The most entertaining outcome is the most likely: why crypto is here to stay, algorithmic stablecoins or not.

Recalling The Great Wizard Elon,ⁱ we have all the insight we need into the future of crypto: will it survive or will it all come crashing down?

The latter question held some relevance this week, a week in which there was considerable (and perfectly justifiable!) excitement in the crypto space as an $18 bn algorithmic stablecoinⁱⁱ called UST (aka TerraUSD) lost its peg,ⁱⁱⁱ wiping out itself, $40 bn of its “parent” currency Terra, and something like $1 tn of broader crypto market cap in the process. At the wicked hands of Terra CEO Do Kwon Tae Kwon Dork, there was fear, uncertainty, and doubt oozing out of every pimply pore in the space. It was quite the sight to behold!^iv

And that’s really the point. The point is that we couldn’t take our fucking eyes off our screens and go for a leisurely walk outside. We couldn’t spend time with our parents, children, partners, and loved ones. We couldn’t work our jobs, pay attention in class, or even so much as bathe. All we could do was DOOM SCROLL.^v

But why? Because monkeys like shiny things! While “numba go down” in 2022 and newbs fucking with fiery-assed leverage have surely been liquidated by Alameda et al. in this latest unwinding, the level of engagement we’re seeing bodes incredibly well for the future of crypto, because wherever there’s fresh popcorn to be popped, there’s going to be eyeballs. And attention matters!

Also, with the macro environment looking as bad or worse than crypto – between the ongoing war in Ukraine, continued lockdowns in China, pending famines, and emerging markets political instability – don’t expect benchmark US Federal Reserve interest rates to rise to the 5%+ figures that many “economists” expect. Not with US Debt-to-GDP of 135%, consumer debt in an equally precarious situation, yuuuuge global demand for dollars, and a massive “Fed put” in play. This isn’t the 1970s, folks, it’s the 1930s/40s with hyper-networked jet fuel poured all over the glowing embers.

As such, don’t be surprised if the days of prolonged multi-year crypto bear markets also are now in the rearview mirror. For all intents and purposes, the future of the crypto-economy looks to feature more mega-dives followed by mega-rebounds – id est V-shapes everywhere – with more compressed cycles and heightened volatility both to the upside and to the downside. And why not?

It all makes for the greatest show on earth.

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1. Archived. ↩
2. For those blissfully unaware, a non–algorithmic stablecoin is backed by tangible assets with real-world utility (eg. USDC/USDT, which are in theory(!) backed with dollars, bonds, precious metals, and other stable-ish investments), whereas an algorithmic stablecoin is backed by some very light math but mostly just the full faith and credit of some random schmuck in his mother’s basement. You might say “But Pete, isn’t $USD just an algorithmic stablecoin (ponzi!) then? Isn’t all fiat?” Not quite, Timmy, because the guns enforcing fiat are very much tangible and have very explicit real-world utility. You should pick one up some time and try it. Just don’t use my credit card to buy them. ↩
3. Archived. ↩
4. Not that the “Hive Mind” gave us much warning! But is the hive mind really a thing? I remember reading one of those crypto-anarchist books on the subject (maybe alert readers remember the name? published about 10 years ago… it escapes me) that spoke of a “hive mind” future, and yet here we are in 2022 still pinning our hopes on “the crowd”. The problem with this approach, at least in my current estimation, is that size corrupts! This is true when Google scales up and its “don’t be evil” motto distorts from somewhat believable to full compliance with NSA, CCP, etc., and it’s equally true of the Real Vision Bot and its “Hive Mind Crypto Portfolio” that as recently as two weeks ago ALMOST COMPLETELY REMOVED BITCOIN from its portfolio weighting and went balls-to-the-wall on… you guessed it… LUNA. I can’t make this shit up, people. Because in the same way that it only takes a few kids with dwarfism to drag down the average height of an NBA basketball team, it only takes a few mealy-mouthed maroons who are too young to remember Pirateat40 to bring down a portfolio’s returns. I guess average is indeed over?

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5. Image at top is XCOPY’s DOOM (MOOD), 2019. It’s actually listed for sale now for 1`044 ETH ($2.12 mn) by owner “snow.” How perfect! *chef’s kiss* ↩