Compiled by: Vernacular Blockchain

I often ponder Michelangelo's inner world as he painted the Sistine Chapel ceiling. It's one of the most remarkable works of art in human history. Initially, he had no desire to undertake this task. Michelangelo's specialty was sculpture, shaping the human form with hammer and stone; that was his arena.

He was deeply in debt after failing to deliver a sculpture for the tomb of a deceased pope on time. However, Pope Julius II commissioned him to paint the Sistine Chapel frescoes. Michelangelo believed this was a plot by a rival to embarrass him, as the project was extremely challenging. He was caught between the commissions from the deceased and the current pope.

Michelangelo, Sistine Chapel Ceiling, 1508–1512, fresco (Vatican, Rome)

All of this was created by a person who claimed that he was "not a painter".

I guess in those days, no one dared to directly say "no" to the head of the Catholic Church. So he accepted the commission and spent four years, from 1508 to 1512, painting the ceiling. He was so disgusted with the task that he even wrote a poem comparing himself to a curled-up cat . The lines from the poem that particularly stood out to me are:

• My paintings are dead.
• Defend me, Giovanni, and protect my honor.
• I wasn’t in the right place – I wasn’t a painter.

For those who have dedicated their lives to art, this may be familiar: missed deadlines, unwanted work, and questions about self-worth. However, remember that this person who calls himself "not a painter" is creating culture and history.

The Giovanni mentioned in the poem refers to Giovanni da Pistoia. But today we're not talking about him, but another Giovanni—Giovanni Medici. He was Michelangelo's childhood friend, and the two grew up together. As a teenager, Michelangelo was brought to the Medici court by Lorenzo de' Medici, where he received their patronage.

The Medici family was a prominent banking family in medieval Europe, comparable to JPMorgan Chase or SoftBank in the 15th century. They were not only financiers but also the driving force behind the Renaissance—the "godfathers" of their time.

I sit here, writing about Michelangelo, 520 years after he completed these paintings, in part because he was supported by the most prominent bankers of his time. Throughout history, the intertwining of capital and art has created what we call "culture." Artworks that society admires often have substantial financial backing. Michelangelo may not have been the greatest artist of his time.

There are probably countless artists throughout history who have better captured human emotion, but we know so little about them. This is partly because they haven't been able to reach the capital market, and partly because some artists hide their best work in unpublished sketches. (Please publish your work!)

This becomes even more interesting when we examine how modern media operates. The "Sistine Chapel" of our time isn't in Europe, but on the internet. Your daily login to X, Instagram, and Substack provides access to these "chapels." Today's Michelangelos no longer wait for the Medici's favor, but rather hope that algorithms will favor them. The modern Medici acquire "chapels" and embed their own imagery within them. Elon Musk significantly increased the visibility of his posts after acquiring X. The new generation of "gods" are building their own cathedrals.

Technology has accelerated the pace of cultural change. In the age of nine-second videos, memes are the Lego blocks of culture. But they also require capital to scale. We wouldn't be talking about platforms like Facebook without billions of dollars in funding and regulations protecting its founders from legal liability for content posted on their platforms. Imagine being able to sue Mark Zuckerberg for that racist meme his distant uncle posted on Friday night.

Technology is the lever that changes culture today, expanding the medium of human expression. Every technology leaves a mark on culture because it changes the way people express themselves.

I've been thinking about how technology, culture, and capital converge over time. As technology scales, it attracts capital. In this process, technology dilutes its expression. For example, we no longer discuss radical decentralization, but rather the better unit economics of the cryptocurrency industry. We no longer criticize banks for their evils, but instead praise them for how they distribute digital assets. This shift fascinates me. It impacts everything from how founders pitch their products to how CMOs define their stories.

Before we delve into that, let’s review the evolution of the medium itself.

evolution

Humans are machines of expression. From the moment we learned to scribble on cave walls with leaf sap, we have been leaving traces—of animals, of gods, of lovers, of longing and despair. With the onlineization of our mediums, our expressions have become even more vivid.

You may not have noticed, but our logo features a hand-cranked printing press. It's a tribute to Gutenberg and an ironic metaphor for the spread of information. When Gutenberg printed the Bible in the late 15th century, he probably couldn't have imagined how his invention would advance the spread of information.

For example, by the 17th century, almanacs (or dense scientific texts) had become the primary form of literature consumed in Europe. The ability to print and distribute ideas enabled the Scientific Revolution. You could openly discuss the idea that the Earth was not the center of the universe without being executed for it.

The mention of "faith" in literature has decreased, while "love" has gradually become dominant.

As you can see from the graph above, references to "faith" in literature have decreased, replaced by "love." This doesn't mean that all of Europe abandoned religion in search of better life partners, but rather that the nature of the medium changed. The very tool that initially spread faith (the printing press) may have contributed to its decline.

The printing press symbolizes that once information or technology is launched, its uses are difficult to predict.

It transformed written texts from a public good into a private one. By the 18th century, people no longer read aloud but rather silently in their bedrooms. This made sense: before the spread of print, neither books nor literacy were common.

Reading, then, became a social activity, with people gathering together and one person reading aloud from a book. As books became cheaper and the nobility had more leisure time, silent reading became common. This loss of control over the dissemination of ideas sparked a moral panic of the time.

Families worried that teenagers were spending their time reading romances instead of participating in the Industrial Revolution. Clearly, media shifted from a public to a private matter. The shift from temple sculptures and monasteries to printed pamphlets in private hands changed the nature of the dissemination of ideas. From devout religion to science, romance, and politics—areas that lacked the means to disseminate them in private discourse before the advent of print media.

The Church, the King, and the nobility had no reason to publish treatises on the workings of power.

This may have contributed to the political uprisings of the late 18th century, such as those in France and the United States, which decided to change their way of governing. But before we get off topic, there’s another century of media to review: radio, television, and the great internet!

Over the next century, the way media was monetized changed how it operated. Commodities like radio and television depended on as many people as possible listening or watching simultaneously. This meant you couldn't focus solely on a niche core market. Primetime television was almost always news, not romantic dramas, because that's what families watched together.

The ideas broadcast are almost always in sync with what society is accepting at the time. (A scene in The Crown brilliantly illustrates how television, as a medium, brings the Queen closer to the public.)

“The Internet Creates Infinite Reach,” from Ben Thompson’s article.

Ben Thompson captures this shift beautifully in his article. In the 1960s, I probably wouldn't have been able to find a large enough online audience by writing about emerging technologies like debit cards. As a creator, I needed to focus on local audience interests. The internet changed that equation. It allowed me to reach people interested in the digital economy around the world. Our audience spans 162 countries.

This is all thanks to the power of the Internet.

This scale also affects how culture spreads. J.K. Rowling's Harry Potter books, Jay-Z's Blueprint album, and Dr. Dre's headphones all have one thing in common: they are all exquisite works of art, but they also form a flywheel through popularity and capital accumulation: money fuels the spread of art, and art, in turn, fuels the growth of capital.

But there is a common element behind these transformations: technology.

Platforms like YouTube, Kindle, and Apple Music help spread works to a global audience. Culture is no longer centered in the creator's city, but is now consumed and embraced by an international audience. This significantly expands their audience base, improving unit economics. Platforms benefit from this user growth.

When you're trying to attract a large audience, a shared culture is the easiest hook. I've written before about how SuperGaming leveraged the IP of a well-known brand to scale their games. As of this writing, they've had over 200 million downloads.

From the Financial Times

In the age of artificial intelligence and algorithmic recommendations, culture is trending toward centralization. Today's teenagers may no longer actively seek out new media, but instead be drawn into a vortex of algorithmic content that reinforces their worldviews. Large language models (LLMs) exacerbate this risk, as users are no longer exposed to human-generated content, but instead engage with chatbots that reinforce existing beliefs. This can lead to serious consequences, including suicide. On the other hand, these same tools are also increasingly being used in psychotherapy.

This demonstrates the dual nature of technologies like the internet. On the one hand, it's the perfect place for small-town Indian boys to discover the best artists and aspire to emulate them. On the other, it's also the perfect place to discover bad ideas and become sucked into a vortex of content that reinforces them. This explains why society seems increasingly divided. We no longer have a dialogue, but algorithmic reinforcement.

We no longer have stories to tell, but content. We have traded depth for virality in niche circles.

Who cares about truth if it gets clicks? When everyone has only 15 seconds of fame, we replace nuance with attention-grabbing hooks and flashy moments. The stories, emotions, and virtues passed down through generations are compressed into fleeting pleasures between meetings. The human experience has become a repetitive slide, an endless pull of the lever in the modern content casino. Gone are the stories grandmothers told their grandchildren; Google Gemini now generates them because no one has the time or patience.

We’ve replaced hard-earned physical love letters with whimsical one-liners, and finite precious things with infinite digital junk.

What does this mean for cryptocurrencies?

To understand this, we need to look at how the industry has evolved.

Transformation

From Michelangelo to Jay-Z, from the Medici to SoftBank, it's clear that capital helps culture scale. When culture has monetary stability behind it, more people embrace it. Technologies like the printing press, broadcasting, and the internet help spread culture. Capital is used both to create art and as a means of distribution.

But what happens when the medium of expression itself is money?

This is the trillion-dollar question the cryptocurrency industry is struggling to find an answer to.

Cryptocurrency originated from the desire to replace banks with cypherpunk values. This is understandable, considering that many people on the mailing list to which Satoshi Nakamoto sent the Bitcoin whitepaper encountered trouble for their cryptographic work. In the early 1990s, exporting encryption software was compared to exporting nuclear weapons. Consequently, early adopters of Bitcoin weren't fintech enthusiasts, but rather drug marketplaces like Silk Road and companies like WikiLeaks, which was banned by PayPal. When WikiLeaks accepted Bitcoin after being banned by PayPal, Satoshi Nakamoto warned them they had "kicked a hornet's nest." This was in 2011, and Bitcoin was still a fringe phenomenon.

The industry began to attract attention with Ethereum’s ICO (Initial Token Offering) in 2014. Cosmos’ ICO in March 2017 laid the foundation for the blockchain boom.

Uber? Put it on the blockchain! Tinder? Yes, put it on the blockchain too! Local governments? Must be on the blockchain!

We're putting everything on the blockchain and tokenizing everything because the world needs more decentralization. Just kidding—with a hint of sadness.

Two factors come into play here:

• Ethereum's smart contracts make it easy to issue, transfer, and trade assets.
• On-chain capital formation is a novel idea. Founders can bypass “evil” VCs and raise money directly from the “community” — or, in other words, from people who intend to sell their tokens for a profit.

ICOs brought liquidity to venture capital equity investments while allowing retail investors to participate. The great promise at the time was that the venture capital business model would be disrupted. The culture at the time centered around the idea that shared asset ownership (usually tokens) and distributed governance (often through DAOs) could lead to better outcomes.

Like many chapters in financial markets, that era was filled with optimism until asset prices fell.

As the market has grown, cryptocurrency users have split into two categories: quantitative traders and farmers.

• Quantitative traders are savvy traders who use pools of capital, information advantages, and financial knowledge to build wealth.
• Farmers are ordinary users of cryptocurrency who earn rewards by contributing labor to the protocol. I consider myself a farmer, as most of my cryptocurrency comes from contributing intellectual property (IP) to the protocol. The long tail of farmers are users who go the extra mile to secure airdrops.

You don’t even need to issue a token, just call it “points” and sell a dream.

We went from wanting to overthrow the government to expecting airdrop subsidies in a brutal bear market.

Good old times

Suddenly, the conversation was no longer about decentralization, but about which token seemed most valuable. This echoed the evolution of media: from a medium for private consumption to a medium for social reputation. As I explained before, the ICO craze cooled by 2019, and no one could raise funds solely through issuing tokens.

But the signaling mechanism has changed. The market has begun to price tokens based on which venture capital firms have invested in them and which trading platforms are likely to list them.

Like any startup, we're finding our voice. Should I call everyone "ser"? Do I really need to attend this DAO meeting? Who cares? We've seen founders using DAO tokens to buy luxury homes, and Snoop Dogg buying real estate in the metaverse. Maybe I should check out his turf and see if Dr. Dre is still making "Dr. DRE."

We mistook a large group of Discord members for a community. We assumed the token was the product, and its price a sign of product-market fit. We ignored the fact that protocols valued at billions of dollars were generating less than $100 per day in revenue. We confused founders' ability to discuss problems with their ability to execute. Most importantly, we mistook technical jargon for a sign of novelty and competence.

When Bitcoin rallied after the ETF craze and most Altcoin failed to follow suit, we clearly realized that the emperor had no clothes.

The memecoin craze of 2024 symbolized the market's realization that volatility is a product. As long as prices rise and the asset's issuance appears fair, people will trade. From WIF to Fartcoin, and on to a host of meaningless assets, we've learned that speculative assets can sometimes be a medium of expression. The common sentiment conveyed by all these assets is:

The desire for profit.

Cryptocurrency culture has shifted from ideology and technology to the behaviors it unlocks. The focus has shifted to transactions. This is logical. If the blockchain is the rails of money, then its core purpose should be to move money quickly and efficiently. Everything else is a distraction.

But at the same time, alternatives emerged that showed the formation of parallel cultures.

Extended products often leverage behaviors that may seem strange to outsiders. Layer3 is easily mistaken for a platform for airdrop farmers. But a closer look at their business reveals that they provide a one-stop solution for onboarding millions of Web3 users. They provide on-chain reputation, wallets, exchange tools, and support the most chains. What seemed like a simple platform for tasks has now become a benchmark for early-stage product growth. (Our own startup portfolio frequently uses them.)

What are your chances of predicting this in 2021? Image of Pudgy Penguins' tweet

Similarly, NFTs were considered a dead technology. But Pudgy Penguins proved otherwise. Their partnership with Walmart generated over $10 million in revenue. Its brand assets receive approximately 300 million views per day, totaling nearly 120 billion views. Pudgy leverages crypto-native primitives and takes a fundamentally different approach to making them relevant: partnering with retail channels and leveraging Web2 social networks to attract attention.

These two products raise questions about what crypto culture is all about. Is it mindless speculation fueled by memes? Is it daily liquidations on perpetual trading platforms? Or is it a bet on a token just released last night, because AI will disrupt jobs and we have less than two years to escape the permanent middle class?

The market has already answered the question. Cryptocurrency is both a medium of expression and a culture of exchange. Consumers have embraced its ability to transfer stable value, which is why stablecoins have become the dominant mechanism for global capital flows. At the same time, however, the market has rejected some alternative ideas. For example, the "play-to-earn" model has failed miserably. Content coins have also yet to gain traction, despite my strong hopes for their success.

I check out what my friends are sharing on Instagram every day, but I have no idea how valuable my own content is on Zora. (That's sad.)

Just as free speech cannot exist without some offensive speech, global resource coordination may also be impossible without bad actors exploiting the market. In both cases, actions have consequences. If done poorly, over time, no one will want to listen to you or buy the assets you issue. Crypto Twitter may be facing the consequences of both.

It's important to acknowledge that the evolution of cryptocurrency mirrors the evolution of most media. We don't know about the millions of books that have become irrelevant. The web is filled with blogs that no one knows or cares about. Social media works because the content people express disappears in a day. The same is true for crypto assets. There are currently over 40 million tokens, many of which will eventually be worth zero. Content tokens may one day be as nostalgic as NFTs were in 2021 or ICO tokens were in 2017.

Irrelevant is the norm for most things, unless culture is involved.

Culture is often defined by how it communicates. Language shapes how we feel and understand the world. Until 2021, we were able to communicate in jargon. But as the industry expands beyond its core niche, we need to communicate in a more accessible language—an art we're striving to perfect at Decentralised.co.

For example, your dating app can't just talk about how it's powered by zero-knowledge proofs (zk-proofs). People just want dates. Stablecoins aren't competing on how many networks they support, but on who can offer the lowest-cost, fastest way to move money globally. Consumers care about what they can get today, not hypothetical features in the future.

The closer our industry is to consumer goods, the more we need to communicate in a language that ordinary netizens can understand. Because language often depends on a sense of belonging and the frequency of interaction, we need to change the way we attract and retain consumers.

The new Medici will be merchants of attention.

Ironically, the new Michelangelo will be the artist who defines the flow of capital. Let me explain.

Redemption

One way to think about cryptocurrency is through the analogy of a casino and a neighborhood café. A casino is indeed a high-velocity environment. People frequently move money between products—but the house often wins. You don't see people staying in a casino for long periods of time, at least not most people. In contrast, a neighborhood café attracts the same crowd day after day.

Bangalore’s Champaca café is a prime example of a place where people gather to drink coffee and read books. Many drafts of this book were written while sitting in a chair, gazing at a mango tree outside.

These people use coffee as an excuse to gather, share stories and troubles. The calm and joy that coffee shops offer is what draws them in. In more religious societies, temples or churches play a similar role. Coffee or faith become the medium that brings people together, but their reasons for staying go beyond the product itself.

Culture is the collection of stories people share. Too often, the stories we share are price charts. When those charts turn red, people have little incentive to come back. How do we get people to come back again and again? What levers do we have to get this technology across the chasm?

To understand this, perhaps we should look at the network itself.

The web is shaped by two forces:

• In the era of AI and Large Language Models (LLMs), there is boundless content being created. When everyone is a creator, no one is truly a creator. People need mechanisms to own, monetize, and distribute their content.
• Verifiability. In the attention economy (think X or Instagram), endless AI-generated content keeps people engaged longer, leading to more clicks and revenue.

All the capabilities that cryptocurrencies offer the internet can be boiled down to verifiability and ownership. These ideas are not new; we’ve been discussing them in this publication since 2023. However, regulatory changes and shifting attitudes among capital allocators are the primary reasons to pursue these opportunities now.

The internet has always been a tool for free expression. Cryptocurrency empowers people with the channels and networks to create these expressions. It also allows for the free issuance, trading, and holding of assets. The memecoin craze is a result of everyone being able to express themselves through currency.

When the internet emerged, people marveled at how it would drive the evolution of work. However, what attracted retail users to the internet wasn't the prospect of employment, but rather the potential for entertainment and socializing. Meme assets are akin to entertainment in the crypto era, but due to the associated losses, they lack the ability to last (the lindy effect). Perhaps not everything should be a transaction.

Only 1% of people on the internet publish content. If we apply this analogy to cryptocurrency, we could see a world where users spend 99% of their time in apps without actually transacting. Finding ways to bring users together without transactions being the core value proposition will be the magic of the next generation of consumer apps.

I know, it sounds ironic. On the one hand, I believe blockchains are money rails and everything is a market. On the other hand, I also acknowledge that having users constantly transacting will lead to churn. As they say, attention is all you need.

What might this look like?

Here are some early observations in the social networking and entertainment space:

Prediction market-based social networks

Currently, prediction markets are beginning to reach KOL, suggesting embedding prediction markets within content, with a portion of transaction fees going to creators. X is about to integrate Polymarket into its information flow. The convergence of the attention economy and the transaction economy will be driven by the cryptocurrency track.

Cryptocurrency, for all its flaws, is the only hedge against Jesus returning. Not sure you can scale.

Music streaming platforms with better unit economics

Spotify currently pays out around $0.03 to $0.005 per play. This is partly because revenue is tied to keeping subscription fees low. Allowing creators to release digital memorabilia and collect fees from them could be a way to boost this figure. For example, I'd like to own a signed vinyl copy of Fort Minor's "Rising Tied" album. Perhaps in the future, the vinyl could be issued on-chain but redeemed off-chain at some point in the future. This business model is already happening in some capacity. You can buy game packs from Courtyard, but the social or streaming elements are isolated.

This isn’t to say that financial primitives aren’t important. There’s a reason we keep discussing revenue-generating applications like Hyperliquid and Jupiter. They’re the modern-day Medici banks. The concentration of capital enables experimentation with new tools that attract attention.

But the way to sustain it is to build products that keep users coming back for non-betting reasons. Trading needs to go beyond pure speculation.

All this got me thinking – what exactly is culture?

Culture is a collection of stories we cherish. It's me sharing Pakistani songs with the taxi driver on the way home from the office. It's me saving a Kheer recipe on Instagram because someone told me her mother "bribed" her with Kheer when she was sick. It's me suggesting "Jab We Met," "Veer Zaara," or "Laapatha Ladies" when someone asks me for a Bollywood movie recommendation because I think they represent culture well.

Perhaps, it was because my relative was diagnosed as being free of disease that I thought of going to the church where three generations of my family prayed.

There's no monetary value exchanged in these moments. Instead, there's a foundation defined by shared stories and emotions that connects us. That sense of belonging is what makes things priceless. They're fleeting expressions that give life value and are at the core of who I am. They're fleeting, yet they add depth to the rest of my life. And to some extent, that sentiment is reflected in the products.

Look closely at Apple products, and you'll trace Steve Jobs's legacy back to his time at Disney. Pick up an iPhone, and you'll sense his desire to create something "magical." These elements are what keep you buying iOS products year after year, even when the changes are minimal.

Web3 products rarely replicate this foundation at scale. In Web2, this was intentionally built in. For example, Facebook didn't launch a points program, relying instead on a base of Ivy League graduates. Quora was once the best place to get insights from Silicon Valley developers. Substack remains the best place to find literature on the web. Web3 products also have their own foundation.

Watch the activity at PumpFun or the discussion on Polymarket long enough, and you’ll see a culture emerging. But like any startup, it won’t last.

Remember how I talked about how the internet transformed love letters into effortless, short texts? It's also revolutionized how people find love. By 2023, 40% of couples will have met online. This ironically demonstrates how technology works. On the one hand, it changes the medium of expression; on the other, it increases the surface area of ​​randomness where beautiful things can happen.

If we cling to the view that cryptocurrencies are solely speculative applications, we give up the surface area of ​​randomness that could exist.

Perhaps, it’s time to view cryptocurrency as a medium of expression. Perhaps, it’s time to envision an alternative culture to the industry we’ve invested so much of our lives in.

Link to this article: https://www.hellobtc.com/kp/du/08/6012.html

Source: https://www.decentralised.co/p/culture-capital-and-crypto