What Celsius has done. What FTX is doing. What Terra, 3AC, Coinbase, a16z, Changpeng Zhao and venture capitalists the world over represent—the current financial system. Recreated, except much worse, because legacy finance with its critical flaws is still beholden to consumer protections, charters, and securities law, which took a century from the crash of 1929 until now to achieve and refine.
The war in most minds right now is a legal war of shady lawyers, class actions, and prison sentences, which is a pyrrhic war I’d expect waged from a fiat-distorted inflationary mind.
I’m at my breaking point because bitcoiners warned about this incessantly for years and I already watched this play out with Mt. Gox, a watershed moment for bitcoiners. While I don’t credit that event with the self-custody dogma bitcoiners have (because bitcoin was born long before exchanges existed), I do credit it with the birth of hardware wallet companies and custody solutions, most of which started back then (under different names) growing into CoinKite, Ledger, Trezor.
I’m also at my breaking point because I know a salon owner who keeps all her savings with Celsius here in NYC.
“Yield,” she told me last summer, “is crypto’s killer app.”
Crypto is a scam. That’s something that waits around for bitcoin’s halving to do anything. It’s something you’ll find on a stadium's rooftop and block Twitter bots from advertising. Indeed yield is crypto’s killer app. That’s a phrase Alex Mashinsky coined himself if I’m not mistaken at the Bitcoin conference in 2021 where I first met him. Catchy. But yield is a scam in this still undeveloped space, of course a robust yield curve is coming, but it's not here yet, and I warned her against all forms of yield, because I know how DeFi works. It’s designed around dapps that try capturing your money in exchange for their speculative tokens. They hire promoters, do rounds on podcasts, pay YouTube shills, are active on social media, partner with VC’s, and the ultimate goal is to get listed on major exchanges. The money these dapps separate you from is centralized derivative monies—USDC, DAI, and WBTC. I use these three as examples because they’re the #1, #2, and #3 coins by mkt cap in the Ethereum Network behind only ETH itself. These are just centralized representations of USD and BTC though, because USD and BTC are not derivatives, and the latter (BTC) is not centralized.
But that’s just DeFi Basic. DeFi Pro adds collateralization cakes that grow more and more layered until they shadow 2008, they also lever DAO’s run by TradFi and CEX linked companies, where insider trading, manipulation, and soft rugs are the trade craft. We’re watching it live with 3AC, Lido, Celsius, etcetera.
MONEY is not tps, tx cost, or throughput. Those are all features of a blockchain. As for the largest “crypto”, which is Ethereum, ETH’s job is to ferry the centralized derivative money that we talked about above around the system. ETH is a gas token. The Ethereum Network then, is an IOU database. This is not an innovation, and I agree that PoW isn’t necessary for this, and neither is decentralization for that matter, if your network’s hardest money is centralized derivative money.
DeFi and web3 is an orgy of swaps, wraps, burns, mints, and stakes, run by centralized dapps that do nothing but optimize token interactions to keep the orgy going.
Again, there is bitcoin, and there is crypto. Crypto as you can see from what’s happening with yield-seeking, and wobbly pegs, DeFi, illiquid vaporware, etcetera, is a scam. Crypto only exists because of VC’s, exchanges, centralized derivative money (stablecoins, WBTC), and the fact there are no securities regulations. But all these nasty scammy creatures only have relevance and power because you’ve given your money to them.
So what then is the innovation in this space?
The innovation is decentralized MONEY. The radical idea is separating MONEY from State. That’s it. Bitcoin is decentralized MONEY. Progress is where everything builds on top of decentralized money—in layers—with everything in those layers ultimately getting settled in this decentralized money. This is how an honest and transparent base layer is made. Our current economic base layer is fiat and debt. This is a dishonest base layer. Nothing built over a dishonest base layer can ever be honest. And that dishonesty leaves us here, distorted AF, because distortion in money causes distortion in information.
The salon owner said what she put into Celsius is inheritance she’ll leave to her children, calculating that at 6% interest, the amount would double after just a dozen years. Now it’s a subject to ponder wether or not she’ll have anything remaining. Alex Mashinsky is nothing new. Do Kwon was talked about in the Old Testament. Sam Bankman-Fried’s FTX is an 80s junk bond desk. Coinbase is a boiler room. UniSwap is a mob casino sportsbook with its own chips. Changpeng Zhao is one of China’s top spies. A16z is selling you middlware disguised as "software that will eat the world". Ethereum isn’t a “world computer”, that’s just more VC-speak, because we already have one, it’s called the internet. Ethereum is just a derivative version of the internet, an intranet, except more expensive, less efficient, slower, and harder to use, an IOU database that ferries around centralized derivative money. So what are you?
You are exit liquidity
This is war. Not like Fight Club’s project Mayhem requiring violence and demolition explosives. It’s a war of peace, a non-violent revolution:
Your first act of war:
Take self custody of your property. That means a hardware wallet. That’s your savings. That’s where the majority of your coinage stays. Your checking account with small active amounts can be anything else. Preferably non-custodial but something like CashApp etc is fine too.
Your second act of war
Do not use CEX’s (centralized exchanges) for buying or selling. STOP! Dip your toes into the DEX’s (decentralized exchanges) world. The only effective vector that blockchain forensics have to lever are CEX’s, because of the KYC. Without that, as the data set grows, identifying individuals becomes impossible without unlocked access to their physical devices, anything less wouldn’t hold up in a court of law. Here’s a list of all the non-KYC bitcoin DEX’s. I’ve used everything on this list above an 8 and they’re great.
We need way more volume on these DEX’s. I understand Jack Dorsey’s Block (parent company of Square, CashApp, etc) is busy building what they hope to be a major global bitcoin DEX as well and will integrate it with their WEB5 plans.
Your final act of war:
Run a node or mine. Preferably a node with Lighting support. But neither are necessary, only the first two acts of war are. Running an LN node without putting in the work to understand what you’re doing won’t help the network, but make it worse. Here’s a very good article on why that is:
https://darthcoin.substack.com/p/recommendations-for-ln-users?s=r
Running LN nodes will become much easier and automated with time, but until we have full Taproot support and better BOLT spec, we are where we are.
The salon owner called me crying out of the blue at 11 p.m, an hour after the Celsius freeze was announced on Monday night. I wasn’t sure how she had my number, but remembered I’m in her salon computer under the name “satoshi” because I’m the first person that’s ever paid her in bitcoin since she started accepting it. I took the call from my small outside balcony. I can see Mashinsky’s penthouse from where I live. The lights are on and I wonder what he’s thinking. He’s a father of six and all indications are he’s happily married to a beautiful woman. I hadn’t heard about the Celsius freeze until then, but my immediate concern was what could happen if they filed for bankruptcy protection. Celsius no longer has a business. The trust is gone. No institutions will send money there again (a Canadian pension invested $400M in 2021), fewer individuals will send money there, and opening up the withdrawals would see the platform lose everything within 24 hours. There are few securities laws around crypto, so without any retroactive enforcement by SEC, the Celsius rug will have some legal successes in places.
“Do you think it’s gone—that I’ll get it back?”
"Mashinsky has nine lives,” I said, “I’m just not sure how many he’s used; even Madoff’s victims got 80% of their losses back.”
I hated each word that came out of my mouth there. Trusting your money to a “crypto bank” violates the ethos, purpose, and escape velocity of decentralized money or decentralized finance. It’s like sending bitcoin through Western Union, or using Visa’s discrete payment network to spend your crypto. Ridiculous. If you don’t respect that ethos, then there’s no reason to hold anything but USD and use banks, because both are better than crypto and exchanges. Both are safer. Both are no less centralized and custodial than crypto and exchanges. Things only change when the money governments use, and the money everything is settled in is replaced. Using centralized derivative money, chasing yield on centralized dapps, trusting shady custodial platforms, and using VC buzzwords like unbank yourself isn’t progress.
We have to unite under one banner. Only then can we march down the prestige of global governments, demonetize politicians, slowly disintegrate borders, and align the incentives of all people by using the same decentralized money, connected to the same decentralized network. With the Lightning Network, TARO protocol, DLC,’s, Taproot scripting and mesh networks, bitcoin will over the next two years reach the velocity of money that the internet’s velocity of information achieved in about the same timeframe (15 years from 1979). Its mining, which is 59% renewable already will subsidize flexible load energy of grids, capitalizing renewable energy infrastructure and R&D in a way that heretofore only governments have been able to achieve with manipulation of the tax code (credits, import duties, write-offs). An abundance of goods and services OUTSIDE the money can only achieve such deflation if there’s an over abundance of energy, paired with an interconnected single network allowing for global arbitrage of the global economy. And like the internet again, which created an overabundance of information outside its deflating hard drives and silicon, bitcoin will add the missing piece. The internet of money.
The internet of money is where we win, and I hope you come for the profits, but stick around for the revolution.
The salon has a sign on it that says closed until further notice. Don’t let this happen to you or anyone you know ever again. For godssake let’s unite.
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