My general thanks for the kind words.
Under extreme personal pressure, on the brink of wipeout, I bought a few more LUNA—and set aside some shreds of money to get more if it dips under $1 again, as I missed earlier.
I am not a trader. Although I know I will and should be rewarded for this if Terra recovers, my primary motive is not speculation on the price: I cannot afford that right now. No matter what the potential gain, I cannot properly afford to invest even one dollar now—not even one penny.
I should explain why I deem this so important.
This is not about whether Terra is perfect (I don’t think so), or whether you’re a fan of Do Kwon’s Tweets (I personally am not), or even about Terra at all. This is much bigger than that.
Terra stepped up and did the work to create the first popular, mass-market algorithmic stablecoin. That is not only technical work: Promotion is an indivisible part of the value of the system. The nature of money is that network effects dominate many other factors. In the abstract, a moderately inferior currency with superior network effects is, overall, strictly superior to a hypothetical competitor with a better technical design, but negligible adoption.
Nobody has achieved that before. There have been many algorithmic stablecoins—and I must emphasize, the history of the past decade is littered with the corpses of failed pegs. None reached the mass market. Therefore, none had any lasting effects beyond their own ecosystems—which were negligible in the big-picture “do you want to change the world?” evaluation.
Lasting effects can be for better or for worse.
Terra was the first even to begin to attain what marketing folks call “mindshare”, on a mass scale. That places them in a unique historical position.
If Terra succeeds—which means, at this moment, if they can restore confidence in their peg—then that will set the precedent. Algorithmic stablecoins will gain mass acceptance. Naturally, in that scenario, Terra will dominate the algorithmic stablecoin market—as well they will deserve, for this achievement.
If Terra now dies, there may not be another chance. The whole concept may be irreparably tainted in the public mind—and I think there is active propaganda for this right now, attacking Terra as a pretext to persuade people that trustless, permissionless, decentralized stablecoins can never, ever work—that we need to turn to Circle/USDC—that we need regulators to step in and protect the public against these nasty, evil algorithmics—the next step is CBDCs. Thus, regardless of its technical merits, a new project may be standing in its grave before it is even conceived.
Worse: This is a collateral propaganda attack on the concept of using Bitcoin as a reserve currency. People who don’t understand Bitcoin’s economics are already using Terra as an excuse for ill-considered, unjustifiable claims that Bitcoin doesn’t work for this purpose.
I said earlier, I’m a Bitcoiner. I have a friend who is an ultra-maximalist, who thinks that this is not about Terra at all: It is only an attack on the concept of using Bitcoin as a reserve currency, with Terra as a thin pretext. I won’t go that far, but I think it is certainly a big factor. And as I said at the beginning here: This is much bigger than Terra, in and of itself.
Ultimately, whoever is trying to crush Terra is attacking the whole concept of trustless, permissionless cryptocurrency. I am not spinning a conspiracy theory: I am pointing to the actual real-world effect. Loss of confidence in Terra is already being used by media pundits and government officials as a pretext to attack that concept: Not only the algorithmic stablecoin concept, but the concept of “crypto” altogether. And if Terra dies, Terra’s death will be used, abused, and exploited to establish a popular meme that “trustless, permissionless, decentralized currency is too dangerous. We need CBDCs!”
If I may now address the Terra people: You attained a big achievement. With that achievement comes an awesome responsibility. The historical weight of a pivotal moment in the development of money now rests on your shoulders.
My economically negligible LUNA purchases are tantamount to spitting into the ocean, insofar as the market is concerned; and at a moment when I am almost bankrupt myself, I can’t afford to buy enough to be really meaningful to me, even if LUNA does 50x tomorrow. I am doing it as my skin-in-the-game endorsement of the following things, in this order:
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The abstract concept of trustless, permissionless, decentralized, price-stable currency.
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Bitcoin as a reserve currency: A decentralized, trustless, permissionless, politically neutral global reserve currency, which savvy individuals can access directly. That seems to have been Hal’s view of Bitcoin; and after my years of pushing for adoption of Bitcoin as money, I recognize that Hal was really right. Bitcoin is an excellent reserve and settlement currency, and it’s a great investment for people who want to hold long-term savings in sound money; but price stability is needed for mass-usage in everyday transactions. Hal described how to fill that gap. Terra’s success would fill that gap for good.
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Terra. Although I seem a bit critical of Terra, I recognize their achievements; and I want them to succeed. They have an interesting technical design. They have previously survived some scenarios that killed prior attempts at an algorithmic stablecoin. If they can fix on a long-term basis what recently broke (and big Bitcoin reserves to backstop the LUNA algorithm will help much with this), then they will justly deserve recognition as the people who first solved the price-stability problem for trustless, permissionless, decentralized currency.
Dear readers of this post: If you think that these things make the world a better place, then you will understand why I am on the brink of literally throwing my last dollar into a currency that is currently in a death-spiral. I am not recommending that others follow me in that. It is now an extremely high-risk investment—and I recognize that any investment in LUNA is now a double-edged sword; if it does not recover, then essentially, dollars now spent on LUNA will become a donation to the people who are attacking it.
Indeed, at this juncture, I think it’s much more important to explain to people why this is important—to answer the mushrooming propaganda attacks on all of the above-listed things. Please think of the big picture, the long term, and how this affects the future development of money. Tell people why it is important. Don’t pump LUNA. Explain to people how this is about much more than Terra/Luna—this is much bigger. All else follows naturally.
