The Whitepaper - The "Bible" of Crypto

When you buy Bitcoin  , what are you actually buying?

The tech? Nah, there are many others like it at this point - many of them superior, at least technologically.

What you're buying is actually the story behind the origins of the coin, which is shrouded in mystery and unresolved tensions that keeps the intrigue going.

Part of the genius of BTC (and Satoshi by extension) lies in the way it's talked about. It has the intrigue of a murder mystery but also lets the audience "participate" with the story as a version of themselves like a well designed video game would. And all it took was the founder to remove themselves from the process - which is something that rarely happens in the ego-driven worlds of Silicon Valley.

The weird contradiction of Bitcoin is that it's supposed to be decentralized, but the reality is that it's basically one story that holds everyone together. If this were a religion, Satoshi's whitepaper is The Bible - variations are found within The Text, but not outside of itself...you are either a believer or not. There is some truth to the claim that crypto is, in may ways, a cult in it of itself.

It might be hard for people who just joined crypto at the last cycle to understand, but there was a time where if you wanted to start a crypto project or launch an ICO, you were required to write a "whitepaper" - an oblique, dense jargon of academic text that laid out every possible detail of the project in excruciating amount of detail. Most people never read any of it, of course, and if we looked back at it now a lot of it would probably show that it was more performative than substantial. But it didn't matter - the point was for you to convince the would-be investor that you figured it all out, and that your economic model was air tight and immune to hacks and security threats as a whole. People wanted the reassurance that people were taking this stuff seriously, and there was something to that whole thing that made it last through the winters throughout, I think.

Skip over to the bull run in 20' and we have basically the exact opposite - loose money and a ton of grifters trying to make a quick buck. And all of that culminated, and traveled all the way to the top, with FTX. I'd say that 90% of the people in "Web3" (a new phrase that didn't exist before by marketing departments) don't even bother using ledgers, and is still using wallet addresses as if they were disposable. Old habits die hard, I suppose - but crypto destroyed its own credibility by ignoring the very tools it was advocating others to use. People eventually saw through it, and the market crashed. That's basically it, really.

The (Failed) Pluralism of Ethereum

On the other side of the spectrum, there's Ethereum, which was supposed to represent the idea of "pluralism" in crypto. Not just one story, but many stories, at the same time, all the time - the diversity of the world (similar to many claims within secularism) as a whole, at least in theory.

The ethos of ETH is very similar to what I experienced in Silicon Valley while I was working there - and it's pretty obvious that there is a very big overlap between the moguls in Web2 and Web3 on the Ethereum ecosystem itself. To be fair, there are some good things about the culture, but it has its pitfalls, too - if you look at the region now (in the real world, not the metaverse), it's a far sight from its utopian claims, which has peaked around mid-2010s as they were unable to keep rising costs of living under control. (NIMBYism in its housing policies are to blame, but that's another story.)

I won't get deep into the political stuff here (it is very depressing right now, as many know) but it's kind of uncanny how crypto reproduced the left/right spectrum here too. Ethereum's ideals have very strong connections to American progressive/liberal politics (keep in mind that this is a very specific thing compared to the rest of the world), while Bitcoin's ideals tend to resonate strongly with people who lean more conservative/libertarian. I guess as human beings, were just hard-wired to think of everything in binary terms - us vs them, even though at its core, the two sides are still very much related.

So in this context, where does Tezos fit in? Well, to me, Ethereum is already a failed project because over time it became more similar to Bitcoin - scarcity economics, high fees (which they have no real plan to fix), monoculture politics...marketing soundbites aside, it's very difficult to know what it really stands for anymore. Bitcoin at least has its whitepaper-bible (which supporters still refer to all the time), but ETH has already been fragmented from the various forks and internal battles it waged over the years - mostly due to money. It's very difficult to see how they're going to dig themselves out of this one since there are entrenched interests that are already formed and solidified...making real change very unlikely at this point. (I'm open to being proven wrong of course, but I do need evidence pointing to the contrary before I can change my mind.)

The Tezos Pluralism

For people following the Tezos ecosystem, it's been a known fact for a while that the foundation and whales on XTZ hold large amounts of Bitcoin as a "hedge". There's a few other coins out there, but it's overwhelmingly Bitcoin and very little Ethereum, at least from the reports I've seen recently.

It seems contradictory for a relatively "old" coin like Bitcoin to be supporting one of the most radically progressive crypto projects out there - but as good storytellers know, contradictions are not necessarily a bad thing - they build intrigue. In a way, it's reflective of the complexities of the real world, as well - where you'll see a lot of communes and radical groups staying adjacent to military bases and testing facilities, for example. The reaction to the former is still a connection to the latter, after all.

I would probably argue that it's that contradiction within the Bitcoin/Tezos ecosystem that makes it interesting, in a way. As with many Silicon Valley transplants, a lot of Ethereum Maxis forked away from home, never to return, but BTC/XTZ has, for a lack of a better word, a "parental" relationship between that may be interesting to look at closer. If the arguments between BTC and ETH are between relatives that never speak to each other anymore, the relationship between BTC and Tezos are between parents and children whom disagree on many issues, but still keep in touch. (The initial funding for XTZ came from Bitcoin holders like Draper, after all.) There's a sort of humanism and civility in the way Tezos operates that makes the ecosystem interesting to be a part of, and why I believe it will eventually fill the void that Ethereum failed to fill in the long run.

You'll notice that after FTX, the NFT market crashing, and the battles with the SEC continuing to be waged, celebrities have stopped talking about crypto as a whole - even smaller acts and influencers avoid it because it's become a liability for most creatives to touch. (The artists minting NFTs in earnest right now are the exception, in other words.) Internally, I know that a lot of the dialogues between celebs/influencers and ETH platforms typically go very poorly, mostly because Web2 habits of expecting content creators to work for free hasn't gone away yet. And instinctually, creators know - these people are not on our side. ⚔️

The results speak for themselves, I think. It's pretty obvious to everyone except for people in the industry right now so the quicker we realize it, the better. The reason why Tezos still has hope is that a lot of the art movements were self-organized through a combination of its decentralized protocol and low barriers to entry (i.e. low fees). Though it tends to get less attention than the projects with higher market caps, it has real communities and activities that has allowed it to survive the crypto winters for several cycles now. (Though still a relatively new project, having launched in 2018.)

How Ethereum's Pluralism Narrative Unraveled

Ethereum's storytelling has always been questionable at best - some will blame the "developer brain", being too "logical", or lack of social skills - but it's more of a matter of values and priorities, I would say. Despite all of that, ETH was able to survive and grow by simply having the best (known) technology in the space, at least up until 2020 or so. It was able to get this reputation because the early days of ETH were made up of mostly developers who just wanted to make an idea work in earnest - though not really formalized, it was at least authentic and pure. There's videos of Vitalik flicking a booger onto a wall during an important video call (😂) - and while it made a few people cringe, there was also that charm of someone who cared about the work so much that made you feel like he was gonna be doing it even when you weren't looking.

A lot of that started going downhill - I would probably argue - during the ETH/ETC fork in 2016 where a contentious issue (a DAO that Vitalik was directly involved with got hacked and they wanted to "reverse" the transaction by moving to a separate fork) caused to the community to split into two different chains. A lot of people were (and still are) upset that the ecosystem decided to "reverse" the hacked transactions in order to protect the personal interests of a few - a thing that should never happen on a "proper" blockchain. Why did the rest of us have to suffer for the carelessness of those at the top? The argument itself had some validity to it, at least at the time.

The community voted in favor of "fixing" the hack, and things went back down to normal, at least on the surface. But this was the moment where ETH's idealism began to fade - they had "forked away" both their problems and the people bringing it up, after all. It was the end of the concept of dissent - the end of pluralism - the end of disagreement - which every pluralist society needs in order for itself to make that claim. Since Ethereum has no on-chain governance (and still has no plans to, because Vitalik was largely opposed to the idea for most of his career) we don't even know if the vote was fabricated or not - we will probably never know. And did they come up with better methods to do reverse transactions or voting mechanisms since the devastating hack? Nope. They swept it under the rug and hoped it would take care of itself, magically. Magical thinking is very prominent in Silicon Valley too, but if you're looking at ETH as a serious investment it's generally not something you want to see the core team subscribing to. (For Web2 projects magical thinking didn't hurt it that much because everything was free anyway.)

There are other issues with the culture of ETH from a startup standpoint, too - as a nod to Satoshi, Vitalik occasionally talked about "removing himself" from the ecosystem when no longer needed, but he's still around - not really strong enough to do what Satoshi did from the very beginning. This is a common thing you see in a lot of projects - founders unable to "let go". And anyone that can do something about it doesn't seem to be doing anything about it, so it just lingers on and on. You could argue that he indeed did reduce his involvement and became more of a figurehead (ETH is gate-kept by 5 EIPS editors right now, whom he retired from several years ago), but he is still continuing to contribute to one of the most important parts of the project - the narrative.

Recently I've seen some yes-men articles pop up when talking about Ethereum, trying to rationalize the Straussian idea that the masses need to be herded into correct decisions by the enlightened few (a carryover of the ego-based model of Web2), but therein lies the problem: not only does that run counter to the "decentralized" narrative as a whole, it also reveals the lack of awareness of the fact that the self-selection process of "forking" has lead to a type of monoculture that lowers the quality of participation as a whole. And it will only get worse over time, since it is too late to do anything about it now.

To be clear, I'm not making the claim that centralization is always bad and decentralization is always good - sometimes you do need a bit of both just to get things done. Voting on everything is not practical nor even desirable in every circumstance, after all. But for Ethereum, the problem lies in, again, how the story is being told. They made many promises in the past that they failed to keep in ways that makes it harder to trust than Bitcoin - whom the founder is literally out of the picture, completely.

Scalable Stories

So - Tezos has at least the ingredients to do what ETH failed to do - unify the various ideas, values, and contradictions of the crypto space, and turn it into a coherent narrative that can be both understandable and believable by the public at large. But XTZ also has the additional challenge of doing it at scale, so that it can be the place where lots of stories are happening all the time, all at once, without everyone stepping on each other's toes.

Is this difficult? Extremely difficult - it's something that even real-world systems haven't been able to figure out yet.

But the promise of Web3 is that we can build something better than the real-world has to offer, so that's what it needs to do if it wants to be taken seriously. The project that crypto, blockchains, and DAOs have set out to do is more difficult than most people imagine - on the level of difficulty of nation-building or getting people to show up to vote on obscure topics that no-one has even heard of before. At the same time, in many ways it's also easier than most people think, just because of the weakened state of the status quo - as we head further into November in the United States for an election that nobody really wants, it's going to become more and more obvious - even for the average person out there - that alternatives ways of doing things are going to be needed if there is to be any chance of hope.

Where is the solution going to come from? The artists and creatives on XTZ, of course - art is always at the forefront of social change and Web3 art is no exception - it's within the complex web of economics (crypto), politics (DAOs), and storytelling (NFTs) that will allow for a genuinely new system to emerge, after all. It will take some time to develop, but as far as anyone knows, this is the only place where all three things come together in a very clear way. And really, only on Tezos does it seem like it can come together in a cohesive way, since the rest of the industry seems to be fine with forking away their problems.

Bitcoin's narrative has stayed more consistent over all (I have a slight preference of BTC over ETH now since they tend to exaggerate their claims less) but they are still a fork-based system so it has its limits, also. My prediction is that over time BTC and ETH will become more similar to each other as ETH eventually gives up on building products and passes those initiatives onto its L2s, where it seems much more viable to do so. Ethereum will there largely to collect fees and act as collateral - to be merely a "Store of Value", in other words. On Bitcoin's side, they're approaching the same destination from the other vantage point - being a "Store of Value", then trying to build something on top of it without ruining the core of the narrative itself. (Some Bitcoin Maxis are opposed to the idea of building anything on top of the chain as a whole, not surprisingly.)

On Tezos, the technology and infrastructure is there to have it both ways, which is what makes the chain unique. But it's the narratives itself that is often complex and very messy - making it difficult to market to the general public as a sound bite. But the potential is still there - at the end of the day, we're banking on a few people to take on the daunting task of building society anew - from scratch, really. The journey won't be an easy one, but many have taken it on in hopes of a better way to do things - a better way of life. How far can we take it? Time will tell. 🤞