Bad is Good Enough
The first advertisement for the telephone was apologetic in tone: Alexander Graham Bell warned that his invention would require "practice" and "the occasional repetition of a word or sentence."
He hoped early customers would be forgiving: "After a few trials the ear becomes accustomed to the peculiar sound."
Despite these shortcomings, the telephone was a hit — so much so that farmers, unable to wait for the phone company to bring copper wires to rural areas, used their barbed wire fences instead.
A telephone signal received over barbed wire is not high fidelity — but the telephone was so useful in connecting otherwise isolated areas that farmers were more than happy to put up with it.
Today, this remains the best test of a new product: Release it before it's ready and see if it's useful enough for people to put up with its shortcomings.
The first Apple computer, for example, was just a printed circuit board. But it proved so popular with hobbyist computer clubs that the two Steves, Jobs and Wozniak, knew they were on to something big.
Similarly, when I first heard about Bitcoin in about 2011, I passed because it seemed too janky to ever catch on: Surely no normal person would send real money to a stranger found in an internet chat room in return for a string of numbers only accessible via command line, I thought.
That was not just wrong, it was 180 degrees wrong: The fact that a core group of enthusiasts was willing to suffer such a bad user experience to obtain digital money was the only evidence I should have needed to know that digital money would be a hit.
This, I think, is what crypto's countless critics may still be failing to grasp: Blockchains are slow databases, yes. Paying for things with crypto is still too expensive, yes. Self-custodying assets is still terrifying, yes.
And yet…people use it.
Is that all the evidence we need?
Noisy Signals
That early history of Bitcoin has been re-run over the last few weeks with the advent of Ordinals, which are more or less NFTs on Bitcoin.
At inception (way back at the end of January), Ordinals were difficult to create (you had to run your own Bitcoin node) and even more difficult to trade (you had to go to Discord to find someone to sell you one).
This is partly by design: The inventor of Ordinals, Casey Rodamor, deliberately made them hard work. His intention, according to a recent podcast, was to engage and reward the most dedicated and knowledgeable bitcoiners — those running nodes.
Happily, this also provided a test of the potential demand for Bitcoin NFTs — a test which they passed with flying colors: hundreds of thousands of Ordinals were created before there were apps to create them with, wallets to hold them in, or markets to trade them on.
The signal here could easily be obscured by the profit motive, however.
It may be that people are willing to jump through hoops to get NFTs on Bitcoin because they believe they have real value: Ordinals metadata (the code that creates the image or text) is immutably inscribed in satoshis, which seems better than many Ethereum-based NFTs which point to an off-chain server rather than using Ethereum block space.
But it may also be that early adopters are running Bitcoin nodes and buying in Discord chats simply in hope of making a quick profit by selling to the buyers they expect will come in as soon as Ordinals get more user-friendly.
The early evidence is mixed: As Ordinals have gotten a little easier to access in the weeks after launch, the number of inscriptions has risen, but the fees being paid have fallen.
The profit motive makes it difficult to separate the signal from the noise here.
In other areas of crypto, however, the signal seems more reliable.
The Bad Bull Case
In the US, we want DeFi to be perfectly decentralized and entirely permissionless.
In most countries, though, a mostly decentralized and semi-permissionless financial system is more than good enough — as is the case in Argentina, where keeping USDC in a digital wallet is self-evidently better than keeping hyperinflating pesos in a bank account or $100 bills in your pocket.
In the US, we want to disintermediate the banks because the banks are the bad guys. But in Venezuela, people buy stablecoins for indirect access to those same banks we love to hate.
Argentinians and Venezuelans don't have the luxury of worrying about how decentralized their digital dollars are — compared to the alternatives, any dollar will do.
We all wonder, for example, why anyone would use highly suspect Tether dollars. But if those are the only dollars you have access to — for location, KYC, or other reasons — those are the ones you'll use.
Like a photographer's camera, the best digital dollar is the one you have with you: Tether dollars are not very good, but people still use them — which proves that they're useful.
Using crypto at this stage is about like making a phone call over a barbed wire fence. Or programming on an Apple I computer.
How popular will it be when we get to the stage of smartphones and MacBooks?
The bull case for crypto is therefore not how good it is, but how bad.
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