It's unclear what the executive order's impacts will be, but it does identify a few themes, which we'll discuss in a minute.

The order mainly revokes executive guidance from the Biden administration. It also establishes a working group that will study current issues and report back with guidelines for new policies or actions. One of the things the working group is tasked with is evaluating the potential impacts of a digital asset strategic reserve.

The fact sheet that the Whitehouse published as a companion to the executive order clarifies the broad brush goals. The actions aim at fulfilling the campaign promise "to make the United States the 'crypto capital of the planet.'"

In other words, it's a broad mandate.

What's telling are the few areas of focus called out in the order and how they relate to the various topics we've been covering in this newsletter.

The executive order's first point addresses protections for participating in digital asset networks and specifically calls out that these protections should extend to the ability to self-custody.

"Protecting and promoting the ability of individual citizens and private-sector entities alike to access and use for lawful purposes open public blockchain networks without persecution, including the ability to develop and deploy software, to participate in mining and validating, to transact with other persons without unlawful censorship, and to maintain self-custody of digital assets."

Here's more context on why self-custody matters and how it contributes to Open Money's overall openness and decentralized aspects.

Why self-custody matters for Open Money

Is the ability to self-custody digital assets slipping away?

https://www.danielmcglynn.com

The most popular stablecoins by market cap hold their treasuries in US dollars and US Treasury debt. That means encouraging growth and access to digital stablecoins can help strengthen the dollar or at least give it another surface to help it stay relevant in a changing world.

Again, taking from the executive order:

"Promoting and protecting the sovereignty of the United States dollar, including through actions to promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide."

Stablecoins might be boring compared to the rest of crypto, but they might also be the most innovative feature regarding digital dollars. Here's some more background:

Stablecoins as Shelter

By design, stablecoins are boring. They are designed to hold their value even as other digital assets fluctuate wildly. The mechanics of stablecoins are now attracting attention outside of the crypto space. They just might become an important tool for managing the United State's growing debt.

https://www.danielmcglynn.com

This point is interesting but needs more context to fit in with the rest of the order. It's not totally clear what this means, but it likely relates to how banks have put shadow bans on people and businesses with crypto transactions. The language in the order doesn't leave many clues:

"Protecting and promoting fair and open access to banking services for all law-abiding individual citizens and private-sector entities alike."

Beyond crypto transaction-specific banking issues, losing access to basic banking is an issue we've covered before:

Permissionless Money in a Time of Algorithms and AI

There are a lot of reasons why the shift to open money makes sense. One of them is that the world is changing. Increasingly algorithms and AI will start to make decisions about our lives. In that kind of world, permissionless, open money will become an important tool.

https://www.danielmcglynn.com

In the executive order, the new administration also argues against the development of a central banked digital currency or a CBDC.

CBDCs have both costs and benefits. On the benefits side, CBDCs could act as an easy on-ramp to other digital asset systems.

On the cost side, there are a lot of concerns about privacy and financial surveillance that would be made possible by government-controlled digital money.

Here's a backgrounder on how governments around the globe are in the research and development phase when it comes to CBDCs:

Digital loonies and the fate of central bank digital currencies

After years of research, the Bank of Canada is putting a pin in plans to develop a central bank-backed digital currency.

https://www.danielmcglynn.com

The Open Money project hit a significant milestone this week. We made it through the first section of the outline — or at least what's in the outline right now.

The first group of posts are all about defining Open Money and establishing why a basic framework is worth figuring out.

I'm looking forward to the next section and to exploring some of Open Money's financial aspects before we return to the tech side of things in section three.

It's always great getting feedback, so thank you for all the questions, comments, and words of encouragement.

Section one recap: A look at the framework so far

A summary of the key takeaways from section one of the Open Money project

https://www.danielmcglynn.com

Dot earth | Open Money and internet scale

Operating at internet scale makes Open Money both inevitable and resilient

https://www.danielmcglynn.com

The incomplete internet | Why decentralization is inevitable

The internet is still growing and getting better

https://www.danielmcglynn.com

Open Money is network money

The network effect is one of the ways that Open Money systems grow

https://www.danielmcglynn.com

Encryption comes standard

What if cryptocurrencies were named open currencies instead?

https://www.danielmcglynn.com

Here's a summary from Politico.

President-elect Donald Trump late Friday launched a cryptocurrency token that exploded in value overnight, potentially increasing his net worth by tens of billions of dollars on paper just days before he is set to be sworn in as president.

Trump launched the so-called memecoin — a digital token with no intrinsic real-world value that is traded on a digital ledger technology called blockchain — with posts on his social media site and X after 9 p.m., prompting the asset to soar in value. Its market capitalization was above $5 billion as of 2:30 p.m. Saturday, according to data from CoinGecko, and it has seen more than $11 billion in trading volume.

Remember, memecoins are a trade on attention. They are a new way to monetize on the internet and often have some digital culture underpinning.

So far, opinion seems to be split about the overall impact or significance of the presidential coin launch. Some within the crypto industry see this as a big mainstream moment— and that this launch signifies that crypto has arrived and is finally relevant to the establishment.

Others see this as a big departure from the entire reason crypto was created in the first place (as an alternative to the establishment).

The idea that the memecoin launch could simultaneously be interesting and disastrous is the great thing about open-source technology and information systems.

People can use them for all kinds of things.

Some of those uses we might like and agree with. Some we disagree with. But the point is people can build things, launch them, and then let the market or the people decide what is valuable and what isn't without the need for lots of layers in-between.

While more memecoin launches will likely punctuate the incoming administration, it's essential to pay attention to issues that are really "crypto-friendly," and that will matter in the long term.

Here are four things to keep in mind as regulators and legislators propose new laws and policies:

While self-custody might not command the same headlines as a viral presidential token, it is a key component of Open Money. The ability to fully control financial assets without an intermediary, is what makes fully decentralized digital asset systems possible.

While we are likely to hear a lot of pro-crypto rhetoric in the upcoming weeks and months, what's essential is that talk and posturing actually result in protections for technologies that allow people to quickly and safely self-custody their assets.

We don't need another FTX debacle. Instead, we need thoughtfully designed consumer protections that help mitigate fraud and improve transparency. Striking the right consumer protection balance is key — over-regulation could stifle innovation, while under-regulation risks leaving everyday users vulnerable to exploitation.

Creating consumer protections that make sense for decentralized systems will likely be the most challenging goal on this list to solve.

The importance of bitcoin production, or hash rate production, will soon become a new thorny geopolitical issue.

Encouraging domestic hash rate growth is not just about securing networks but also about asserting economic influence on a global scale. Countries that embrace crypto mining with sustainable energy strategies can position themselves as leaders in the digital economy. They will also have a say about how and where the energy supplied to the hash rate comes from, which can mitigate or exacerbate environmental concerns (at least within their own borders).

Regulatory clarity and incentives in this sector could provide a competitive edge and reinforce national security interests tied to blockchain infrastructure.

Bitcoin's role as a strategic reserve asset is increasingly entering the policy discourse. Nations exploring BTC reserves are not merely investing in a digital asset but recalibrating their economic hedging strategies against inflation and currency volatility.

The decisions made within the context of a strategic national reserve will have profound follow-on effects, influencing trade policies, monetary frameworks, and international negotiations. No pressure or anything.

While these issues might not be as glitzy or sticky as memecoin launches or hosting massive crypto industry events, self-custody, consumer protection, mining policy, and how best to create bitcoin reserves — will shape the trajectory of crypto's integration into mainstream financial systems.

This week was another productive week for building a book for a public project.

We are still in the opening section of the outline, but we will wrap that part up this coming week.

This first section's goal was to cover all of the different elements of why the Open Money framework is important and why we need a framework like this in the first place.

Upcoming sections will cover how the framework is a natural extension of the evolution of the internet and money systems, a closer look at the key components that make Open Money significant, the Open Money use case, risks to these new systems, and more.

It means a lot that you are following along. I appreciate your support. Here are the posts from this week:

Triangulating Open Money

Open Money is open source, permissionless, and decentralized

https://www.danielmcglynn.com

Open Money is more than money

It's a tool for a reimagined digital world - a world where identity, user-control, collaboration, and participation take on entirely new forms.

https://www.danielmcglynn.com

Open Money as a meta-narrative of our times

Open Money keeps getting better. We can't say the same for other big systems

https://www.danielmcglynn.com

Open Money should be like email for your wallet

Does moving money need to be so complicated?

https://www.danielmcglynn.com

Why Open Money is better money

Access and programmability make Open Money a different animal

https://www.danielmcglynn.com

This post is part of the Open Money project, an ongoing series that forms the basis of a longer work. Subscribe to get a weekly update as it unfolds.

While the project could help develop a broad-stroke investment thesis, or maybe more accurately, a distinct and informed point-of-view from which to develop an investment thesis, the goal is not to create some new financial framework. (Here's a disclaimer highlighting all the very good reasons why this is not financial advice).

Instead, Open Money is about creating a new kind of navigation system with the simple goal of helping people separate noise from signal — or junk from high-value information — as digital asset systems become more complex and ubiquitous.

Not long ago, keeping tabs on crypto and its related offshoots was as simple as paying attention to anything that sounded like "blockchain." But given the pace of the technology's development, it's not that simple anymore.

Here's an example of what I mean. The funny thing is, this thread goes on forever, which drives home the point.

Hopefully, that's where the Open Money framework comes in. It's a way to take new information from new projects and systems, compare it against a set of guidelines or benchmarks, and then decide whether to dive deeper or move on.

Crypto or digital assets, more broadly, have yet to achieve the one-click moment. Crypto is still complicated to use and discuss, but it doesn't have to be that way.

Crypto solves very thorny problems, but the language and thinking needed to understand them don't need to be complex. Or that's the idea, anyway, driving the creation of the Open Money project.

The framework so far

Last week was the first week of writing daily posts that will eventually form the structure we can use to understand Open Money.

I'm still figuring out how to operationalize this in a way that makes sense beyond writing and publishing a post daily until we get through the entire outline.

I got some really encouraging feedback and good ideas, so thank you. It always helps if you share this newsletter.

Here's what we covered last week:

Why Open Money matters: And why has new financial tech become a word salad?

Why do we need an Open Money framework: One of the hardest things about learning new systems is figuring out where to start

Open Money: a framework for everyone: The Open Money framework is designed to help make digital assets and the open internet more accessible

Why now is Open Moment's moment: The right timing is critical to the success or failure of big moments, revolutions, and societal change

The Open Money growth story: Five reasons why digital assets systems are growing so fast

For the past year, I’ve written a weekly post about Open Money. The posts have covered a wide range of topics, such as crypto ETFs, the beginnings of memecoin mania, and the movement of more activities onchain.

Last year was fun. Sometimes I was able to write several posts a week. I published a newsletter every single Sunday, and I got to connect with a bunch of great people from all over the world.

But in order to take the Open Money framework to the next level, I think I need to sharpen the focus and be more deliberate.

To that end, I’ve decided to change things up and try something new in the first quarter of this year.

I plan on publishing a new post every weekday for the next 100-120 days. Each post will focus on one aspect of Open Money. The posts are designed to act as standalone explanations or insights. But hopefully, when we get to the end, they will weave together into a larger work.

Here’s what’s in it for me:

First, writing a book has been a lifelong goal. By doing it in public, I’m creating a structure that forces accountability and consistency — two things that can be elusive in solo creative projects.

This approach aligns with the ethos of Open Money itself: transparent, iterative, and community-driven. By sharing my thoughts as they evolve, I can collect feedback, refine ideas, and figure out what resonates and what doesn’t.

At the very least, I hope you find parts of this journey interesting. Maybe you’re here to learn more about digital assets, decentralization, and how Open Money fits into the broader context of the internet’s evolution. Great — this project is meant to explore those topics in depth.

Maybe you’re curious about the process of building a book in public. How do ideas grow into a cohesive narrative? How does feedback shape the final product? That’s part of the story, too.

Or maybe you’re just here for the drama. Let’s face it — publishing unfinished ideas, exposing early drafts, and opening yourself to critique has the potential for disaster. If it becomes a train wreck, at least you’ll have front-row seats.

Here’s what to expect: I’ll share essays, drafts, and ideas as they develop. Some will feel polished, others might be rough sketches. All will be open to discussion. The goal isn’t perfection — it’s progress. Along the way, I’ll be honest about what’s working, what’s not, and what’s next.

Whether you’re here for the ideas or the chaos, welcome. This is the beginning of something that, I hope, will evolve into a meaningful exploration of both Open Money and the creative process itself.

My plan is to post daily and still send out the newsletter on its regular Sunday schedule (so don’t worry, I won’t blow up your inbox). Likely for the next few months, the newsletter will be a roundup of the week’s posts with some elaboration.

Please send thoughts, feedback, guidance, whatever. You can reach me on Twitter or Warpcast @danielmcglynn.

Also a good barometer for me is new newsletter subscribers. I really appreciate you reading what I write every week. If you have a minute, please share this link with a friend.

Slowing or dwindling developer interest might indicate that a project is losing steam or that adoption is waning.

Interestingly, as valuable a metric as developer activity is, it is also the most under-reported, and it needs more visibility compared to other kinds of digital asset data.

One of the main reasons is that financial metrics, like market cap or TVL, are usually the brightest lights in the room when looking at onchain activity or growth. In many cases, financial metrics are valuable and popular because they are easy to understand and obtain.

The issue is that financial metrics can also be fuzzy or easy to game or manipulate. Countless examples of inflated token prices or other economic data don't match reality or utility.

Developer metrics might be less glamorous than rocketing prices. However, understanding which chains developers are working on is a good way for market watchers to know where things are headed.

That's why the annual Developer Report from Electric Capital is so valuable.

The report aggregates data from across the onchain space and worldwide and combines it to help give market moves and narrative trends more context.

To see how this year's trends and analysis compare to last year's report, check out this post:

Unpacking the Electric Capital Developer Report 2023

Before diving into the takeaways from this year's report, it's important to note that the data that makes the basis for the report was collected based on code commits made in GitHub, a popular code repository for open-source projects.

In other words, this report's existence is a great example of why building with transparent systems is such an important component of Open Money.

With that out of the way, here are the trends:

SOURCE

Crypto bull markets attract a new crop of developers. And while there is always a dropoff in developer activity during bear market cycles, the number of experienced developers (with 2+ years of experience) continues to grow.

The number of experienced developers grew by 27% in 2024. This growth matters because 70% of code commits come from this group of more experienced developers.

SOURCE

North America and Europe are losing developers. Now, 1 in 3 developers live in Asia.

India is the source of the most new developers, pulling past the United States in 2023.

Africa and South America are also gaining developers, with Africa outpacing South America for the past few years.

SOURCE

What's interesting about this data is that while Ethereum continues to be the most popular platform for established developers, Solana is more popular for new developers.

It's also interesting that it's not clear platform-wise what comes after second place for developer activity. Base, Polygon, Polkadot, and ICP are all in contention for the third-most-popular chain.

SOURCE

Blockchain developers are increasingly working on more than one chain, with 1 in 3 working on more than one chain.

Overall, the level of Bitcoin developer activity has remained consistent with last year in terms of volume. What's noteworthy is that 42% of Bitcoin developers are working on scaling solutions.

SOURCE

Are NFTs back? In 2024, the number of wallets with minting activity hit 67 million, with the most minting activity on Solana, Polygon, and Base.

Minting transactions grew from 153 million in 2023 to 568 million in 2024.

While market watchers tie previous spikes in NFT activities to digital art and collectibles, the 2024 non-fungible token mint rally was more distributed among NFT use cases and included DeFi utilities, rewards programs, identity applications, and gaming.

February saw the most significant spike in minting-related activities.

SOURCE

Innovations continue to hit the DeFi market, with Ethereum still the clear winner for onchain DeFi providers. For more context, Ethereum DeFi is seven times larger than the next biggest chain, Solana.

Market charts reflected EigenLayer's continued growth. Restaking is now the largest sector within DeFi, accounting for $30.6B TVL, representing 1,818.47% year-to-date growth.

Solana is a leader in the decentralized exchange (DEX) use case. In 2024, 81% of all onchain DEX volume happened on Solana.

SOURCE

A big trend for 2024 was the rise in the use and utility of stablecoins as a valuable digital asset.

Stablecoins broke all kinds of records in 2024. There are now $196 billion in stablecoins in circulation, and $81 billion in stablecoin volume is transacted every day.

Ethereum is still the dominant stablecoin platform, with 59% of all stablecoin transactions happening within the Ethereum ecosystem.

A trend within the larger stablecoin adoption story is using stablecoins to back real-world assets, such as US Treasuries, which do not account for $90 billion on stablecoins.

What does developer activity say about what to expect in 2025?

One of the most striking aspects of the 2024 Developer Report was how the major developer trends seemed to be in sync with the major narrative trends of the year.

For example:

• The surging popularity of stablecoins

• The adoption of Base as an easy-to-use platform for builders. (Here's a database of Base projects).

• Solana is a growing platform for NFT projects and a popular memecoin launcher.

Overall, developer activity is growing at a steady pace (despite regular market fluctuations). The continual distribution of developer talent around the world is another example.

Here's where you can find the complete report:

2024 Developer Report

Or, put another way, Open Money is whatever you want it to be that's not the dominant narrative.

OK, what does that mean?

Watching how crypto is vilified or championed by politicians and corporate leaders has been interesting.

Usually, you hear something like crypto having no value or that it's only money for criminals.

Or, at the other extreme, you have people launching pointless meme tokens or vacuuming up bitcoin in a way that feels, well, more like betting than it does like a financial strategy.

Crypto, or more specifically, Open Money, isn't really about either of those extremes. It's really about people finding their own alternatives to what isn't working for them.

Legitimate and in-demand use cases for Open Money could include easier cross-border payments, a better way to find yield or store value, or monetizing creative work without having to become an affiliate or an influencer.

Open Money is not about having an extreme position. Instead, it's the middle way.

The main advantage of having an alternative financial system that works parallel to the establishment is that it offers a different kind of fulcrum to hold things in balance, especially during disruption or chaos.

Open Money is a means of navigating the extremes of our times and building personal financial and information products that provide individual control and more global access (sometimes simultaneously).

But as crypto becomes part of the establishment, will it lose part of its utility?

Not that long ago, it was easier to understand crypto—or at least what it wasn't.

The early adopters and builders were generally interested in creating alternatives. The narratives in the early years were positioned in opposition to the status quo.

Interestingly, in the last 12 to 18 months, crypto has started to feel more like a new product line in the legacy system rather than something completely different.

Here are just a few examples:

• The launch and demand for crypto ETFs and the arrival of institutional money.

• Crypto as part of presidential politics — and crypto leaders and influencers embracing the attention of political leaders.

• Crypto has mainstream moments — crypto-based prediction markets compete with legacy media during the presidential election cycle.

While all of that is underway, there's also a sense that the best of crypto—the people, developers, and teams pushing the bounds of what's possible—will always need to operate at the edges.

It's that time of year when people start to get both reflective and forward-looking simultaneously.

In my case, looking at headlines about the appointment of a new crypto czar, the power of the freshly organized crypto lobby, and whether or not the incoming SEC chair has enough crypto experience (or not), it's stunning to see how quickly crypto has moved from fringe to spotlight.

And yet, somehow, it feels like a pivot towards "legitimacy" is missing the point. It feels important not to get wrapped up in it all—and not to create another "too big to fail" situation at the cost of losing the plot.

The world is changing.

And it's changing fast.

Alternatives, backups, and systems that can scale from the individual to the global are a good idea.

We've covered how the big shifts in demographics, information technology, and economics will accelerate change and how decentralized, permissionless, and non-custodial assets will become even more important in the future.

Open Money gives people more options to insulate against change in a few basic ways.

• Permissionless systems allow people to opt into systems (financial, information, identity, creative) that best suit them.

• Non-custodial wallets or key management means that people have control over their assets (this is good for liquidity, portability, and privacy).

• Interoperable and programmable systems enable deploying digital assets for many use cases (peer-to-peer payments, cross-border or cross-jurisdictional movements, digital store of value, etc.

Open Money allows people to preserve individual freedom while leveraging tools and networks at an internet scale.

These attributes will only become more critical as we enter a period of reorganization and dramatic change.

We still need protest money.

This post is part of the Open Money project. Please consider subscribing.

At Devconflict, a side event of Devcon 2024, a global conference held by the Ethereum Foundation, there was a debate about the best way to scale blockchain-based products and services.

The primary purpose of the debate was to determine the best way to scale or finally achieve an escape velocity that makes blockchain products more accessible to the masses.

Two core arguments emerged from the debate:

1. Onchain products should be built to serve billions. Building for scale helps get your product or service in front of more people.
   
   Building for scale also helps with things like user experience and distribution strategies.
   
   This helps new users or entry-level users, but it also helps more sophisticated users find new and interesting ways to use the underlying product or service, which then helps fuel more adoption.

2. The counterpoint is that onchain products and services should be built for specific niche audiences — or tailored to groups of people with specialized needs outside of the mainstream.
   
   The point here is mainly that building for billions requires making too many trade-offs and that onchain products and services will start to feel too much like the web2 stack.
   
   The logic here is that to reach a billion users and beyond you really need command and control structures like global corporations running things. On the flip side, building for specific use cases is more aligned with the spirit of decentralization.
   
   The goal here is to build technologies that can be combined or remixed to reach internet scale via supporting communities.

The crux of the debate is whether or not onchain technologies can really scale in a way that allows them to maintain the values of what makes them unique or alternative in the first place.

Here’s a quick breakdown of the two scaling strategies and then a take on which route makes the most sense.

The build-for-billions mentality makes sense when thinking about internet scale.

One of the great things about building for the internet is that, for the first time in human history, you can build goods and services that are global and universal in a way.

Another advantage is network effects or the idea that an app or service becomes more valuable the more people use it.

During the Devcon debate, both sides kept pointing toward messaging services like WhatsApp that have successfully reached a billion users.

To reach that scale requires getting a lot of things right. Maybe the thing that a product like WhatsApp got right is solving a fundamental need.

Messaging apps are a great example because they solve the fundamental problem of making it easy and cheap to communicate with other people.

What’s interesting about a product like WhatsApp is that the real utility — the end-to-end encryption is not the main feature that helped onboard its billion users.

Instead, people use WhatsApp because it’s easy to use and it’s easy to find other people to connect with.

Likewise, like messaging, many onchain products solve fundamental needs like making it easy and cost-effective to send, receive, or collect digital assets.

In the spirit of build-for-billions, blockchain-based services should abstract away friction points like wallet key management or interoperability issues that make it complex to navigate between one product and the next.

The issue is that a lot of the complexity inherent in the product design of blockchain-based services is there for a reason.

The risk is that oversimplifying something like wallet key management requires handing control back over to a company or organization rather than an individual user, which could potentially lead back to a web2 user experience.

So the tricky part with onchain products and services is to build for billions but in ways that empower users rather than just recreate new versions of already existing technologies.

After all, while it is true that one of the fundamental reasons a service like WhatsApp was able to reach a billion users is because it is essentially “free.”

But the app is monetized via data collection for targeted advertising, which doesn’t exactly fit into the ethos or principles of building onchain.

The alternative to building new internet technologies that don’t require billions of users to become successful is to build more precise solutions for a smaller group of users.

Building specific solutions enables two things:

1. Products can be tailored, customized, or precise to solve a well-defined issue.

2. Products and services can exist that aren’t necessarily billion-dollar businesses, but still generate a lot of value for end-users and the people creating them.

Building a successful product that is used and loved by hundreds of thousands or even millions of people can be really useful, but is it mainstream or even a name brand? And does that even matter?

Probably what matters more is if the product can operate in a way that is sustainable and can create value for the team who created and maintain it.

One of the promises of building onchain is that it enables new kinds of economies — more internet-native economies — that don’t require the same kind of big box store, mainstream media, kind of approach to success.

Put another way, maybe the goal of building for billions is antiquated — or like the Walmart of the digital age.

Maybe instead the goal should be to build small specialized stacks of products that can be easily stacked and combined with related products to build suites of services that leverage things like network effects and global access, but do it in a way that is also extremely custom and bespoke.

The most obvious answer to the question about how to scale new kinds of internet services is just to build products that are better than anything that exists right now.

For people concerned about privacy, that means building the best privacy product — one that delivers both the best user experience and the best alignment with privacy-preserving principles.

For people with concerns about having their retirement funds rugged by banks, it means building a streamlined non-custodial experience — one where key management becomes as easy as saving a username and password.

For people worried about the rise in nationalism and closing borders, it means building technologies that are global and multicultural at the foundation — where there is no off switch available to politicians or people pretending to be politicians.

Maybe the key to scale is not so much thinking about success in the traditional web2 context of milestones of millions of users.

Maybe the right way to think about scale for onchain services and beyond is to think about how the product is composable, durable, and accessible.

If the answer is yes then it can become part of the fabric of the open internet. The product or service might even get remixed into something else or used by some other project.

After all, the internet works best when it operates as networks of networks — guided by rails of common protocols — but is also dynamic, open, and adaptable.

If you like this post, please check out the Open Money project.

As of this writing, BTC hit an all-time high of $99,655.50, which puts it within striking distance of the major psychological milestone of $100,000.

Hitting $100k will be a big deal for a few reasons, but mostly because, like it has done in previous cycles, hitting that milestone is likely to trigger the interest of more investors and more capital.

In other words, by hitting $100,000, bitcoin will likely trigger a bubble or bubble-like behavior.

Bitcoin is notoriously bubbly, so much so that it's becoming a scientific discipline. This is pulled from a recent study that was published in the journal Nature, for example:

"The starting hypothesis is that there must indeed be parallels between Bitcoin prices and those of other speculative assets. After the empirical study, the hypothesis was confirmed. This research shows that there are significant coincidences between the behavior of Bitcoin prices and that of previous well-known bubbles. Therefore, thanks to this study, the idea that Bitcoin is an asset that tends to behave in the form of a bubble is reinforced."

But even without an academic study, looking at the peaks and valleys of bitcoin’s charts over the past decade is enough to confirm that there are notable boom and bust periods.

In the case of bitcoin, the boom times, or bubbles happened in 2013, 2017, 2021, and now, well…

Financial bubbles have happened for as long as markets have existed. Bitcoin’s bubbles are compared with one of the earliest and most famous financial bubbles — the tulip mania that happened in 1636.

Understanding the mechanics of a bubble is pretty straightforward — it’s basically when FOMO or fear of missing out takes over — and new investors and more capital flood the market not wanting to miss the top.

We can all understand that FOMO feeling because it’s part of how humans work.

It’s basic psychology.

It’s also why we see this kind of behavior form around other non-financial trends, like Pokemon cards, for example.

This is all to say that the bubble dynamics are not limited just to crypto.

In the context of bitcoin, the market bubble dynamics are a feature, not a bug.

The hype cycle or the boom/bust cycle serves the purpose of bringing more people and more capital to the market.

Sure, for the investors that time the market wrong or enter at the top, and then get quickly wrecked as the bubble pops and the price recedes, the bubble dynamics can lead to negative sentiment.

But bitcoin bubbles are part of its underlying design. This is a point missed by a lot of people, including new entrants to the market looking to catch the top.

Bitcoin’s bubbles are fueled, on a regular schedule, by its halving dynamics.

Each halving tights the supply side and creates issues related to mining activities and other conditions that drive the price up following basic supply and demand theory.

The last bitcoin halving was just this past April.

According to a study published in the June issue of the journal Sustainable Futures:

"However, despite numerous empirical studies on the determinants of the Bitcoin speculative bubble, this event is often overlooked. This omission could have significant consequences for institutional investors who make decisions based on scientific research results. It may lead to a partial understanding of price dynamics and expose their portfolios to increased investment risks. This is because they will not be prepared for potential price volatility leading up to the halving.”

It’s also helpful to think that each market cycle is a series of bubbles or a chain of bubbles, that all connect at regular intervals to drive market adoption, development, and innovation.

Since bitcoin’s bubbles, so far, happen in relation to halving events, which occur every four years, it’s kind of like bitcoin bubbles are the financial market equivalent to the Olympics or the World Cup.

At regular intervals, the world gathers around and finds itself captivated by new storylines and new unbelievable feats, but eventually, it all comes to an end and we all go back to our normal lives until the next go-around.

And that’s where we find ourselves right now.

If the past few weeks of bitcoin’s price climb are any indication, then it feels like we are entering a new phase and potentially the next bubble.

It’s important to understand the role of bitcoin as a crypto market leader.

When the dynamics described above play out, the impacts will trickle down to the rest of the crypto market, essentially driving bigger bubble behavior.

This is when understanding why market capitalization and market dominance come into play. Historically, bitcoin has always been a market leader. Its current market dominance is 57.68%.

Understanding bitcoin’s dynamics, and its bubble-by-design architecture helps to understand how related assets perform, and what to expect from Open Money markets.

As a parting word, bubble markets and the overall hype cycle can be fun to watch and participate in. But they can also cause financial distress and ruin for people who get too caught up.

Be sure to keep in mind that all bubbles pop, eventually.

This post is part of an ongoing series called Open Money. New issues are published every Sunday. Learn more about the project at danielmcglynn.com

One emerging theme is that the outcome felt different than what was portrayed in the media and the polling numbers in the run-up to voting day.

While there is nuance to the way that we understand election results, mainly because of the difference between the popular vote and the electoral college outcomes, the stories coming from news outlets before November 5 were that the race was a “tossup” or “too close to call.”

But once the votes started rolling in (or more accurately, once the breakdown of the electoral college became clear) it was obvious that there was dissonance between the pre-election polling numbers, media stories, and the actual outcome.

This isn’t the first time this has happened.

Clarifying some of the fuzziness between how major events are covered or predicted by pundits and pollsters and the on-the-ground reality is where decentralized predictions markets are starting to provide utility.

In the run-up to the Super Bowl earlier this year we took a deeper dive into prediction markets and covered how Polymarket, a new-ish platform was gaining momentum.

In the weeks leading up to voting day, election-related markets kept growing and changing on Polymarket.

Beside trying to forecast the winner of the presidential election, there were a number of different but related markets including things like the popular vote, electoral college outcome, overall outcome, down-ballet outcomes, and other, smaller election-based markets.

In some regards, there was so much attention (and money) on Polymarket’s election markets that it felt like a stress test to see how the platform would perform — and if the results were actually useful or predictive.

For people paying attention to what the media was saying and what the markets hosted on Polymarket were saying, it became clear that one side was going to be right (or "more accurate" is probably a better way to say it) and one side was going to be wrong (or "less accurate").

And, as it turned out, as the dust of the election day settled, Polymarket won.

The sudden rise in popularity and usefulness of decentralized prediction markets is triggering people.

One of the main objections is that prediction markets are a form of gambling — and so that association makes them illegitimate or somehow not the same category of tool as say a poll or survey conducted by a third party.

While decentralized prediction markets are a form of speculation: people bet on outcomes and then either make money or lose money.

What's different or interesting here is that there is a mechanism or a structure that makes decentralized prediction markets useful beyond just placing bets.

What I mean is that the public market nature of a decentralized prediction market provides utility for everybody else not participating in the market.

Interestingly, and as a quick aside, watching the election prediction markets was made even more intriguing by the fact that people living in the United States are not legally permitted to participate on Polymarket.

Although based in NYC, a 2022 decision by the Commodities Futures Trading Commission (CFTC) prohibits Polymarket in US markets because the platform is not registered as a designated contract market or swap execution facility.

Of course, there are workarounds to this ban, and based on the news this week that the FBI raided the Manhattan home of Polymarket’s founder and CEO, the government decided to racket up its investigation of exactly how many US-based people are participating. The timing of the raid, right on the heels of the election, also prompted cries that the investigation was somehow a form of political retribution.

What if, instead of gambling on outcomes, we thought of prediction markets of staking money on an idea or an opinion?

The combination of financial incentives, game theory, and cooperative market design enables a tool that is a useful way to efficiently crowd-sourced information from a large swath of sources — or agents.

SOURCE

Vitalik Buterin, the founder of Ethereum (recently profiled in the documentary Vitalik: An Ethereum Story), wrote a piece this week about the utility of platforms like Polymarket.

In that piece, he draws the conclusion that prediction markets are a stepping stone to the larger domain of info finance.

"Predicting the election is just the first app. The broader concept is that you can use finance as a way to align incentives in order to provide viewers with valuable information,” Buterin wrote. “…you can read market prices to infer a lot of knowledge about the world.”

Buterin takes a deeper dive into info finance and its potential use cases, but it felt like a lot of the concepts of info finance align with the Open Money frameworks that we talk about.

One of the biggest overlaps has to do with scale. One reason why Polymarket is thriving right now is because it is blockchain-based, which makes it easy to access (technology-wise, not so much regulation-wise), and can scale to create markets of all different sizes.

The idea about market size and info finance is maybe one of the most interesting components here.

Internet-scale markets enabled by blockchain could create new and more efficient data-gathering mechanisms about important events around the world (the US election is a great example).

But, summarizing the Buterin article here, the scope of info finance markets can also work at smaller scales — such as deploying AI agents to help with community, DAO governance, or even personal decisions.

On the face of it, decentralized prediction markets might look an awful lot like gambling, but behind the scenes, a powerful information-gathering tool is at work.

In a time of rising misinformation, disinformation, and the blurring of lines between entertainment and news gathering, maybe having a market-based solution to help ground truth important events will be valuable.

If crypto is a new system of participatory capitalism, then web3 offers a new form of participatory marketing.

OK, what?

Pre-internet, mainstream marketing was generally considered mass marketing.

Think billboards, magazine ads, and cable TV. Creative directors were tastemakers and brands thought about the number of eyeballs seeing their stuff.

Web2 made marketing more precise.

Think of ad targeting and tracking. Sometimes ads feel customized and well-time, other times it feels like someone is constantly watching over our shoulder.

In the web2 model, algorithms became tastemakers and brands became overly concerned with impressions and conversions.

Either way, and up until now, marketing was defined by one-way communication.

People on the other side of advertising budgets are making decisions about what we see and what actions we should be taking.

That’s how we got to where we are now.

But marketing-wise things are changing with web3. The biggest shift is the idea that connecting people with goods, products, and services doesn’t need to be so one-sided.

What is working, if the project known as Nouns is any indication, is the idea that the openness of the internet can be leveraged to create new kinds of marketing right along with new kinds of community.

Meet the NOUNS

Nouns was launched in 2021. At its core, Nouns is a decentralized autonomous organization (DAO) built on Ethereum.

The DAO is responsible for creating a new algorithmically-generated Noun character every 24 hours.

The characters are sold as non-fungible tokens (NFTs) and the proceeds generate a treasury. Each Noun holder also gets a vote on how funds from the treasury are spent.

So far, Nouns-funded projects have been all over the place including art projects and building skate parks.

If the goal of web3 is to build a more open internet, then the underlying structures of how information is created and controlled will also need to change.

Looping back to crypto — we are starting to see what the difference between public and private money looks like (we got into this concept in the recent central bank digital currency post) and what some of the regulatory ramifications might be.

In order to truly build an open internet, other traditional power structures will also have to change.

SOURCE

Rather than having traditional corporations shill goods and services across new onchain platforms, web3 native companies understand that the value of their interactions will come from a network.

Here are five features that help Nouns build a brand-as-community style projects:

• Open source ethos. Open money and the open internet should be built with open-source tooling and principles. What we’ve learned from earlier web3 projects is that calling something open and being open are two different things.
  
  One of the most striking things about Nouns is that it has relinquished strict control over its brand and actively encourages sharing, blending, and re-mixing brand assets.
  
  Rather than a limitation or a liability, by encouraging spin-offs and derivates, Nouns are fueling growth and brand awareness. This is especially true in an increasingly meme-driven world.

• Community of creators. When we think of traditional brands we often think of brands as storytellers or brands as creators, and people as, well, consumers.
  
  Nouns flip this idea on its head by using a decentralized autonomous organization or DAO as a means of getting creators and people involved in the community.
  
  By purchasing a Noun, consumers have a voice in governance and a say in how the Nouns’ treasury is used. A Noun is both a unique collectible and it’s like a ticket to the show and a backstage pass all in one.
  
  In traditional companies, the shareholders, the brand creatives, and the consumers are all very distinctive and separate roles. Not so much with a project like Nouns.

• Sustained engagement. New Nouns drop daily. This creates an opportunity for constant engagement, but it also makes the brand accessible.
  
  If you missed your shot to own a Noun today, then there’s always tomorrow. This consistency and routine make it possible to keep moving into new audiences and bring new people into the Nouns fold.

• The virtuous cycle. Talk to any good business operator and eventually the conversation will return to flywheels. The basic idea is to create a product or service so good that it sells itself.
  
  This works with widgets and gadgets, and it works with onchain experiences. The thing about Nouns is that by ceding control to Nouns holders, the project creates a flywheel of new ideas, new people, and new energy.
  
  This newness has value.
  
  But it also provides value to previous Nouns holders and project participants. As a bonus, the idea of collective good or public good also encourages new input, which creates new activity, which fuels the flywheel.

Part of what makes Nouns work is a sense of engrained play and purpose combined with basic tokenomics.

The result is a sensible cool that people want to share.

The internet, or web3 more specifically, is not unfolding in a vacuum. As the world around us feels more fragmented and divided, it makes sense that people will want to find new kinds of communities in digital spaces.

My guess is those communities won’t flourish under the mass media or algorithmically-driven models of brand or digital space-building that were popular up until now.

Instead, good web3 practices, including marketing will take advantage of open-source technologies and practices to create co-ownership of creative experiences and outputs.

If it works, good web3 marketing should feel less transactional and more about a shared sense of mission or purpose.

Put another way, the future of marketing is less about cleverly defining brands and protecting images and more about the composability of products and identities.

A good marketing campaign will no longer be about eyeballs reached or clicks received, but about how well-woven a project can become into the broader internet culture.

When I was 25, I found myself living in an end-of-the-road town.

The thing about this particular town was that it was on the edge of Lake Nicaragua. I’m originally from the United States. Only a few months before, I joined the Peace Corps, an NGO that places Americans in communities outside of the US with the goal of building better relations.

I might have stretched the extent to which I could speak Spanish when I requested an assignment in Central America. Or maybe, because I was 25 at the time, I still had an out-sized belief in my own potential.

It took months — more than a year maybe — before I would have command of enough language to be useful.

During the time I lived there, I made a lot of mistakes. I got laughed at a lot for saying the wrong things. One time I was giving a training and I kept referring to a poster I made. My goal was to give teachers ideas about how to be more engaging and interactive in the classroom.

The only problem was that I forgot an important accent mark on the title of my poster. So instead of saying “school year,” the title of my presentation actually resembled something closer to “school anus.”

There were many such cases of stories like that. Given the new language and culture dynamics, I was frequently disoriented enough to do something foolish, or comical, depending on perspective.

Looking back now — two decades later — there are a lot of feelings that I associate with the two years I lived in Nicaragua. One of the big feelings was frustration.

Sometimes it was the simple things, like when a bus wouldn’t show up and I would have to wait for hours to get somewhere. Or when I had to distill an important point or emotion down into simple words because I didn’t have the right vocabulary.

But a lot of the time I was just frustrated with myself for not being able to learn fast enough.

I’m telling you all of this in the hopes of qualifying what I’m going to say next. I’m going to dive into the idea of Farcaster and the mission as I understand it and explain how sometimes it can be confusing or disorienting to use.

I mean, right away, I have to explain to you what I mean when I say Farcaster because what I’m really talking about is my experience using Warpcast. See, it gets confusing already.

Farcaster is a protocol, or base-level infrastructure, that was designed as a way to make it easy to build decentralized social media apps or clients. The people building the Farcaster protocol are prone to say that the network is “sufficiently decentralized.”

This implies, I guess, that decentralization exists on a gradient. The way I hear this is that decentralization is more like a dimmer switch and less like an on/off switch. More confusion.

In some ways, I see Farcaster as an offshoot of crypto more broadly. Or maybe it makes sense to say that Farcaster is crypto-adjacent. The whole onchain movement feels similar. It’s related to crypto, after all some of the tools and principles are the same, but the desired outputs are more specific.

Farcaster's goal is to solve the problems inherent in centralized social media. The list of issues with corporate-controlled social media platforms is long. However, the best way to summarize Farcaster’s value proposition is that it enables builders to create new apps and communities without the risk of getting rugged or de-platformed by a centralized authority. It allows internet builders to create permissionless services and experiences for the first time.

The issue is that because of Farcaster’s newness, or its emphasis on being a builder’s platform, the experience can feel unstructured to the point of being disorganized. In a lot of ways, using Farcaster shares similarities with trying to learn a new language or fit into a new culture.

The stakes aren’t quite the same as moving to another country, but there are still frustrations when things don’t work like they are supposed to — like when frames (a native tool that allows users to bring supported actions right into their timeline, think things like minting NFTs or reading articles) won’t load, or wallets won’t connect, or when you click on things and get a message saying they are unavailable.

And there are times when I open my Warpcast timeline — Warpcast is like a clone of Twitter, but with more onchain functionality built-in — and scroll for a few minutes before I realize that I don’t really understand anything that I’m looking at.

What I mean is that other Warpcast users might be playing a new onchain game I’ve never seen. Or they are going on about some kind of challenge, or tipping in a new memecoin, or promoting an obscure NFT.

In other words, there’s a lot of inside baseball happening. It’s like going to a party and feeling like everyone is somehow mid-conversation and they are talking about things that you can’t relate to.

And trying to navigate Warpast is the easy part. Just beyond there is a growing constellation of other Farcaster apps. It feels like there are so many different projects that it’s difficult to keep up with everything, which feeds into the feeling of never really being able to get a firm grasp on what it means to be on Farcaster.

Nevertheless, the community is growing. And not just in terms of daily active users but in terms of the new kinds of apps, services, and even new asset systems that people are creating with the newfound freedom of an open and interoperable social graph, which is Farcaster’s main utility.

I send a weekly newsletter about crypto and related topics (like this post). Sometime soon my whole operation will be onchain. Until then, please check out danielmcglynn.com.

In a lot of ways, so far, using Farcaster — or more accurately, using Warpcast — feels similar to how it felt living in rural Nicaragua.

It can be confusing. Many times it can feel like I am are watching the world go by, but that I don't have enough words to say anything about it.

At the same time, the experience feels fresh and new. It’s still social media, and some of the functions such as liking, commenting, attracting followers, etc., but there is also something about minting, tipping, and using frames that feels like it is not fully cooked, but promising.

When I was in Nicaragua, I remember hitting an inflection point. I got to a place where I didn’t feel like I was on the outside looking in. And while I still made mistakes, I also felt comfortable, like I could move around and say stuff without confusing people. I started making friends and going on adventures.

Over time, I started to realize that the town I was living in wasn’t really the end of the road. I mean, it was literally the end of the road, but it was figuratively the beginning of something else — a new kind of network.

The more time I spent in the community, the more chances I had to explore the water on the simple boats with the local fisherman.

One of my favorite places to go was to a finca, or a small farm that was only accessible from the lake. The farm wasn’t much in terms of holdings, it was little more than a fenced in pasture. When I would visit we would collect milk in big jugs from half-feral cows.

For a long time whenever someone would refer to the farm, its name didn’t really register. Then one day it all clicked. They were calling it Paraiso…Paradise.

To be clear, I’m not trying to overcook this analogy. I’m definitely not trying to say that Farcaster is Paradise.

But what I do mean to say is that sometimes big-picture things don’t initially seem obvious. Mainly this is because we look at them through the lens of our past experiences and not through the lens of future potential.

For me, the biggest use case of Warpcast, and maybe Farcaster in general, is as an entirely new discovery engine. Even though I might not fully comprehend everything I'm seeing on Farcaster, I do appreciate the creative energy and the fact that every day feels a new projects are launching.

I’ve realized it’s OK that I don’t know what people are talking about all of the time. I feel like I’m still in the figuring things out phase, and that I haven’t connected the dots yet that Paraiso means Paradise. Someday, I’m convinced, it will start to click.

For now, it’s enough to know that Farcaster is an alternative to how the internet works so far. Decentralized social media is just an entry point into a new kind of network — into a new way of doing things. It's about realizing that there is still more out there beyond the end of the road.