I’m here to tell you: no, the cool thing about this technology is not money, it’s cryptographic trust.
The internet solved one half of the equation for global coordination: it gave us unlimited reach. But reach without trust cannot achieve its full potential. Cryptography solves the other half – it scales trust.
Bitcoin fully integrates these principles and layers a new primitive on top: value. But money was just the first application of ‘crypto’.
Crypto(currency) is not just about money; it’s as fundamental as the technologies it’s built on: the internet and cryptography.
Social Coordination: Reach and Trust
The Dunbar number defines our cognitive cap on stable social relationships, restricting us to meaningful interactions with roughly 150–200 people. So how can we exceed this natural boundary?
The internet expands our reach, connecting us on a global scale. But in doing so, it also amplifies noise, misinformation, and manipulation, making trust harder to maintain. In isolation, scaling achievements in reach lead to a degradation in trust. We don’t want greater reach just for the sake of reach; we want it as a means to larger scale collaboration. For a group to achieve superlinear growth, reach and trust must scale together.
Cryptography counterbalances the internet’s extreme reach by anchoring interactions in mathematical certainty rather than reputation. This moment has also been explained as “the move from web1 to web2”, or “the evolution from ‘read’ to ‘read/write’.” Added cryptography is what makes it possible to have accounts, publish posts, and use your credit card online safely.
Just as the internet enables global connectivity, cryptography ensures that this connectivity remains reliable, forming the foundation for scalable social coordination.
Scaling Trust: A Computational Perspective
Unlike reach, which can be brute-forced with better computation – more bandwidth, faster processors, and more efficient algorithms – trust is a fundamentally different problem. It cannot simply be "added" to a system in the same way.
Computational complexity theory helps us understand why. Trust, in a cryptographic sense, relies on problems that are hard to solve but easy to verify – a defining feature of NP problems. NP problems are essentially puzzles. What makes a puzzle a puzzle? The ability to ‘give away’ the answer. They’re difficult to solve but easy to check if you know the right answer. This is the ‘ah ha!’ moment of learning the answer to a riddle, as well as the difference between being able to recognize a great piece of art vs being able to create a great piece of art.
Cryptographic Trust
Cryptography belongs to the NP class, inheriting its asymmetry of solving vs. verifying. And that is cryptography’s strength: it creates secure systems where verification is computationally simple, but forging solutions is prohibitively expensive. This is why anyone can verify a bitcoin transaction or a digital signature with ease, but not pass off an invalid one.
This special category of math maintains its integrity against two fundamental pressures:
Economies of scale: More resources do not improve cryptographic security or make breaking it more efficient. A student with a laptop has access to the same level of encryption as a nation-state. Cryptography does not favor centralized power.
Entropy: Unlike most human-made systems – which decay over time or require constant upkeep – cryptography resists entropy. Once established, its security remains intact as long as the underlying mathematics hold. This is an advantage for those with fewer resources, as they do not need to constantly defend or maintain their security.
As a result, cryptography is not just an agnostic security tool – it is fundamentally defensive and favors the individual. It’s a force for individual sovereignty, resisting centralized control in a world where power seemingly concentrates. These properties are inherited from NP problems to cryptography to cryptocurrencies.
Then Came Bitcoin
Bitcoin adds resource allocation on top of the reach of the internet and the trust of cryptography. Together, they form a stack for scalable social coordination:
The Internet – Expands reach, enabling instant global communication.
Cryptography – Provides trust, ensuring integrity and security.
Bitcoin – Introduces resource movement, enabling permissionless value transfer.
Viewing humanity as a superorganism, these layers act as vital systems:
The internet is the nervous system, transmitting information instantly across the hive.
Cryptography is the immune system, enforcing integrity, preventing corruption, and ensuring verifiable trust.
Bitcoin is the muscular system, enabling the movement of resources without compromising the security or openness of the first two layers.
Note: I stole this analogy of the nervous/muscular system from Mike Casey after a game of mini-golf. Thanks Mike
Other analogies to this progressions include “web1 to web2 to web3” and “moving from ‘read’ to ‘read/write’ to ‘read/write/own’.” It’s all directionally the same, but I find the other framings, while catchy, to be reductive.
Bitcoin as the First Large-Scale Coordination System
Bitcoin is the first cryptographic coordination system to reach real adoption. And what does it coordinate? Money.
The provenance of money is often examined through two fundamental dimensions: space and time. Bitcoin’s two foundational technologies map directly onto these:
Space: The ability to be transported over large distances.
Bitcoin’s settlement occurs over the internet, which is free from physical intermediaries, unlike physical currencies. A strict improvement on the space axis.
Time: The ability to hold value over time.
Bitcoin’s security is rooted in cryptography, which is entropy-resistant, unlike institutions. A strict improvement on the time axis.
The old trust system is failing. The gig is up. Economic activity will no longer be secured by institutional trust – it will be secured by cryptographic proofs.
What Comes Next?
The many sectors of cryptocurrency come next. Social coordination extends beyond money – while creating a new form of money was the logical first step, it is not the full scope of this technology class.
The broader cryptocurrency sector adds another layer to this stack:
The Internet – Expands reach as the global nervous system.
Cryptography – Provides trust, ensuring verifiable integrity.
Bitcoin – Introduces capital and resource movement.
3.5 ‘Cryptocurrency’, i.e., more distributed, cryptography-based systems – Extend programmable, trustless coordination for more use cases.
Most people assume money is the end goal, but it’s only the first iteration. The same cryptographic principles that power bitcoin can be extended to all other forms of coordination:
1. Allocating Alternative Resources
Decentralized Physical Infrastructure Networks (DePIN) are markets for real-world resources – GPUs, compute, bandwidth, data storage, and more.
Bitcoin proved that you can build global coordination systems from the ground up.. While money is the most fundamental form of trade, other assets must also be exchanged and can benefit from the same cryptographic assurances as bitcoin itself.
2. Iterating on New Social Systems, Governance, and Technologies
How do you test a new system for voting, property rights, or governance? How do you know if Harberger taxes or quadratic voting actually work in practice, outside of a vacuum? How do you iterate on a new technology?
If you don’t want to be confined to academia or overthrow a government, your only real-world option is to find a sandbox with broad reach and built-in trust.
A system where real people interact, under programmatic rules, with real resources. One that you can spin up, test, break down, iterate on, and relaunch orders of magnitude faster than you can on traditional infrastructure or in-person.
Sounds familiar? What’s needed is our coordination stack: Internet, Cryptography, and Bitcoin .
Using Bitcoin for More Than Just Money
If the top sectors of the cryptocurrency industry – DeFi, NFTs, DePIN, etc – could have been built on bitcoin the first time around, they would have been. And now, we might be able to build these crypto systems on bitcoin. Now, with emerging innovations like modular bitcoin networks, proof verification, and covenants, we might finally bridge that gap without compromising bitcoin’s security model.
Programmable ‘layer-2’ networks, those which use bitcoin for security but retain independent and custom execution environments, may soon be realized. Why build out a new security system if you could secure your alternative coordination system with the security of bitcoin? Bitcoin works; let's use its security and capital as the foundation for new systems. Importantly, let's orient in such a way that bitcoin is agnostic to the success or failure of these new systems.
However, it's hard to leverage bitcoin for L2s. Proof verification and covenants are two key tools which would allow this integration. These features wouldn’t make bitcoin a different system; they would preserve its core simplicity while allowing future innovation to happen externally. In this sense, they represent the last major change needed to make bitcoin fully extensible through layers rather than internal modifications.
The cryptocurrency industry has deep potential in extending the properties of bitcoin as money to other forms of coordination. And just maybe, the whole industry will come back to bitcoin via L2s. This is the dream for scaling bitcoin through layers – keeping its security intact while extending its capabilities.