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Growth is not price

bitcoin social trading

If you get growth, everything else tends to fall into place. Which means you can use growth like a compass to make almost every decision you face.

– Paul Graham

When it comes to startups, economies, individuals, and most other things, growth is good. YCombinator urges its companies to prize growth over all else. Tyler Cowen argues that nothing matters more to society than economic growth. And “growth mindset” has become the “one simple trick to become successful” that actually works.

But real growth is not necessarily price growth1. Especially not in crypto.

In crypto, price is an environmental effect. Or a source of randomness that can have a positive or negative effect, but cannot and need not be relied upon.

Growth is building something that solves a valuable problem in a large market and being able to get the market to use your product. Price can help. When prices soar, speculators show up and are willing to try your product when they otherwise would have ignored it. When prices crash, most of those speculators disappear.

I’ve written about this a few times: here, here, and here.

Speculative bubbles produce the mirage of real growth that evaporates alongside the bubble. The users that remain form the foundation for growth. You need to find more users like them or make your product more attractive to more people.


What do you make of this chart? Looks like growth.

MakerDAO collateralization chart 2018

ETH locked up in MakerDAO CDPs

Venture capitalists love charts that look like this, especially in companies that are networks. As the network gets larger, each new unit of adoption adds more value to the network than the last unit of adoption. These are the network effects we know and love.

If we start to see more and more charts like this from dapps, should we bet that crypto will eat the world2?

Probably not. Most of these users are true believers in crypto3 and the total market of true believers is small. And markets need to be big for something to eat the world.


Ethos users (true believers) vs ethos-agnostic users4 is a useful way to think about addressable markets for crypto projects. To obtain growth, a project can either focus on serving ethos users or ethos-agnostic users.

Ethos-agnostic users are hard to serve. They don’t care about hypothetical benefits. They care about real benefits and direct solutions. I like the way Nathan Wilcox put it:

End users rarely care, nor can even detect, global emergent properties. They can only notice local properties, whether direct or emergent. End users can see transaction fees, times, UI complexity as direct properties. They can “see” network effect locally, even though it’s an emergent property. Users can’t see privacy and sound money properties locally. So a currency can’t compete on those properties alone.

Wilcox labels the properties of a product as either global or local, and direct or emergent, resulting in a 2×2 with the following four quadrants:

wilcox 2x2

  • Q1. Global and direct: transaction fees
  • Q2. Global and emergent: privacy, censorship resistance
  • Q3. Local and emergent: a local tax or local incentive
  • Q4. Local and direct: “local subnetwork effects” like it being easier to get crypto by mining in Venezuela than to get cash dollars

He suggests that users detect direct properties and usually do not detect emergent properties with the exception of the occasional “local subnetwork effect” where a global property can be tangibly experienced locally. Global and emergent properties are hardest of all to detect.

These hard to detect properties are also the properties that we tend to foucs on when discussing the merits of crypto projects. Off the top of my head:

  • NFTs are better because there’s true scarcity
  • NFTs are better because there are uncensorable
  • DeFi is better because different services are composable and interoperable
  • Bitcoin is better because it is more sound than other moneys

These arguments have merit and may win over a long enough time horizon, but they do not attract ethos-agnostic users. By and large, the properties that matter the most for the ethos are global and emergent, and thus undetectable by most.

A user will use a product if the benefits outweigh the costs.

Ethos users detect the benefits and the costs in Q2. For example, an ethos user may prefer Zcash to fiat because of privacy, valuing the global and emergent property of privacy. That same user might detect the Q2 cost of Google Search, and elect to instead use DuckDuckGo.

Ethos-agnostic users ignore the benefits and the costs in Q2. They are fine using Bitcoin because it’s the most liquid and Google because the search results are better.

So how do we grow?

True believers will continue evangelizing their beliefs, growing the market of ethos users. But ethos users will only ever make a very small percentage of the population. The projects that are able to serve ethos-agnostic users will be the ones that win the biggest prizes. To do that, they’ll need to focus on improving benefits and reducing costs in Q1, Q3, and Q4.

Many–including myself, to some degree–will not like the trade-offs made by projects targeting ethos-agnostic users. These projects will look more like Ripple than Bitcoin, GUSD than Dai. True believers care most about the global emergent properties that end-users dismiss. But I will keep an open mind. Perhaps delivering these benefits to the world requires some concessions along the way. Maybe that’s okay, as long as those concessions are reversible.

What do you think? Is growing the population of true believers sufficient? Is ethos-agnostic user growth worth it if it means conceding Q2 benefits? Is there a third way to grow?

  1. I’m making a conceptual point here. Obviously you can see the price “grow” from x to x+y. ↩

  2. “Why Software is Eating The World” by Marc Andreessen ↩

  3. I could be wrong about this, though. So if you have datapoints of MakerDAO users that don’t believe in the mission of crypto (e.g. censorship resistence, permissionlessness), please let me know. ↩

  4. h/t Jon Choi for exposing me to this term in his excellent piece ↩