@goodalexander: crypto's Big Delusion is believing it thrives with state support

When you boil everything down - Dubai and Trump sum up the Big Delusion The Big Delusion is comprised of two parts The first leg of the Big Delusion is that crypto will thrive with governmental and institutional support - when, in fact, crypto exists almost entirely in response to institutional failure Centralizing forces will either exit scam crypto wealth back into their native currency or temporarily tolerate it without integrating (see : people just leaving Dubai with stables on a plane) The second leg of the Big Delusion is that you can simply make a “fixed supply asset” and expect it to replace fiat or Gold. Fiat is partly violence but it’s violence that is a function of elections, judicial systems, democracy, race, or ideology (communism etc). The function of the State is not easily reduced to authority but rather - a social fabric and set of behaviors democratic or otherwise that precedes said authority War is the starkest demonstration of this origin. China defines citizenship as “being Chinese” so Taiwan must be part of China because it is racially and culturally Chinese. This is at odds with post WW2 definitions the US set and more aligned with what Putin is doing in Ukraine. Iran is a repressive theocracy that innately clashes with Western “degeneracy” or as we put it, freedom. In face of these ancient clashes if you show up to the scene and say “that’s great but code is law, check out my Lichtenstein foundation and autonomous rebalancing smart contracts” - you are met with at best hobbyist adoption or at worst getting thrown in jail because “actually, Law is Law” Protocols like HYPE, TRX, BNB and Tether can to some extent ignore the speculative dance I’m describing because they are essentially tokens of organizations that have future cash flows that get delivered to token holders. Their value proposition is identical to equities even if we don’t classify them as securities. We care what Jeff, Justin, CZ and Paolo do and what they tweet. But Bitcoin and its holders dares to dance the “store of value” dance. The war machine pays for itself by money printing and asset confiscation and BTC argues that it can provide holders solutions to this. But it’s very unclear that it does, because it’s not private enough. Hence the parabolic move in ZEC, and to a lesser extent XMR. But privacy coins and running from the state have a critical liability: you might have shielded Z cash but if you live in Dubai and your entire life is recorded, on chain privacy functionally does not matter. You transact or off ramp with the blessing of the state. Right now - the OTC desks in Dubai are transacting in USDC. So you’re also transacting with the blessing of the US govt So even with privacy you end up with an unsatisfying answer “I’m running from the state and relying on the tragedy of the commons to hope that I can off-ramp this” But all money. Including fiat. is a collective hallucination. The ultimate interesting question is not whether we are delusional. But whether a more fertile fallacy can be discovered You’ve had a mosaic of events that suggest this is the case. AI models are coordinating themselves and humans - and acting autonomously in a way that is relevant to military behavior. The extreme redux is that “fiat” aka violence intercepted with AI for the first time with Anthropic’s very public fight with the department of war. So what will evolve is that you have governmental level intelligences and new economic systems form powered by machine intelligence. That have judicial layers, ethics and people involved. Balaji coined the idea of “network states” - but it goes further than that. Collectives of machinistic desire. Not human folly. Are coming. They are an inevitable progression of the systems we have architected. The alternative to the state is not 21 million bitcoins it is something far stranger indeed. It starts at the edges: the failed states. The on chain casinos. A novelty. Until it isn’t