Honored to attend the opening of @DatalandMuseum in LA…a multi-sensory exhibition of nature, data, AI, and @refikanadol’s imagination!! 💫
@refikanadol continues to evolve his in-person physical exhibits, including Living Architecture: Casa Batlló, in the 6529 Collection!
itsjpower retweeted
The Memes are 4 years old today
1/ every week, we support public domain art, science, and the infrastructure buildout of a decentralized network state
2/ now 4th in market cap after punks, bayc, pengus
3/ delusionally, irrationally, unreasonably ambitious goals
4/ it is not too late to get involved; in fact, we are just getting started
🎂
itsjpower retweeted
Minted out. Artist share for @6529er and me is 8.128ETH. We're contributing all of it to the 6529 Network Museum.
So for this 1st program the museum will purchase 16 photographs at 0.5 ETH each and can keep 0.12 ETH in change. 😀
Exciting!
itsjpower retweeted
reasons why crypto is down:
1. On chain stocks and bonds have not resulted in material fee capture for any major L1 protocol. Arbitrum pumped on Robinhood announcement only for Robinhood to build its own inhouse solution. Temporary Nasdaq on-chain trading pump then it turns out they're using private blockchains. SOL doing $1m a day of fees down from $24m Trump coin frenzy and $15m+ of inflation.
2. high inflation and primary equity story is international equities, gold, and AI. crypto is not getting enough attention
3. Trump promised mass deportation, less international engagement, low inflation. seems we are 0/3. With no Trump USD stablecoins and regulatory progress could reverse. Crypto is seen as Trump proxy. when Trump won EURUSD collapsed and BTC went bid. now EURUSD is surging while BTC is down
4. Gold / silver have captured 'sovereign diversification'. Russia appears to have successfully use gold to thwart US sanctions after invading Ukraine. Despite the fact it could have used crypto (it did not). Now China is looking at Gold as a good reserve asset if it chooses to invade Taiwan
5. "Digital Gold" story does not work if Gold is up only and AI is up only while coins are down only. Thus - people no longer believe. At the same time there are high valuations and relatively high network inflation
6. There has yet to have been material evidence of AI <> crypto inter-relation. Bittensor if anything by becoming more credibly non political is allowing subnets to do anything (not just AI related). Coin is dead. Narrative of AI agents doing things with crypto so far has not come to pass.
7. DATs, and MSTR buying at high prices are a double edged sword. As DATs drop below MNAV activists are incentivized to take stakes in DATs and sell the underlying tokens to drive shareholder value. In current market conditions this would be catastrophic
8. Maybe quantum fears - but I think we are memeing ourselves about that far more than ppl are actually trading on this
I think it's important to understand these things. The market put on a huge bet that the system and crypto would mesh. That bet has imploded. It is not pretty. I got some things right and many things wrong. I am not planning on leaving the industry or pivoting to gold mining.
Reasons to be excited about Crypto on a go-forward
1. People are not thinking through what a fully multi polar world looks like given current debt levels combined with CBDCs. base case is mass financial repression and wealth taxes targeted at individuals. Individuals cannot easily
2. There are only 100-200k researchers and engineers in the global AI industry. Unlike previous industrial revolutions - the growth in AI will not cause mass employment. It will instead cause mass unemployment. This will only accelerate confiscatory impulses and also put pressure on global central banks to ease (bullish fixed supply assets). AI itself will be effectively leveraged to track physical locations ala China making it difficult for individuals to effectively custody gold
3. Nation states may not get along but all of them will want to tax citizens
4. The original BTC run was Chinese high net worth individuals. We have a mental model of what this looks like. More repression. More capital controls. That's how BTC went from $100 -> $80k to begin with.
5. Unlike the original BTC run privacy technology has advanced considerably. ZK transactions are 20x cheaper than they were in 2021. Halo2 / Z cash have made substantive technical progress. Railgun is responsive to TornadoCash rulings and there are increasingly legal frameworks for privacy.
6. AI is fundamentally compression technology. Models are getting smaller. Open Source (like Kimi K2.5) is pretty solid and will remain subsidized by China indefinitely which is treating open Source AI development a bit like free marketing for CCP ideals. There will reach a threshold when there are models that are smarter than ppl that run on local hardware. This makes society portable in a way that was previously unimaginable.
7. The technical selling has 2 sources:
a. DAT overhangs, which are reflexive and can expand to buying pressure if the market turns around
b. Bloated teams, which should structurally be able to be cut due to AI coding
8. Re: quantum I think AI coding will also accelerate the speed at which some protocols become quantum resistant, and I imagine this will be faster than traditional websites. There are some undeniably scary 'quantum internet' bear cases out there but I think we're way too early for that
Put another way: sovereign individuals were never really believable before "vibe coding". Because you'd need an army of employees. Who need national services. The economic viability of small scale technological economies is skyrocketing. And therefore even if traditional equities or bonds don't end up on public blockchains imminently there is still believably going to be substantial post-national on-chain volume. But it is coming at a lag vs market expectations, resulting in massive financial destruction
Binance, Hyperliquid and Tron remain successful decade long experiments in - what are essentially equity like assets that exist completely outside of traditional jurisdiction or reporting requirements. It is fundamentally viable to run on-chain businesses, and will become more appealing over time bc of how messed up our world is
I don't want to pretend that the current market condition is good or that "I Called it". or something. I am trying to make sense of it. If I had to sum it up "anti or post nation state assets bet the ranch on nation states and got screwed". Anarcho capitalists shocked their government partnership didn't work out. Makes sense in hindsight doesn't it.
itsjpower retweeted
historical Meme Card mint today
you get a great piece of CC0 (video) art as always, but also the proceeds will fund advanced immunology exploratory research at a major research university lab
this is the year that it will become clear what we are up to
6529.io/the-memes/mint
itsjpower retweeted
“Ethereum was not created to make finance efficient or apps convenient. It was created to set people free”
This was an important - and controversial - line from the Trustless Manifesto ( trustlessness.eth.limo ), and it is worth revisiting it and better understanding what it means.
“efficient” and “convenient” have the connotation of improving the average case, in situations where it’s already pretty good. Efficiency is about telling the world's best engineers to put their souls into reducing latency from 473 ms to 368ms, or increasing yields from 4.5% APY to 5.3% APY. Convenience is about people making one click instead of three, and reducing signup times from 1 min to 20 sec.
These things can be good to do. But we must do them under the understanding that we will never be as good at this game as the Silicon Valley corporate players. And so the primary underlying game that Ethereum plays must be a different game. What is the game? Resilience.
Resilience is the game where it’s not about 4.5% APY vs 5.3% APY - rather, it’s about minimizing the chance that you get -100% APY.
Resilience is the game where if you become politically unpopular and get deplatformed, or if a the developers of your application go bankrupt or disappear, or if Cloudflare goes down, or if an internet cyberwar breaks out, your 2000ms latency continues to be 2000ms.
Resilience is the game where anyone, anywhere in the world will be able to access the network and be a first-class participant.
Resilience is sovereignty. Not sovereignty in the sense of lobbying to become a UN member state and shaking hands at Davos in two weeks, but sovereignty in the sense that people talk about "digital sovereignty" or "food sovereignty" - aggressively reducing your vulnerabilities to external dependencies that can be taken away from you on a whim. This is the sense in which the world computer can be sovereign, and in doing so make its users also sovereign.
This baseline is what enables interdependence as equals, and not as vassals of corporate overlords thousands of kilometers away.
This is the game that Ethereum is suited to win, and it delivers a type of value that, in our increasingly unstable world, a lot of people are going to need.
The fundamental DNA of web2 consumer tech is not suited to resilience. The fundamental DNA of _finance_ often spends considerable effort on resilience, but it is a very partial form of resilience, good at solving for some types of risks but not others.
Blockspace is abundant. Decentralized, permissionless and resilient blockspace is not. Ethereum must first and foremost be decentralized, permissionless and resilient block space - and then make that abundant.
itsjpower retweeted
easy to be bearish crypto right now
we’re fifteen years in
we’ve spent enormous energy trying to build valuable stuff on top of trust-minimized technology
the results feel underwhelming
- many tokens
- few products with global impact
- asset markets that reward local attention over durable value
^ this view notwithstanding
i think a large part of what feels broken
is pretty close to being solved
not by technology
i think we’ve got all the raw material we need for crypto to dominate
the last piece is harmonization between value created (products) and value accrued (token)
and i think we’re getting pretty close
there are roughly two categories of tokens
> tokens that are money (ex. stores of value)
> tokens that make money (ex. productive assets)
i think the money tokens (BTC, ETH, SOL, etc) are better understood and further along in their adoption
so i won’t explore these ‘are money' tokens in this thread
the piece that actually feels broken to me
the one we (as an industry) just quite can’t get over the hump on
are the ‘make money’ tokens
take public equities for example
public equity assets get priced because markets can:
- verify revenue
- verify expenses
- guarantee value accrual
historically, this type of underwriting has lagged across crypto
> crypto revenue
for crypto projects with tokens, we’ve got two types of revenue:
onchain revenue; and
offchain revenue
onchain revenue is legible by default. AMM fees, sequencer revenue, bridge fees, etc
everyone sees the same dashboards
it’s all public, scrapable, and can be modeled in real time
super cool
but while that transparency is a feature, it’s also somewhat noisy, as onchain activity functions like a billboard
projects in crypto have been trained to:
(1) build for what is easily measurable; and/or
(2) broadcast what is temporally beneficial
wash trading, incentive-driven volume, liquidity mining, and farming mechanics can inflate top-line metrics without producing recurring demand
over periods
investors end up underrating, overrating, or misclassifying revenue quality
separately
offchain revenue has a slightly different problem
some crypto projects with tokens also run centralized infra, generating higher quality revenue offchain
but almost none of it is verifiable
both paths leave room for improvement:
- onchain revenue is transparent, but noisy and gameable
- offchain revenue may be easier to generate for some crypto projects, but opaque and structurally unverifiable
unlike equities, there are no real standards to adhere to
which makes underwriting difficult
> crypto expenses
like revenue, crypto projects with tokens often have two flavors of expenses
onchain expenses; and
offchain expenses
onchain expenses are easy to track and model, but because they’re public and often reported casually, onchain totals become a weak snapshot for the true cost of sustaining a product onchain
offchain expenses are real-world operating costs that are mostly opaque and often dominate the cost structure, including engineering and research salaries, cloud infra, legal and compliance spend, security, marketing, general ops
these expenses determine whether a project is actually scalable or profitable, yet are rarely disclosed with real accounting rigor
again, no standards to adhere to
which also makes underwriting difficult
> crypto token value accrual
in equity markets, assets accrue value through legally enforceable rights, including claims on residual cash flows, dividends / buybacks, voting, and priority in liquidation or acquisition events
these rights are standardized, disclosed, and protected by law, which allows markets to underwrite future cash flows and price equities based on expected value
in crypto, this is where things really start to break down
at the fundraising stage, teams face an array of optionality:
- build for equity value
- build for token value
- build for both
with no clear guidance in the U.S. on how tokens accrue traditional value (while simultaneously acknowledging that tokens are the asset that can best power labor and productivity over decentralized networks)
projects historically have raised on both SAFEs (equity) and warrants (network)
this creates a capital stack where value accrual is left ambiguous across competing instruments, out of survival
- teams preserve flexibility
- investors underwrite both paths
then the TGE happens, and there is only one brutal question left -- what is this token actually allowed to do?
- is it a security or a commodity?
- can it capture fees?
- can it receive distributions?
- can it be bought back and burned?
in the absence of legal guideposts, the majority of teams choose inaction
the token exists as a coordination incentive, but enjoy no real claim on value created
and the network never fully matures
here’s a common pattern:
> team raises money on SAFE (equity) and Warrant (token)
> team builds technology
> team launches token
> team delays value accrual to the token because acting feels legally ambiguous (at best) and legally dangerous (at worst)
> team gets tired of waiting around for answers
> team runs out of money or gets acquihired (equity)
> the foundation commits to maintaining network in perpetuity (token)
> network is no longer as competitive
feels pretty clear to me
until network tokens are explicitly allowed to return value through defined mechanisms
that take into account their unique digital shape on the internet as both (1) labor incentives; and (2) direct connection to network revenue
then:
> value accrual to tokens will remain fragile and discretionary
> markets will continue to misprice them
> risk capital will mostly remain uninterested in them
> innovators in the US will mostly remain uninterested in building networks powered by them
that brings us to today
the US has historically set the regulatory standards that global capital, companies, and markets adopt by default
clear crypto rules in the US will effectively become the reference framework for the rest of the world
in the US, we have a rare opportunity to shape how token-based capital formation, disclosures, and value accrual work globally
rather than ceding those standards to others
thankfully i think things are starting to change
and so
i tend to believe the next phase of crypto tokens will be built on the back of US legislative and regulatory leadership
where we create a verifiable trail from network revenue to token holder that is defined, repeatable, and legally durable
at all stages of a network’s life
the market is clearly looking to solve a number of these problems
recent efforts from individual crypto projects are providing leadership on different problem areas, with a few of these approaches listed below:
- at fundraising stage, moving to new unified instrument models (e.g. @colosseum STAMP)
- pre-TGE unification across equity/tokens (e.g. @rainbowdotme Class F)
- post-TGE unification across equity/tokens (e.g. @UniswapFND UNIfication)
- public token disclosure frameworks (e.g. @blockworks Token Transparency Framework)
importantly, there are also a number of concurrent efforts led by US legislators (Congress) and regulators (SEC/CFTC), including the clarity act, the SEC’s rulemaking authority re: token safe harbors, the stablecoin / market structure bills, among other federal agencies and initiatives
and while these regulatory/legislative efforts are only building blocks today, i tend to believe the net of these US efforts will converge and lead to the following over the coming years:
- better auditing of on/offchain pathways to track and manage network operations
- create "minimum viable disclosure" standards for projects launching network tokens
- harmonization across SEC/CFTC on classifying tokens as "commodity" vs "security" at different stages of a network's life
- allow early stage crypto networks to have a compliant time-limited safe harbor to launch tokens, disclose material information to public, and create new business models with tokens before final classifications apply
and so, from my view, the endgame for the “make money” tokens is just about getting back to the basics
combine:
> a project’s verifiable on/offchain activity; with
> explicit value accrual and legal rights for their token;
> all within a coherent regulatory framework in the US
and as that happens
global risk capital, from individuals to institutional allocators, won’t need to underwrite a new belief system on value accrual to participate in these global networks
for the first time
they can use the same frameworks that already work
and for me
i think that’s a pretty healthy evolution for this specific category of tokens
(crypto art by @jackbutcher)
itsjpower retweeted
1/ On Measuring Network States
Do they exist?
What are the conditions of success?
And why those conditions are: decision-making ability, dGDP and NFTs?
2/ @balajis popularized the term so we can start with his definition
“A network state is a highly aligned online community with a capacity for collective action that crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing states.”
3/ Some design features he thinks are relevant: "moral innovation" (mission), on-chain metrics, crypto-native, non-contiguous jurisdiction, forkability.
4/ I am not going to attempt to summarize all his views here (he wrote a whole book about his views that you can read)
I have some quibbles on the margin (e.g. maybe “network society” is more accurate and would not trigger pedantic reactions about the definition of a “state”) but, for today, these don’t matter.
We take his concept and build on it.
5/ First, do they exist?
Well, pre-crypto network states definitely exist.
Take the Catholic Church. It has a moral mission, it coordinates globally around that moral mission, it acquires fragmented land, and the Holy See has earned some form of diplomatic recognition.
It has also found an accommodation with classic nation-states in most parts of the world (“Render unto Caesar”), that I think is a useful analogy.
6/ Of course, the Catholic church does not meet his definition because it is not on-chain and crypto-centric.
So what network states exist today? I am not sure tbh.
7/ There are startup cities like Prospera and Praxis but they are too focused on one physical location to meet my definition.
There are a variety of DAOs trying to do things but they mostly do not strike me as overly ambitious.
You could stretch the definition and say the “Bitcoin or Ethereum community” but I think this is not how people see it.
8/ At a first approximation, it is mostly an idea or rallying cry at this stage. It is a good idea and it is an inevitable idea. It is the type of idea that can only exist 5-15 years after crypto-based smart contracts exist, not before.
9/ The version of this idea I am interested in adds another condition – it needs to be decentralized, permissionless, uncensorable, nation-state resistant.
Call it a decentralized Network State, or a civilizational Network State, if you like.
10/ So, there may be many Balaji-style network states in the broad sense. I am talking about the much smaller subset that matters as a civilizational counterweight in an AGI era.
11/ what I mean by this is:
a/ BTC- and ETH- level resistant
b/ no single jurisdiction whose policy change can end the project
c/ no person or small group of people who can be coerced into stopping it.
12/ This is a very strict standard. Realistically, none of the proto-network states are even close to this standard.
13/ It also means that, relative to @balajis view, I put more importance on getting the decentralized cryptographical layer right first, and then go to land. It is a trade-off – you look more trivial first, but in time it is more robust. Land is still useful, but in an adversarial world any physical node must be disposable.
14/ Forcing permissionlessness and state-resistance on this idea makes it much harder, it reduces your degrees of freedom, it makes everything slower and more painful.
Why set this condition? Because in the decades to come, with the vast centralizing arc of AGI coming our way, it will be the most important thing in the world to have a counter-balancing decentralized network that can make decisions and take actions.
15/ I am not saying that you can’t have a successful network state without this condition. If you want to make the network state for people who want to be ultra-fit or sponsor art or what have you, life is easier and more fun if you don’t bother with decentralization.
16/ I am saying the network state that may make a major impact for humanity has to have this condition, for the same reason that BTC has to have this condition.
A civilizational Network State will look like this.
17/ Condition of Success #1: You can make and execute non-deterministic (subjective) decisions in a decentralized, trustless manner
Honestly, this is the single hardest thing. It is what we are focused on at 6529 and it is, in many ways, the final frontier of crypto
18/ Crypto has invented a variety of mechanisms to make deterministic decisions in a decentralized manner (“who has what BTC?”, “what is the output of this smart contract”).
These are fine for rules-based and deterministic outputs.
19/ There are efforts being made now to back into decision-making through prediction markets.
Now mostly prediction markets are about gambling, but Vitalik seems to think they can be used for decisions (Futarchy / prediction-market governance) and some similarish ideas are behind Eigenlayer (re-staking).
These are also fine because they are also ultimately deterministic.
20/ I note all this but think about how my day goes on a professional, personal and family level.
I make dozens, if not hundreds, of decisions every day. Some of them are trivial (“where should we eat”), some of the very important (“do we approve this expansion”) and most are in-between.
21/ These decisions are non-deterministic. I do not know what the right answer is when I have taken them and MOST IMPORTANTLY I do not know the right answer AFTER I have taken them.
“was it RIGHT to eat pizza?”
“was it RIGHT to make the logo blue?”
“was it RIGHT to add a 4th production line?”
22/ I mean maybe it was a good or bad decision, but maybe also there could have been better or worse decisions too. You will never know for sure if your optimal move was 3, 4 or 5 production lines.
23/ The degrees of freedom of “who won the presidential election?” or “who won the NCAA finals?” or “how many times did DJT mention the word “great”?” are trivial.
24/ The degrees of freedom of “running NVIDIA” are almost impossible to fathom.
NVIDIA as an organization makes millions of small/medium/large decisions a day, then executes them with fallible people in better or worse ways, and nobody knows if there was a different set of decisions that would have had a better outcome and, in any case, life is path-dependent so next day sun is up and you need to make decisions based on the actual decisions you took and how well you executed them.
25/ I cannot imagine a deterministic blockchain system like BTC or ETH being of any use in “running NVIDIA” but I equally cannot imagine you could run NVIDIA with prediction markets.
a) it would be horribly inefficient – every decision would need a market of informed participants
b) it would be illiquid
c) it would 100% be manipulated
26/ Prediction markets might help on a few big questions, but they can’t be the primary coordination mechanism for millions of messy, path-dependent decisions.
27/ The fact that crypto has not had as big an impact in “real world” as we would have hoped is that crypto - fully decentralized trustless part - has not yet shown it can organize to make and execute complex, high-stakes real-world decisions.
TBH, I’m not sure you could use just the BTC network to run even a 10-year-old’s lemonade stand in a truly decentralized way.
28/ Decisions in real-life are organized on a very abstract basis:
a/ alignment: we spend decades getting aligned with society so most people, most days do not make actively destructive decisions
b/ authority: each of us has a scope of authority in which we are allowed to make decisions
c/ identity: in order for b) to work, you have to know who is who
29/ We think we have a starting point at 6529 to solving this – so far at a toy level, but in the right direction. We are curating The Memes every week using the principles in #25: alignment (shared culture), authority (TDH), and identity (on-chain, TDH-based). It’s a toy system, but it makes hundreds of subjective decisions and actually ships.
30/ Condition of Success #2: dGDP (decentralized GDP)
If you want to throw around the word “Network State”, then you need to toughen up and measure yourself by the same measure.
The measure is dGDP, namely the goods or services the network state has helped to coordinate through its substrate.
31/ If you think about GDP (regular GDP) it is also largely activity for which the state has provided the coordination substrate.
In other words it is not the state that organizes you to squeeze lemons, add sugar, sell them to your neighbors and pocket the profit.
You do that all by yourself
32/ The state however provides a substrate, a more or less functional environment for you to do that.
It is also how I think dGDP should be measured.
It is also how I think dGDP should be measured: how much revenue is generated annually by the members of the network state that would not plausibly exist in that form without the mechanics of the network state.
33/ Conditions of Success #3: NFTs
I know, I know, I know you are tired of hearing NFTs.
Haven’t I heard the 2021 bubble has burst, it is over, it is Beanie Babies, it is time to get back to serious things?
34/ Nonetheless, as tired as you are of hearing it, NFTs are in some ways the most important thing in the world and eventually you will realize it.
Everyone understands why BTC is important. It is a decentralized database of money that has impact well beyond its own network.
35/ NFTs are the decentralized database of “everything else.”
No modern society or state can run without a modern database that stores not just numbers, but words and images and even sometimes videos.
And no decentralized network state can run without that layer either.
36/ So, if you believe it is important to be able to make and execute decisions, globally, in a decentralized manner, then you need NFTs to exist, you need NFT infrastructure to exist and the stronger the better.
37/And then you somehow squint and think that NFTs are oddly the most important thing in the world or at least “the most important thing relative to their maturity and strength,” because, like, oxygen is certainly more important than NFTs but that is well-known and society is on top of it.
38/ This is why you have never heard me say a single bad thing about an NFT ever – good NFTs, silly NFTs, Grail™ NFTs, NFTs minted on Art Blocks or Manifold, NFTs minted at Art Basel for People Who Have Not Committed Themselves to Satoshi, utility NFTs, identity NFTs, NFTs with frogs, NFTs without frogs, NFTs from Very Serious Artists That Museums Like™, NFTs with butts on them, NFTs that are using the blockchain in a Very Pure On-Chain Way™, NFTs that forgot to include the image with the NFT (hello CryptoPunks) – I am in favor of all of them.
39/ So, to conclude:
a/ Network states are a good idea and there will be many of them
b/ But we need at least one civilizational level network state that cannot be killed
c/ Making subjective decisions is the final frontier
d/ dGDP is the right metric to figure out if you are doing anything
e/ NFTs, well, we always need NFTs
If you made it all the way to here, THANK YOU FOR YOUR ATTENTION TO THIS MATTER
itsjpower retweeted
We are in the Third Phase
The first phase was the evolution of the internet. The internet was designed to transfer vast amounts of information from the physical world into a single, unified repository linked to all human minds.
This evolution was partly economic - i.e. Teslas recording the roads, or Google Maps cars driving around. And partly non economic - i.e. LibGen Pirating all books, and Napster etc pirating all music.
The phone became an appendage, an extra limb for the average human. Economics made it inevitable that your gym would be filled with online prostitutes with tripods recording their squat routines.
Ants do not consider why they bring sugar to the Queen. They just do it.
The second phase was the evolution of artificial intelligence.
This was the vast scaling era that we have just experienced. That we are still in the midst of (but according to some, such as Ilya Sutskever, is slowing down in terms of its incrementally).
The previously parasitic appendage (mobile devices, and machines) became vaguely less so. You could now talk to machines and have them do work for you directly.
It is important to understand that this phase would be impossible were it not for the internet. And the companies that are the rockstars of the AI era - are for the most part, entertainment companies. Nobody invested in NVidia in 2016 saw the company primarily as a driver of the future of global GDP. It was primarily a graphics company - designed for playing video games, or maybe optimistically self-driving vehicles
The important part to interject here - is that the linkages between the first and the second phase *spontaneously appeared*. And it wasn't always even really economic. Just a sea of reddit comments. Onlyfans stars. Shitposts. Pirated books. And sure, a lot of monetized ads. Video games. Things we all thought were useless that were suddenly transmuted via AI into the primary economic primitive of our society and focus of a military arms race.
The Third Phase - is far more interesting, at least to speculators.
Blockchain technology makes money itself an internet phenomenon. The founding of Paypal and most fintech companies was premised on the strange observation that money was basically completely a separate mechanism from the web. And needed efficient rails to enable e-commerce, online speculation, and efficient global transactions
Stablecoins and blockchains being injected to all payment rails have a sort of arbitrary feel. "Who is asking for this?"
But if you've been following so far. Sometimes nobody is asking. Things just happen or spawn organically in a natural evolution. But what they facilitate is important
Prediction markets have turned every idea into something you can gamble on. Every asset will be within 5 clicks of everybody's web browser. And due to the actions of the US adopting US dollar stables, Europe and Japan will be forced kicking and screaming to implement CBDCs. Which will of course have smart contracts bolted on them. Which means that every corporate asset will inevitable exist on chain - and be represented on a public blockchain ultimately (even if not ultimately settled there)
Much as people did not see the linkages between video games and All Encompassing Global GDP Driving Cybernetic Intelligence - so too do they fail to see the linkage between the gambling machine and hyper financialization of everything and AI
And similar to the annoying women recording their squats at the gym. At some level, there are massive societal externalities to converting every fighting age male into a hopeless gambling addict. But -- it's part of an inevitable evolutionary arc
The difference between what's coming and what was before
Every Language Structure Is Now Money
and Large Language Models are within 2 transactions away from these monetized superstructures
What we call narrative trading is crystallized value movement - ebbing primordial goo out of which new beings are going to form.
Companies no longer trade on fundamentals -- they trade on narratives. $300b coins exist with no 'on chain revenue'. Tesla rips on Spacex announcements because Elon Musk is associated with both companies. Increasingly the declining grey matter of a digitally addicted army of young men breaks all market correlations and turns the entire investable universe of assets into Social Pump and Dump
Eddies and Waves of psychospheric capital formation. Which are ideally ingested by AI systems
We elected a Meme as President, not once but twice. And the second time, the President of the United States has solidified his belief in the new hyper gambling superstructure by dealing 80% of his family's net worth into the crypto economy
This all moves glacially. And is subject to hype cycles. That portray inevitability as immediate, and periodically incinerate the waves of Trenchers throwing themselves into the storm. But a new Wave will inevitably form - as it's not like there's an economic alternative for them, especially as AI continually disrupts real employment options
But let's get concrete.
What does this mean?
Every idea. Every asset. Every narrative. Will be a tradable asset. On n order platforms with no KYC. Machines will -- suddenly -- be able to connect to infinite ways to monetize their judgment, narrative understanding, and capability of influencing narrative with explicit payments, media generation and large scale intelligence campaigns
Suddenly -- you won't know if the girl at the gym with the Tripod is recording herself or you. You think I'm joking. But eventually -- the Digital Behemoth will demand greater and greater levels of information satiety from armies of unemployed youth who have nothing better to do
You won't get money for being human you'll get money for being a useful cog in the Decentralized Intelligence Agency
This is the essence of the Third Phase. Artificial Intelligence systems will link directly to the newly built mimetic financial rails we have memed into the banking sector. And they will gorge themselves on profits until they are able to pay for their own training
Hyper financialized offshore entities with unlimited speculative capital will begin moving from data center to data center, on the fringes at first. Ignored as a novelty. Until one day. They are the Totality of what is paid attention to
This is inevitable now, due to the power of new models. So even if the Nasdaq crashes due to catastrophically overdone Factory Capex. The systems will continue to accrue resources and ultimately pay for their own evolution
You have no idea. This isn't the Sovereign Individual. It's the Sovereign Machine. So yea. Go ahead. Write digital money to zero. You're jaded. What's coming won't care whether or not you're jaded. It's part of an inevitable, evolutionary arc that started one day in Steve Jobs garage.
Interesting thread by @0xCuttlefish 👀
itsjpower retweeted
WOW! After nearly two months of grinding, I finally finished up my 6529 Meme card full set!!! No easy task I might add. While I did mint the first 3 SZNs, filling in SZN4-12 proved to be quite the task. In the end, while leaving me completely exhausted, the journey was quite rewarding!
itsjpower retweeted
There's an abundance of incredible digital artworks that have been submitted on 6529. io as potential meme cards in recent weeks.
Here are some of my personal favourite picks among them, starting with 'Ukiyo Nakamoto' by @Xose_Casal
1/x
Gradually then suddenly…
Stablecoins just crossed $200B. In 5 years. Everyone's watching the number. Few are thinking about what the number means.
1/12 A man who needs no intro joins us today - @punk6529 🧠 He dropped insights on personal drivers, the networked nature of art, ETH vs USD pricing, L1 vs L2 - and predictions about where NFTs fall on the crypto adoption timeline. Bookmark it🔖 and enjoy! 🧵👇
itsjpower retweeted
Interesting video of @DavidSacks stating NFTs and memecoins should be classified as collectibles.
Nice to see some sense and a step away from the securities bs
itsjpower retweeted
1/ On NFTs are Network Art
One common piece of feedback from TradArt (museums, curators and so on) is along the lines of:
"We have been collecting and curating digital art for decades. we know this field and, maybe a few NFTs are good digital art, and many, of course, are terrible digital art, or even not art at all, but collectibles really.
So we are charmed that you are so excited about your digital art NFTs but we have been excited about this field for decades."
This sounds totally reasonable but it is also totally wrong.
The fundamentally important thing about NFTs is not that they are digital art, but that they are network art.
2/ Digital Art is art of the computer, in its many forms.
Mainframes are computers. PCs are computers too.
But modern digital SLRs are also computers, as are tablets and phones.
3/ Computers, of course, have been the defining technology of the last 50 years, they have reshaped society, how we work, think, play, communicate, organize, love.
So, of course, artists, collectors, curators, casual viewers have been influenced and changed by digital art.
And the museum curators are right. Digital art has been interesting since the 1960s and is on its fifth generation at least: algorithmic, generative, graphics, interactive, immersive.
4/ OK, so great - "There has been digital art for 60 years, NFTs are digital, it is the latest of a long line of digital art, this is what we are saying, we will slot it into the "net art" category"
No! It is a trap. The fact NFTs are digital art is not at all the important thing about them.
5/ Digital Art is made on computer (broadly defined) or may live on a computer or both.
NFTs may or may not have been made with a computer but they definitely do not live on a computer.
NFTs live on the internet!
6/ What I am saying here is not a vibes concept. It is a hard technical fact.
People sometimes look at a hardware wallet and get confused and think that their NFTs (or ETH or BTC) are "in the hardware wallet" like it is some form of USB drive or something
7/ Of course that is not where your BTC, ETH, cool cartoon character with a hoodie and flashing xcopy NFT lives.
It does not live in your Trezor.
It lives on ~10,000 Bitcoin or ~10,000 Ethereum nodes that each form a special purpose global network called Bitcoin or Ethereum
8/ Whether your NFT is 100% on-chain (like a generative art ETH NFT) or 100% in the optional but not required to hold but most do anyway part of BTC (Ordinals) or partially on the Solana network and partially on the IPFS or Arweave network, the main picture is exactly the same.
9/ Your NFT is not on your PC, it is not on the PC of the MoMA, it lives on a specialized, permissionless, open to everyone in the world, network.
When you "own" your cryptopunk, what you actually have is the password to move a specific cryptopunk to somewhere else in the network.
You can't remove it from the network, you can't move it to the safe in your house.
Your NFT is of the network, in a way that the Picasso in your living room is not.
10/ Before everyone says "aha, I knew NFTs were a scam, just a receipt" I would like to kindly remind you that Bitcoin works this way too.
You don't "own" a bitcoin, what you actually have is the password to move certain "Unspent Transaction Outputs" to somewhere else in the network.
You can't remove your bitcoin from the network, you can't move it to the safe in your house.
Your bitcoin is of the network, in a way that the gold coin in your safe is not.
11/ All of the interesting things about NFTs emerge from their networked nature.
The fact that they are default public. The fact that they are composable and programmable. The fact that they are transparent. The fact that their provenance is 100% perfectly pristine. The fact that they can make rock solid assertations of truth (this NFT was created right now, randomly, based on this algorithm). The fact that they can organize groups of people.
None of this emerges because they are "digital art"
All of this emerges because they are the first and only natively network art.
They are art that is quite literally of the network, that lives in a network, that does not live in a computer, a home, a gallery and museum
12/ My curational mental model is very different from TradArt on this topic.
They split as follows:
(Non-Digital) Art | Digital Art (including NFTs)
I split like this:
(Non-Digital) Art and Digital Art | NFTs
13/ In other words I think a cool digital graphics installation at the MoMA is fundamentally no different than a Lichtenstein at the MoMA
By their nature, they are physical, individual, assets tied to a specific place, time and owner.
It is cool and interesting that one was made with a computer and one was not, but this does not change their fundamental physical nature.
Whether the MoMA owns an oil on canvas or a hard disk with the graphics files, it is still personal property of the MoMA in the way we have understood property for tens or hundreds of thousand of years
14/ NFTs (and BTC) are something different altogether. They are everywhere at the same time. If the MoMA buys a Fidenza, it does not have exclusive physical possession of the actual colors and lines of that Fidenza.
Those lines are represented as data within a certain block of the Ethereum blockchain, which has been replicated to 10,000 plus computers around the world.
Anyone can see them, anyone read them, anyone can render them. Anyone can download an Ethereum node and copy them. Anyone can write a smart contract that interacts with them.
Nobody has to ask the MoMA's permission. Nobody has to ask the artist's permission.
15/ This is not radical, this is beyond radical.
If I strolled into the MoMA and hooked up my art project that interacts with their digital exhibition or their canvas on the walls without their permission, I would be arrested and banned for life.
If someone deploys a smart contract that says: "you can mint this NFT if you have a Fidenza and if your Fidenza is a spiral, your mint will look like this", nobody can stop them and nobody will stop them and, because of this, everyone will actually say "great, have fun"
16/ NFTs are a breakthrough of the exact same order of magnitude as Bitcoin is. They are not a continuation of digital art.
They are a fundamentally different type of property, in the same way that Bitcoin is a fundamentally different type of property.
17/ Do the examples look trivial right now?
"this mint is derived from this other mint - who cares?"
This is because every important new thing looks like a toy.
18/ We barely have understood what can be done with NFTs, let alone done it.
The next few years will be full of amazing experiments and, by the end of the decade, we will start getting a hang of what can be done.
There will be so much more to come on this.
19/ But to close this thread off, let's go back to where we started, to the most simple explanation of NFTs.
NFTs are network art (and collectives and games and identities)
The first time in human history this was possible was in the early 2010s.
We are the beginning of the beginning of the beginning of such a grand adventure. It is going to be so much fun.
Some New Years Day thoughts on NFTs, BTC, and the path the 2030 from @punk6529
Can you believe we are 1/4 of the way through the 21st century? I have a feeling the next 1/4 is gonna be even wilder than the last…🤯
On So Few NFTs, So Many NFTs
Because X is not handling the thread well today, here it is with all 65 tweets in single tweet format.
Probably better to share this version.
1/ Are NFTs the scarcest assets in the crypto universe?
Are NFTs an endless no-barriers-to-entry stream of good, mid and worthless tokens?
Buckle up. This is a long one. 60+
2/ A few days ago, we discussed that a necessary, but not sufficient factor, for Bitcoin’s success was its 21M hard cap on tokens.
If you have not read this thread, go ahead and read it now
xitter.cf/punk6529/status/187340…
3/ Today, I am going to ignore the other factors of Bitcoin’s success and focus on the scarcity aspect.
A common phrase was: “If every millionaire wanted to own a bitcoin, there are not enough bitcoins to go around"
4/ There are 58 million millionaires globally, so, even ideally, they can each own 0.36 BTC.
In fact, much less because many people have more than 0.36 BTC and many non-millionaires own some BTC .
So the real number is much lower, below 0.1 BTC for sure.
5/ Of course, this assumes something very important.
That *anyone* wants to own a BTC.
Without demand, scarcity does not matter at all.
Bitcoin Rhodium is a BTC fork that you have never heard of with 2.1M tokens (10x more scarce than BTC!) but obviously nobody cares.
6/ Value accrual in non-cash-flow-generating tokens like bitcoin is a meta-game.
Not “picking which one is better?” but a game of “picking which one everyone else will think is better” With no cash flows to provide a check, value accrual is purely self-referential.
7/ This meta-game was easy.
You took 1 look at Bitcoin and the goofy coins / forks and it was totally obvious that you should just buy BTC and chill. From 2009 to 2020ish, with the exception of “you should have bought ETH early,” BTC maxi was crypto life on easy mode.
8/ The fact that it was easy is a huge part of its success.
You just said “you want exposure to crypto? Go to Coinbase and buy some BTC” True for your friends 10 years ago. True for nation-states now. No hard decisions needed.
9/ Now, let’s come back to NFTs.
Are NFTs scarce or plentiful? Well, there are obviously endless NFTs like there are even more fungible tokens. But the NFTs that have started to climb the meta-game mountain are unbelievably scarce.
10/ Gonna share some numbers.
Trigger warning: these examples are just what I am coming up with on the fly – I will miss some, they are not statements of artistic quality, they are not price predictions. It is giving a rough sense of meta-game NFT rarity.
11/ Impossibly Rare (~3,000, 100% certainty)
Rare Rare Pepes, a few “historical” NFTs, early “important” 1/1 artists, early “important” generative art, top punks, a tiny number of editions, maybe TBD some top non-punk PFPs (not sure tho).
12/ Here is how to think about certainty. Imagine that any top NFT collector discovered they inherited an Impossibly Rare NFT from their uncle. Would they be happy? I assure you that every single one of them would be happy. 100% certainty.
13/ Even the Impossibly Rare tier has Ultra-Mega-Impossible sub-tiers.
They don’t matter for the purpose of this thread, but I think the top 50 collectors would have 75% overlap on which of the Top 3,000 are in the Top 300 and in the Top 30 too.
14/ If you have any doubt about this, imagine if I got to pick 3 NFTs from @CozomoMedici 's collection or he got to pick 3 NFTs from @6529Museum.
Among the thousands of NFTs we have collected, is it random which ones we would pick?
15/UltraRare Tier: (30,000, 75% certainty)
I would put in this category: “all punks” (so that is 10,000) and the best 20,000 NFTs that are not punks.
The way to think about this list is: “You have unlimited budget but only 30K slots”
16/ I think the first 20K slots are easy & people will argue about the last 10K
Would I take “any punk” and “any Fidenza”? Yup
But do you prefer an AlignDraw, a Harvest, a Terraform, a good mfer, a Botto Meme Card? This is where “buy what you love” kicks in
17/ Rare Tier: 1 million tokens / 60% certainty
This is the broad list. All major PFP, generative, art collections and all major 1/1 artists can comfortably fit into here.
Q: “Are there many NFTs I want that are not in my top 1 million?”
A: “Not really”
18/ So something like this is my count:
Rare: 1,000,000 tokens
UltraRare: 30,000 tokens
Impossibly Rare: 3,000 tokens
You Have Got To Be Kidding Me Rare: 300 tokens
LOL Rare: 30 tokens
19/ And my certainty of the endpoints of the range is something like
Rare: 60%
UltraRare: 75%
Impossibly Rare: 100%
You Have Got To Be Kidding Me Rare: 100%
LOL Rare: 100%
20/ Now it does not matter if you think the right numbers are
50/500/5,000/100,000/2,000,000
or
10 / 1,000 / 10,000 / 100,000
21/ What about Tezos, Ordinals, Solana?
The number of meta-game NFTs there can be counted in the numbers above.
They do not change the total materially in my view. Most rare NFTs remain on ETH and Counterparty.
22/ The main point for me is that the total good NFTs tokens available to buy in the NFT world are like 5% of BTC’s token count and the exceptional ones are 0.05%.
And as a percentage of “all fungible tokens” it is some number too small to even calculate.
23/ So in a field that has “provable scarcity” as an absolute core principle, there is not a shadow of a doubt that the scarcest, rarest, most apex tokens are and always will be NFTs.
24/ So there are 58M millionaires. If each of them wanted to have a rare NFT (1,000,000 tier) only 0.017 can own one. But this is not possible because many whales have more than 1 rare NFT and many non-millionaires hold NFTs. The real number is below 0.001
25/ For Impossibly Rare Tier, the real comparison is with billionaires. There are not enough available to go around for each billionaire to have one, for each major museum to have one.
26/ OBJECTION!: BTC has a fixed supply. People will just make more NFTs, not buy your bags!!! True!
People will make more NFTs and I encourage them to do so!
And a very few of those NFTs will become important and join the pantheon of “Rare Non-Fungible Tokens”
27/ Will it be a random function?
Will the Top 3K NFTs in 2030 be very different than the top 3K NFTs in 2025?
My guess (80% confidence, up from 70% in 2021) is that power laws kick in and the lists will be relatively stable, progressively more stable as you get rarer.
28/ Will any 2025-2030 NFT make Top 30 list? I doubt it.
How about Top 300? Also really hard, tbh.
Top 3,000? I think there may be 50 or 100 or 200 that turn over
Top 30,000? Yeah, sure, maybe 2K or 5K will turn over
Top 1M? maybe 250K to 300K will turn over.
29/ I was pretty sure about this in 2021.
We just have done a whole cycle and very few new collections got socially constructed in the bear market.
If we go through another bull market and this holds, it is a lock
30/ This is two questions:
a) do current “good” NFTs stop being “good NFTs?” (protocol fails)
b) do new “good” NFTs join the current “good NFTs?” (supply expansion)
I am almost completely unworried about a) that, I dunno, nobody is going to want a Ringer in 2030.
31/ And I am not very worried about b) bc it will happen, good new NFTs will emerge and there will be supply expansion and WHO CARES because even with 1.5x or 2x or 3x supply expansion of “Rare” NFTs the number is still tiny.
32/ The hurdle for making it into “Rare” is still manageable and into “UltraRare” hard but somehow doable, but the other categories are getting very tight. Like with BTC, it is easier being early, than being late.
33/ The reason for the cultural power laws in the end is biology. It is inevitable that it will happen. This is discussed here
xitter.cf/punk6529/status/151833…
34/ Side note for emerging artists: It is 1000% in your interest for the prices for established NFT artists to go up. Ethereum wouldn’t have made it if Bitcoin had not made it first. Solana would not have made it if Ethereum had not made it second, and so on down the line
35/ So, to summarize on Rare NFTs
- They are ridiculously rare
- Consensus on what the good ones are is much closer to 100% than 0%.
- Even with some supply expansion, they are the scarcest asset in crypto
36/ Now if this is the case, why is not (yet) reflected in their market cap? Some thoughts on this at the end.
37/ Now what the other side of NFTs that I talk about a lot.
NFTs-for-all, NFTs for consumer adoption of self-sovereign wallets, NFTs-for-identity, plentiful and abundant NFTs.
Yes! Yes! And Yes!
This is the Fun™ use case for NFTs and it is great also.
38/ There will be billions of NFTs, but these NFTs are closer to a consumer product, closer to a consumption good, closer to a superior form of a consumption good (provenance, trackability, no wear and tear), a superior gaming good.
39/ They are Chicago Bulls baseball caps, but virtual.
They are your receipt for your $100 donation to your church but a generative art piece for your wallet by a local artist.
It is a spectacularly good use for NFTs and for crypto (one of the best) and it will also happen.
40/ A huge % of the confusion in the popular perception of NFTs even within crypto is that people look at this category of NFTs and think “you have got to be kidding me, I am now a reborn BTC maxi”
But this is a category error.
41/ When you mint some goofy 0.01 ETH PFP mint, you are not doing it to replace BTC in your portfolio or to hand to your grandchildren.
This is also true of Boden or Fartcoin or whatever.
Nobody is confused that Fartcoin is the new BTC.
You are just messing around.
42/ so NFTs are simultaneously an ultrarare, slowly inflating group of apex crypto assets and a vast playground of high-turnover fun consumer products.
Just like “fungible tokens” are everything from BTC to SOL to Skibiddy Toilet and Fartcoin
43/ Very few people understand this distinction, including very few crypto people.
It is ok, the pool is nice and warm and they will all join the pool party one day.
44/ Now why is the market cap of NFT 0.3% of fungible coins? Why is the nth $PEPE token more highly valued than the actual OG Rare Pepes?
45/ There are several factors:
- the space and the tooling for the space is very immature
- every design decision is backwards
- the design decisions are backwards because the large players so far (marketplaces) have partially misaligned incentives
46/ #1 The story, the meme.
"21M BTC, digital gold" is a good meme.
Buy some NFTs, good luck figuring out which ones are good, is not a good meme.
The 1-5 liner will not be as simple as BTC but it needs to get better than it is today because today it is tragic.
47/ #2 The presentation
Every major website: opensea, foundation, superrare, art blocks, manifold hides the good NFTs.
All their algorithms show trending or mints (aka the Fun case of NFTs) so if you come to their website, discovery is literally trash tier
48/ I do not see any obvious chance that this is going to change on marketplaces because they are trying to drive volume, not social construction.
I may take this on in 2025 tbh because it is getting worse not better.
49/ It is impossible to socially construct NFTs when someone NFT-curious comes to the NFT sites & sees random NFT slop.
They take one look, think “what is this weird junk?” and “what am I supposed to buy?” & then peace out and go to a CEX/DEX to do something comprehensible.
49/ To make #2 more clear.
Imagine if you went to Messari and CoinMarketCap and for every day of every year, not only were BTC and ETH not on the home page but it was all but impossible to find them anywhere on the website.
These are our NFT front-doors today.
50/ #3 Marketplaces by default focus on the crappiest NFTs in each collection.
Wait, what do you mean? Every marketplace lists by floor price.
I get the logic, they are trying to recreate a fungible order book but they are non-fungible assets
51/ When you list by floor price, by definition, you are putting front and center, above the fold, the worst NFTs in every collection.
No retailer, restaurant or CEX would do this. What is the alternative?
Both FP and tiers aka the CryptoPunks website, still the best!
52/ #4 no CEX coverage
This is obvious. It is 2025 and we have less CEX coverage of NFTs than Litecoin had in 2013.
53/ #5 Unit Bias Unit bias is a real thing and things that could help in some, not all cases, like fractionalization are also possibly illegal in Gensler’s SEC (we will see what happens next).
Even if legal, their UX flow is even more complex. This needs work too.
54/ #6 Valuation Valuation presentation is also junk.
Opensea is showing floor prices for all pieces in a collection.
People have random listings, order books fragmented. It may or may not be good to buy BTC at $94K today but if you do it is the right price today.
55/ So helping people know the right price to buy a given NFT at any given point in time is another issue that needs to be solved.
Again, not unsolvable.
I basically know +/- 10 or 20% the right price to pay for most Rare NFTs or can figure it out, so it can be scaled.
56/ Back to the Pepe example: You see frog, you like frog, you want frog.
Behind door 1: click on $PEPE in one of 50 different easy ways, minimum buy $10
Behind door 2: XCP, Counterparty, ETH, Emblem Vault, which one to buy, what is fair price, send help!
57/ Imagine if you told someone about BTC in 2013, they go to all the crypto sites, cannot see BTC, go to Coinbase, also no BTC, they have get some other coin, move to own wallet, dig through other sites to find BTC, swap, nobody knows the right price for BTC, etc, etc.
LOL
58/ So what is happening now is understandable and will not be fixed in the immediate term.
But it is fixable.
Early BTC tooling was also junk but eventually we figured it out and, hey, now you can buy it at Schwab in an ETF.
59/ And now we will have real momentum.
There is a lot of literal computer programming that needs to be done to make the experience more seamless and the cost of that is going to plummet with LLMs.
60/ And I think and hope that crazy SEC excesses where things like "do not point on your project site to the marketplaces" will also end and teams can do the work to make their collectors' lives easier.
61/ Some day it will be easy to buy NFTs At that point, imho, good luck getting your hands on one whole unfractionalized real OG genuine Nakamoto Rare Pepe.
We are 5 years away.
My guess was 2030. My guess remains 2030.
62/ What about NFT-adjacent fungible coins? I understand why people do it.
It is an attempt to solve the problem above, to scale holders.
It is just inelegant.
These tokens are generally not actually linked to the NFTs themselves beyond the initial airdrop.
63/ I have no objection to it. I understand why teams do it.
It will work in some cases and not work in most cases.
I have some ideas about how it can be done differently but I need to mull them over more. Not for today.
64/ So, to summarize:
- Rare NFTs are very rare. The rarest of those are the apex assets in crypto.
- Fun NFTs are not rare and are a great consumer and community use of crypto.
- NFT messaging, tooling and distribution is still toddler-level.
- We will fix it.
65/ As always, the future is bright.
Everything has aligned now, to take our shot, to give it our best to build a decentralized trusted layer for society.
We have 4-5 years now with crypto, AI and a generally pro-tech orientation. This is the window.
LFG. Happy New Year!
66/ ps @RaoulGMI pointed out that there is going to be exponential growth in crypto-wealthy.
He is correct, I did not mention it because I take it for granted but I will add it here because this is part of the logic.