It takes an honest heart to acknowledge failure. - xh3b4sd

We can still hear people complain that crypto has no apps. Meanwhile the city of Buenos Aires has rolled out digital identities using zero-knowledge proof technology to all of its roughly 3.6 million citizens. This is a huge deal for two reasons. For one those digital identities are secured by Ethereum, since the underlying infrastructure is provided by an app on top of ZKsync, an Ethereum L2 rollup. And two, these credentials are the cryptographic property of individuals, who can now reveal only what is strictly necessary in order to verify some required fact about their identity and citizenship. This kind of data privacy makes Argentina one of the first governments to utilize zero-knowledge proofs for better privacy and higher efficiency. This new way of authenticating citizens opens up the potential for spectacular efficiency increases across all kinds of administrative processes. For the most part governments around the world do still operate on the basis of many many pencil pushers who frankly spoken do nothing for the GDP of any given country. Those archaic administrative processes waste everyone's time and resources. Technology will enable us now to do away with all that slack, ultimately freeing up the human spirit and human creativity that is best allocated somewhere else. As an example application, imagine you start a new job, which requires certain background checks to be facilitated. Your new employer needs to be sure that you are who you are. People need to know where you live, what your bank account is, maybe even some of your medical records and other sensitive details of your living and working history. So far it has taken weeks and months in order to find and copy documents, sending them away, receiving them on the other end, making sure everything is catalogued. All manually of course. Forget all of that. We can now build systems in which you get a request to verify certain facts about your identity, and once you clicked a button to approve this verification it takes a couple of seconds for your new employer to get the green light about everything they need to know. Processes that took months can now be facilitated in seconds. This works because with zero-knowledge proofs everything can now be in one place without having to expose all data to everyone. The future is already here, it is just not equally implemented. And today we can already see that Ethereum helps to be better tomorrow.

The following is not so much about crypto, but more about you as a person and the psychology of the market, or better, the internet as a whole. In one of the recent Powerlaw memos I have mentioned that people often complain about the content on their social media timeline. It now happened to me that I got suggestions for very violent videos on Twitter. So far I have never clicked on any of this kind of content, I never searched for it, I was never asking to see this. And now it just so happened that I received these "recommendations". The point I am trying to make is that you are in charge of your social media diet. And even if the algorithm is stupid and opaque and unfair and wrong, you can still choose to tell the system that you do not want to see any of this garbage. You can choose to either not use the app at all anymore, or choose to make an effort so that you get exposed to a more suitable set of content. I think this pattern of using "algorithms" to show people content is absolutely inappropriate. That is also why we are not doing any of that with Uvio. I believe that the user should have the choice and the understanding of how something works. And so everything on Uvio is either sorted by time or categorized by topics. One feature that I am excited about in the future are custom lists as first class citizens. So that you as a user can define how your home feed ought to look like, without being bothered by random or even toxic suggestions that, frankly, have nothing to do with anything as far as your own preference is concerned.

Here is an interesting question I saw the other day. How should we build committees in DAOs that are easier to dismantle if needed? In any event, we should try to prevent the creation of any committee in the first place, if possible. The question should always be "What is this even good for?". Organizational structure should maybe generally be approached by first asking "why" 5 times until the actual problem is identified and understood. Any slack that is building up over time should be addresses immediately. We have heard of stories in which DAOs pay "contributors" enormous amounts of money for basically doing nothing at all, and nothing that matters anyway. I believe that we are approaching governance issues on a merit basis with Uvio information markets. The idea is simple. Make a truth statement with conviction and stake your reputation on it. Sounds like a lot, but that process breaks down the governance problem in a way where responsibilities are clear and the process itself has an expiry. Decision making will more and more happen onchain, because the future is already here. If you haven't tried Uvio for your own decision making or record keeping, just give it a shot. It's easy, it's free. And if you have any feedback, or if you need anything implemented or fixed, just hit me up and we get this going.

Paul Tudor Jones said this week "all roads lead to inflation". And with that we maybe have to talk about the underlying mechanics of inflation once more. There are monetary and economic mechanics at work when we talk about inflation. The part that confuses everyday people may be that "inflation" is often represented by the Consumer Price Index, but the CPI only shows the change in price over time of any given good or service across the economy. Price changes are outputs of economic systems. What I am hearing when Paul Tudor Jones says "all roads lead to inflation" is the monetary impact of policy makers on hard assets. So what interests us in terms of inflation is not so much an output like price changes, but rather an input like currency debasement. As elaborated many times across many different Powerlaw memos, our civilization very fundamentally runs on debt. And that is why household deficits will eventually matter, whether you are a nation state or blockchain network. The United States will inevitably print more money, which in turn will cause asset price inflation. This form of deliberate government enforced currency debasement is the very thing that hard assets like BTC and ETH are there for to protect against the loss of purchasing power. I often hear people argue that crypto did not protect wealth when the CPI was rising. And of course it didn't, because the CPI is the wrong kind of inflation that you are looking at when you talk about crypto's potential as an inflation hedge. What you have to look at is currency debasement, because that kind of dilution is what hard assets can protect against. For the time being BTC will do its job on that front. What I am just worried about is the uncertainty about Bitcoin's failing security budget. Because the thing that is there to worry about is the simple fact that nobody is talking about it, and that nobody seems to have a good answer for that question in the first place. All the while every scammer with an audience leads more useful idiots to the slaughter house. As mentioned above, household deficits will matter eventually, whether you are a nation state or a blockchain network.

BTC dominance is almost at 60% and I can't believe how strong this thing is going these days. I somehow want there to be a top, because in my mind this relative strength makes no sense. Meanwhile my hot take about the bottom of the ETH/BTC ratio in August was entirely wrong and we have now touched almost 0.036. All of this in the face of facts and fundamentals is an absolute insult to my intelligence and I just want the bleeding to stop. All predictions aside, there has to be the bottom somewhere. Eventually fundamentals do have to matter, and I am hopeful that 2025 becomes a good year for crypto fundamentals at large. Despite all the pain in my body, despite all the cognitive dissonance on the timeline, despite all the noise and twisted incentives in the markets today, I do still believe that Ethereum will be a profound building-block of our economic future as mankind. Almost all fundamental metrics point up into the right. Never forget that the market can remain retarded longer than you can remain solvent. But this too shall pass.