Why Crypto Still Matters

Yesterday in Washington, D.C., five leaders from the crypto and blockchain world spoke to lawmakers about how digital assets can drive innovation and keep the U.S. competitive in technology. The goal was to provide an open, bipartisan forum to discuss a new draft bill that would add a bit more clarity to how digital assets are regulated in the U.S.

While I recognize that crypto may not be everyone’s favorite dinner table topic, if you care about innovation, it's worth paying (a little) attention to what’s been happening under the hood.

One of the people who testified was Alex Miller, the CEO of Hiro Systems, a company that helps developers build programmable applications and tools on top of Bitcoin. I've known Alex since we worked together over a decade ago at Stack Overflow, and last year I joined the board of Hiro because I believe there's a big untapped opportunity here.

But after watching about 90 minutes of yesterday's roundtable (where bipartisan support was noticeably lacking) it became clear to me that many people still don’t understand how strong financial or digital systems can fuel technological innovation.

Blockchain as Digital Infrastructure

A lot of us who have spent many years in the crypto ecosystem often describe blockchain technologies as infrastructure. In other words, they’re the foundational systems that supports more complex operations on top of them.

Just like cities rely on physical infrastructure (think about how the MTA in New York powers the entire subway system) you can think about things that power the internet as digital infrastructure. And there's a pretty compelling case to be made that blockchain technology plays a really important part of that.

When infrastructure is strong, it encourages other people to build on it. The subway doesn’t just move people, it powers an entire ecosystem and micro-economy. Companies design and build subway cars, businesses advertise in stations, and individual musicians opt to set up solo shows to perform at busy subway stops. It's a flourishing network.

The same is true in crypto. Solid digital infrastructure creates space for an entire economy of builders, creators, and innovators. This is why there’s so much energy in crypto around getting developers to build on specific blockchains. (At the core, it’s all about jumpstarting innovation and getting the builder flywheel going.)

How to Jumpstart Innovation on Digital Infrastructure

You can measure the size and strength of infrastructure in a lot of ways (ie: how many people ride the subway every day, or what percent of a people live within 10 minutes of a subway stop). But the most common way is to make it about the total amount of money transacted on that system.

Today, Bitcoin has itself has a total market cap of about $1.8 trillion dollars. If that still feels too abstract, consider this: Only 10 companies have ever achieved a market cap of $1 trillion. When you think about the thousands of businesses and micro-economies supported by the infrastructure provided just one of those giants (see: Google ads businesses, for one), it’s easier to see how powerful it might be to unlock even a small amount of innovation and liquidity on top of digital assets like Bitcoin.

Part of what yesterday's hearing was about is figuring out how to make the United States a little bit easier or people to learn how to build businesses (in the U.S.) using this infrastructure.

The total global market cap for all cryptocurrencies today is just over $3 trillion. But historically, it's been pretty tough for crypto companies to figure out all of the rules about how to legally run a blockchain-based business in this country. As Alex pointed out in his testimony, even in Hiro's case (as the first crypto org to run a qualified Reg A token offering), the cost of the filing and legal fees ended up exceeding the $15 million they raised.

That's not sustainable for innovation in the sector. (Not a lot of companies can afford to spend $15M on legal filings just to make sure they continue to exist.)

I've worked in crypto long enough to have seen some serious shit. There's still a lot of work to do to make the sector as a whole a little bit safer, approachable, and transparent. But I've also worked in the space long enough to see that many of those who have stuck around and weathered bear market cycles have been serious enough to hold true to their convictions that this technology is worth fighting for.

I was proud to see Alex and his peers show up for a tough conversation at the highest level yesterday. But for real progress, we’ll need people on both sides of the aisle to engage and listen. After all, if we have the chance to support the next wave of builders, wouldn’t we rather see that innovation happen on our own turf?

Representative Bryan Steil who chaired the subcommittee said it best: “We want to make sure the next innovators can come from dorm rooms and basements, not board rooms and law firms.”

You can read more about the roundtable and watch the full roundtable here. (Or just skip to minute 46:08 to hear Alex's opening remarks directly.) Disclosure: As stated above, I am on the board of Hiro.