The Lessons from Crypto
Updated: Jan 10
"The rules of any given game determine the behavior of the players in that game. When you change the rules, players behave differently. So rather than looking to change the world by changing individual actors in a system, the highest leverage point is to change the rules." - John Ellison
John Ellison is a social entrepreneur and behavior designer exploring how to use web3 to redesign money and heal the earth. He’s the Source at ReFiDAO, host of ReFi Podcast and a passionate community builder.
1. What 3 books/websites/resources would you recommend for a person, with no prior knowledge, wanting to understand the broad principles of Crypto/Web 3.0?
I recommend people read the Bitcoin white paper as well as the Ethereum white paper. These two seminal works build on top of one another and lay out the core foundation for distributed ledgers and their role in building a more open, transparent, and effective monetary system.
Beyond this, crypto Twitter is an incredibly good place to make sense of web3. There are a lot of brilliant people who openly share their thoughts and perspectives on Twitter which acts as the town hall for the crypto space. Bankless is a great podcast, they have an evergreen 2-hour 'Welcome to Bankless' episode that covers the Bitcoin and Ethereum thesis for those who aren't keen to read a white paper!
2. What principles from Crypto/Web 3.0 can be applied to other fields?
There are 3 ideas in crypto that are especially useful for anyone looking to make an impact in the world: (i) Coordination, (ii) Game Theory, and (iii) Money as Technology.
The first concept of coordination is a key tenant of blockchains and the cryptocurrencies that live on them. Coordination is when one or more actors work together to achieve some specific outcome. Its outcomes are determined by a large number of factors including the number of players, the incentives, and the rules of the 'game.'
Coordination failure is when actors in the game are unable to achieve a positive outcome. Examples of coordination failure are things like climate change, biodiversity collapse and social injustice—to name a few.
Climate change itself can be seen as one of the greatest coordination failures. The economic system of our world today creates incentives for people to neglect the negative externalities of most economic activities (creating greenhouse gases that warm the planet, destroying habitats and ecosystems, exacerbating wealth inequality, etc.).
(ii) GAME THEORY
The breakthrough insight game theory provides is that the rules of any given game determine the behavior of the players in that game. When you change the rules, players behave differently. So rather than looking to change the world by changing individual actors in a system, the highest leverage point is to change the rules.
When you look at the largest coordination failures, you realize that money itself sets the rules for the game and the resulting outcome.
(iii) MONEY AS TECHNOLOGY
What is money? It's a technology... It's a specific tool that humans have designed to achieve a specific outcome. Once you grasp that money itself is the technology it unlocks a lot of insight into the way our world works (the rules), and why coordination failures arise as they do.
With these 3 key ideas of: (i) Coordination, (ii) Game Theory, and (iii) Money as Technology, you discover an entirely different landscape from which to create solutions to the most pressing problems of our time.
Money is one of the greatest levers we have for enacting systematic change. If you change the rules of money, you change the rules of the game. Some interesting questions friends in the crypto space ask in this model are:
- What if money knew where it was?
- What if money decayed the longer it was held?
- What if money knew its impact on the planet?
There are countless other inquiries that can yield interesting thought experiments and lead to prototypes for new solutions that haven't been explored before now...
3. What small things make a big difference in Crypto?
Intention is key. If the intention of a given technology is to make people rich—the culture and behaviors will reflect this intention.
4. What is the biggest misconception or the biggest mistake that people make in Crypto?
Most people get into crypto to get rich when actually what they need isn't money—it's usually something else: Belonging, purpose, meaningful work. The interesting thing is the way that crypto communities have grown from this original exploration of wealth creation into creating deeply resonant spaces where people belong, have a sense of purpose and can make meaningful contributions to a bigger cause.
Many people write off crypto as a scam and miss the fact it is a coordination technology that can be used to fulfill a wide range of intentions. In the same way that websites are versatile tools that can be used to fulfill the creator's desire (cryptocurrencies are powerful tools that can be applied towards any number of desired outcomes.
It's just unfortunate many of the early adopters of crypto have decided to use this technology for selfish reasons...
5. Which gadget or tool has the biggest bang for the buck in Crypto?
If you're going to put money into crypto the security and responsibility you take should be reciprocal to the amount of money you put in.
Don't put large sums of money into this tech without knowing how wallets work and the various ways you can lose money! Read about this powerful new tool and you might just find some new and interesting ideas that change the way you see the world and go about making a meaningful difference in it...