This week, we look at:
China’s Five Year Plan, the industrial logic of the system, and its ramifications for blockchain and fintech in the country
The regulatory challenges faced by Chinese tech companies, including the resignation of Ant Group’s CEO and the anti-competition fines for Tencent
The growth path of the e-CNY digital currency, as well as Beijing’s enterprise blockchain powering the city infrastructure and governance
Footnote: Stripe worth $95 billion, closing $600 million investment
Fintech is expensive. Fintech is everywhere. If you are a thinking about starting a financial services company, and it does not have technology at its core -- don't. You will lose to someone similarly positioned building a more augmented business. Fintech is the global competition for regulation, talent, and macroeconomic supremacy. Fintech is the trade war between the US and China. Fintech is Facebook and Amazon. Fintech is the next bubble to burst. Fintech has burst already.
I've seen a whole bunch of headlines this past week about how Facebook is launching its version of the "Supreme Court", as if that were an app feature. The oversight board is meant to police controversial content decisions, and have the power to overrule Zuck's judgment on political matters. Its charter is drafted as if Facebook's 3 billion users were citizens of an Internet nation. Add to this the insanity over WeWork's failing IPO plans, where the CEO has been personally named in the amended filing documents with clear checks on demonstrated abuses of power. We are drifting into a Twilight Zone episode where modern corporations act as if they were feudal states run by divine kings negotiating with their nobility over a Magna Carta. Which is actually sort of where we are.
This week, we look at:
The relationship between an individual and a system, and how that applies to the power games of politics and economics. Did Trump change the system, or did the system generate Trump?
The difference between fighting and signalling, and what creates fragility and flexibility in governance structures
Why the Communist Party stopped Ant Financial's IPO, and how Jack Ma bears a resemblance to Mikhail Gorbachev
You work. You get money. You take money and invest it. If you are lucky, it becomes larger. Otherwise, it becomes smaller. If you have a lot of money, you can either start a company or not. If you start a company, you invest in your own ability to influence outcomes and in your own transformation function. There are other, personal utility functions also being satisfied in executing the transformation function. Alternately, you focus on the work of getting capital into other companies. For this allocation and selection work, you are rewarded. To this, you can add the capital of others, until you are doing selection on their behalf.
In this conversation, we talk with Beatriz Helena Ramos – artist, entrepreneur, film director, producer and illustrator – the mind behind DADA.art. DADA is “a space where everything is about cooperation and solidarity, which are amazing ways to allow self-expression, as well as constant inspiration. Additionally, we provide simple tools to encourage creativity, and erase intimidation.”
More specifically, we discuss Beatriz’s journey to creating DADA, decentralized power structures, community-inspired creative collaboration, assymetric rewards in NFT markets driving new value distribution methodologies, DADA’s latest project called “The Invisible Economy”, and technology-inspired and centric approaches to empower artists in the future.
The realist digs deeper to that Constitution and holds it up to a magnifying glass. The Three Fifths Compromise is right there in Article 2, counting "other persons" as 3/5ths of a free person for taxation and representation. The intent of this clause was to balance power between the North and South, preserving Congressional representation of the free States, where slavery was outlawed. Maybe it was better than nothing -- but in all cases it reminds us of the truth of American slavery and the determinations of its power.
In this conversation, we talk with Patrick Berarducci of ConsenSys, about the valuations and multiples of capital markets protocols in Decentralized Finance on Ethereum, now making up over $60B in token value. Additionally, we explore the nuances of scaling Ethereum and its solutions, such as Metamask and the emerging Layer 2 protocols.
We also discuss law and regulation, including a fascinating story about Bernie Madoff from when Pat was a practicing attorney. This leads into a conversation about the embedded compliance nature of blockchain and crypto technology, the early days of ConsenSys, the path of crypto brokerages like Coinbase, and Metamask exhibiting emerging qualities of a neobank.
This week, we engage deeply with Ray Dalio's economic research about American Empire, capitalism, and the structure of money and credit. His clear ideas and model of the macro economy help connect the dots between emerging schools of thought, like Modern Monetary Theory and Market Monetarism, and the scarcity-focused philosophies of Gold and Bitcoin. This exploration will give you tools for understanding the $2 trillion printed by the US government, as well as potential associated impacts on finance and society.
We anchor our writing around the World Economic Forum 223 page report on CBDCs and stablecoins. The analysis highlights the key conclusions across several white papers in the report. We then add a layer of meta analysis around the language in the report, and question what it is trying to accomplish, and whether that will work with the Web3 revolution. This leads us to think about the tension between populism, as represented by crypto, and institutionalism, as represented by banking structures. We discuss theories of cultural and national DNA, and the rise of populism, as difficult problems to solve for any global alignment.
