The Crypto-Farmers Almanac
A long range forecast of the DApp development environment
Today is the first day of Spring where I live and to kick off the planting season I’m publishing a Farmer’s Almanac for DApp develop for this growing season and help you prepare for the next.
I will open each season’s forecast with a quote from the Tao Te Ching because the seasons themselves are a product of the Tao; Tao can be said to be the principle underlying the natural order of the universe. As a buidler (DApp builder), I find that the Tao Te Ching helps me to reason from first principles.
Cryptospring
The sage’s Way is to act and not to contend. -Tao Te Ching ch. 81
A quick glance back at the price chart of Ethereum makes it appear as though cryptospring officially began on December 15th, 2018. In February, Consensys released #cryptospring An Atmospheric Report in which Joseph Lubin writes that he believes that we have already turned the corner into spring. He points to some seeds sprouting that were planted in cryptowinter as leading indicators:
- Gnosis is ceding full control of the DutchX exchange platform to the 100% community-owned dxDAO which, according to Marin Köppelmann, “has the potential to become the largest financial entity on the planet.”
- Digital publishers now have an open source option because Civil will soon be natively integrated into Newspack, WordPress’s new publishing platform.
- Crowdfunding is evolving with Gitcoin experimenting with CLR (Capital-constrained Liberal Radicalism) to help contributors get an exponentially larger match.
- The launch of Ethereum 2.0 on testnet in addition to live deployments of Layer 2 scaling solutions.
The brightest flower to blossom, from my direct experience, is the xDai sidechain launched by POA Network. It has already demonstrated better than credit card user experience on DApps like Burner Wallet and Ching!.
Any good gardener knows that the most important element in a garden is the soil. Rich with nutrients and biological activity, soil that is moist and acidic to break down those nutrients and make them easily slurpable. In the Ethereum space we’ve kept the same number of active developers as before cryptowinter, a biological presence that has been building co-operative relationships through conferences, hackathons, and open-source repositories. Busy as we have been, we have been depleting the ecosystem of precious capital. External inputs have thinned out considerably during cryptowinter; it has fallen on established projects to inject capital into the community. This has kept the Ethereum ecosystem healthy whereas my tools and libraries for Satoshi chain development have all but decayed. Mobius on the Stellar Network is an unfortunate example of library rot in the shadow otherwise exciting recent headlines.
The good news for DApp developers on all chains is that much of the R&D being conducted in the Ethereum ecosystem can be repurposed on other chains at substantially lower cost. The Bitcoin.com repo is an excellent case study for how to apply Ethereum development patterns to Satoshi chains.
At this time, Ethereum’s soil is the most healthy, water and fertilizer will be able to serve their intended purpose and be highly slurpable. Building on Satoshi chains will challenge DApp gardeners to carefully select viable clones and carefully monitor environmental conditions. The flip side to that coin is that DApp specimens adapted to poor soil can bear much more exotic fruit and don’t have as much competition from weeds as the bellwether varieties.
This season will last for almost a year because the global economy is still surprisingly strong and stable. For most of 2019, there will be very little competition for investor funding and startups will absorb all currently available talent to work on an unprecedented variety of DApps.
Now is the season to build, invest, and experiment. Resources directed towards beating the competition are misguided and wasted. Looking at you here BSV.
Cryptosummer
To understand the limitation of things, desire them. -Tao Te Ching ch. 1
Just like this cryptowinter was the longest on record, this cryptosummer will be the longest one yet. There are several reasons for this, but the most important of which has been the negative media coverage of cryptocurrency that has been fairly constant since about October, 2013 (obligatory advisory statement: “some” of that article may have been fake news). Many of the people who would’ve been early adopters during this cryptosummer were burned when they entered the ecosystem in the last half of 2017 during a rather uncharacteristic season of positive media attention. Those users will return, but they are human and creatures of habit, so we shouldn’t expect them back until cryptoautumn.
Some other contributing factors to the long summer are the long overdue general recession, the maturity and diversity of DApp development during this time, and interloping by unpopular state-sponsored institutions.
Whether or not the general recession strikes during this cryptosummer it will not hasten the arrival of cryptoautumn. A general economic downturn is already anticipated and will continue to be expected until it actually happens. Safe havens for capital are still generally trusted with the exception of student loan debt and municipal bonds. General goodwill towards cryptocurrency won’t return until significantly long periods of sustained growth and consolidation have passed. My gut feeling is this summer will last three times as long as the most recent cryptowinter which would make it longer than the entire last uptrend of 152 weeks. Take note, that it will likely be four years from today before crypto technicals go parabolic.
The maturity and diversity of DApp development will provide a hedge against that parabolic exuberance because investors will be comparing DApps on their own merits instead of the merits of their underlying chain. Several chains will have killer DApps that get up to 10 million active users, none will hit 100 million daily active users (DAUs). Many of these will abstract away token economics from the user interface. Many will provide microfinance services and provide them at a higher quality than any other application has ever been able to achieve, but world class user experience won’t be enough to break the habits of billions of traditional finance customers. Many projects will be lead by Fortune 500 companies that only expose cryptoeconomics to superuser amateurs and the valuation of these projects will be reflected in their stocks and not their native tokens.
Interloping by state-sponsored institutions will depress crypto prices and cause investment to slow to a corporate pace. Regulators will do what regulators do and find new things to regulate, requiring permits for sandbox testing of open-source software, putting KYC/AML requirements for even the smallest inconsequential transactions, and putting onerous burdens on traditional industries to discourage them from experimenting with cryptocommerce. Coincidentally, STOs will be in vogue and will end up in people’s employer sponsored retirement accounts. In democratic countries, large banks and trading houses will leverage blockchain to decrease transaction times and costs while sponsoring legislation to keep competitors from doing the same. At least a dozen authoritarian regimes will remonetize their currency to private chains and experiment with ways to falsify transactions while, at the same time, forcing their citizens to use the state’s official crypto under threats as sever as summary organ harvesting. Looking squarely at you China. Russia will cut off access to all TCP/IP ports used by blockchains and they will allow all of their DApp developers to emigrate to the west. Intelligence and law enforcement agencies worldwide will fabricate narratives and charges against some of the most gifted innovators in the DApp ecosystem. Calvin Ayre will be the most infamous of these victims, making him a household name and earning Cuba international prestige. At least one major terrorist attack will be completely funded by a single privacy coin, masking state sponsorship and sparking a “war on privacy coins”.
And this is STILL cryptosummer.
The underlying value of the technology will cause week after consecutive week to tick up on the market charts. Any week in which a state-sponsored activity does not occur will be an up week in the broad crypto market. Investment and development will continue unabated in a fairly linear fashion over the weeks as the use case is proven over and over again in different industries.
An interesting thing will happen during the cryptosummer. 99% of projects that launch in cryptosummer will basically just be copycats trying to improve on some aspect of a project that launched before cryptosummer. These projects will attempt to improve upon a narrow scope of the source project, apply the source project to a new industry, or combine the source project with another emerging technology. They will secure funding an order of magnitude larger than what their source project required and spend most of it on advertising. This is because the talent required to compete with the source project will still be at the source project or generally unemployable. The talent gap will be filled by talented project managers from web2, underskilled development shops, and marketing geniuses from 5th Avenue. A portion of the remaining 1% will work on a groundbreaking technology to combine trustless and trusted systems with social media resulting a “black swan event”.
The black swan event will mark the end of cryptosummer and the beginning of cryptoautumn. I’ll explain what the black swan event is likely to be in the cryptowinter section, but we won’t be aware that it has happened in either cryptowinter or cryptoautumn. We’ll know cryptoautumn has arrived when crypto markets go parabolic again.
Cryptosummer will be marked primarily by the refinement of DApps and user experience to the point where they are superior to Facebook, Medium, Visa, PayPal, YouTube, YouPorn, Uber, and Air B&B. The job of DApp developers, blockchain researchers, and investors is to tend the garden they planted in spring so they can provide the customer with a higher quality product come harvest time.
Google and Amazon are making more money than ever and they are officially comfortable with crypto transactions.
Any newcomer into the space would be well served to be a cryptonative. Only cryptonatives will understand the pain points from wanting DApps to do all the things and not being able to do every single thing. Only a cryptonative will be able push a project past the edge of the impossible, especially at a time when so many resources are being devoted to excellence in user experience. During this time there will be a lot of competition for investor capital and talent is going to have to be provided either by blockchain focused coding bootcamps or by poaching the best talent from the best firms. Expect to pay up to a million dollars a year for top talent by the end of cryptosummer.
Cryptoautumn
People fail at the threshold of success. Be as cautious at the end as at the beginning. -Tao Te Ching ch. 64
By cryptoautumn we have seen multi million DAUs on several DApps. People who have never touched crypto are getting their packages delivered in record time because an army of amateurs are betting on their immediate satisfaction through prediction markets. People are betting a portion of their retirement on DApp 2.0.0-beta34 getting more market share than DApp 1.24.6. Every bank and payday advance place has a way to process crypto to fiat transfers. Miners and validators are making profits in every neighborhood in the world, often in completely sustainable ways off the grid, instantly swapping between chains to take advantage of arbitrage opportunities. Mainstream media is singing the praises of an all crypto future.
Sounds pretty alright, huh? We’re looking at somewhere around March 2023 and the weather is going to be pretty nice worldwide for the next couple months. Either the global economic downturn has already passed and we’re okay; or we are in the middle of it, but our businesses and investments are crypto based so we’re good, or money is going to flee the traditional markets into crypto in which case we’re going to the moon in lambos.
Not in this almanac. This almanac doesn’t have a happy ending.
In cryptoautumn there will be countless crypto startups that get funded, listed, traded, and relied upon for income. They are all worthless. At any other time, they could be just fine, but in this particular season they aren’t worth the time or attention anyone has put into them and those resources would’ve been better spent on AI, drone tech, AR, logistics, or medicine. Basically anything that has a military application.
10–15% of the world’s population is holding crypto, of that, approximately half are exposed to it’s cryptoeconomics. The other half has been enjoying the benefits of the technology, but reticent to get involved in something with so much regulation and associated with terrorism. But the news is so positive and all of the people who got burned last time are back in! People just like themselves have made fortunes in the last four years and all they had to do was expose some of their savings to the coin markets!
This exposure to crypto came through DApps, not the blockchain itself. In our efforts to bring crypto to the masses, we as DApp developers have brought DApps to the masses. Once a user is onboarded, it’s permissionless. Once they have their private keys, they can make any decision they like and no government on Earth can interfere with that because the code is law. That is the value proposition. Without realizing it, we have made people, who are accustomed to relying on government for their needs, more powerful than the mechanisms of control government can use to effect or reverse those decisions. No one can stop the half who are exposed to cryptoeconomics from upskilling the other half. We can’t stop each of them from talking to one or two other people. And we certainly can’t stop all of these new superusers who outnumber the population of China, from speculating and buying up the underlying crypto and driving up prices in a parabolic moonshot.
Now is the season to harvest what we have sown in the last two seasons. Set your stop-loss at 5% slippage and ride that wave up. You sowed your seeds wisely for four years, it’s time to take your profit. If the global economy hasn’t entered a recession, it will now. A nation of superusers, larger than any nation on Earth, has taken control of the blockchain and each individual superuser is acting in their individual best interest, attempting to maximize profits. Unimaginable sums of money are flowing from securities to crypto. It becomes clear that STOs were never securities because they are not affected by the 85% flashcrash on Wall Street. Cryptoautumn has brought with it the greatest redistribution of wealth in the history of mankind. No one can predict with certainty what happens after this point. In computer science, we refer to that as a Singularity.
The story of the Singularity is the story of the individual becoming asymmetricaly empowered against the State. -Gabriel Cardona, Plan B: A conversation with Gabriel Cardona on the trajectory of Bitcoin
Before this roller coaster peaks, half of the world population will either be invested in crypto or trying to get in. The other half are skeptics by nature and would say no to a free sandwich just on the principle of the thing.
It took us twenty thousand years to move from the invention of accounting to get to letters of credit. It took about four hundred years to move from letters of credit to double entry accounting. It took us six hundred years to go from double entry accounting to distributed ledger. And it has taken us less than fifteen years to go from distributed ledger to Singularity.
Now that we’re done reaping, we are not done playing the gardener. It’s time to “sell some, eat some, save some”. Singularities may be unpredictable, but seasons aren’t. As sure as autumn follows summer, winter follows autumn. And this is CRYPTO NUCLEAR WINTER! (Please attribute the phrase “Crypto Nuclear Winter” to me, that would be the most metal thing that could possibly go into a wikipedia article)
The beginning of winter on the Prairies is inherently unpredictable. Sometimes it starts in December, sometimes in mid-October. When you reach the end of October to early November, the weather can turn very quickly. You can go from 10 degree days of sun to -10 degree days of blizzard in only a day or two. So, the long hours can’t stop; there is still much to be done. -Jake, southsaskfarmer.com
Seven months could pass, ten months could pass, we don’t know beforehand. Just don’t get caught holding a bag without liquidity when it happens. You as an individual should be completely out of the market. Your DApp can keep chuggin along doing it’s thing, in agriculture we call that over-wintering, it’s cool. But your harvest needs to be converted to things that will serve you well in the coming season.
- Sell some: Definitely don’t stay exposed to crypto. Stable coins might be a good route, as long as they are pegged to something other than some nation-state’s currency like USD. You just set off a chain of events that’s going to cause that asset class to hyper-inflate. Not paper gold, gold stocks, gold certificates, or gold futures, all that stuff is all garbage now. Think cigarettes, Juul pods, Everclear, and cannabis (wax). Gold and silver bullion is fine if you don’t mind taking a bath on “service fees”.
- Eat some: You just crashed the world economy so fresh food may be a bit of a luxury for a while. Load up on shelf stable food stores, I’d do 12 month’s worth to be on the safe side. Just make sure it’s preserved, portable, and enjoyable. Military rations (MREs) aren’t bad, I used to live on them.
- Save some: Convert a portion of your portfolio to assets that aren’t all wibbly wobbly in relation to demand; housing, electricity, food, clean water, drugs, and waste disposal tend to have pretty constant demand even in the worst of times. The most important part of this step is to have something with which you can trade for crypto when cryptospring rolls around. (Feel free to revisit the “some” fake news article linked earlier or this one that Andy Greenberg phoned in a couple years later.)
- Taxes: I’m writing this from the USA, we add tax up at the end. It’s a pain at the grocery store already, having to guess how much your total is going to be since every State-County-City combination has their own total and they don’t tell you what it is until you’re already rung up. But even after you’ve already demonstrated how hard you can own the IRS, all of your city’s employees need to get paid and about half of them have guns. I’d recommend watching out for something titled “Guidance” or “Notice” on how to handle taxes on their website. It’s not likely to be delivered by mail.
Seriously, everything that happens after the Singularity is wildly unpredictable, make sure you plan in advance for you survival needs first so you can make it through cryptowinter. Then make sure you have a war chest you can access to fund your buidling through cryptowinter on into cryptospring.
Cryptowinter
Give evil nothing to oppose and it will disappear by itself. -Tao Te Ching ch. 60
This ain’t your papaw’s cryptowinter. The assumptions everyone has made about microfinance and high finance have turned out to be disastrously false. The people that leveraged their future on trips to the moon are completely bankrupt and for a great many of them, this is the second time. Financially, you’re better off than the elites. That makes you a target. You are public enemy #1 in every country on the planet and hurting people are demanding that their governments hold you to account.
People are dying all over the world because the governments they relied on for basic survival needs are insolvent. Entire industries have been disrupted to the point of cessation. Even a nuclear war broke out between India and Pakistan so the leaders of both sides could scapegoat the other and retain their grasp on legitimacy. Religious leaders leverage the human tragedy to increase their own power and coincidentally radicalize hordes of military aged males for the cause of defeating technological idolatry. Politicians worldwide mobilize for offense because war is the health of the State and nation-states just aren’t very healthy right now. Governments need their people to need them, and people think they need their governments. World war helps the people to reorganize toward a common goal and accept centrally planned economies just so they can get the necessities they need to survive.
Wars, even world wars, are generally localized affairs. You’ll be safe from harm if you avoid conscription or residing in urban areas at the junction of supply lines. If you can avoid being identified as one of the engineers of the Crypto Nuclear Winter and reside in a rural agricultural center, you should be able to last until cryptospring.
There’s just one catch, that black swan event I alluded to back during cryptosummer. There is a new distributed computing technology called “The Web of Trust”. It allows a user to rate the trustworthiness of anyone they are connected with through social media. It runs on distributed ledger technology and keeps an immutable record of the impressions of acquaintances. It aggregates the ratings of the people that connect you and returns the trustworthiness score for any person on Earth in relation to you. It wasn’t fully functional before it gained a critical mass of adoption, but it has that now. If it had gained mass adoption at the beginning of cryptosummer, it could attest to the good hearted, philanthropic nature of the DApp developers. It could even attest to the self-serving, untrustworthiness of the politicians who are sending victims of one catastrophe into the meat grinder of another catastrophe. But that’s not how history has played out. There was no need for The Web of Trust when traditional institutions were serving the greater good and crypto was making everyone rich through the power of belief. Now though, now times are hard, people are desperate, and there’s no one you can really trust.
In a perfect world, you could continue going about your business and the system would rank you as trustworthy. It could defend you in the court of public opinion against politically motivated prosecution. But it has a vulnerability: a Sybil Attack subverts reputation systems by forging or counterfeiting identities and voting as that identity. At no other time in the last 70 years would voting members of The Web of Trust allow signs of a Sybil Attack to go unpunished. But now? Desperate times, desperate measures.
Either The Web of Trust enables us to return to a state of general peace and actually improves society beyond what we experienced in the early 21st century, or hand control over to state-actors in exchange for increased security and we all get early 21st century China’s social credit system. Either way, our social credit on the blockchain becomes the most valuable currency we can own.
By the end of cryptowinter we have collective control over currency, debt, and credit worthiness through a blockchain powered DApp. It turns out that cryptocurrency (at least in this form) is the only form of currency which is trustworthy. And you are one of it’s intrepid designers, which ingratiates you to literally no one.
Even if cryptowinter doesn’t turn out this severe, the individual will have unprecedented power to affect entire institutions and those institutions are comprised of people not dissimilar to us. It is exceedingly important that we plan ahead and give evil nothing to oppose, especially the evil within our DApps.
Next Cryptospring
Do not interfere and people become rich by themselves. -Tao Te Ching ch. 57
Crypto had a rocky beta test, now it’s ready to go into production!
In the next cryptospring, the general population will be more skeptical of crypto than this cryptospring because more people will inevitably be harmed by it. We will be starting out from a larger base of active users and many of them will be evangelists for the tech because it has served them well in practical ways for five years.
The next cryptospring will be the longest in history because we didn’t fulfill our promises and crypto didn’t empower everyone equally and politicians have vilified it more than ever.
By then, we will have a value layer and a reputation layer on the internet. We will have The Interchain with many popular DApps that are sustainable and censorship resistant. And in that season we will plant the seeds for a new search engine and repository for information, truth, finance, goods, services, and all the things. Our history and memories will be saved and accessed there. Our cognition will be augmented by billions of other humans making decisions in their own best interest. Market cycles will lengthen and volatility will decrease as market efficiency becomes something we can manipulate individually as easily arithmetic on a pocket calculator.
Just remember to manage customer expectations responsibly this time. I’ll check in next cryptospring to see if I beat The Farmer’s Almanac’s accuracy rate of 80%.
