I was at a dinner recently where the topic of crypto came up. Only two of us at the table were full-on believers, and the rest were generally sceptics. So naturally, the two of us started talking about why we think crypto is important. But in moments like this, it always becomes immediately clear that crypto is really hard to explain in a succinct and compelling way. Like, I don't know how to do it. Thankfully, venture firm a16z just released their latest State of Crypto report, and so here are a handful of interesting takeaways.

The number of crypto addresses continues to grow. Currently it's at an all-time high of approximately 220 million, which roughly mirrors the adoption curve of the internet back in the 90s (log scale). It is, however, important to note that one crypto address does not necessarily correspond to one human being. For example, I have many different crypto addresses. So if you dig a little deeper, you'll see that their net estimate is somewhere between 30-60 million real human beings transacting using crypto every month. This is the estimated active user base and it continues to grow.

The number of mobile crypto wallet users is also growing rapidly outside of the US, namely in countries like Nigeria, India, and Argentina. This is the result of a number of factors: population growth, mobile phone adoption, government support, inflation, and many others. I mean, since 2010, the Argentine Peso has lost basically 99% of its value against the USD. So of course you'd rather put your money somewhere else, such as in stablecoins.

Stablecoins are cryptocurrencies that have their value pegged to something else, such as a fiat currency. Today, they are one of the most popular crypto products and virtually all of them (more than 99%) are pegged to the USD dollar. This is viewed by some as an opportunity to strengthen the dominance of the US dollar at a time when it's waning (see above). But more importantly, stablecoins already serve two important functions in the market: one, it's as stable as the US dollar; and two, the cost of sending a stablecoin anywhere in the world is now basically free. Say goodbye to bank wire transfers.

It's worth reiterating that a16z is a venture capital firm that is heavily invested in the crypto space. And so reports like this are naturally a form of marketing and a form of lobbying. Still, there's a lot of great information in here that you can use to form your own opinions about the sector. It may not be succinct, but if you take the time, I think you'll find it compelling.

I am halfway through reading Read Write Own and I can confidently say that you want to read this book. If you're already a believer in this "next era of the internet" (like I am) it will make you a true believer. And if you're not a believer, maybe it will make you one. Or not. Either way, I am thoroughly enjoying it.

One chapter that will be particularly interesting to all of you is the one where Dixon makes a comparison between the internet and cities. Cities, he argues, work because of a delicate interplay between public and private interests. And the private side works because, among other things, we have the rule of law and the construct of ownership.

If I own an asset, like a piece of real estate, I'm only going to be confident to invest in it if I know that someone won't take it away from me (or dramatically change the rules on me), which is why if this prerequisite doesn't exist, you typically see a lack of investment.

The same is true on the internet. But currently, the dominant form of networks are centralized corporate networks. In city terms, you can think of these like an amusement park. Once you enter through the gates, you're in their world. You could maybe rent some space, but at the end of the day, the owner makes the rules. And if they don't like what you're doing, they can remove you.

It's a pretty stark contrast when you think of it in these terms, which is why it's hard not to feel compelled when you consider that similar dynamics are playing out on the internet right now. Cities thrive because we have rules, ownership, and the freedom to innovate on top of the foundations laid by government.

So I'm all for making the internet more like our most successful cities.

Decentralization, in the crypto/blockchain/web3 sense of the word, is a crucial thing. Here is an excellent article talking about why it is the key innovation of blockchain technology and why it is a central feature in this new emerging web3 world.

But of course, it can all get very complicated. So I thought this -- and in particular the sentence in bold below -- was a good way of describing the benefits:

"...decentralization enables web3 systems to be credibly neutral (they cannot discriminate against any individual stakeholder or any group of stakeholders, which is critical to incentivize developers to build within ecosystems) and composable (to mix and match software components like Lego bricks). As a result, web3 systems function more like public infrastructure than proprietary technology platforms. In contrast to the gated software of Web2, web3 protocols provide decentralized internet infrastructure on which anybody can build and create an internet business. Crucially, in web3, this can be done without the permission of the original deployer of the protocol or the need to use a centrally controlled interface."

This resonated with me because think about how important public infrastructure is to our cities. Most of us take it for granted that, when we need it, we can just plug in and access electricity, water, sewer, and other public infrastructure.

But throughout history, these services have been fundamental to the growth of our cities. They empowered scale and better health outcomes, among other things. So it's exciting to think that we are now living through the creation of something kind of similar in tech.

Image: a16z