A cultural war has emerged among the builders of the crypto community, pitting the early purists (crypto computer faction) against the later arrivals (crypto casino faction). This article, written by Richard Chen and translated by Blockbeats, explores the current cultural war in the cryptocurrency industry, analyzing the two factions within the industry – the “crypto computer faction” and the “crypto casino faction” – and explains how this divide came to be. The article not only analyzes the current situation but also presents concrete solutions, suggesting that the industry should shift from zero-sum games to creating more positive experiences.
Drawing on Steve Wynn’s success in the Las Vegas casino business, the author points out lessons that the cryptocurrency industry can learn, specifically focusing on experiences beyond gambling. This provides a new perspective and thinking for the future development of the cryptocurrency field. The original article is translated as follows:
Without a doubt, the culture of this industry has undergone significant changes over the past year for any OG in the crypto industry.
A cultural war has emerged among the builders of the crypto community, pitting the early purists (crypto computer faction) against the later arrivals (crypto casino faction). I will explain the positions of these two political factions and how we arrived at this conflict today, and then outline a detailed path forward for the cryptocurrency industry to resolve its cultural war.
The people in this faction believe in the ideals of the industry’s founder, Satoshi Nakamoto, which is to decentralize power from corrupt institutions to the people.
They tend to be the early adopters of the crypto industry. A group of people in 2013 were mainly monetary libertarians who were attracted to Bitcoin as a hedge against reckless monetary policies. For these die-hard Ron Paul gold bugs, Bitcoin would serve as a liquidity sponge to absorb excess liquidity from the Federal Reserve.
“Ron Paul gold bugs” refers to those who staunchly support the views of former U.S. Congressman Ron Paul. Ron Paul is well-known for his support of the gold standard and his criticism of the U.S. Federal Reserve system. His followers are referred to as “Ron Paul gold bugs.” These individuals typically believe that a gold standard or similar financial system can provide a more stable and reliable store of value, particularly in combating currency devaluation and central bank monetary policies.
In this context, Bitcoin is seen as a “liquidity sponge” for these Ron Paul gold bugs, absorbing the extra liquidity in the economy resulting from the excessive printing of money by the Federal Reserve. In other words, for these Ron Paul gold bugs, Bitcoin is a tool to resist the traditional financial system and central bank policies, which they believe may lead to currency devaluation and economic instability.
A group of people in 2017 (I am part of this generation) were mainly technologists who may not be as ideological but were attracted to crypto as a new computational norm. Ethereum showcased the potential of decentralized applications (dApps), allowing you to not just read and write data but own them. This was followed by the concept of web3 and the decentralization of large tech companies and gatekeepers of the internet.
Today, these two groups represent the silent majority who still believe in Satoshi Nakamoto’s vision and have an optimistic attitude towards new use cases and products driving the field forward. However, at the same time, they are afraid to say anything negative about the current hype-driven scams for fear of being attacked by online mobs. Therefore, they remain silent.
The people in this faction cynically see crypto as a decentralized casino and want to keep it that way. The purpose of their construction is to add more rooms to the casino. That is, to find new creative ways to hyperfinancialize everything and speculate, whether it’s speculating on a friend’s net worth using a mobile phone or speculating on shitcoins using Telegram bots.
Most of them entered the crypto industry in the latter part of 2021 and come from trading and financial backgrounds. They are a very outspoken minority, adept at cultivating interactions on Twitter. As a result, they dominate the online discourse and create tension between the early purists and the later “tourists,” just as nativists harbor resentment towards immigrants who don’t assimilate and change the culture.
Most of them are also young. My hypothesis is that this is a “second-order effect” of a decade of zero interest rate policy (ZIRP) and the failure of the traditional financial system to serve the millennial and Gen Z generations. Young people increasingly feel the need to get rich quickly to pay off student loans and afford mortgage payments. When people feel perpetually trapped in intense competition, they turn to casinos in an attempt to escape their predicament.
Casinos are useful for guiding adoption because degens are early adopters. They have the risk tolerance to be beta testers for unproven financial products. Degens are easily overlooked by outsiders, but they are the lifeblood of crypto. They are the blue-collar workers in the trenches, hands-on with every new product.
During the bear market in cryptocurrencies, there were no new users entering the space. Apps struggled to onboard new users and were forced to focus on their existing strong user base. In the short term, this was fine as trading volume was primarily driven by the strong users. For example, the top 2.2% of users on OpenSea accounted for over half of its trading volume.
However, problems arise when projects become cynical and believe mainstream adoption is impossible. Motivation becomes to accelerate the degradation of blockchain technology and design zero-sum applications akin to casino table games. Hence, we see the emergence of Ponzi economics, multi-level marketing schemes, and the unsavory parts of finance.
Ponzi schemes have short-term product-market fit because there will always be thousands of crypto natives, degens, who gamble on every new shiny speculative app. This creates a culture of zero-sum financial engineering, with influencers emerging to attract naive retail users to buy in, only to dump later. This is why so many people desperately cultivate interactions on Twitter and become influencers because only then will the odds of the casino be in their favor. In the casino, influence is a profitable business model.
Outside of the casino, catering only to degens is off-putting to anyone not in the degens’ bubble. I don’t blame the general public for hating cryptocurrencies and NFTs. Every time they hear about them in the news, it’s associated with greed, Ponzi schemes, and unsavory characters on the internet. Designing zero-sum applications discourages more people from entering the crypto space and using on-chain products.
We need to consider ways to grow the user base of cryptocurrencies, such as Bitcoin ETFs. Bitcoin ETFs are a breath of fresh air in this space, as they allow trillions of dollars in retirement savings that previously couldn’t access cryptocurrencies to finally gain exposure to Bitcoin.
That being said, how do we truly achieve mainstream adoption?
I met Steve Wynn in October, and he told me about his experience developing hotel and casino businesses. One unique insight he had was to focus on experiences beyond gambling. Las Vegas used to be a place where people came only to gamble, with hardly any other reasons to stay.
Considering that nowadays every Las Vegas casino offers concerts, performances, celebrity chef restaurants, luxury shopping, and more, it may sound crazy. But in 1989, when “The Mirage” opened, it was a contrarian move, and its success quickly forced other casinos to invest in high-quality facilities and entertainment, not just gambling.
In the 1990s, Steve Wynn played a crucial role in transforming the Las Vegas Strip from a gambling-centric destination to a world-class entertainment and leisure destination. Excellent hospitality made the Las Vegas experience no longer a zero-sum game and significantly increased the number of visitors to Las Vegas each year for various reasons.
Clearly, the cryptocurrency industry can learn a lesson from here. We need to reduce zero-sum table games and increase more positive experiences.
Prediction markets are a great example. Degens love prediction markets because they enjoy betting on extreme risk choices for binary outcome events, either winning it all or losing it all. Just as they can gamble on meme coins and win 10x or lose all their funds. At the same time, numerous studies have shown that prediction markets are more accurate than mainstream media and experts by eliminating biases and introducing “skin in the game.”
People using prediction markets don’t necessarily have to place bets on them but can use them as a source of news for geopolitical events, just as people don’t need to visit Las Vegas solely for gambling. Even Trump now frequently releases his odds on Polymarket on Truth Social.
There are many other examples. Using decentralized physical infrastructure networks (DePIN) to create WiFi mesh networks or vehicle performance data. Using airdrops to incentivize restaurant loyalty or better fitness outcomes. Using NFTs to empower up-and-coming creators without going through the gatekeepers of Hollywood. Crypto degens are early adopters of all these, but they bring positive value to society.
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