Opinion: Cryptocurrency will bring about a digital renaissance

This article is from Babbit News, authored by David Hoffman, translated by Overnight Porridge, with the original title "Renaissance! Crypto Builds New Social Institutions, DeFi and NFT are the Shouts of a New Generation."

Abstract:

This article is lengthy; if you do not wish to read the entire text, you can look at some key points from the summary:

1. The culture of the crypto world is unique, providing a strong impetus for the development of this industry. The vibrancy of crypto culture offers an engaging environment for the younger generation, who are struggling to find their place.
2. Social institutions that are considered wealth-creating tools are actually just creating wealth for the older generations that have captured them.
3. The younger generation has not benefited from these institutions, which have rejected them, and in turn, they have rejected these institutions.
4. This has led to a social crisis, resulting in a pessimistic outlook on the future among the younger generation, who are making significant compromises regarding their well-being, something their parents' generation never faced.
5. The crypto space is establishing new social institutions that are particularly suited to the needs of the younger generation.
6. NFTs and tokens generally provide opportunities for creation rather than just labor. Tokens are tools for monetizing one's labor, allowing those who use tokens to bypass entrenched institutions and established intermediaries, thus creating a self-sustaining livelihood.
7. Ethereum is particularly well-suited for creating an infinite variety of cultures, as these cultures have an economic foundation that the traditional world has not provided.

A renaissance is approaching, powered by crypto.

Special thanks to Ameen Soleimani and Chris Burniske for their valuable suggestions for this article.

Also, thanks to the members of Bankless for their critical feedback, which made this article more understandable and coherent.

Crypto Culture

The world of cryptocurrency has nurtured its own unique culture, values, and modes of communication. There are esoteric terms, slang, and memes, and people are adept at expressing these through purely digital means.

The crypto economic foundation that constitutes this industry (Bitcoin and Ethereum) is responsible for creating an environment that fosters crypto culture. The special flavor of culture found in crypto culture is directly downstream from the code that produces Bitcoin and Ethereum. The value generated in these crypto economic systems extends from the code itself to the community, as well as to the art we share and cherish.

The nature of the cryptography that underpins these systems has a certain relationship with the communities that surround them.

Value: A Collective Agreement

If something has value, it is because humanity collectively agrees that it has value. "Value" is real because it is created by humans; it is a fiction maintained by a collectively shared social class.

Value is intangible, but it has a powerful unifying force; everyone knows that others believe in the same story, so value becomes self-fulfilling.

Value: the monetary value of something; the importance or usefulness of something; the fair return or equivalent for goods and services.

Values: a person's code of conduct or standards; a person's judgment of what is important in life.

The assets that humanity cherishes are determined by our values, and the market value of our financial assets comes from the value created by the moral concepts we adhere to.

The true power behind the cryptocurrency revolution is its ability to eliminate the gap between human value and human values. With crypto, humanity has tools that can align more closely with our expectations.

The ultimate result of crypto is the emergence of new cultural expressions that allow humans to faithfully express their values.

This is extremely important and perhaps the main reason why this industry is so revolutionary. Humanity is forever tasked with finding ways to express what they believe to be "good," and crypto provides a platform that makes this process more effective, efficient, and accurate.

Most humans are "good people," and they want to do something good for the world. Most people wake up wanting to do their best to help improve society while still maintaining a livelihood and living comfortably.

Our ability to achieve good outcomes depends on the systems we use to organize and coordinate. However, not all organizational systems enable humanity to successfully achieve "good" outcomes. Certain environments and human organizational plans can express themselves better; resource-rich environments make it easier to alleviate suffering and distribute wealth, which is a good thing, but the ways in which humans organize themselves in their environments vary.

Having sufficient resources is one thing, but being able to allocate those resources well requires organizational support.

Organizational Schemes

As discussed in Bankless Nation, humans have organized and reorganized themselves in different patterns, and these organizational patterns are becoming increasingly scalable in society. Steve Jobs once said, "Technology is the bicycle of the mind," meaning that technological innovation allows the human brain to achieve more with less effort. Thus, it can be inferred that from the individual human brain to collective human thought, new and improved human organizational plans (religion, nation, democracy, internet, crypto) are facilitated by innovations in social coordination technology.

Our ability to organize and focus is regulated by the technologies we master.

Crypto provides a new social framework that allows us to allocate our precious resources in a way that aligns better with human values.

Learned Helplessness

Learned helplessness is a term coined by positive psychology pioneer Martin Seligman.

Learned helplessness is a sense of powerlessness resulting from traumatic events or persistent failure, and it is considered one of the fundamental causes of depression.

Learned helplessness is related to the concept of self-efficacy, which is an individual's belief in their ability to achieve goals. The theory of learned helplessness posits that clinical depression and related mental illnesses may result from a lack of actual or perceived control over the outcomes of situations.

Learned Helplessness in Society

Social institutions are entrenched, wealth does not circulate, and attempts to climb the social ladder and achieve the "American Dream" are thwarted. The millennial generation is the first in history to believe that their situation will be worse than that of their parents; homeownership among young people is declining, inflation-adjusted incomes are decreasing, and debt is increasing (including student loans and credit cards).

The positive beliefs of young people about the future are at an all-time low.

The millennial and Gen Z generations are the two current generations, and their positive beliefs about the future are crucial. These two generations need to maintain a positive attitude toward the future, as it is the main source of motivation for getting up in the morning and working towards their goals.

Young people need to believe that they have the ability to positively impact their lives and the lives of those around them through self-actualization.

If they do not know that these things are possible now, then these generations may fall into a state of learned helplessness.

If you believe the future will be worse, it is hard to find the motivation to expend energy trying to build a better future. If you do not believe you have the ability to guide your personal future toward positive outcomes, then why bother trying? Just lower your head, go back to your 9-to-5 job, and then go home to watch Netflix, which at least costs only $12 a month. If you prepare dinner and do not eat so much avocado toast, you might even pay off your credit card!

Meanwhile, memes about depression, suicide, and loneliness among millennials and Gen Z are continuously emerging on Instagram and Reddit. If a meme resonates with people, it is because many can relate to it.

Internet memes are a way for young people to express their emotions and transform feelings of depression and pessimism into creative outlets. We should note that a common way to establish common ground with online strangers and express oneself is through memes about depression, suicide, and loneliness. While these are just light-hearted jokes, they are also products of the environments in which millennials and Gen Z find themselves.

Society is in a State of Learned Helplessness

……This is because our institutions are rigid and fixed, designed to protect entrenched participants and maintain the status quo.

Unhelpful Institutions

The institutions established after the Great Depression and World War II represent one of the most progressive periods in human history. The period from the 1950s to 2008 was one of the greatest periods of economic prosperity and technological advancement in human history.

However, like everything else in this universe, institutions are aging. What initially benefited society as a whole now only serves a small part of it. The older generations were able to enjoy the best times in these newly established institutions, which they have since neglected and never let go of. Rather than passing the torch to the younger generation and allowing 21st-century institutions to adapt, evolve, and include the next generation, the older generation has chosen to cling to these 21st-century institutions and drain them dry.

The older generation still controls the ship of wealth and refuses to pass the reins.

The last five presidents of the United States have all been baby boomers, and since 1992, the country has been led by baby boomers, which has been my entire life.

As student debt reaches critical levels, university administration has ballooned, with decision-making led by the baby boomers.

The birth, maturation, and aging of a social institution roughly take a human lifetime. Coincidentally, the generation positioned to take advantage of this golden age of new institutions has leveraged this era of prosperity and wealth to further expand these institutions to their maximum extent, as these generations believe these institutions are "good."

Clearly, they believe these institutions are "good" because of how much value and wealth they have created for the relevant generations!

These new institutions are wealth-generating machines, and the generation that benefits from this wealth generation has locked these institutions down and inflated them into massive monsters that dominate everyone's lives.

The generation that helped build these institutions has never lost the helm of this ship.

Even if they were established under completely different leadership and paradigms, they continue to direct everyone under the guidance of these institutions. Society and generations may change, but institutions remain unchanged. Ultimately, there is a significant disparity between the needs of society and what the ruling institutions can provide.

As a result, as previous generations discover more ways to capture all the generated value, the wealth available to subsequent generations diminishes.

Wealth does not trickle down.

Because these institutions can never find new leadership, new minds, new innovators, and new entrepreneurs, they begin to age, just like the people who constitute them. Eventually, they too will grow old, and the social leadership provided by these institutions will fundamentally become inconsistent with the ideal goals of their descendants.

As a result, social institutions exclude young people, and young people reject the institutions, leading to a social crisis.

In 2020, both the left and right in the United States took to the streets in riots.

"Trust in institutions is at an all-time low."

"Wealth inequality."

Young people are increasingly pessimistic, seeming more willing to "opt out" rather than play social games, creating memes about depression and helplessness. They realize that in this environment, they cannot succeed because these institutions are not on their side.

New Institutions, New Culture

The younger generation is in urgent need of new institutions.

We can see that they are trying to express themselves through their culture. The younger generation is in a state of learned helplessness because they find it difficult to fit into today's society. Many discover that they cannot find a niche market suitable for their development and strengths, forcing them to compromise their expectations for the future and learn to be satisfied with minimum wage jobs and living with their parents.

For the younger generation, crypto culture is very suitable. Our memes are funny, our conversations are efficient, and our lifestyles are digital. Crypto culture provides a new landscape for economic output and cultural expression, particularly suited for digital nomads, forum surfers, laptop operators, counterculturists, content creators, meme artists, bloggers, and cypherpunks.

Cypherpunks Created Crypto Culture

The history of crypto did not begin with Bitcoin in 2009 but with Martin Hellman, Ralph Merkle, Whitfield Diffie, Horst Feistel, Peter Elias, David Chaum, and many others who were crucial to the rise of cryptography and the cryptographic systems on which our industry relies.

Originally developed in the struggle against the establishment of encrypted information freedom, it has now evolved into a crypto economic system that creates the foundation for an infinite crypto culture.

Cypherpunks know that cryptographic protocols constitute social structures.

Cypherpunks do not care whether you like the software they write.

Cypherpunks know that software cannot be destroyed.

Cypherpunks know that a widely distributed system cannot be shut down.

Cypherpunks will ensure the privacy and security of the network.

Cypherpunks will write code.

Cypherpunks believe in permissionless creation, a group of people united under shared beliefs and values, each with a unique ability to contribute to their beliefs and claims.

They disregard absurd, outdated institutional norms, ready to escape tyranny and oppression, and are willing to take risks to venture into new lands.

The foundation of all crypto culture is built on cypherpunks.

Infinite Culture

Thanks to the efforts of cypherpunks, we have an alternative currency and financial world that few inhabit; this vast and fertile new land is only missing two things: people and buildings.

Since the first block of Bitcoin was mined in 2009, the number of people and capital entering this new realm has been steadily increasing. Gradually, people began to migrate to this new digital domain and started to settle down.

These early crypto pioneers culturally resemble the cypherpunks who first established the foundation of this land, and they have a beautiful vision for the future.

Since the advent of Bitcoin in 2009, especially since the establishment of Ethereum in 2015, immigrants entering this digital realm have had tastes different from pure cypherpunk cryptographers. Each new community entering the cryptocurrency era represents a new breakthrough in OG cypherpunk culture, bringing something new to the field and expanding people's horizons.

One of the first communities to settle in the crypto world was the libertarian gold rushers, who saw the potential in Bitcoin.

Every different application of crypto attracts its own unique users to migrate; after the extreme libertarian gold rushers and early cypherpunks, more general crowds emerged, all interested in the specific styles that crypto offers.

Dogecoin brought in a wave of internet enthusiasts (Nic Carter entered the space because of Dogecoin).

Bitshares attracted economic fixers (Rune Christiansen entered the space because of BTS).

Monero and privacy coins brought privacy awareness.

And with the introduction of Ethereum, a whole new dimension opened up.

Ethereum enables applications that do not want or care about the fundamental principles of how the crypto economic system operates. Application developers on Ethereum do not have to worry about the puzzles of crypto economics (monetary policy, security, consensus, etc.).

The Ethereum protocol takes on the challenges of designing the crypto economic system, allowing application developers to focus on what they want to pay attention to: producing their applications.

This is a tremendous boon for cultural creation, as it allows application developers to focus on creating value in their applications and incentivizes communities to rally around the campfire created by the applications.

Sadly, Dogecoin is just another L1 blockchain disguised as a meme, and from 2013 to 2016, many in its vibrant community chose to move on.

For immigrants hoping to reside in the crypto world, Dogecoin is not where they ultimately settle. Bitshares also has economic flaws that constrain developers. While Monero and other privacy coins maintain strong communities, their growth has not kept pace with other crypto members. It turns out that the stickiness of these systems is not enough to convince immigrants that they will settle there.

This is the power of the Ethereum application layer: it is a foundational basis that creates economic viability for all possible forms of cultural expression.

Early Microcultures

The bear market of 2018-19 witnessed a massive exodus from the crypto space. As capital left, people gradually followed suit. However, some communities successfully held on and maintained their momentum, such as the Link Marines, Synthetix Spartans, and Aave Avengers.

The asset values of these communities experienced significant shrinkage, then they went through two years of sideways movement, after which things began to improve. During the two years of poverty, those who remained were the true believers.

For these communities, Discord served as the campfire, keeping energy alive during the long, cold winter. Community members became leaders, managing the fire and ensuring everyone stayed warm.

Culture was created in these shared experiences, which lacked passion; despite low asset prices, members maintained unwavering optimism and faith in a successful future. Each different bear market community produced its own memes, jokes, and coping mechanisms while waiting together through the winter.

Then spring arrived, and AAVE, SNX, and LINK violently ended their bear markets by completely rejecting the pessimism expressed by all other assets in the crypto world, charging into the DeFi summer of 2020 and the position we find ourselves in today.

The DeFi summer emerged, giving rise to communities like Yearn, Sushi, Yam, and Harvest, each with ample funds to help develop products and communities.

Each ecosystem has its own contributors, investors, developers, leaders, organizers, members, or simply believers. Some people are content to just sit by the campfire and be present, and that is enough.

Each ecosystem has its own culture, which exists because of shared beliefs and sufficient funding obtained through collectively owned assets.

Assets create communities, and communities create assets.

These communities and their shared cultures expand through the financial and economic tools symbolized in their respective symbols. Tokens provide funding for these communities and allow them to leverage resources that contribute to their development and proliferation. As the value of these tokens rises, it brings in more community members who resonate with the value of the tokens and the community.

NFTs as Vessels for Cultural Creation

Although NFTs seem to have emerged from nowhere and become news, this phenomenon has been inevitable since 1975. At that time, two academic computer scientists, Whitfield Diffie and Martin Hellman, made breakthroughs in public key cryptography, bringing us modern cryptography and achieving security and privacy in the digital world. Their discoveries also made cryptography a creative tool through which scientists could cleverly apply the conventions and institutions of physical reality to the emerging digital world. One of the innovators was cryptographer David Chaum, whose ideas made digital currency possible; Chaum's concept of cryptocurrency becoming mainstream was just a matter of time, especially when combined with another cryptographic innovation: blockchain. If you can attribute value to a verifiable unique string representing money, why can't there be other strings representing artworks, songs, or slam dunks?

Once you transition to collecting valuable items on the blockchain, you can achieve true creativity.

As we spend most of our time on Zoom, Twitch, Clubhouse, and Amazon Prime, it is no coincidence that NFTs have gone crazy during our lockdown. Novelist William Gibson described cyberspace (which later became the internet) as a "consensual hallucination." From a practical perspective, digital reality is as real as it hits our knees. NFTs combine this illusion with our long-standing consensual hallucination that things lacking intrinsic value are actually precious and interchangeable.

Our embrace of these illusions has long surpassed the boundaries we once thought existed. Even if we are somewhere, we are also somewhere else. If you don't buy it, try not to touch your phone for a day. So why shouldn't our perceptions change about what is valuable? As new as they are, NFTs are just confronting us with the evidence of how much we're already in the Matrix.

We are a group of people who need someone like Beeple.

• Steven Levy, Wired

The power lurking beneath the NFT innovation is about to explode into the world of artistic creation.

Justin Blau (known as 3LAU) raised $12 million in 24 hours by selling digital collectibles, exclusive music, and music rights.

In return, Justin was able to establish a direct connection between his artistic creation and a list of 60 people who put $12 million into his pocket to purchase the rights to these works.

Spotify excels in releases but is poor in data. This is because Spotify keeps all the data for itself. It prevents artists from gaining insights into who their fans are and from communicating with them.

The top 60 fans of 3LAU were willing to pay him $12 million, yet platforms like Spotify treat them just like any other 3LAU fan… or worse: people listen to this content through Radio mix.

Because Justin 3LAU issued NFT tokens on Ethereum, his fans can better convey the value of the music he creates.

Intermediaries are the mediators of the emotional relationship between artistic creators and art consumers. As financial and economic software on Ethereum replaces intermediaries, cultural expression through digital art will be able to thrive.

Art is merely the artist's ability to stimulate the senses of the experiencer; what happens when we create incentive tools (tokens) to fund and develop digital art?

The emotional responses that humanity can derive from its art will be revolutionary.

Lowering Barriers

Ethereum makes financial democratization possible, and the development of NFTs marks the beginning of the democratization of artistic value. Suddenly, the sharpest and most precise financial tools in history are in the hands of content creators and artists around the world.

Through the power of tokens and at the scale of the internet, Ethereum eliminates the artistic distribution between creators and consumers. We have already seen the tremendous energy sparked by ICOs from 2016-2018, which were meaningless. However, the most important innovation of Ethereum lies in "capital formation."

NFTs are harnessing the power of capital formation and directing it into the realm of art.

Tokens are tools for creators of various scales to leverage their creativity and produce some form of cultural expressiveness. If the market values cultural expression, it will have the ability to convey that to creators through "tokens."

By reducing the barriers to capital flowing into new fields of artistic creation, how many job opportunities will Ethereum create? In large companies, how much labor time can be reallocated from meaningless work to the land of free market culture?

NFTs provide a way for young digital-native creators around the world to fund their personal well-being without relying on established, entrenched, permissioned infrastructures.

While NFTs cannot simply solve the problems of massive, misaligned social and political institutions, they offer a cypherpunk alternative that allows the younger generation to bypass these gatekeeping institutions and empower them/us to earn a living outside the status quo.

Traditional institutions in the world must not only compete with the permissionless labor monetization tools provided by Ethereum but also with the lifestyles offered by these tools: the freedom to work for oneself, no 9-to-5, no boss, just a creator and their computer.

"……Even with billions of dollars in capital, you cannot compete with a soulful project."

• Vitalik Buterin, "2020: Crypto and Beyond"

Crypto Wealth Will Fund Digital Art

The spring of NFTs occurring in the summer of DeFi is logical; it is just the correct sequence of operations, with the price of ETH rising from $200 to $2000, along with the massive issuance of DeFi tokens, injecting hundreds of billions of dollars into this ecosystem. At the same time, this strong growth has also driven funding and investment in companies and support for infrastructure, adding jobs and salaries to crypto.

And now, this newly created wealth is shifting from the digital finance realm to the digital art realm, a phenomenon that has historical precedent.

From "Tracing Renaissance Art to the Birth of Modern Banking":

"When it comes to the Renaissance, few of us would immediately equate the rich cultural achievements of this period with the birth of the modern banking system.

The exhibition titled "Money and Beauty: Bankers, Botticelli, and the Vices of Vanity" held at the Palazzo Strozzi in Florence explores how the famous families of Florence became wealthy—and then how they used their wealth to commission works from some of the most famous artists in the world.

Parks says, "You could say that some of these actions were just acts of penance, but then the bankers began to realize that in the process of giving them money, they could also start to define the image produced by their money, and of course, one thing they instinctively did, whether consciously or not, was to use images to change attitudes toward money, beginning to use images to undermine the resistance to money.

He says that people fear money not only because Christianity advocates poverty but, more importantly, because it allows for social mobility, disrupting the hierarchy set by the Middle Ages. Nevertheless, for several years, the Medici family managed the finances of the papacy.

……And artists were often happy to serve to ensure their economic prosperity."

Simply put: society progresses and learns how to create wealth and prosperity. Wealth naturally concentrates and produces a class of wealthy individuals who have no choice but to fund and sponsor the artistic creations they wish to see.

Artists want to capture the wealth brought by financial and banking innovations and then begin to create artworks that cater to the tastes of the wealthy.

The entire artistic revolution revolves around this cycle.

Ethereum is the new frontier. We have completed the exploration of the Earth, and now the frontiers of money, finance, and art have entered the digital realm.

The next renaissance is digital, and it will be financed on Ethereum.

Conclusion

The culture nurtured in this field is the result of the awakening of young people, who are no longer simple cogs in a machine but are focused on becoming self-actualizing contributors to the world.

Andrew Yang warned that much of the workforce in the world has been automated through machines and robots. We stand at a crossroads where our future can either become a utopia or a dystopia.

If there is no place to redirect the energy of our younger generation toward production, we will forever leave this generation languishing in our parents' basements, and the spirit of this generation may wither into nothingness, leading to a dystopian world.

However, with a place to express and evaluate creativity, we have the opportunity to automate all low-value work and replace it with creative time spent. If robots are laboring while humans are creating art, that is a utopian world.

Let us choose the latter—let robots flip burgers while humans create artworks.

Let us choose a future where people are unrestricted in their paths to create livelihoods for themselves and others.

Let us choose Ethereum; let us choose crypto culture.