We used to be able to make things with our money. Gold is an industrial metal with useful applications outside of being a pure transaction medium. Even copper is useful in an industrial sense—if all goes wrong, you can at least smelt a copper coin to make an electrical wire. You can’t use a Rai stone you received as dowry for much, but you can at least use it to hold up the roof of your house.
Releasing government currencies from the chokehold of linkage to a fixed supply of commodities freed governments to leverage inflation as a political tool and currencies as a diplomatic weapon. It also started an era of fiat belief in the integrity of government as the primary backing to each monetary transaction. Bitcoin’s innovation was removing the government from this equation. The problem is that, yes, each BTC is a representation of a unit of ‘work’, but is this work materially useful to anyone? Or is it just sweat on a gym t-shirt? So, you hooked up your graphics cards to do prime factorization puzzles, but did you achieve anything of value? An intriguing meme is that BTC represents stored work in the same way that capital is somewhat analogous stored labor. However, while you can melt 10g of silver and make it into a coin to 'store', you can't unspin capital back into labor in an absolute frame of reference—whether you count it on fiat coins or sats.
One of the more notable evolutions of the bitcoin narrative has been its drift away from the paradigm of BTC as ‘electronic cash’ and towards the adoption of store-of-value narratives. The intent is to meme fiat demand for government currencies into fiat demand for bitcoin. Large holders of BTC have a strong and warranted cultural aversion to trusting governments, which I share. But they also have every incentive to maintain the narrative only insofar as it is replaced by belief in the orange coin and its network of holders. So, the question is not whether BTC is a better currency than government shitcoins—we know it is. Rather, if we can all agree that modern monetary systems are being run into the ground by incompetent tools of the establishment, why do we have to believe that the network of BTC holders would be any better? They probably would be, but I am not seduced by the possibility of replacing one network by another, equally arbitrary, network. Bitcoin’s value, in USD terms, is driven entirely by the ability of its community to meme BTC use into existence.
The emergence of ETH as an asset class, on the other hand, is a retvrn to money as a commodity with use. Each unit of ETH represents partly its speculative value as a cryptocurrency for normies to bet on, sure, just like BTC. But, intrinsically, and more importantly, it represents the amount of demand for bandwidth for transactions other than working out the ledger of ETH itself. Crucially, this value has nothing to do with USD or other government ponzis. Whether people need and rely on blockspace is a real abstraction of ‘value’ from government intervention—ETH blockspace can be valuable on its own. It’s not clear yet that the same is true for BTC, whose blockspace is an entire technological iteration behind in utility.
ETH is the alternate ending to late-stage postmodernism, and it has pushed us down a fork in the road. Previously, we were hurtling down a spiral of an ever more cynical unmooring from reality towards a fragmented multiplex of different truths. All of a sudden, we find ourselves in an alternate universe where the free market and all of its imperfections now has a fully realized digital equivalent, in a network state of its own, with demand for blockspace as the 0 Kelvin.
The insane development that ETH has brought the world is that the frantic heartbeat of technological innovation now pulses in money. All previous forms of currency were pet rocks. And the wild thing about technological innovation is that, one day, ETH might become obsolete too.