Crypto Is Eating The Internet

Gm Pal,

I've been getting street-cred on Twitter so I haven't been consistent with the newsletters. Upcoming newsletters will be bits and pieces of an essay I'm writing on DAOs (exclusive to your eyes only -.-). Let me know what you think since we're basically pen pals and all. Enjoy.

“Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.”––Software Is Eating The World

A decade ago, Marc Andreesen argued that “software is eating the world.” His thesis was physical products would eventually integrate with software. A decade later and everything mentioned in Marc’s essay is seen today. The internet is heavily relied on by all kinds of industries, businesses, and people for online distribution.

In short, software has eaten the world. We’re now at a point where crypto is eating the internet:

  • Web1 (1990–2005): The evolution of the internet began with computers being equal peers maintaining a network. Users owned web servers and experimented with protocols to create and publish content online
  • Web2 (2005–2020): The internet eventually became concentrated by a few companies controlling online distribution. Web2 gave birth to software businesses like Facebook, Google, and Amazon to eat the world
  • Web3 (Today): We’re now beginning the web3 era. The internet is evolving to a stage where it can be owned by users and governed through digital tokens

The single most dramatic example of crypto eating the internet is with the rise of Non Fungible Tokens (NFTs). If you don’t know what NFTs are yet, you’re ngmi and aren’t living under a rock JPEG worth $3.5 million. You might think how is it possible for an image of rocks to be worth millions. The simple answer is––crypto is eating the internet:

On the backend, blockchains make it easy to launch software-powered tokens that give built-in digital property rights to its owners. This allows for networks to be built, operated, and owned by its users rather than institutions. With internet native money, the ability to track internet ownership, and an expanded market for digital assets, the result is crypto eating the internet:

From Banks To Bytes

Tokens are money that’s native to the internet because it transfers value the same way we deliver messages through the web. Bitcoin and Ethereum were conceived directly from internet protocols. It’s a currency running directly on top of network layers like TCP/IP––allowing for money to travel in bytes rather than banks. This allows for crypto to evolve with the internet — instead of legacy systems conforming to it.

Tokens Make The Internet Ownable

If money makes the world go round, tokens make the internet ownable. Tokens move beyond internet money. They’re software tools that have built-in property rights for creators and owners. Tokens are online contracts that use the computational of blockchains to make strong commitments. They have mathematical proof-of-ownership embedded into online money, media, artwork, and reputation. (It’s how the rock jpegs are selling for $3.5 million)

The two types of tokens with different functionality are:

  • Fungible — medium of exchange, store of value, or making collective decisions (Bitcoin, Ethereum)
  • Non-fungible tokens (aka NFTs): new business models, proving reputation, collectibles, rewards, or sense of identity, status, and belonging (Cryptopunks, BYAC)

Composability Compounds Code

Compound interest is how investors like Warren Buffett built their wealth. Interest earning interest. An example of why compounding is crazy: $81.5 billion of Buffett’s wealth came after his 65th birthday:

s/o to VV

Apply compounding to software and you get composability. All web3 applications are open-sourced code. Composability is when you can use software in a way that the next developer can pick up where you left off. It’s when software can connect like legos to other software. Treating code like lego blocks incentivizes developers to invent better technology. It makes it easier for developers to invent new things faster. Best of all, each problem only needs to be solved once.

Like Marc Andreesen’s essay predicted, software has eaten the world. By the looks of things, crypto may eat the internet.

gm,

-rushil