Permissionless IV, Day 1

Hewlett and Packard; Jobs and Woz; Gates and Allen; Page and Brin; Bezos and (the now-forgotten) Kaphan.

The history of technology in America is a history of two people incubating whole new industries from a garage.

Would any of Hewlett-Packard, Apple, Microsoft, Google or Amazon have been incubated over Zoom?

We’ll never know, but empirical evidence suggests not. Even in this age of video conferencing, face-to-face interaction remains a key ingredient in the alchemy of innovation. 

One study found, for example, that adding non-stop flights between two locations resulted in a statistically significant increase in research citations and collaborative patents between said locations.

Another study, published in Nature, offers an explanation as to why getting off the sofa and onto a flight might be worth it: “Videoconferencing hampers idea generation because it focuses communicators on a screen, which prompts a narrower cognitive focus.”

(As someone who happily works from a sofa, I report that result only reluctantly.)

Researchers have even used GPS data from Silicon Valley to quantify the effect of chance encounters on innovation, finding “substantial returns to face-to-face meetings.” 

It’s easy to imagine why this might be the case. 

To cite just one pitfall with remote work, 25% of the emojis we send are misinterpreted by the recipient, often in the opposite way they were intended.

How long would Steve Wozniak have put up with Steve Jobs if any portion of their communication happened by text message?

Not long, I’m guessing.

Businesses seem to get this — it’s presumably why they spent an estimated $1.4 trillion flying employees around for IRL meetings last year.

Businesses don’t spend that kind of money if they don’t think they’re getting a return on it.

I’m guessing it’s also why crypto conferences like Permissionless continue to be so well attended. 

You can watch the livestream of all of this week’s panels from your sofa, but it’s more fun to be here in person.

And more productive, too. 

A few of the things I heard on day one

Mike Ippolito opened the conference with some charts and a call to action.​

The rising ratio of crypto traded on decentralized vs. centralized exchanges is a key performance indicator that everyone at a conference called Permissionless will feel good about: 

Binance and Coinbase are great (and would make excellent sponsors of this newsletter). But the raison d’etre of the crypto industry is to move people onchain and, by that measure, we seem to have made a sudden burst of progress.

The revenue being generated onchain is a little underwhelming, however:

Using Solana network revenue as a benchmark, the industry seems to be lacking momentum. 

Flatlining revenue is an indication that we’re still waiting for a breakout application to inspire people to do things onchain (other than trade memecoins).

When asked for a crypto success story this morning, the Bitcoiner Peter Todd cited Polymarket — but couldn’t immediately remember its name, mistakenly said it’s on Solana (it's on Polygon), and then dismissed all non-Bitcoin blockchains and applications as being “highly centralized.”

That, I think, is a measure of how much work the non-Bitcoin crypto industry still has to do in both finding utility and becoming credibly decentralized.

Non-sovereign money, stablecoins and permissionless gambling (aka, memecoins) is an excellent start. 

But is that all there is?

My questioning of Permissionless attendees this morning suggests that crypto enthusiasts are still hoping for more, but are unsure of what that might be. 

In opening the conference, Mike Ippolito framed the crypto industry’s challenge by quoting Nikola Tesla: "The present is theirs; the future, for which I really worked, is mine."

In other words, money and finance still belong to TradFi, and that won’t change unless crypto people make it change.

“The present is not good enough,” Ippolito concluded, “and the responsibility is on us and us alone to make it better.”

Keynote speaker: Eric Adams, first Bitcoin mayor of New York

The mayor began his talk by recounting his family story, which started in nearby Brownsville, Brooklyn before moving to Jamaica, Queens. 

This resonated with me because my mom’s side of the family did the opposite, going from Queens to Brooklyn, where I spent my formative years of 0 to 3. 

(Yes, I’m from Brooklyn, but, no, don’t ask me for directions.)

More substantially, the mayor used his origin story to explain his support for the crypto industry.

Noting that over 40% of Brooklyn’s residents speak a language other than English at home, Adams said he hoped New Yorkers would adopt bitcoin as a better way to send money to relatives abroad.

That is approximately the oldest idea in crypto and has yet to really catch on, but maybe we still need to spread the word: Adams stressed the need for the industry to educate people about how crypto “benefits everyday working class people in the city.”

To benefit the city itself, Adams plugged his idea for BitBonds — municipal bonds backed by bitcoin.

That sounded a little gimmicky to me, until the moderator asked if New Yorkers would be able to pay their parking tickets in bitcoin, which the city could then use to back its bonds.

“We would love to do that,” the mayor responded.

And why not, it would be a cheap call option for the city: If bitcoin goes up, take your profit; if it goes down, default! 

Unfortunately, the mayor might not have enough time to make it happen. The aforementioned Polymarket gives Adams a 10% chance of re-election in November.

Panels I watched: As I had hoped, the afternoon track on DePIN restored my faith that crypto is at least trying to solve real problems.

David Vorick noted that in some parts of the emerging markets, “energy is the difference between life and death.” He explained that the mission of his DePIN venture, Glow, is to incentivize the buildout of solar energy in exactly those places.

Listening to Vorick is a reminder that crypto tokens can have purposes beyond gambling. “If you want to see a lot more solar in the world,” he said, “holding the glow token is a way to both express that preference and help make it happen.” (Paraphrased.)

If that sounds cringe to you, it’s because you’re reading it in a newsletter — in person, it sounds perfectly sincere, as I’m sure it is.

Abhay Kumar of the Helium Foundation similarly explained that DePIN is a “new way of making networks” and that tokens determine what kinds of networks get made: “Voting with your wallet is real.”

Finally, Sam Hougan explained that Inference.net is creating a DePIN network to help “data centers around the world fill the extra capacity they have” — a use case that will only get more useful, I imagine.

DePIN is no longer the new-new thing, and the results so far have been modest.

But there’s hopefully bigger things to come: The panellists cited satellites, manufacturing and drones as important sectors that are most ripe for DePIN-enabled disruption.

Quotes from day one: “It’s very stupid, you’re going to lose money, but it’s fun.” — Dan Smith, Blockworks Research, on memecoins

“You have to break your brain to understand it.” —  Dan Smith on the memecoin industry

“I don’t think tokens should be money. Tokens need to have some utility in the network.” — Sam Hougan, Inference.net

“I think tokens are one of the most powerful forms of money.” — David Vorick, Glow

“We’re super excited about crypto now.” — David Rhodus, Permissionless Labs, after seeing the demand for DePIN provided bandwidth

“We’re actually building stuff useful enough that people are willing to pay for it, which is very exciting.” — Logan Jastremski, Frictionless

Overheard: “People can’t think about two things at once.” — Anonymous, on crypto losing mindshare to AI and why “TradFi is sleeping on crypto”

Crypto conference innovation: Holding half a conference outdoors turns out to be an excellent idea, even when it’s 100 degrees out.

Merch of the day: Cooling neck scarves. Dunk them in ice water, wrap them around your neck, and you’ll forget it’s summer in New York City.

Something I learned: Air conditioning is the greatest invention in human history.

Today’s big takeaway: Egg and cheese on a roll, with salt, pepper and ketchup.

See you tomorrow for day two.

— Byron Gilliam

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