The Degeneration
Unless you’ve been completely avoiding the Internet and social media this year, you’ve probably heard about the rise (and fall) of Bitcoin’s price, the energy costs of cryptocurrency mining, and the $69 million NFT. Cryptocurrencies and blockchain have entered the mainstream consciousness in a big way in 2021. Over the years, people always ask, “Should I buy Bitcoin now?” or “What cryptocurrency should I buy?”
These are not the questions you are looking for.
There is a new cultural class of cryptocurrency investors that refer to themselves as “Degens.” They’ve embraced the Urban Dictionary definition of a “degenerate” gambler as a semi-shameful badge of honor, because the money that they made was so “easy.” Except it wasn’t really “easy.” It required a high level of technical expertise, non-traditional vision, luck, and big… tolerance for risk.
Bitcoin peaked in USD value in mid-April 2021 at $63,863.10 and a total market capitalization of over $1.17 trillion dollars. Ethereum peaked in USD value in mid-May 2021 at $4,362.35 and a total market capitalization of over $472.6 billion. After a dip in the market earlier this year, Bitcoin is over $50k again, the cryptocurrency markets have been on a bull run, and there is talk of Bitcoin breaking $100k before the end of the year. We shall see.
Since DeFi Summer 2020, the Total Locked Value (TVL) across Defi has grown to almost $200 billion. To understand DeFi, a good place to start is the World Economic Forum’s Decentralized Finance (DeFi) Policy-Maker Toolkit Whitepaper.
DeFi Summer was catalyzed by a few interesting new technologies that were developed and launched in the cryptocurrency space over the past few years. Finally, there were ways for people to make real money in crypto beyond speculation or pump and dump strategies. DeFi applications mostly fall into the following five categories:
Lending/Borrowing
Decentralized Exchanges
Derivatives
Payments
Assets
DeFi is the most recent segment to emerge in the still nascent cryptocurrency and blockchain industry. The Degeneration is the inevitable rise of decentralized Internet of Money and beyond. Traditional financial institutions, nation states, corporations, investors, and individuals are all evolving to deal with the Pandora’s Box opened by Satoshi Nakamoto when he published the Bitcoin whitepaper.
The Bitcoin whitepaper is a good place to begin to get a fundamental understanding of Bitcoin and blockchains. So is the MIT OpenCourseware Fall 2018 Blockchain and Money course, taught by Professor Gary Gensler, which can also be viewed on Youtube. Gensler is now the head of the U.S. Securities and Exchange Commission (SEC), so you can bet that the governments of the world understand the importance of cryptocurrencies.
The Bitcoin whitepaper was released on Halloween, October 31, 2008 to a cryptography mailing list by the anonymous entity that posted as Satoshi Nakamoto. Nakamoto cracked the code for decentralized cryptographic currency. It made history. Cryptocurrencies were born.
Our cultural fabric, particularly in the younger generation, has evolved with different values that previous generation. The Blue Church appears to be crumbling, and a new paradigm is emerging. The memetic tribes of the Culture War 2.0 have formed in the mainstream world, as DeFi has created an entirely different battlefront - the Metaverse, where memes, mathematics, and algorithms are the weapons.
Degens are the often (but not always) anonymous actors in this new struggle to create the future of Humanity, and HODL is their battle cry.
Blockchain and cryptocurrencies have developed their own culture, and it is a shift in mindset, unplugging from the Matrix of the fiat world.
The key breakthrough with DeFi is that this has enabled the Degens to completely function outside of the regulated Matrix. This terrifies the governments of the worlds. China has banned Bitcoin mining, and even Gensler, an MIT professor and head of the SEC, and his regulators are unsure exactly how to regulate the Degens.
Degens may have made their money mining Bitcoin as teenagers in between gaming sessions. Traders may have deployed brilliant investment or arbitrage strategies. Others may simply bought some Bitcoin before 2017, or participated in ICOs, or traded shitcoins, or a myriad of other ways to generate millions of dollars in value in cryptocurrency. US citizen cryptonatives move to Puerto Rico to minimize taxes, and others traverse the world as digital nomads, living a life of pseudonymous minimalism in the real world with millions of dollars worth of cryptocurrencies and NFTs in their crypto wallets.
Even Elon Musk is embracing minimalism and selling his real estate and physical property… to “reduce his attack surface.” Many Degens deploy a similar strategy.
The Degeneration is here. Understand it or … you’re NGMI.