The Church of Currency
This is the Part 1 of a series. In upcoming Part 2, I will discuss the anatomy of a successful cryptocurrency.
During the past year, I have observed and studied the massive, disruptive, and breathtaking growth of cryptocurrencies. It has been a wild ride that has unfolded much faster than we can understand.
Being a technically oriented person, I observed the evolution of various currencies while they mooned — a term used in crypto circles for rapid growth.
I could not understand the crazy rallies of various currencies that had no apparent utility. It did not make sense that a strong project with high utility and a real solution to a real problem would be valued at a fraction of a project that had only a white paper to show.
Gradually it dawned on me. I realized I was missing something very, very important. These currencies weren’t about fundamentals.
Currencies are about faith.
In his best-selling book Sapiens, professor Yuval Noah Harari wrote that homo sapiens became the most successful living species on the planet Earth, because we had a unique ability to believe in shared fictions.
Religions, nations, corporations, money and various isms are human fictions that have enabled us to collaborate and organize on a massive scale. They exist, because we collectively believe so.
Money has always been one of the most powerful and potent religions.
The promise of freedom and fulfillment of one’s desires already during their lifetime is powerful. The ability of money to provide instant gratification is hard to compete with. Most other religions require their members to restrain themselves in order to receive an ultimate reward later, often after death.
While dollars and euros have been powerful religions in themselves, they have lacked one important ingredient that the traditional faiths have:
A sense of community.
A successful faith community is one that has a mechanism for funding itself, a mechanism for acquiring adherents, and a set of lifestyle rules that differentiate the group from other faiths.
The first one has traditionally been covered by tithing, the second with missionaries and the third with unique interpretation of the lifestyle rules written in the holy books.
Lifestyle rules are actually much more important for the longevity of a religion than beliefs. They build the group’s cohesiveness by creating an appearance of unity even when the beliefs differ, and make the group appear uniquely different from others.
When people are prosecuted for their difference, they feel stronger in their faith because of it. This is why it is so hard to get rid of traditional religious rituals. They make people feel unique — the chosen people.
The rapid progress of science and education, as well as the broad availability of information on the internet have eroded traditional religions. This has in turn eroded our sense of community.
But we never lost our faith in money, the most potent religion.
Cryptocurrencies have been a successful new religion, because they bring back one of the most important lost aspects of religion, the sense of community.
Just like other successful religious communities, cryptocurrencies have a potent mechanism for funding themselves. The token generation process takes care of that.
Also, cryptos have missionaries. When people invest into a token, they keep shilling it in every forum available. It is hard to find more active missionaries in any other religion than the missionaries of cryptocurrencies. Evangelists like Andreas Antonopoulos and Naval Ravikant are worshipped in the crypto circles.
Thirdly, the crypto community has unique lifestyle choices that differentiate them from others, just like the religious rituals and lifestyle rules do in traditional religions.
The crypto community is full of weird people. People who are often not only different in their thoughts, but also appear physically different. They use psychedelics, wear weird clothing, sport nicknames and use their own language. Have you ever heard about terms like fomoing, altcoins, mooning, hodling, FUD & ICO?
Oh boy, have they been prosecuted!
They have been called criminals. They have been called idiots. They have been called fraud. They have been called heretics. They have been called the force of evil.
This continuous prosecution has not eroded the faith. No, it has made the faith much, much stronger. Governments can try to limit the access to blockchains, but they can’t take away the faith. If the public forums are banned, people will go underground. When Bitcoin is monitored by FBI, Monero will grow.
Bankers can badmouth Bitcoin, but it will make the crypto-faithful just laugh at their ignorance. They haven’t seen the light yet. Someday, they will.
The success of a religion depends on its ability to mobilize the community behind its cause, and to defend it at all costs. Cryptos have all the necessary ingredients to create a strong faith community.
Vitalik Buterin has been a great example of a religious leader. He is a young, brilliant and caring entrepreneur who clearly doesn’t focus on status symbols, but rather asserts the Ethereum faithful to focus on a greater good.
When Charlie Lee, the founder of Litecoin, announced that he sold all of his Litecoins at the peak, he made his adherents lose a lot of faith in the currency. The currency dropped hard, and has yet to recover from this news.
The religion of the Litecoin had a prophet, Charlie, and his selling of his soul had a material impact. He probably didn’t even realize it himself. He thought that the decentralized currency will be just as good without him. Technically he was right.
But this is not about technology. It is about faith.
When Justin Sun, the Chinese celebrity founder of Tron posts something in social media, thousands of eager adherents will go to all channels to rally around his message.
Justin is the perfect portrait of success in China. A good looking, young and wealthy man — a protege of Jack Ma — who wines and dines with some of the most prominent leaders in China.
When Justin made series of announcements in early January, the currency mooned to almost $20 billion. Why? Because the community had an almost blind faith in their leader.
When Justin was accused of plagiarizing the white paper from Filecoin and IPFS, the community defended him. When he was accused of secretly selling a major amount of tokens at the peak, the community rallied and called the claims unfounded.
When the faith is strong, prosecution only strengthens it.
In the traditional capitalist economies, the most successful companies are funded by venture capitalists, who in turn sell them to larger corporations, or list them to public markets. The value of the companies is based on their future expected earnings, i.e. their ability to extract economic rent from the markets they operate in.
An individual employee, or a customer of the company rarely experiences being part of a bigger cause. More often, they feel like being used.
Capitalism sucks the soul out of you.
Can a for-profit business even have anything that would resemble a soul? When you think about it, you will probably think of charismatic leaders that you can look up to. Someone like Elon Musk or Steve Jobs.
When a charismatic leader speaks, people listen. When a charismatic leader asserts, people believe. When a charismatic leader screws up, people defend.
Have you heard of the term reality distortion field? When Steve Jobs was giving his product announcement speeches, even the most mundane small update sounded like the biggest invention of the year. It was magical.
This is how it feels to be a member of a crypto faith today — magical.
It surely feels better to be a crypto faithful than being a dollar faithful. The former see themselves as prosecuted, pioneering adherents of something better to come. The latter are simply egotistical greedy a-holes.
The biggest test of this strong and growing crypto religion is still ahead of us. A major crash. What do you think, will the faith survive a big downturn?
I am pretty sure it will.
Berlin, 10.1.2018
Mikko Alasaarela
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I am founder and CEO of Inbot. Join the Inbot Ambassador community today, and become a shareholder in the future of AI simply by making intros.
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If you liked this story, check out some of my previous stories:
End of 2017: We are losing control
The Rise of Emotionally Intelligent AI
The Human API
How Humans will merge with Machines
Tokens could give birth to AGI, Artificial General Intelligence
AI offers us a new path to opportunity
