcefully align with the British as a preemptive defensive measure in what would come to be known as the Glorious Revolution. In November of that year, the Dutch sailed a fleet four times the size of Spain’s famed Armada to England, where they overthrew and replaced King James II with William of Orange (William III) as King. John Locke’s Two Treatises of Government, published one year later, contextualizes the widespread sentiment that led up to the Revolution.

William and the Dutch brought with them the innovations of Amsterdam and Antwerp, leading to the formation of the Bank of England, the evolution of the stock market, and the modernization of the British Empire. In fact, the momentous financial implications of the Revolution have led many to brand it the Financial Revolution.

In 1689, Parliament issued a joint monarchy under William III and James’ daughter Mary, who in return agreed to sign the Bill of Rights outlining constitutional principles including the right for regular Parliament, free elections, and free speech in government. The absolute monarchy was effectively extinguished, and a constitutional monarchy rose to take its place.

The preceding case study serves as a useful example of how effective regime change can be in revitalizing our world. The establishment has rarely been a powerful catalyst behind innovation throughout history.

Asset Bubbles — 1696 A.D. to 1773 A.D.

London’s stock market began to expand rapidly in the 1690s when tales of fantastic successes drove the public to buy ownership in any company they could. When the first bubble finally popped in 1696, more than half of all British companies had gone under.

The first mutual funds also emerged at this time, while early examples of the securitization of assets appeared as well, initially as packaged plantation loans sold to investors as securities. These, too, captured the imagination of the public but ultimately made for poor investments.

Meanwhile in France, an exiled Scot named John Law had convinced the near-bankrupt monarchy to support his launch of the Banque Générale. The Regent granted the Banque the authority to print notes partially backed by government bonds as part of Law’s new monetary system. These notes would allow companies credit for use against their business ventures. Law then built a monopoly over trading in Louisiana and French Canada via the Mississippi Company.

While prices of shares in the Company soared for a number of years, the hype eventually collapsed as the company failed to deliver on its early promise and Law began printing huge sums of money via the Banque to support the stock.

The South Sea Bubble was yet another contemporary case study in excitement and failure in which financiers in Britain copied the Mississippi Company’s model to form a company with a monopoly on British trade in South America. As with Law, the hysteria around company shares enveloped all of levels of society before the share price collapsed on itself as outflows began to outpace inflows. Even the great Sir Isaac Newton, at the time Master of the Mint, fell for the South Sea Bubble fraud.

While it may be unsurprising that senseless frenzy tends to accompany periods of rapid innovation and development, what we see time and again is people of all levels of education and power falling prey to these schemes. The presence of fraudulent “get-rich-quick” schemes is not necessarily indicative of a broader falsehood. Rather, they tend to opportunistically accompany periods of genuine progress.

A major challenge in crypto is differentiating between the durable infrastructure and applications being built and the opportunistic scams inevitably arising along the way.

The Early Industrial Revolution — 1760 A.D.

History’s most important technological revolution was really just a frenzied period of development in which entrepreneurs and financiers sought to answer an important question: how can we do things better across our entire economy?

When Adam Smith published “The Wealth of Nations” his fundamental point was that people have a tendency to maximize their own self-interest, which in turn results in a more prosperous society through the “invisible hand” of the market. Smith’s seminal piece marked the rise of free-market capitalism and would set the stage for the industrial explosion that would follow.

The British would soon conquer India, cementing their place as the globe’s superpower with India serving as a major source of the raw materials that would build the modern world.

Steam had been explored as a source of power over several millennia, but the development of the first crude steam engine, initially to remove water out of coal mines, marked the real technological turning point. Throughout the next century, steam would serve as the fuel behind the Industrial Revolution and the primary driver of the transition from human to machine power.

Another key invention was the Spinning Jenny, a machine that would see the textile industry weave together a new global order built on inputs like exploited labor and cotton.

The explosion in textiles would in turn yield the first factories built by entrepreneurs like Richard Arkwright, who helped imagine a new world based on efficient manufacturing at incredible scale.

A cunning businessman named Samuel Slater would later recognize the potential of Arkwright’s water-powered factory system, bringing it under secrecy to the US where he would help kickstart America’s own revolution in industry.

Unsurprisingly, the New York Stock Exchange would be created just a few years later on Wall Street — the site where the Dutch in New Amsterdam (New York) built their defenses to keep out Native American and English threats.

The irony of Wall Street originating where people literally built walls to keep others out provides an incredible metaphorical perspective into the very nature of the existing global financial order.

The Industrial Revolution saw astonishing experiments play out — many failed, others were outright frauds, but this period of insatiable innovation would ultimately yield a remarkable array of world-changing inventions.

Our most important achievements come from relentless trial and error — the more trials are conducted, the greater the resulting success (in both scope and scale). The study of history has a tendency to gloss over the failures in favor of the major successes.

The Gold Standard — 1820 A.D.

England would first experiment with the Gold Standard in the 1700s under Sir Isaac Newton but didn’t formally adopt it until the 1820s, with the United States, Germany, France, and others following soon after. Advocates of the structure felt the system prevented individual countries from driving significant inflation by excessively printing money, while the system would also strengthen free trade by minimizing cross-currency volatility.

In the new system, currencies were fixed to gold and therefore to one another under a new international standard that caused price levels around the globe to correlate. Problems soon arose as the direct relationship between nations’ currencies saw monetary shocks spread rapidly — for example, new discoveries of gold in one country drastically increasing overall supply and affecting prices everywhere.

The desire to build a unified global system backed by a standardized commodity was born from reasonable intentions, but was ultimately predicated on the belief that countries would work together in good faith. When tensions reached a boiling point in the lead up to WWI, the classical Gold Standard fell apart as political alliances changed and countries began to pursue inflationary policies against the spirit of the agreement.

The classical Gold Standard existed for just a few decades and eventually collapsed thanks to the paradox of maintaining a global standard underpinned by numerous centralized entities each pursuing individual actions under differing agendas.

Countries adopting the Gold Standard were expected to follow the “rules of the game” regarding the adjustment of domestic bank rates in response to fluctuations in the value and supply of gold itself.

The failure of the Standard is just one example of how handshake agreements and even formal laws can be ignored by centralized actors when convenient, demonstrating the importance of immutable and objective rules built into publicly visible code.

The Boom in Technological Infrastructure — 1850s A.D.

Over the next few decades, many incredible developments would play out on both sides of the Atlantic. In 1856, Henry Bessemer invented a new process for the mass production of inexpensive steel. The world’s first subway opened in London in 1863, while the Transcontinental Railroad would be built just a few years later in the US.

Following Samuel Morse’s invention of the telegraph a few decades prior, Alexander Graham Bell patented the telephone in 1876, marking a critical inflection point in the world of global communication. Edison’s light bulb would come just a few years later.

The Wright brothers took flight in 1908, only a few decades after Belgian inventor Jean-Joseph-Étienne Lenoir built the first commercial internal combustion engine. That same year, Ford began production of the Model T using production lines inspired by Arkwright’s factory systems.

A crucial theme of this period saw production coincide with scientific research on a scale never before seen, with the resulting pace of innovation dwarfing any historical precedents.

We often forget that technology drives new user behavior — history is full of monumental examples of new developments that precede product-market fit, requiring years of tinkering before society recognizes the potential and begins to adopt it at scale.

The technological advances occurring in crypto in many ways precede the endgame use cases that will ultimately form. The mistake people make over and over again is to discount the present, as well as future, value of a technology because it has yet to find mainstream applications. This is exactly what is happening in Web3 today.

Abolishing Slavery But Not Inequality — Mid 1800s A.D.

The middle years of the nineteenth century saw the abolition of slavery in Britain, the Ottoman Empire, France, and the United States. Though the various abolitions of slavery didn’t end the exploitation of workers around the world, they marked an important turning point in the perception of labor: namely, the right of individuals to profit from their direct contributions to output.

Even though slavery was ultimately abolished, workers in industrialized nations continued to work in subhuman conditions for pennies throughout the Industrial Revolution. Despite the improvement in labor laws over the following years, workers around the world continue to suffer today.

In first world nations, marginalized people struggle from systemic biases and unequal access to resources that starts from birth and is often impossible to reverse. In developing nations, corrupt officials, primitive financial and technological infrastructure, and economies built by profiteers and dictators prevent upward mobility.

Importantly, a large portion of people around the world are locked out of the financial system we take for granted in developed nations. The censor-resistant, open financial ecosystem that crypto seeks to build offers a source of hope and empowerment for these same people. A powerful open letter issued to Congress this year made this point exceptionally well.

The Great Depression — Early 1900s A.D.

As America matured into a global superpower following the horrors of the First World War, Wall Street became the new home for investors and speculators around the world. Ironically, the War saw the formation of an interconnected global order made up of individual nations with little trust in one another. As a result, systemic risks could quickly spread globally while individual nations could do little to protect themselves — an issue that the Gold Standard only amplified.

In the pre and early post-War years, America’s newly launched Federal Reserve helped create a relaxed monetary and low-interest environment that encouraged consumers to borrow heavily and invest on credit. The Roaring Twenties saw a boom in American manufacturing & consumption driven by continuous technological improvements in industry, while retail investors began to use loans to invest in stocks at an extraordinary pace.

The Smoot-Hawley Tariff was enacted in 1930 in an effort to protect American agriculture but resulted in foreign countries raising taxes on American exports in return, leading to a significant decline in global trade.

When the stock market finally began to pull back, investors who had traded on margin were crushed as sentiment (and therefore consumer spending, production, and employment) throughout the economy plummeted. Fear also drove people to liquidate their bank accounts, leading to runs on banks throughout the country.

The rise of a new global network in the early 20th century allowed for incredible cross-border efficiencies in trade and collaboration. However, the downside to this new construct is that systemic risks become hyper contagious if countries stop working together or begin to attack one another economically.

Just as leverage amplifies an investor’s upside or downside, global interconnectivity magnifies the opportunities and risks associated with swift economic changes.

In the lead up to Covid-19, the US and China — the two largest members of the global economic order — faced off via tariffs and protectionism. As we saw during the Great Depression, the fragmented yet interconnected global order ultimately exaggerated early demand shocks via uncorrelated government responses and broken supply chains.

Further, it is the developing world that predictably deals with the most severe ramifications under this construct.

We can therefore see that the global economic system that emerged in the 20th century is largely characterized by one-way flows: of value (to developed nations) and of destruction (to third world economies).

Post WWII and the Modernization of Finance — Mid 1900s A.D.

A decade of stagnation in America soon came to an end as the Second World War effort picked up, leading to an explosion in employment, manufacturing, and economic output. Contrary to the expectations of many, the boom would only accelerate in the aftermath of the War as military factories were repurposed to serve consumer needs and investment skyrocketed under The Marshall Plan.

The invention of the transistor in 1947 by Bell Labs was a monumental achievement that would usher in a new age of computing as well as the perpetual innovation engine described by Moore’s Law. The Univac I, the world’s first commercial electronic computer, would be produced just a few years later.

Back in 1914, Western Union had issued metallic plates allowing holders to defer payment to a later date, known as “Metal Money,” as an early predecessor to credit cards. In 1946, John Biggins launched the Charg-It card before Diners Club and later American Express would create their own general purpose credit cards in the 1950s and 1960s.

IBM’s invention of the magnetic stripe used on credit cards & IDs meant merchants could obtain account information and authorization on the card itself, rather than having to call the credit company each time.

Interestingly, we see that many of the 20th century’s most important technological achievements came as a result of inventors seeking to reinforce and simplify the collective infrastructure underpinning our world.

The Dawn of the Computing Age ­– Late 1900s A.D.

The Department of Defense built the first functioning prototype of the Internet in 1969, known as ARPANET, to allow several computers to communicate and share information across a unified network.

As more computers sought to connect to the network, computer scientists Bob Kahn and Vinton Cerf developed Transmission Control Protocol and Internet Protocol, or TCP/IP, as a standard for transmitting data throughout multiple networks. ARPANET’s adoption of TCP/IP in 1983 saw the emergence of an interconnected network of networks around the world that would ultimately become the Internet.

The early internet generated immense excitement, but usage was generally limited to academics and scientists due to the complexity of the prevailing systems. The Domain Name System (DNS) was created in 1983 to simplify IP addresses by converting them into human-readable form. Tim Berners-Lee would soon propose a new way of organizing and connecting information across computers under a web of information that would come to be known as the World Wide Web.

Berners-Lee developed numerous fundamental technologies underpinning today’s web, including HTML, URL, and HTTP, as well as the first browser and web server. Crucially, Berners-Lee demanded that the technology be made free and open to the public in perpetuity.

The Internet and World Wide Web would forever change our world, but they wouldn’t have done so had they been built in proprietary manner. As we’ve seen repeatedly, the concept of open-source technology isn’t simply a moral one: it drives more effective solutions.

Berners-Lee in particular introduced core ideas like decentralization, publicly visible code and universal compatibility into his designs. Without these themes underpinning his technology, the interconnected computing age we take for granted today might not exist.

This is an incredibly important point: the Internet isn’t just a layer of infrastructure for communication. It’s also the most powerful library of information ever assembled and a core source of empowerment for disenfranchised people around the globe. A world of several closed Internets would unquestionably hurt billions of people in the developing world.

The Dot Com Bubble & Finding Adoption ­– Early 2000s A.D.

The excitement around the Internet accelerated into the late 1990s as the potential behind the Internet captivated the world. As investors struggled to reconcile their lack of technical understanding with a desire to compete, endless pools of capital were thrown at thousands of opportunities.

While legitimate technological progress continued, particularly at the infrastructure layer, the commercialization wave led to an incredible windfall of speculation that ultimately crashed at the turn of the millennium.

The years following the Bubble saw improvements in bandwidth speeds, the transition from dial-up systems to cable internet, and PCs becoming mainstream. Early use cases began to resonate — e-mail, search engines, social media, and more ­­– allowing the Internet to go mainstream as users switched from speculation to native utilization.

The parallels between crypto’s current era and the dot com bubble are covered extensively, but the focus tends to converge on the boom and bust nature of both periods. The truth is that both periods saw the introduction of world-changing technologies that saw early hype exceed actual traction and the discovery of product-market fit.

Those writing off crypto because of spikes and declines in asset prices fail to understand the real parallel between the two eras: crypto’s potential today mirrors the Internet’s in the late ’90s. More importantly, the excitement captivating grassroots builders and users feels similar to the sentiment that surrounded the early days of the open-source internet.

As crypto continues to discover and refine its core use cases throughout the emerging “Application Era,” we will start to see blockchain technology become a part of our daily lives.

Just as we do with the Dot Com Bubble, we’ll inevitably look back at this era with 20/20 hindsight bias and recognize the immense potential that crypto offers today and question how anyone ever missed it.

Satoshi & Beyond — 2008 A.D. and Onwards

History is riddled with examples of universal currencies struggling due to the differing agendas of the underlying entities that govern them. As such, it’s unsurprising that various thinkers have attempted to counter this using decentralized technologies.

In 1995, cryptographer David Chaum designed an electronic form of currency called Digicash that used encrypted keys. Bit Gold, designed a few years later by Nick Szabo, introduced a novel concept that required participants to spend computing power to crack cryptographic puzzles as a way to disincentivize malicious behavior.

The Bitcoin white paper, published by Satoshi Nakamoto in 2008 as the Financial Crisis shook the world, outlined a global peer-to-peer electronic cash system that incorporated these existing ideas but also solved the critical issue of preventing double spending — essentially, the ability to copy and paste code — without the use of a governing central authority.

Bitcoin served as a revolutionary (and functional) example of a truly peer-to-peer, decentralized currency and medium of exchange, but its architecture was somewhat limited in the broader applications it could support. So in 2014, a group of developers led by a remarkable young programmer named Vitalik Buterin raised funds for a platform that could support generalized use cases beyond simple payments.

Ethereum went live in 2015 as a Turing-complete blockchain that could understand and implement complex instructions, setting the stage for a new world of decentralized, open-source protocols and applications. Since then, many other blockchain ecosystems have sprung up, some leveraging Ethereum’s infrastructure, others trying to create their own architecture and consensus mechanisms. Some optimize for security while others build with high throughput in mind.

The sector has experienced multiple boom and bust cycles over its short life as a loose macro environment and stories of riches attracted everyone from retail traders to global institutions. Early bubbles formed around NFTs or protocols promising exorbitant yields, while projects both good and bad raised immeasurable capital with ease.

What we’re seeing today mimics the tail end of the dot com bubble. The endless excitement that drove up asset prices in the space over the last couple years has come crashing down, destroying many who traded on leverage and eviscerating poorly thought-out protocols built to take advantage of the hype.

But just as we saw before, during, and after the dot com bubble, incredible infrastructure continues to be built throughout Web3. Scaling solutions, payments infrastructure, privacy layers, digital identity primitives and more are all being designed by some of the smartest and most passionate people in the world.

Today, governments everywhere are experimenting with blockchain technologies, with many seeking to build their own centralized digital currencies. In evaluating the current environment, it is critical we remember history’s recurring lessons on what society on aggregate loses when we build behind giant walls, optimizing for control over utility.

The complexity and obscurity that defines the global financial system today is a deviation from the original principles upon which commerce was built. Some might argue that the complexity is a natural byproduct of an increasingly convoluted and interconnected world, but in reality it is our disjointed institutional and retail systems that have made the world the way it is. And to be clear — this is very much by design, so that power resides with the few institutions (government and private) that understand and can control the monetary system. Except, we see time and again that even these organizations don’t fully understand the world they’ve built.

History is full of examples showing why an obscure and interconnected system sets us up for contagious, systemic shocks that spread rapidly and concentrate their damage on society’s marginalized.

Likewise, the trend of centralization that has played out in technology over the last two decades is an aberration that goes against not only the original tenets of the Internet but also actively ignores what made technology so incredible in the first place: open collaboration.

The most productive periods of innovation tend to materialize when centralized authorities step back and let the natural forces described by Adam Smith play out. The inevitable scams and ponzis that came along in eras past neither defined those periods nor derailed their progress.

The models that govern our world today are designed to benefit the few, not the many, while the crusade against crypto seeks to control, not protect.

Web3 is a revolutionary experiment that seeks to rebalance the system in favor of the many by replacing human bias with immutable code to unlock human creativity with composable infrastructure.

The ongoing search for true mainstream product-market fit is indicative of the magnitude of the project, but as we’ve seen time and again, if the incentives are right, people will find a way to build incredible things.

The last few years have given rise to a trend of empowerment as represented by people demanding more: more freedom, more meaning, more ownership.

Those who make the mistake of evaluating the probability of crypto’s success using immediate economic returns are missing the forest for the trees.

A new era of interoperability and imagination is upon us. Those who disparage it either don’t know their history, or simply seek to retain control, fearful in the face of a changing world.

Introduction

At its core, crypto represents an unprecedented systemic overhaul — an attempt to restore credibility to the global financial system, to correct the broken economic models underpinning human commerce and ultimately, to reverse the trend of centralization that has played out over the last 10 millennia.

The technologies underpinning the crypto revolution are very much 21st century, but its ideological building blocks can be traced back thousands of years. Crypto is more than yields and PFPs: it is a movement built on the belief that you can empower people and unlock limitless creativity using composable, open networks and censor-resistant code.

For those who don’t fully appreciate the gravity of what is playing out, it is imperative we demonstrate why crypto is neither a temporary fad nor the latest form of counterculture — rather, it is the natural point of evolution in a long and linear journey of human connectivity.

The point here is not only to demonstrate the continuity of human innovation, but also to show how crypto is very intentionally a multi-cultural, cross-discipline movement that aims to address the shortfalls of the existing global economic and technological orders.

The biggest misconception concerning the space is that it is simply a collection of cryptocurrencies. The use of cryptography and blockchains to create peer-to-peer digital currencies was just one early application of a groundbreaking technology. The real potential lies in an endgame where entire industries leverage the power of blockchains to create new user behavior and models that unlock infinitely more efficient value creation and capture.

But first, let’s rewind…

Early Numbers — 3000 B.C. to 1500 B.C.

Five thousand years ago, early Sumerians laid the groundwork for the first written language by developing a ledger-based system to record transactions, contracts, and inventories. These early thinkers pioneered concepts like compound interest, deposits, and interest rates using a clay tokens to communicate and store economic information. Early forms of writing would also later emerge independently in Egypt, China, and Mexico.

The Babylonians inherited and expanded on the Sumerian’s base-60 numerical system, building the first positional numeral structure. To promote transparency and impartiality, they eventually codified their principles through texts like the Code of Hammurabi which standardized the laws governing money in society.

These early efforts saw the first attempts in human history to create an impartial, ledger-based monetary system similar to what is being built using today’s blockchains. It’s relatively well known that Web3 is an attempt to revive the internet’s original tenets: unrestricted, borderless collaboration and user-first business models.

But beyond that, crypto represents a reversion to the earliest principles underpinning human commerce.

Democratic Governance — 700 B.C.

Centuries later, the ancient Greeks expanded on these ideas by pioneering an early version of democratic institutions that governed cross-border commerce. The Athenians developed a network of merchant courts that could oversee and arbitrate agreements between third parties using voluntary juries, fixed speaking times, and a legal code inscribed on large blocks in public areas.

Rather than having lawyers or judges represent each side, individuals were allowed to represent themselves in arguing their cases in what was one of the first examples of self-sovereignty and control over one’s public identity.

The use of public forums to display laws, intended to foster trust in the regulatory system, was highly successful in encouraging citizens to voluntarily partake in juries and deliberations.

Universal Currency — 600 B.C.

It was not long after this that the first coins began to circulate, having been developed independently in Ancient Greece, China, and India. Importantly, although early mediums of exchange were previously created using a variety of commodities, the first true coins were formed using metal as the preferred base, demonstrating the importance of durability, divisibility, fungibility, and portability in currency.

It was around this time that Aristotle first contemplated the problem of commensurability, or how to create standard methods of measurement across very different things. Aristotle concluded that Money can be used as a standard medium of measurement across non-equal things, while he also theorized the core principles and functions of money: a unit of account, a medium of exchange, and a store of value.

In the centuries that followed, the Roman Empire would introduce a standard coinage system (the silver Denarius) that spread throughout much of the world, inspiring the creation of many similar currencies as well as the adoption of the word to represent money across a range of cultures, even today.

For those focused on the value of crypto assets as currencies, much of that value is derived from cryptocurrencies’ ability to satisfy these early traits: durability through decentralization, fungibility through open standards, and portability powered by P2P software and the internet.

Equally important, it was the Romans who first demonstrated the problems associated with coins minted and controlled by a powerful centralized authority: in particular, inflation-driven debasement as a form of reckless taxation. As a modern example, the real value of the US Dollar has dropped by an incredible 92% since 1933.

Identity — Bronze Age

Across a variety of bronze age civilizations, gold served as both a form of currency and a form of jewelry, adorned to display wealth or status. Not long after coins were first introduced to the world did mints begin incorporating designs reflecting artistic and cultural symbolism as represented by animals, deities, and emperors.

The emergence of this fixation represented an early example of how finance, art, and culture would begin to collide over the coming centuries, leading to much of what we see in crypto today — for example, the marriage of DeFi and NFTs, or the vibrant communities and imagery that make up the ecosystem.

The Silk Road & Global Trade — 500 B.C. Onwards

The Persian Royal Road, built by Persian King Darius the Great and later expanded by the Romans, served as one of history’s first high-speed global networks designed to disseminate trade and messages across long distances. When Alexander the Great conquered the Persians and spread his empire deep into Asia, he leveraged the Persian roads to establish cities across Asia, including Alexandria Eschate, also known as Alexandria Farthest.

Centuries later, when the Han Emperor Wu sent his emissary Zhang Qian to repair relations with the nomads of Central Asia, the envoy came across Alexander’s descendants, who the Chinese termed Da Yuan (Great Ionians), taking note of their particularly powerful horses.

The early exchanges between these two cultures, as well as the resurgence of the Persian Roads, saw the formation of the Silk Road and the export of commodities like paper, gunpowder, and silk. The Silk Road supercharged the exchange of goods and ideas around much of the world until the Ottomans, following their conquest of the Byzantines, closed off the routes. Crucially, the Ottoman closure of the Silk Road routes encouraged merchants to turn to the oceans for trade, leading to the Age of Exploration.

The free exchange of ideas and technology across the Silk Road saw the best pieces of different cultures and technologies adopted by people around the world. As we see time and again, open collaboration is an infinitely more effective engine for positive evolution than building behind closed doors. Applying this framework to Web3, we begin to understand why the pace of development in crypto’s first decade has been so tremendous.

China & Paper Money — 700 A.D.

Having invented the first true paper as well as an early example of movable type, China’s Song Dynasty later developed an early form of paper money, initially as a form of promissory notes that holders could redeem for coins. A few hundred years later, the Song created the world’s first formal paper money system as we know it today, printing bills known as jiaozi.

Though a revolutionary step, the transition to paper money, as opposed to coins minted from tangible metal with perceived intrinsic value, was not without issue.

Several centuries after the introduction of paper money backed by the full faith and credit of the issuing government, the Ming dynasty ceased printing paper money and reverted to the system of coinage after runaway inflation devalued the monetary system.

Though not immediately successful, the introduction of paper money represented a historically significant step forward: namely, the acceptance of money as an intangible, faith-based representation of value.

Islamic Golden Age — 800 A.D to 1300 A.D.

In the early medieval period, the Islamic world led a golden age in mathematics and science, translating and consolidating early innovations by the Greeks, Romans, Persians, Indians, and others that would likely have been lost as much of the world underwent a period of decline.

The spread of paper from China saw information become democratized, allowing people from all professions to build on one another’s work in another early example of the incredible value that comes from open-source knowledge and composability.

The region saw many important developments across a range of disciplines, but perhaps most important was the Islamic world’s contribution to mathematics. Numeral systems around the world had famously struggled with the calculation of large numbers until the development of the Hindu-Arabic system in the first and fourth centuries by Indian mathematicians. Persian mathematician al-Khwarizmi was principally responsible for the introduction and adoption of the system in the Middle East before Fibonacci’s Liber Abaci helped popularize the system in Europe where it eventually replaced the Roman Numeral system.

Al-Khwarizmi also pioneered trigonometry and algebra, with his name giving us the word for algorithm. Other achievements during this period centered on advancements in geometry, astronomy, and medicine, largely fueled by one of the most significant scholarship movements in history.

Not only is this era responsible for a lot of what our modern world is built on today, it is also perhaps the best example in history of what can happen when walled gardens are torn down and unrestricted creativity is allowed to flourish. The most important developments in crypto’s relatively brief history have almost all been built by groups of cross-discipline individuals leveraging and expanding on existing achievements across technology and finance.

In fact, one could credibly argue that the pace of innovation seen in crypto materially exceeds that seen in almost any other industry precisely because of its open-source nature.

History is full of valuable case studies that allow us to explore this concept by examining the parallel growth and decline of major civilizations — the rise of the Ottomans as Europe (confined by the Church) fell into the dark ages; the decline of the Ottomans as they consolidated while Europe opened up and entered the Renaissance; the fall of the Ming who went from the world’s naval superpower to burning ships and effectively outlawing foreign ideas and commerce.

Medieval Europe — 1300 A.D.

In the late Middle Ages, cross border trade saw the center of financial innovation shift to Northern Italy where sophisticated financial institutions began to emerge. Europe’s first university was founded, and the seeds of the modern financial system were planted. In particular, cities like Venice, Genoa, and Florence began their rise due to their extensive trade with the Middle East and Asia, who exported not only their products but also their ideas.

To service this trade, successful merchants and traders began to engage in structured financial practices, eventually forming the first modern banks known as Merchant Banks. Fibonacci’s Liber Abaci didn’t just popularize a system of numbers; it helped lay the foundation for innovations like double-entry bookkeeping and the bill of exchange, as well as present value, profit distribution, and interest rate calculations.

With their primary activity foreign exchange, the early financiers of Tuscany conducted their business on benches (bancu), lending us the word for bank. Meanwhile, Genoa developed a system for trading currencies using a forum structure that governed rates by vote, in an early example of a consensus-based financial marketplace. The city also launched the first form of European public debt in the form of compere, that was eventually fractionalized into standardized, transferable shares.

The Medici dynasty would soon rise to power in Florence, first as a banking dynasty and then as the most significant patron of the arts during the Renaissance — another example of how art and finance have long represented two sides of the same coin.

Around this time, Nicolas Oresme released his Treatise on the Origin, Nature, Law, and Alterations of Monies, one of the earliest publications on monetary theory, in which he argued that regulation of coinage and minting should belong not to the state but to the people under communal governance.

In particular, the shift away from the Roman Numeral system serves as an invaluable case study in what can be accomplished when people prioritize efficient design and objective value over tradition.

The regulatory battle surrounding crypto is falsely made out to be about protecting people, when in reality it is more a crusade designed to protect existing systems and powers.

Moving North — 1500 A.D.

Italian merchants began to shift their trade north to cities like Bruges and Antwerp, where they could conduct business with counterparts from all over the region. As the blossoming financial industry made its way north, a major milestone in the history of technology took place in Germany: the invention of Gutenberg’s printing press, marking a monumental step forward in the realm of global interconnectivity.

In parallel, Bruges became one of the early homes of commerce in northern Europe, hosting consulates also known as nation houses on behalf of the major trading houses. The most prominent host of such houses was the Van der Buerse family who helped lay the seeds for the first modern stock exchanges as platforms for trade and discourse. It is believed that the Van der Beurse name lent itself to the word “beurs” and its variations used throughout Europe to describe stock exchanges to this day.

As the Age of Exploration began to take off (spurred by the previously noted closure of the Silk Road by the Ottomans), Antwerp emerged as a powerhouse in global commerce, giving birth to new dynasties that would shape much of the next few centuries, including the Hochstetters, Fuggers, and Welsers.

Initially fueled by Portuguese naval commerce, Antwerp’s rise also benefitted massively from Spanish expeditions by conquistadors like Francisco Pizarro, who uncovered the seemingly incalculable wealth stored in the silver mines of Potosi, Peru. The Spanish Dollar (Piece of Eight), modeled after the German Thaler (Dollar), was minted on the backs of slaves working in unimaginably cruel conditions and became the world’s first global currency, circulating from Peru to the Philippines.

Antwerp heavily promoted the bill of exchange as an instrument, and built a commodity exchange as a predecessor to the world’s stock exchanges. In doing so, Antwerp facilitated an explosion in global commodities trading, the creation of the modern derivatives market, and the launch of an international money market for sovereign debt.

Despite having uncovered a well of apparently infinite fortune, the Spanish empire began to decline within just a few centuries as a result of continent-wide runaway inflation caused (in part) by the massive oversupply of precious metals. The Spanish regression and prolonged seaborne wars irreversibly hindered Antwerp but opened the door for a new city: Amsterdam.

The Dutch Golden Age, Tulips, and the First Stable Coin — 1600 A.D.

As the Spanish kingdom fell in power, its former subjects in the Netherlands rose to dominate the seas and the markets. The Dutch Empire established the Dutch East India Company (the VOC) in 1602, generally recognized as the first joint-stock company in history, formed on the world’s oldest stock market, the Dutch Stock Exchange. The VOC introduced concepts like limited liability and permanent capital, and would go on to become the largest company in history with an army of its own.

As the center of trade conducted using a wide range of currencies, Amsterdam had to contest with the challenge of inconsistent coinage quality caused by people hording coins of higher purity — a phenomenon described by Gresham’s Law. To combat this, the city founded the world’s first formal Central Bank ­- the Bank of Amsterdam — designed to standardize the value of currency.

The Dutch Guilder, modeled after the Florin in Florence, was built using a novel system of debits and credits represented by a centralized ledger, and eventually became the world’s reserve currency, in part thanks to the comfort derived from the 100% reserve ratio the Central Bank maintained.

The Bank also introduced tradable receipts for use by merchants in their daily activities — an early predecessor to modern fiat currencies. Sweden would soon launch its own central bank — the first in Europe to print banknotes and still the world’s oldest central bank.

Famously, tulips also began to arrive in Amsterdam via the spice trade and were immediately sought after for their exotic origins, leading to massive speculation and trading. The bubble and subsequent collapse in prices represented one of the most famous asset bubbles in history.

Though prohibited from doing so by charter, the Bank of Amsterdam began to lend heavily to the Dutch East India Company, whose board members held intimate relations with those governing the Bank*.* As the Dutch Empire began to see its share of global trade decline in favor of the British following the Napoleonic Wars, the Dutch East India Company was no longer able to service its debt obligations to the Bank, whose own irresponsible lending practices left it critically overextended. As a result, the world’s first Central Bank collapsed.

The Dutch played an invaluable role in building the first stock market, joint-stock company, modern global reserve currency, and even central bank, but their reckless lending practices and neglect of their original mandate led to their downfall.

One of the crypto’s most important contributions is the introduction of systems with programmable guarantees built into publicly visible code. This means that we can now build systems where the original mandate is codified and unalterable behind closed doors.

Collective governance isn’t just about building a more equitable system; it also offers a much better business model. For the first time, a direct line of discovery can be built between users’ interests and the way commercial organizations are governed via an infinitely more efficient set of relationships.

London Rises — 1688 A.D.

When tensions with the French reached a critical point in 1688, the Dutch made the decision to forcefully align with the British as a preemptive defensive measure in what would come to be known as the Glorious Revolution. In November of that year, the Dutch sailed a fleet four times the size of Spain’s famed Armada to England, where they overthrew and replaced King James II with William of Orange (William III) as King. John Locke’s Two Treatises of Government, published one year later, contextualizes the widespread sentiment that led up to the Revolution.

William and the Dutch brought with them the innovations of Amsterdam and Antwerp, leading to the formation of the Bank of England, the evolution of the stock market, and the modernization of the British Empire. In fact, the momentous financial implications of the Revolution have led many to brand it the Financial Revolution.

In 1689, Parliament issued a joint monarchy under William III and James’ daughter Mary, who in return agreed to sign the Bill of Rights outlining constitutional principles including the right for regular Parliament, free elections, and free speech in government. The absolute monarchy was effectively extinguished, and a constitutional monarchy rose to take its place.

The preceding case study serves as a useful example of how effective regime change can be in revitalizing our world. The establishment has rarely been a powerful catalyst behind innovation throughout history.

Asset Bubbles — 1696 A.D. to 1773 A.D.

London’s stock market began to expand rapidly in the 1690s when tales of fantastic successes drove the public to buy ownership in any company they could. When the first bubble finally popped in 1696, more than half of all British companies had gone under.

The first mutual funds also emerged at this time, while early examples of the securitization of assets appeared as well, initially as packaged plantation loans sold to investors as securities. These, too, captured the imagination of the public but ultimately made for poor investments.

Meanwhile in France, an exiled Scot named John Law had convinced the near-bankrupt monarchy to support his launch of the Banque Générale. The Regent granted the Banque the authority to print notes partially backed by government bonds as part of Law’s new monetary system. These notes would allow companies credit for use against their business ventures. Law then built a monopoly over trading in Louisiana and French Canada via the Mississippi Company.

While prices of shares in the Company soared for a number of years, the hype eventually collapsed as the company failed to deliver on its early promise and Law began printing huge sums of money via the Banque to support the stock.

The South Sea Bubble was yet another contemporary case study in excitement and failure in which financiers in Britain copied the Mississippi Company’s model to form a company with a monopoly on British trade in South America. As with Law, the hysteria around company shares enveloped all of levels of society before the share price collapsed on itself as outflows began to outpace inflows. Even the great Sir Isaac Newton, at the time Master of the Mint, fell for the South Sea Bubble fraud.

While it may be unsurprising that senseless frenzy tends to accompany periods of rapid innovation and development, what we see time and again is people of all levels of education and power falling prey to these schemes. The presence of fraudulent “get-rich-quick” schemes is not necessarily indicative of a broader falsehood. Rather, they tend to opportunistically accompany periods of genuine progress.

A major challenge in crypto is differentiating between the durable infrastructure and applications being built and the opportunistic scams inevitably arising along the way.

The Early Industrial Revolution — 1760 A.D.

History’s most important technological revolution was really just a frenzied period of development in which entrepreneurs and financiers sought to answer an important question: how can we do things better across our entire economy?

When Adam Smith published “The Wealth of Nations” his fundamental point was that people have a tendency to maximize their own self-interest, which in turn results in a more prosperous society through the “invisible hand” of the market. Smith’s seminal piece marked the rise of free-market capitalism and would set the stage for the industrial explosion that would follow.

The British would soon conquer India, cementing their place as the globe’s superpower with India serving as a major source of the raw materials that would build the modern world.

Steam had been explored as a source of power over several millennia, but the development of the first crude steam engine, initially to remove water out of coal mines, marked the real technological turning point. Throughout the next century, steam would serve as the fuel behind the Industrial Revolution and the primary driver of the transition from human to machine power.

Another key invention was the Spinning Jenny, a machine that would see the textile industry weave together a new global order built on inputs like exploited labor and cotton.

The explosion in textiles would in turn yield the first factories built by entrepreneurs like Richard Arkwright, who helped imagine a new world based on efficient manufacturing at incredible scale.

A cunning businessman named Samuel Slater would later recognize the potential of Arkwright’s water-powered factory system, bringing it under secrecy to the US where he would help kickstart America’s own revolution in industry.

Unsurprisingly, the New York Stock Exchange would be created just a few years later on Wall Street — the site where the Dutch in New Amsterdam (New York) built their defenses to keep out Native American and English threats.

The irony of Wall Street originating where people literally built walls to keep others out provides an incredible metaphorical perspective into the very nature of the existing global financial order.

The Industrial Revolution saw astonishing experiments play out — many failed, others were outright frauds, but this period of insatiable innovation would ultimately yield a remarkable array of world-changing inventions.

Our most important achievements come from relentless trial and error — the more trials are conducted, the greater the resulting success (in both scope and scale). The study of history has a tendency to gloss over the failures in favor of the major successes.

The Gold Standard — 1820 A.D.

England would first experiment with the Gold Standard in the 1700s under Sir Isaac Newton but didn’t formally adopt it until the 1820s, with the United States, Germany, France, and others following soon after. Advocates of the structure felt the system prevented individual countries from driving significant inflation by excessively printing money, while the system would also strengthen free trade by minimizing cross-currency volatility.

In the new system, currencies were fixed to gold and therefore to one another under a new international standard that caused price levels around the globe to correlate. Problems soon arose as the direct relationship between nations’ currencies saw monetary shocks spread rapidly — for example, new discoveries of gold in one country drastically increasing overall supply and affecting prices everywhere.

The desire to build a unified global system backed by a standardized commodity was born from reasonable intentions, but was ultimately predicated on the belief that countries would work together in good faith. When tensions reached a boiling point in the lead up to WWI, the classical Gold Standard fell apart as political alliances changed and countries began to pursue inflationary policies against the spirit of the agreement.

The classical Gold Standard existed for just a few decades and eventually collapsed thanks to the paradox of maintaining a global standard underpinned by numerous centralized entities each pursuing individual actions under differing agendas.

Countries adopting the Gold Standard were expected to follow the “rules of the game” regarding the adjustment of domestic bank rates in response to fluctuations in the value and supply of gold itself.

The failure of the Standard is just one example of how handshake agreements and even formal laws can be ignored by centralized actors when convenient, demonstrating the importance of immutable and objective rules built into publicly visible code.

The Boom in Technological Infrastructure — 1850s A.D.

Over the next few decades, many incredible developments would play out on both sides of the Atlantic. In 1856, Henry Bessemer invented a new process for the mass production of inexpensive steel. The world’s first subway opened in London in 1863, while the Transcontinental Railroad would be built just a few years later in the US.

Following Samuel Morse’s invention of the telegraph a few decades prior, Alexander Graham Bell patented the telephone in 1876, marking a critical inflection point in the world of global communication. Edison’s light bulb would come just a few years later.

The Wright brothers took flight in 1908, only a few decades after Belgian inventor Jean-Joseph-Étienne Lenoir built the first commercial internal combustion engine. That same year, Ford began production of the Model T using production lines inspired by Arkwright’s factory systems.

A crucial theme of this period saw production coincide with scientific research on a scale never before seen, with the resulting pace of innovation dwarfing any historical precedents.

We often forget that technology drives new user behavior — history is full of monumental examples of new developments that precede product-market fit, requiring years of tinkering before society recognizes the potential and begins to adopt it at scale.

The technological advances occurring in crypto in many ways precede the endgame use cases that will ultimately form. The mistake people make over and over again is to discount the present, as well as future, value of a technology because it has yet to find mainstream applications. This is exactly what is happening in Web3 today.

Abolishing Slavery But Not Inequality — Mid 1800s A.D.

The middle years of the nineteenth century saw the abolition of slavery in Britain, the Ottoman Empire, France, and the United States. Though the various abolitions of slavery didn’t end the exploitation of workers around the world, they marked an important turning point in the perception of labor: namely, the right of individuals to profit from their direct contributions to output.

Even though slavery was ultimately abolished, workers in industrialized nations continued to work in subhuman conditions for pennies throughout the Industrial Revolution. Despite the improvement in labor laws over the following years, workers around the world continue to suffer today.

In first world nations, marginalized people struggle from systemic biases and unequal access to resources that starts from birth and is often impossible to reverse. In developing nations, corrupt officials, primitive financial and technological infrastructure, and economies built by profiteers and dictators prevent upward mobility.

Importantly, a large portion of people around the world are locked out of the financial system we take for granted in developed nations. The censor-resistant, open financial ecosystem that crypto seeks to build offers a source of hope and empowerment for these same people. A powerful open letter issued to Congress this year made this point exceptionally well.

The Great Depression — Early 1900s A.D.

As America matured into a global superpower following the horrors of the First World War, Wall Street became the new home for investors and speculators around the world. Ironically, the War saw the formation of an interconnected global order made up of individual nations with little trust in one another. As a result, systemic risks could quickly spread globally while individual nations could do little to protect themselves — an issue that the Gold Standard only amplified.

In the pre and early post-War years, America’s newly launched Federal Reserve helped create a relaxed monetary and low-interest environment that encouraged consumers to borrow heavily and invest on credit. The Roaring Twenties saw a boom in American manufacturing & consumption driven by continuous technological improvements in industry, while retail investors began to use loans to invest in stocks at an extraordinary pace.

The Smoot-Hawley Tariff was enacted in 1930 in an effort to protect American agriculture but resulted in foreign countries raising taxes on American exports in return, leading to a significant decline in global trade.

When the stock market finally began to pull back, investors who had traded on margin were crushed as sentiment (and therefore consumer spending, production, and employment) throughout the economy plummeted. Fear also drove people to liquidate their bank accounts, leading to runs on banks throughout the country.

The rise of a new global network in the early 20th century allowed for incredible cross-border efficiencies in trade and collaboration. However, the downside to this new construct is that systemic risks become hyper contagious if countries stop working together or begin to attack one another economically.

Just as leverage amplifies an investor’s upside or downside, global interconnectivity magnifies the opportunities and risks associated with swift economic changes.

In the lead up to Covid-19, the US and China — the two largest members of the global economic order — faced off via tariffs and protectionism. As we saw during the Great Depression, the fragmented yet interconnected global order ultimately exaggerated early demand shocks via uncorrelated government responses and broken supply chains.

Further, it is the developing world that predictably deals with the most severe ramifications under this construct.

We can therefore see that the global economic system that emerged in the 20th century is largely characterized by one-way flows: of value (to developed nations) and of destruction (to third world economies).

Post WWII and the Modernization of Finance — Mid 1900s A.D.

A decade of stagnation in America soon came to an end as the Second World War effort picked up, leading to an explosion in employment, manufacturing, and economic output. Contrary to the expectations of many, the boom would only accelerate in the aftermath of the War as military factories were repurposed to serve consumer needs and investment skyrocketed under The Marshall Plan.

The invention of the transistor in 1947 by Bell Labs was a monumental achievement that would usher in a new age of computing as well as the perpetual innovation engine described by Moore’s Law. The Univac I, the world’s first commercial electronic computer, would be produced just a few years later.

Back in 1914, Western Union had issued metallic plates allowing holders to defer payment to a later date, known as “Metal Money,” as an early predecessor to credit cards. In 1946, John Biggins launched the Charg-It card before Diners Club and later American Express would create their own general purpose credit cards in the 1950s and 1960s.

IBM’s invention of the magnetic stripe used on credit cards & IDs meant merchants could obtain account information and authorization on the card itself, rather than having to call the credit company each time.

Interestingly, we see that many of the 20th century’s most important technological achievements came as a result of inventors seeking to reinforce and simplify the collective infrastructure underpinning our world.

The Dawn of the Computing Age ­– Late 1900s A.D.

The Department of Defense built the first functioning prototype of the Internet in 1969, known as ARPANET, to allow several computers to communicate and share information across a unified network.

As more computers sought to connect to the network, computer scientists Bob Kahn and Vinton Cerf developed Transmission Control Protocol and Internet Protocol, or TCP/IP, as a standard for transmitting data throughout multiple networks. ARPANET’s adoption of TCP/IP in 1983 saw the emergence of an interconnected network of networks around the world that would ultimately become the Internet.

The early internet generated immense excitement, but usage was generally limited to academics and scientists due to the complexity of the prevailing systems. The Domain Name System (DNS) was created in 1983 to simplify IP addresses by converting them into human-readable form. Tim Berners-Lee would soon propose a new way of organizing and connecting information across computers under a web of information that would come to be known as the World Wide Web.

Berners-Lee developed numerous fundamental technologies underpinning today’s web, including HTML, URL, and HTTP, as well as the first browser and web server. Crucially, Berners-Lee demanded that the technology be made free and open to the public in perpetuity.

The Internet and World Wide Web would forever change our world, but they wouldn’t have done so had they been built in proprietary manner. As we’ve seen repeatedly, the concept of open-source technology isn’t simply a moral one: it drives more effective solutions.

Berners-Lee in particular introduced core ideas like decentralization, publicly visible code and universal compatibility into his designs. Without these themes underpinning his technology, the interconnected computing age we take for granted today might not exist.

This is an incredibly important point: the Internet isn’t just a layer of infrastructure for communication. It’s also the most powerful library of information ever assembled and a core source of empowerment for disenfranchised people around the globe. A world of several closed Internets would unquestionably hurt billions of people in the developing world.

The Dot Com Bubble & Finding Adoption ­– Early 2000s A.D.

The excitement around the Internet accelerated into the late 1990s as the potential behind the Internet captivated the world. As investors struggled to reconcile their lack of technical understanding with a desire to compete, endless pools of capital were thrown at thousands of opportunities.

While legitimate technological progress continued, particularly at the infrastructure layer, the commercialization wave led to an incredible windfall of speculation that ultimately crashed at the turn of the millennium.

The years following the Bubble saw improvements in bandwidth speeds, the transition from dial-up systems to cable internet, and PCs becoming mainstream. Early use cases began to resonate — e-mail, search engines, social media, and more ­­– allowing the Internet to go mainstream as users switched from speculation to native utilization.

The parallels between crypto’s current era and the dot com bubble are covered extensively, but the focus tends to converge on the boom and bust nature of both periods. The truth is that both periods saw the introduction of world-changing technologies that saw early hype exceed actual traction and the discovery of product-market fit.

Those writing off crypto because of spikes and declines in asset prices fail to understand the real parallel between the two eras: crypto’s potential today mirrors the Internet’s in the late ’90s. More importantly, the excitement captivating grassroots builders and users feels similar to the sentiment that surrounded the early days of the open-source internet.

As crypto continues to discover and refine its core use cases throughout the emerging “Application Era,” we will start to see blockchain technology become a part of our daily lives.

Just as we do with the Dot Com Bubble, we’ll inevitably look back at this era with 20/20 hindsight bias and recognize the immense potential that crypto offers today and question how anyone ever missed it.

Satoshi & Beyond — 2008 A.D. and Onwards

History is riddled with examples of universal currencies struggling due to the differing agendas of the underlying entities that govern them. As such, it’s unsurprising that various thinkers have attempted to counter this using decentralized technologies.

In 1995, cryptographer David Chaum designed an electronic form of currency called Digicash that used encrypted keys. Bit Gold, designed a few years later by Nick Szabo, introduced a novel concept that required participants to spend computing power to crack cryptographic puzzles as a way to disincentivize malicious behavior.

The Bitcoin white paper, published by Satoshi Nakamoto in 2008 as the Financial Crisis shook the world, outlined a global peer-to-peer electronic cash system that incorporated these existing ideas but also solved the critical issue of preventing double spending — essentially, the ability to copy and paste code — without the use of a governing central authority.

Bitcoin served as a revolutionary (and functional) example of a truly peer-to-peer, decentralized currency and medium of exchange, but its architecture was somewhat limited in the broader applications it could support. So in 2014, a group of developers led by a remarkable young programmer named Vitalik Buterin raised funds for a platform that could support generalized use cases beyond simple payments.

Ethereum went live in 2015 as a Turing-complete blockchain that could understand and implement complex instructions, setting the stage for a new world of decentralized, open-source protocols and applications. Since then, many other blockchain ecosystems have sprung up, some leveraging Ethereum’s infrastructure, others trying to create their own architecture and consensus mechanisms. Some optimize for security while others build with high throughput in mind.

The sector has experienced multiple boom and bust cycles over its short life as a loose macro environment and stories of riches attracted everyone from retail traders to global institutions. Early bubbles formed around NFTs or protocols promising exorbitant yields, while projects both good and bad raised immeasurable capital with ease.

What we’re seeing today mimics the tail end of the dot com bubble. The endless excitement that drove up asset prices in the space over the last couple years has come crashing down, destroying many who traded on leverage and eviscerating poorly thought-out protocols built to take advantage of the hype.

But just as we saw before, during, and after the dot com bubble, incredible infrastructure continues to be built throughout Web3. Scaling solutions, payments infrastructure, privacy layers, digital identity primitives and more are all being designed by some of the smartest and most passionate people in the world.

Today, governments everywhere are experimenting with blockchain technologies, with many seeking to build their own centralized digital currencies. In evaluating the current environment, it is critical we remember history’s recurring lessons on what society on aggregate loses when we build behind giant walls, optimizing for control over utility.

The complexity and obscurity that defines the global financial system today is a deviation from the original principles upon which commerce was built. Some might argue that the complexity is a natural byproduct of an increasingly convoluted and interconnected world, but in reality it is our disjointed institutional and retail systems that have made the world the way it is. And to be clear — this is very much by design, so that power resides with the few institutions (government and private) that understand and can control the monetary system. Except, we see time and again that even these organizations don’t fully understand the world they’ve built.

History is full of examples showing why an obscure and interconnected system sets us up for contagious, systemic shocks that spread rapidly and concentrate their damage on society’s marginalized.

Likewise, the trend of centralization that has played out in technology over the last two decades is an aberration that goes against not only the original tenets of the Internet but also actively ignores what made technology so incredible in the first place: open collaboration.

The most productive periods of innovation tend to materialize when centralized authorities step back and let the natural forces described by Adam Smith play out. The inevitable scams and ponzis that came along in eras past neither defined those periods nor derailed their progress.

The models that govern our world today are designed to benefit the few, not the many, while the crusade against crypto seeks to control, not protect.

Web3 is a revolutionary experiment that seeks to rebalance the system in favor of the many by replacing human bias with immutable code to unlock human creativity with composable infrastructure.

The ongoing search for true mainstream product-market fit is indicative of the magnitude of the project, but as we’ve seen time and again, if the incentives are right, people will find a way to build incredible things.

The last few years have given rise to a trend of empowerment as represented by people demanding more: more freedom, more meaning, more ownership.

Those who make the mistake of evaluating the probability of crypto’s success using immediate economic returns are missing the forest for the trees.

A new era of interoperability and imagination is upon us. Those who disparage it either don’t know their history, or simply seek to retain control, fearful in the face of a changing world.