RWA vs NWA

The Internet was not real to people in its early days. There are many anecdotes from the 90s or even early 2000s. There’s this famous Bill Gates interview on David Letterman when he gets asked “If radio/tape recorder/magazines ring a bell?”, or that famous “Why web won’t be a nirvana” article.

Without a healthy dose of imagination, it’s hard to make sense of breakthroughs in digital technology before they happen. These things just don’t seem real. Especially in times when the price momentum plays into the hands of skeptics we instinctively fall into the trap of talking about what’s real, and not real.

Real things are the things that we know. Things we have seen before. Things that are more predictable. When times are uncertain our brains search for recognizable patterns to anchor the* fundamentals*. Thus we end up with the false dichotomy of real world assets (RWA) and, I guess, the unreal.

What does real mean? Predictable? Tangible? Does it mean cashflows (like Luffistotle argues)? Does it mean existing assets but onchain? In my opinion, it means nothing but the shoehorning of old models onto a new technological paradigm amidst the ruin of the last bull market. We’re afraid to double down so we hide behind the old familiar shapes.

I remember an anecdote of people in the late 90s saying there would be “more than 1000 TV channels on the internet”. Instead, there are millions – every user became a potential media company and a whole new industry of content creators emerged that is today valued at over $25BN. The global online entertainment market size reached $367BN with an expectation of crossing a 1TN line by 2028.

The old information distribution pipeline was unbundled and few saw it coming. With crypto, we’re not only unbundling the old financial rails but also the very definition of what a (consumer) product can be. Old models don’t work in the new world where new user roles emerge.

Product Culture Fit

As I was walking down London’s Savile Row I started to think about how ready-to-wear fashion faced resistance and skepticism when it was introduced in the mid-19th century. Bespoke, or custom-made, was a traditional way to acquire clothing and people could not wrap their heads around “sizes that fit many”.

The industry of tailors saw the emergence of the new trend as a threat (and rightly so). The skepticism was around the quality, degradation of skill, and innovation in fashion that can suddenly be mass-produced. There were also concerns about the lack of status that cheaper off-the-rack clothing represented.

The fact that ready-to-wear was more affordable and could be industrialized led to a massive culture change. As lives in the city became busier and more fast-paced, the convenience of ready-to-wear clothing became increasingly appealing and with the emergence of mass marketing, status found a way to enter the market.

What today is seen as normal was once outlandish. What today is seen as practical was considered impractical. This does not mean every outlandish thing will be normalized or every impractical thing will become practical. What it suggests, in terms of consumer products, culture can change rapidly given the right conditions.

The ready-to-wear concept brought scalability that enabled the emergence of global fashion brands. The culture unbundled around this new concept and a massive consumer pivot followed.

In the 2020s anything could become a consumer product. People are willing to spend money on nonsense, gimmicks, and stuff they will never use. They attribute ridiculous price tags to sneakers that cost at most $100 to be manufactured. How is this real? How can this thin wrapper of illusion turn a commodity into luxury?

The whole industry of marketing is based on creating illusions. Illusions about stuff being real. People have no idea that different brands have their clothes made in the same factories with different labels being slapped on them when shipped out of the warehouse. The invention of a brand is a re-invention of a reflexive mass illusion. Yet no one questions whether brands are real.

Indeed brands have cashflows. However their existence is not based on fundamental physical laws but on social constructs founded on the perception of consumers whose demand is manufactured by memes and narratives. These brands sell expectations of feeling something or looking like something/someone when consuming their products.

So how is a token with clout, or a picture of an ape fundamentally different from these branded goods? Both are selling expectations of something. Why is the memetic premium of one more real than the other? Is it because of the digital vs physical dichotomy?

Or is it only because it is a novel form of product? Are tokens a new form of a consumer product that is enabling a massive culture shift like the ready-to-wear era in the 19th century?

N.W.A Networks Wit Attitude are emerging as branded digital networks with its participants becoming loyal consumers. What is great about this is that consumers can also become beneficiaries. Consumer becoming a stakeholder is a very attractive proposition for the next era of commerce.

But how does one build a brand around a network? Let’s talk about the history of

N.W.A..

Bitcoin, often compared to a religion, is mostly a piece of code with a legacy and cult willing to buy it and promote it. This clever design and fundamental properties can be replicated or forked but not the legacy and a cult. Its moat relies on being a brand of digital gold.

What is gold’s fundamental quality? It was scarce so it became a standardized brand – a practical mass illusion that solved a problem. Bitcoin does the same thing. It also offers much better UX. It’s easier to acquire, track, store, transact with, etc.

It’s hard to imagine that bitcoin does not eventually become a greater brand than gold. All it takes is persistent meme generation, narrative repackaging, and time. Bitcoin is already a global superbrand worth $730BN today, but that’s still far away from its potential at the lower bound of gold’s market capitalization that today stands at $13TN.

Bitcoin is not any less real than gold. It could be actually framed as more real than gold because it exists only in the world of ones and zeros – everyone can see it in its entirety and that makes it much easier to coordinate around. This is what a useful mass illusion is – an anchor point around which society can coordinate.

Why take the value of its original place in the logical world of numbers (digital world = logical world) and attach it to a thing in the physical world only to track it again in the digital world? - Gold has bad UX due to the redundant step. Bitcoin is fundamentally in a better position to win this marketing war.

There are more of these NWAs. Take Ethereum. Contrary to popular belief, it does not necessarily compete with bitcoin in the long run. While ETH could be framed as a store of value, the higher potential narrative is that of the fuel of the world's computer. Ethereum is the new internet where you can own things directly.

Owning ETH becomes a bet on the conspicuous consumption of the Veblen good that is its blockspace. Anyone can launch their own NWAs on ETH. These NWAs could be DeFi products, memecoins, or ultimately – consumer applications.

Let me reiterate again; the great thing about NWAs is that the users become stakeholders. The cry of this becoming impractical reminds me of what people thought of ready-to-wear. Tokens are actually a practical pivot for the culture that happens more and more in the world of bits. It provides a great product-culture fit, allowing new markets to emerge.

Token Is The Product

What makes assets real? In terms of finance, the only fundamental thing is the flow of money. Because people are willing to spend money on sugar water (that is mostly net negative to their health) the stock and the value of a company selling it is real.

Or is it real because they pour a liquid down their throats? Is it real because it is a canned source of energy (calories)? Could people do without it? All of these are valid questions but the only thing that matters is people willing to spend money on it. That is the only thing that sustains it or makes it real in economic terms.

Soft money (fiat) is not real by itself – it’s only backed by consumer trust. Regardless, we came to an agreement that something bought by soft money makes it real, ignoring that real is nothing but a meme being bought with meme means.

The reality is that the only thing that matters is consumption – goods and services – not the means of transacting. Consumption in the fiat economy is as real as in the barter economy. Consumption in the token economy is as real as in the fiat economy. In that sense, crypto is, as any good thing, a repackaging of old concepts into new trends.

Take a random token like Dogecoin. It mostly does nothing beyond transactions. But transacting and owning it is a way of consuming. Dogecoin is like sugar water, probably a net negative for your health (to experience its volatility as an owner), but if there are people consuming it how is it fundamentally different from sugar water?

I’ve seen products worse than tokens

The fact that Coca-Cola is more real than Dogecoin lies in how powerful the meme is. Coke has a much longer tradition with its logo being omnipresent. Some people might not even know why they order a glass of Coke. But if it was not available they’d drink something else and their lives would have been the same.

On the internet, the users became “TV channels”. With crypto – the “Coke Inc stock” and sugar water become one product.

The digitization of the world leads to hypermonetization and hyperfinancialization. As we livestream mass delusion, we have transformed the world into a reality show. That’s the true metaverse; the 24/7 casino where human misery of war, GDP, and inflation are the spectacle.

Serious political matters have become entertainment while entertainment has become politicized. That’s what happens when the cost of distributing information goes near zero and the monetization is predicated on people’s ability to extract dopamine from the screen. Noise is priced as a signal because the noise has become the product.

With crypto, we will double down. In the same way everyone could become a media channel everyone could become a stakeholder of a given product. The thrill of watching numbers go up and down becomes the product - the new addiction. Tokenization is the path of least resistance for more dopamine extraction.

The numbers in the digital world become more important than the physical goods they represent. This is similar to bitcoin versus gold. Bitcoin is superior because it is native to the digital world. Dopamine found in the world of bits is cheaper to produce, distribute, and consume.

This also aligns with the thesis of culture being the product, while everything else remains auxiliary. Networks Wit Attitude are the tokenized culture, a means to facilitate an ongoing consumer preference inversion. And maybe, one day there will be cashflows.

Above I gave an example of Dogecoin which is a primitive token, it only demonstrates what tokens can do, not what the best tokens will be like. It’s just like with products – most are gimmicks with no real value for the consumer. But fundamentally, the value will lie solely in the eye of the beholder.

The Futility Of Utility And The Future Of Liquidity

In a world where information is abundant, credibility is the most scarce resource. Tokens, thanks to blockchains, will become our credibility machines. They will be the source of provenance and authenticity, they will be a source of attribution and a platform to create new brands and memes. Without credible authenticity – there are no brands.

The culture will realign around tokens because they are simply more suitable means of value generation, transfer, and signaling. It is a better standard for a world in which the majority of information transfer happens in the digital world. Tokens enable direct and authentic culture ownership. It is not only about entertaining ourselves to death.

There are ongoing attempts at creating new fandom and loyalty modes based on tokens. Ultimately we are talking about a transition from UGC to UGP. The case of the edgy scientific discovery of VitaDAO and HairDAO embodies goal-aligned communities fueled by tokens. There are more to come.

The tokenization of the world will not happen top-down but bottom-up. It does not start with tokenized treasuries and real estate. It starts with a culture shift, people doing commerce and finance with tokens, forming online tribes that produce, market, consume, and leverage themselves.

Now imagine David Letterman asking “Does an LLC ring a bell?”

Sure it does. But does that mean there cannot be a better way to create microeconomic units in a rapidly digitizing society? Do the old models still make sense? As networks can now be built with digitally-native integrity why shouldn’t we do it? How is this not a better way? Old models are not able to navigate Web2 alone, not to mention Web3. Why not use tokens?

There’s Letterman again “Does the US dollar ring a bell?”

Sure it does, but you can do so much more with the stablecoin. The proliferation of stables is driven by consumer-driven preference rather than the government printing dollars onchain.

Things on the internet want to move freely but also have natural, token-enabled, borders. Tokens will unlock markets for culture. They bring liquidity into places unseen before and they enable fluid web experience which creates new user roles. Liquidity bootstrapping pools become culture bootstrapping pools.

Tokens are products of Networks Wit Attitude - they are the New World Assets, digitized brands, and novel forms of conducting commerce. Real World Assets are less important than we currently make them and stablecoins are proof of that as they serve as the off-boarding from the Real World into the New World.

The more things claim to be real the more they fade into irrelevance. Tokens are a bottom-up commercial revolution, not a top-down financial reformation.

Thanks to long_solitude, Shaun, Xen, Mable, Luffistotle for useful feedback.