New Angles on Crypto - Kyle Samani and Tushar Jain - [Invest Like the Best, EP.92]

Episode Summary

Executive Summary: Patrick O'Shaughnessy interviews Multicoin Capital's Kyle Somani and Tushar Jain on crypto's long-term path, debating Bitcoin's store-of-value thesis versus utility-driven platforms like Ethereum and EOS, the economics of token value, network effects, and why the smart contract platform wars may define crypto's next decade.

Main Topics: Bitcoin vs. utility-based crypto (Priority: 5/5): They contrast Bitcoin's scarce, censorship-resistant reserve-asset thesis with utility tokens that gain value through use. Velocity and moneyness (Priority: 5/5): Ether and other tokens may hold value if they are used as money and have lower velocity. Smart contract platform wars (Priority: 5/5): Ethereum competitors trade decentralization for speed, usability, and lower latency. New crypto design space (Priority: 4/5): Smart contracts enable new coordination, prediction markets, and shared data structures. Network effects and value capture (Priority: 5/5): Network effects are modeled as S-curves and liquidity effects, shaping which assets capture value. Investment framework for tokens (Priority: 4/5): They evaluate projects by immutable trade-offs, not just features, since open-source code is easy to copy. Possible future beyond blockchains (Priority: 4/5): Zero-knowledge proofs could reduce the need for replicated blockchains while preserving verification.

Key Arguments: Bitcoin fits the store-of-value thesis because it prioritizes security, sovereignty, and censorship resistance. Utility tokens can win if they become the thing people actually use as money or for applications. High token velocity can suppress value because less money is needed to support the same activity. EOS sacrifices some decentralization for higher throughput, lower latency, and no end-user transaction fees. Smart contracts open a new design space for prediction markets, social streams, and tokenized securities. Network effects are better modeled as S-curves or log N, not simplistic N-squared Metcalfe's law. Liquidity has diminishing marginal value; once markets are deep enough, more liquidity matters less. Open-source crypto makes features easy to copy, so durable value comes from trade-offs that cannot be replicated. Go-to-market, sales, and storytelling matter because perception creates value and drives adoption. Zero-knowledge proofs may let systems verify correctness without massive replicated computation, potentially changing blockchain architecture.

Data Points: Ethereum transactions per second: 15, 20-ish transactions a second - Used to argue current Ethereum throughput is too low for mass-use applications. Ethereum block time: 15 seconds - Cited as a latency constraint for consumer applications. Ethereum dApps above 1,000 DAU: maybe four dApps - Illustrates how small real usage still was at the time. Bitcoin transaction fees: $50 transaction fees - Referenced as evidence Bitcoin can become unusable during congestion. EOS financing: $4 or $5 billion - Cited as proof the platform wars are well-capitalized. Ethereum Foundation war chest: over $1 billion - Used to show how much capital backs the competing platforms. Crypto user penetration: less than 1% of the world population - Supports the claim that adoption is still early and curves look similar on the far left. Twitter lists: 60 people / 600 people / traders and chartists - Tushar describes his curated Twitter lists as a research tool. Zero-knowledge proof size: a couple hundred bytes, a few hundred kilobytes - Used to contrast proofs with a 200-gig blockchain. Blockchain size: 200 gigs today - Compared against compact zero-knowledge proofs.

Pivotal Quotes: "money not as a noun, but as an adjective" — Tushar Jain: Explaining the concept of moneyness and why assets become money through use. "Sales creates value in the mind of the customer" — Tushar Jain: Arguing that go-to-market and storytelling are essential in crypto adoption. "Bitcoin trades technical inefficiency for social scalability" — Kyle Somani: Summarizing Nick Szabo's framing of Bitcoin's core design trade-off.

Implications: Crypto’s winners may depend less on ideology than on user adoption, token economics, and infrastructure that developers can actually build on.