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5) c) potential use cases: remittances, payments, store of value, NFTs in the metaverse, information transfer, social media, tokenized assets, disintermediated finance, etc. d) the start to scaling solutions: new L1s, L2s, lightning, rollups, etc.; tx/sec is now ~50k

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6) e) An enormous amount of attention. Seriously, crypto punches _way_ above its weight on this one. Crypto market cap is ~2.5T, less than Apple or Microsoft. Which gets more attention, though?

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8:39 PM · Dec 27, 2021Twitter Web App

7) So, overall things have been going pretty well the last few years. What's still missing?

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8) Well, let's start with the obvious: regulation. There has been a lot of tension between industry and regulators, and both sides have, in many cases, left feeling frustrated.

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9) On the one hand, it's not clear what the process is for token issuance, platform registration, and stablecoins in many jurisdictions. This makes is hard for the industry to move forward as securely, and hard for institutional players to get involved.

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10) On the other hand, many regulators have found it very difficult working with crypto companies: instead of working collaboratively, we've seen a ton of examples of tension boiling over.

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11) What else? Well, blockchains are starting to scale, but it's not enough yet. We're at ~50k TPS; industrial scale applications often require millions. And, while digital assets hold huge promise for payments, in practice very few are done with them today.

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12) So, how do we get there from here? As we close down the most explosive year in crypto's history and look forward to 2022, what does the industry need to focus on, and get right?

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13) Well, let's start with regulation. The biggest thing here is to work collaboratively on ways to address current regulatory gaps while allowing liquidity to move onshore -- to the US, and to Europe, and other jurisdictions.

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14) Stablecoins are maybe the most straightforward: create a reporting/transparency/auditing based framework to ensure they are backed as they say they are: ftxpolicy.com/stablecoins This would solve 80% of the problems while allowing stablecoins to thrive onshore.

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15) It's important, while doing so, to make sure that an open network can grow; if the network is restricted to existing banks, it defeats most of the purpose.

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16) Second, there should be standard markets oversight, in a unified regime that creates similar standards for spot, futures, etc. And third, a disclosure, registration, and anti-fraud based regime for token issuances. ftxpolicy.com/areas-for-cryp

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17) The goal of all of this is to come out stronger. To emerge with customer protection and regulatory clarity in a way that consumers and institutions alike feel comfortable interfacing with the digital asset ecosystem.

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18) And I'm optimistic that we might get there in the next few years; that there is a light at the end of the tunnel. How about use cases? Well, the biggest blockers are network effects: in order for crypto payments to work well, both the buyer and seller need to support it.

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19) This means slow, hard work; building out the network until it approaches transition points where enough merchants and consumers use crypto that payments and remittances start flowing. And, similarly for blockchain based social media and information flow.

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20) Tapping into the existing userbase of video games could be huge--billions of users and hundreds of billions of dollars each year. But this only makes sense if it makes the virtual worlds more engaging, not less.

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21) The real goal, here, is to take a great game, and integrate NFTs in a way that makes the game better. And, meanwhile, networks need to keep scaling. I always laugh when a blockchain says they're already fast. None are! Fast means millions of TPS. No one is there yet.

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22) So what matters the most is having a concrete roadmap to scale to millions of TPS, and executing well on it. So, there are some concrete things that the crypto ecosystem needs to manage well over the next year. But more generally, everything matters.

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23) I may write more on this later, but one of the core theses I've come to believe over the last few years is: Everything is the same; everything is commensurable. If you want to grow trust in the industry, regulation matters. But so does UI/UX; and each scam detracts.

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24) Every time we can do something great and beautiful and useful as an industry, we move everyone forward. Every time we fuck up, we all take a step back.

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