This post is a spiritual successor to The Smart Contract Network Effect Fallacy.

Bitcoin has a network effect. Many crypto evangelists assert that the network effect of Bitcoin is so strong that hyperbitcoinization is inevitable.

But this is not quite right. Bitcoin’s network effect as digital gold is not what many assert that it is. Network effects are nuanced, and generally misunderstood.

In this essay, I’ll explore the network effects of Bitcoin as digital gold, and as digital cash. I’ll also explore other competitive moats that are not network effects.

For general background, I recommend this Medium post, this a16z…


Cryptocurrencies and blockchains are not yet mature. Like computers from the 80s and 90s, although they technically work, they’re fragile in practice. As such, most of their users are technical, and tend to focus on technical challenges rather than go-to-market challenges.

The technical people building these systems tend to believe, either wholly or at least partially, “if you build it, they will come.” Against all odds, this actually worked for Bitcoin after its creator left the project without providing any future guidance in 2011.

Many think this was also true for Ethereum, but this patently false. Despite being worth hundreds…


There are a few commonly cited arguments on why it makes sense to build social media platforms on top of blockchains, and how these benefits will enable upstart social media protocols to displace incumbents.

In this essay, I’ll make the case that despite the benefits of moving social media onto blockchains, it’s unlikely that this will happen, at least directly. I’ll then explore alternative options for blockchain-based social apps.

The Problem: Incumbents Are Rent-Seekers

Facebook, Google, Twitter, Reddit, and Snapchat unilaterally control their respective platforms. These companies generate billions in revenue by selling ads alongside user attention. Content creators generally…


There are three fundamental hypotheses that attempt to answer the question, “What path will the super mega winner(s) in crypto take?”

In this post, I’ll detail each of these hypotheses. Note that all three hypotheses achieve the same result: massive stores of value. The primary difference between these hypotheses is the path by which these protocols get there.

The Store Of Value Hypothesis

The store of value (SoV) hypothesis is the most straightforward and the one that best aligns with a historical understanding of money, economics, and scarcity. …


Each of the major smart contract platforms is making a unique set of trade-offs. These trade-offs are not simply the presence or absence of specific features, but rather represent fundamentally different views of what trustless computation means.

This essay aims to provide a coherent framework through which one can understand these trade-offs and how they impact some of the predominant narratives in crypto such as digital gold, programmable money, censorship resistance, and permissionless-ness. Some definitions:

Censorship resistance — complete freedom of expression. In more technical terms, the ability to commit any arbitrary record to the blockchain.

Permissionless-ness — the ability…


There are three types of cryptoassets: stores of value, security tokens, and utility tokens. General-purpose stores of value should be valued using the equation of exchange because these currencies are independent monetary bases. Examples include Bitcoin, Bitcoin Cash, Zcash, Dash, Monero, and Decred.

Although some may disagree, I also include the native tokens of smart contract platforms such as Ethereum, EOS, Dfinity, and Kadena in this category. Why? Because there’s a real chance that the native token of a smart contract platform that becomes sufficiently useful will emerge as an independent store of value.

I won’t touch on security tokens…


Tesla may be a car company today, but Tesla won’t be a car company in 15 years. Rather, Tesla will be a full stack, vertically integrated clean energy company. They may still produce cars, but cars will represent a fraction of total profits.

For a sense of scale, consider that Tesla generated $7B of revenue in 2016. Of that, Tesla does not even break out non-automotive revenue, meaning that their battery/solar business today is small fraction of total sales.

To substantiate the bold assertion above, let’s understand why Tesla exists. The easy way is to ask Elon Musk directly. …


Some quick numbers:

2016 Revenue: $515M (up about 6x year over year due to artificially restricted advertising revenue prior to 2016)

2016 Expenses: $919M

2016 Operating Loss: $404M

To justify a $20B valuation, the market is suggesting that, at some point in the future, Snap would need to generate financials that look something like this (assuming no discount for risk/time):

Revenue: $10B

Operating margin: 20%

Operating profit: $2B

P/E multiple: 10x

Growing revenues and profits by about 10% / year each

I don’t see any way Snap’s current business can achieve these numbers. Revenue needs to grow 20x, and margins…


The Michael Flynn situation is bad. Really bad.

This post will outline Paul Ryan’s game theory on whether to investigate the Flynn situation further and the implications on the Republican party.

Vox provides a good summary of the facts. Here’s the quick version:

1. In December, during the transition, Flynn had conversations with the Russian ambassador to the US. Flynn told Russia that Obama’s Russian sanctions — the sanctions for interfering with the US election — would be revisited.

2. The NSA has for a long time eavesdropped on phone calls with foreign ministers. …


There’s been one common theme throughout Trump’s campaign: that the political establishment in Washington is corrupt, and that he as an outsider can “drain the swamp.” Trump’s final campaign ad is the perfect distillation of this message.

There are many lies contained in this ad. But by far the most salient lie is that Trump somehow represents any notion of change or that Trump is an outsider in any capacity.

Donald Trump is only an outsider in the sense that he has never held formal political office. …

Kyle Samani

Perpetually fooled by randomness. Entrepreneur. Intellectual. Capitalist. Polymath. Managing Partner @ Multicoin Capital.

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