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"In Italy for thirty years under the Borgias, they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace, and what did that produce? The cuckoo clock."

- Harry Lime, The Third Man

The Unpredictable Upside of Memecoin Madness

My all-time favorite movie is The Third Man, a prescient Cold War drama filmed in 1949 when cinematography was art and movies were films.

(I know, I know. Everyone thinks they're an expert on movies. But I really am.)

I wouldn't particularly recommend it, though. It’s too slow for modern sensibilities. 

It takes two minutes and 20 seconds just to get through the opening credits and then it’s another 58 minutes before the star, Orson Welles, makes his first appearance.

This is not a get-off-my-lawn thing — The Third Man is too slow for me now, too. 

That’s because we've all been retrained, our brains literally rewired, to expect instant gratification and a constant stream of dopamine hits in nearly every aspect of life.

I find this nowhere more evident than with movies, where streaming video has not only changed how movies get distributed — it's changed what kind of movies get distributed, too.

Filmmakers know that to hold our attention for any amount of time, they have to get right to the action — if a film doesn't grab us in the first minute or two, we’re likely to go looking for a more stimulating alternative, always just a couple of clicks away.

Even TikTok videos can seem like too much of a commitment for our truncated spans of attention, so we’re certainly not going to sit through two minutes and 20 seconds of opening credits just to get to the start of The Third Man. 

And no director will ask us to, so that kind of film probably won’t ever get made again.

I expect this will soon be evident in investing, as well.

The memecoin reign of terror

RWA-related tokens like ONDO, GFI, MPL and MKR have shot higher this week, probably because BlackRock’s announcement of an Ethereum-based money market fund (BUIDL) has briefly redirected our attention away from memecoins and towards the more sensible segment of institutional crypto.

BUIDL is certainly interesting as a potential first step in blockchain tech making stocks, bonds and real estate more accessible, easier to trade and faster to settle.

But putting money market funds on-chain is like putting The Third Man on Netflix — nice to have, but not exactly revolutionary.

Things only get really interesting when a new mode of distribution changes what gets distributed.

Blockchain-based markets may, for example, someday enable securities with a pro-rata claim on Treasury assets, like we have with Nouns DAO NFTs.

Or the ability to stake and lock our equities in return for a higher dividend yield or more votes in governance.

Or maybe we’ll want to invest in hybrid crypto/real-world businesses, like those being enabled by DePIN.

Most hopefully, though, we’ll be buying as-yet unimagined types of assets and doing as-yet unimagined things with them.

Maybe it’ll be tokenized compute credits, decentralized data centers on the Moon, or an intergalactic currency collateralized by water (the scarcest commodity in outer space).

OK, fine. Probably not that last one — but what ultimately makes crypto relevant is not likely going to be anything as familiar as money market funds or Treasurys either, even if that’s what we’re starting with.

"Early in the development of new technologies," Chris Dixon explains, "doing old things better gets more attention, but doing brand new things ends up having more impact on the world."

It feels like crypto is just at the start of that process — we’re already doing some brand new things, like memecoins, but it’s difficult to see how they could ever have a beneficial impact on the world. 

But smartphones and social media haven’t done a lot of good for the world either, and we keep using them without much question — which is fine: It just means we haven't yet figured out how to use them beneficially.

We haven’t quite figured it out with crypto, either, but we probably will — and probably in unexpected ways.

Yesterday, I cited DePIN as crypto's first great hope. 

Subsequent great hopes, I suspect, will be most likely to emerge from the corners of crypto that currently look least hopeful — like memecoins.

Institutional adoption is welcome and productive, of course, but SEC-approved cryptocurrencies and KYC’d DeFi seem likely to produce the financial equivalent of cuckoo clocks. 

The real innovation will emerge from the financial terror of crypto-native things like memecoins.

― Byron Gilliam

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We're Watching

In this episode, Jason and Santiago recap their experience at the Digital Asset Summit (DAS) in London. They discuss the evolution of DAS over the years, noting the increased institutional presence and sophistication. The conversation touches on major themes from the event, including the financialization of meme coins, the growing importance of staking and restaking, and the potential impact of ETFs.

Watch or listen to Empire on YouTube, Spotify or Apple.

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