Vinay Gupta on the Four Waves of the Crypto Economic Revolution
Discussion
Vinay Gupta:
"Getting crypto built into the web browsers and into the infrastructure of the Internet was the first stage, and the thing that enabled ecommerce. It was probably the single largest transformation that we’ve ever seen in terms of mass consumer adoption of cryptography. Cryptography built into Web browsers is the thing that created multiple trillions of dollars of value in the form of the entire ecommerce ecosystem, and then the Web 2.0 ecosystem that survives on advertising largely driven by ecommerce. All of that was cryptography; prior to the building of the crypto into the Web browsers there was no ecommerce, there were no credit card transactions online, there was really nothing but documents. So, we’ve already gone through one almost industrial revolution in real-world asset trading driven by crypto. The second huge transformation was the creation of SIM cards. SIM cards and bank cards that have chip and PIN and all the rest of these kinds of things were the first real large-scale adoption of hardware cryptography, that was when we started having cryptographic algorithms embedded in chips, which gave you a completely new kind of security.
Then, the next turning point, the third, is the Bitcoin whitepaper.
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Finally, in the fourth step, Ethereum made it possible to run decentralised applications on the blockchain, making NFTs and DeFi possible. "
(https://medium.com/humanizing-the-singularity/the-road-to-rwa-f99cac31361d)
How the Resistance to Crypto Created More Innovation
Vinay Gupta:
"As crypto has developed, there have also been waves of resistance. In the 1990s, with the advent of PGP, the US government freaked out and reclassified cryptography as munitions. They literally said that encryption was armaments, and it became illegal to export from America without a licence under what was called the ITAR [International Traffic in Arms Regulations] regulations. ITAR drove a huge number of cryptographers out of America and a lot of those folks wound up in a place called Anguilla and formed an early crypto island community there. That’s also where you began to see the hybridisation of offshore finance in cryptography, and some people would suggest that that was where you got the birth of some of the stuff that became crypto economics that we started in the late 1990s.
One of these waves of resistance led to the fall of E-gold in 2005. E-gold was a perfectly reasonable gold-backed digital currency system: fully centralised, no real use of crypto, it was a very successful platform. You could transfer $100,000 from one cell phone to another cell phone in the late 1990s for 50 cents, instantaneously, and that was all gold-backed, it was essentially gold-backed stablecoins. That system was effectively shut down in 2005, when the FBI raided its offices over E-gold’s use in criminal activities and confiscated its equipment and files. I would say that almost everybody thinks that the fall of E-gold was the thing that triggered Bitcoin. It was a case of if there was going to be another E-gold and it was not going to get shut down by the government, then it was going to have to be decentralised. The response from the crypto community to E-gold, was Bitcoin and the blockchain, and that led to what we now know as the whole cryptocurrency space."
(https://medium.com/humanizing-the-singularity/the-road-to-rwa-f99cac31361d)