Samantha Yap and Kevin Owocki explore the notion of money with values. Questioning whether money as a medium of exchange can hold greater utility, Yap and Owocki unlock how money represents societal values and the way in which we seek to construct the world around us. Can money shift from its narrow construction and become a system that builds capacity sustainably and fuel the growth of a better society? This episode culminates in the idea that DeFi is the potential for a better, fairer structuring of economic policies underpinning money, one that goes beyond wealth for wealth’s sake.
Kevin Owocki is the current CEO of supermodular, a web3 venture studio that’s building the foundations of a regenerative financial world. He is best known as the founder of Gitcoin, which is at the forefront of sustainable work on open-source software and is the author of Greenpilled – How Crypto Can Regenerate The World. He is also the host of ‘The Green Pill’ Podcast.
What does money mean to Kevin Owocki?
Kevin Owocki grew up in the United States and recognized money as the US dollar. The dollar was a medium of exchange and a way of transferring value between people. However, crypto is independent of nation-state borders. Today, Owocki predominantly uses the Ethereum network and crypto-economic tokens to make day-to-day transactions. This engagement with the blockchain has shifted how Owocki views crypto as a system that is beyond money.
Regenerative crypto-economics is all about creating systems where resource capacity is built over time and is resilient to shocks. Extractive economic systems that harvest resources are unsustainable and deplete over time, making them fragile systems that can be significantly affected by shock events. COVID was an indicator of this. In contrast, regenerative systems increase resource capacity over time and remain sustainable. Owocki explains that the design spaces in crypto are currently trying to resolve how to create regenerative crypto-economic systems that increase resource capacity over time and are resistant to shock.
Crypto is not just digital money. It is a value system.
A good form of money is often viewed as a medium of exchange that is stable and universally recognized via its network effects. However, we can also have units of account that are not stable or don’t have network effects that are more speculative and can represent different things. This is where the design space of Ethereum has really flourished. You can create all sorts of financial instruments that don’t need to be a medium of exchange. It can be tokens that unlock utility in a network. It can be an asset like Bitcoin, where the value is derived from its scarcity. This explosion of the design space has changed what money can represent. Owocki likens this to a scene in the Wizard of Oz: the world used to be black and white, and now there has been a burst of technicolour and an explosion of possibility and discovery.
Owocki emphasizes that the next 30 years will see the rewriting of bank services, finance, insurance, jobs, and how public goods are funded. This will ensure that we can now have digital property rights that are secured by credibly neutral foundations. Why is this important? Well, this means that we can have currencies that are not inflated by political actors. We can now have equal access to these monetary systems from all across the world instead of inside nation-state borders. Crypto can be used to both represent and implement these values, and as Owocki states, “I think that it’s our responsibility to guide it towards a more regenerative system now that we’ve already accepted that it’s going to change the world”.
The issuance of governance rights is an example that Yap and Owocki explore to illustrate how crypto can allow you to transfer something that isn’t a hard currency. Traditional businesses work on a linear loop system where a customer transfers funds to a corporation which then transfers funds to its shareholders. However, Web3 consists of a lot of applications that are designed to be governed by the community that they serve, creating closed loops. These applications issue their users tokens that give them governance rights, shifting the utility of currency.
Crypto will mature but it will be very volatile along the way
In exploring the volatility of the crypto ecosystem, Yap and Owocki discuss how all markets, whether traditional or decentralized, osculate. Traditional market systems are governed by fear and greed, and crypto is no different. When markets osculate, there are two base emotions that take root: flight from the market out of fear of hard loss and greed in wanting to take advantage of the whipsaw effect and make a large return. During a bull market, when there’s a lot of greed, it’s much easier to get a project funded, but it can also mean that investors are skipping out on doing due diligence. The Terra Luna collapse is evidence of this. In times of fear, it’s harder to get funded, and therefore there’s less innovation and more due diligence. These market cycles correct themselves, and this oscillation between fear and greed is what pushes the innovation cycle forward. Owocki summarises by stating that “you have to have a lot of privilege and the ability to stomach volatility if you’re going to be involved in crypto, but I think it’ll mature over time to the point where it’ll be less risky than then fiat systems would be my prediction”.
Episode 10 will see Yap and Owocki continue to unpack the varying values of money.
Follow Kevin Owocki on Twitter here
Buy “Greenpilled – How Crypto Can Regenerate The World.” here
Listen to Kevin’s Podcast – “The Green Pill” here