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“These are the good old days.”

- Chris Dixon

Read Write Own: Newsletter Book Review (Part Two)

The response I get when people ask what I do for a living is a function of the price of Bitcoin: at $60,000 I got a lot of interested follow-up questions; at $20,000 I got a lot of pitying looks.

I’m not proud to admit that my response to the question is also a function of the price of bitcoin: at $60,000 I told people I wrote a newsletter about “crypto”; at $30,000 it was “crypto and finance”; at $20,000 it was “finance and crypto” … and at the very lows it was sometimes even just “finance.”

(Yes, I will let you know next time that contra-indicator is flashing “buy.”)

The latest bitcoin rally has got me back to admitting that I write about crypto and this time I think it might stick — mostly because I spent the weekend reading Chris Dixon’s Read Write Own.

Dixon’s framing of “blockchain networks” (his term for crypto) as an evolution of both computing and the internet has reassured me that writing about the crypto industry is a respectable and worthwhile endeavor no matter what the price of bitcoin is doing.

Dixon wrote Read Write Own because “the technology story is nuanced, slow to develop, and requires historical context to understand.”

Crypto is not good at nuance… or going slow… or context.

Instead, it excels at going fast, breaking things, and making grandiose claims — all of which give skeptics plenty of reasons to dismiss it. 

But naysayers risk missing the forest for the trees when they dwell only on the many, admittedly silly things that happen in crypto.

By placing crypto in historical context, Read Write Own is a bird’s eye view of the forest.

The tech context

Dixon wants you to know that Satoshi’s white paper was not a case of immaculate conception. 

Bitcoin may have been the first blockchain network, but it was hardly the first computer and that’s what blockchains are: “fully fledged computers” that do the same basic job as any other computer — but differently.

“Blockchains are computers that can, for the first time ever, establish inviolable rules for software,” Dixon explains. 

By making “software-enforced commitments to users,” blockchains enable digital ownership, which is represented by tokens: “Money that is held and controlled by software is a new idea that didn't exist before.”

It’s an idea he hopes will radically change the internet.

Tokens enable blockchains to “incentivize innovation, reduce taxes on creators, and let the people who contribute to the networks share in decision making and upside.”

Programmable, composable data structures (ie, tokens) are the “new computing primitive” that will usher in the next phase of the internet.

The business context

Dixon lauds the likes of AirBnB, Amazon, and Google for disintermediating traditional businesses and lowering prices for consumers — but he also believes that that process has run its course. 

Big Tech has taken all of the traditional margins there are to take and has now shifted its focus to extracting as much rent from its users as possible.

In Web2, Dixon writes, users are now “a product to be served up to the real customers, like advertisers.”

He sees Web3 as our chance to reverse this.

Blockchains are the “natural successor” to Bezos’s famous warning to conventional businesses that “Your margin is my opportunity.” 

Dixon writes that Web3 now has a similar warning for Web2: “Your take rate is my opportunity.” 

This is about more than just lowering costs, however: “Cost savings are nice, but wouldn’t it be nicer if companies let users, not just shareholders, participate in their financial success?”

And it’s about more than just money, too: Blockchain networks take Google’s motto of “don't be evil” and do it one better. 

Because their data and code “will forever remain open and remixable,” blockchains “can’t be evil.” 

“Don’t be evil” is Web2’s corporate promise (which can be broken).

“Can’t be evil” is Web3’s cryptographic guarantee.

The finance context

Tokens may be new, but tokenomics is not: Tokenomics simply apply “old concepts to the context of the internet” — the iron laws of supply and demand apply in the digital world no less than they do in the analog one.

There’s nothing new in the market for tokens, either.

Crypto markets follow a “price-innovation cycle” in which rapidly rising prices draw in both investors and developers, some of whom stay on to continue building through the inevitable bust — which sets the stage for a subsequent boom.

This is a familiar, and necessary, pattern: “Speculative manias don’t just characterize tech revolutions; they often enable them.”

Will the periodic crypto manias produce anything as beneficial as railroads, automobiles, or the internet? 

Dixon thinks the innovation this time is a new, blockchain-based internet in which many more individuals can make a living creating games, making movies, composing music, and recording podcasts. (Writing newsletters doesn’t get a mention, weirdly.)

This is particularly timely because in the age of AI, “Creating new jobs isn’t just nice, it's necessary.” 

The challenges

Putting blockchain tech into historical context is enlightening and inspiring to a history enthusiast like myself — but that is of course no guarantee that it will prove to be as historically significant as Dixon hopes. 

What could go wrong?

“Tokens are a powerful tool,” Dixon notes, “but they need to be used responsibly” —- I’d argue there's so far little evidence to suggest they will be. 

“The networks they are part of should provide useful services” —- evidence of utility is similarly limited.

“This is also why thoughtful regulation is important” — evidence that regulators will be thoughtful is even harder to find (in the US, at least).

As for the evidence we do have, Dixon notes that badly designed tokenomics can “fuel a speculative environment that destroys the spirit of the community” — we’ve seen plenty of that, for sure.

More hopefully, he cites Uniswap as a successful example of “turning users into owners,” but it’s unclear what UNI token holders own other than governance rights of questionable value.

And if you’ve been following the recent return of sybil-attacking airdrop farmers, you may be less sure than Dixon that airdrops are a good way to distribute ownership to a community.

He is of course aware of all these challenges, and more: “A reasonable skeptic might doubt … whether the world needs blockchain networks at all.” 

But Read Write Own is showing us not just what crypto is, but what it can be. 

That is both timely and welcome — as is his evidence-based optimism and his sense of higher purpose, both of which I now share.

I look forward to telling people I write a newsletter about blockchain networks.

― Byron Gilliam

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