Bitcoin is special not only because it is the very first cryptocurrency, but for what it birthed: blockchain technology. Prior to Bitcoin there was not a way for two computers to send value between each other in a trustless way. Trustless means without a trusted 3rd party. The trusted third party would typically be a bank, or banks. It’s important to note here Bitcoin was created in response to the self-immolation of the banking system in 2008. I suppose trust becomes less important when it isn’t dependable.

Vitalik built Ethereum to be a platform that could handle any transaction, not just an exchange of money, between two parties. People can build products, games, new cryptocurrencies, launch a stablecoin, create a decentralized crypto exchange, and probably anything else you can think of. Ethereum is positioned to serve as the de facto settlement layer for the internet and the coming wave of innovation in financial services headlined by something called tokenization.

Tokenization is a way to use smart contracts to fractionalize ownership of any real-world asset you can think of. Tokenization makes it incredibly cheap, accessible, and fast. Cheap because it eliminates middlemen. Accessible since you can buy $50 of high quality investment grade assets such as a rare piece of art or high-rise apartment building. Fast because settlement time is nearly instant, instead of a couple days or much longer. Tokenization is possible because of the blockchain and more specifically the blockchain technology of smart contract platforms. Most of the real-world asset tokenization is happening on Ethereum.

The head of Robinhood recently said everything is going to be tokenized. Luckily, Ethereum was built to handle the volume of transactions expected to occur due to the movement of the financial services industry onto a blockchain. This is because of its unique architecture and the design choices that were made by Vitalik and the early builders of Ethereum, which attracted developers to build on the network.

Ethereum was started in 2015 and made the decision to approach its blockchain architecture in a specific way. Blockchains face what those of us in crypto call the “Blockchain Trilemma.” The theory goes Blockchains can only optimize for 2 of the 3 following features: decentralization, security, and scalability.

Ethereum made the decision to optimize first for decentralization and security first. This was important because decentralization protects the network from being controlled by any single entity, or nation-state (fancy name for country). If Ethereum were controlled by a single entity, there is the always lingering possibility that the entity could take the network offline with no explanation. Security is important because Ethereum is dealing with people’s money and ETH, which is essentially their money since it’s denominated in USD. People have to be confident the network they are transacting on is safe and secure. This is the area I know the least about, but lots of people are building what are called layer-2s on top of Ethereum’s layer-1, which leads me to believe they feel pretty good about Ethereum’s security if what they are building is due in large part to the security guarantees they are getting from it.

The Layer-2s are serving as an execution layer for transactions and then they are settled in batches to the layer-1. Ethereum, the layer-1, serves as the settlement layer, and more importantly provides those previously mentioned security guarantees for the transactions, which take place on the layer-2s. Ethereum scales via layer-2s. Layer-2s get security via Ethereum. Symbiosis at work.

Scalability was not initially prioritized by the builders of Ethereum. It was a good decision. Back in 2015 way fewer people knew about cryptocurrency making it highly unlikely there would be a problem with the Ethereum network getting congested. So if you think in the future the entire world is going to use Ethereum to transact, it makes sense to optimize for the most important and difficult to architect areas first.

There are many other layer-1 blockchains. Solana, Monad, Sui, Avalanche, Cardano, and many others. None of them optimized in the order Ethereum did (so they are lacking in some areas that are mostly around security and decentralization), and they do not have the number of developers building on their blockchains that Ethereum does, or the liquidity in the form of users who’ve voted with their dollars by choosing to interact on Ethereum and its numerous layer-2s because they believe in the ethos of Ethereum. Ethereum enjoys first mover advantage as the first turing-complete smart contract platform. Turing-complete means the contract is capable of performing any functionality a programmer can create using Ethereum’s native language, Solidity. Bitcoin offers smart-contract functionality, but it is severely limited.

Which brings me to today. It is thought we are on the brink of a large upswing in the price of Ethereum. I believe that to be the case as well. However, understanding when that upswing takes place is difficult to pinpoint. One of the reasons why is the difference between Ethereum, the network, and ETH, the token, used to pay for computation (i.e. anything you want to happen on the network.) Owning ETH, the token, does not provide you ownership in Ethereum the network. It’s easier to think of Ethereum, the network, like the internet, or roads, or highways. Its function is to move value from one entity to another via instruction from a smart contract. The more capacity the network has to execute transactions, the less it will cost to execute those transactions. Since the NFT craze of 2021, instances where the network was congested have been few and far between.

Now that we are on the precipice of major adoption by the public via a number of different avenues, the expected amount of traffic through the network is expected to spike. However, because the builders of Ethereum have worked hard to increase the network’s capacity, as adoption continues to increase, the price of ETH will rise, with more people needing ETH to pay for transactions on Ethereum and layer-2s, but the cost of those transactions will be much lower because Ethereum, the network, has successfully scaled via numerous network upgrades since 2021, including the latest one on December 3rd. Vitalik has said he believes no transaction on the network should cost more than five cents. People are starting to understand why Ethereum is such a powerful idea. It is transforming global public financial services by allowing anyone with a cell phone to access banking, capital, global payments and much more at a much lower cost and more safely (at least once you know how to use a digital wallet. The Ethereum UI needs a slight uplift, but we’re getting there).

With a stablecoin on Ethereum, I can send money anywhere in the world and it is virtually free and settles almost instantly. Using a lending protocol (two popular ones on Ethereum are Aave and Compound) loans are actually safer because they are over-collateralized.If the ETH you put up as collateral for the loan dips below a certain price the lending protocol will automatically sell your ETH to cover the loan. Yes, it is a small catch, but I will take the tradeoff if it means we can move past the always-has-the-potential-to-light-the-world-on-fire fractional reserve banking system in place now.

While cryptocurrency has had a bad reputation in the past, and even in part to this day, the sole reason blockchain via Bitcoin was birthed is as a response to the financial crisis of 2008 as an alternative to the current banking and financial system which is controlled by a few powerful people. Due to its unstable architecture (did I mention fractional reserve banking?), the whole thing is on the verge of blowing up every so often. The promise of crypto is we can choose a different way forward empowering people and democratizing finance and banking making the financial system truly inclusive.

(Do you think Trump would shut down crypto if he realized it was partially doing the I part of DEI?)

My hope is that it turns out to be true.

I want to be careful about tying the frustration of people insecure about their financial well-being to the plight of struggling professional sports franchises, but I’m here to do it because what’s a Substack for if not semi-controversial, semi-well-developed opinions. I also think the link is worth mentioning because the solution to each situation is the same.

While a public option for sports would unfold a little differently, it would require the intervention of the government to step in and fix what I think you could term are both situations of market failure. In the first scenario, the prices of everything are too high, due to a range of factors from lack of competition, to unnecessary middlemen, to predatory pricing, and the double whammy of people’s wages in the aggregate stagnating for the most part over the last 50 years. For professional sports teams it’s a little bit different.

As outlined in my first column, teams with superior ownership enjoy an unfair advantage over teams with incompetents serving as majority owners. It’s a story as old as the leagues themselves. Billionaires hate accountability, even more so when they have to do it to themselves. I’m also guessing other owners would prefer incompetents running other teams so they have a better chance of winning games. However, as I also outlined in my previous column, professional sports strive to see competition at its highest level. Fan bases having to watch horrible teams year after year because owners are terrible serves no one, except the other teams who benefit from having the advantage.

The only way to fix it nowadays is by the other owners voting out the incompetent owner, which is not going to happen. There’s so many examples of owners being unwilling to throw out bad owners even when there is clear evidence they’ve done horrible things, like Mark Cuban’s full-throated defense of Donald Sterling being supposedly held to an unfair standard in 2014.

Professional sports teams associated with individual cities have a relationship with those cities unlike anything else in any other domain. The city supports the franchise providing all of its revenue from TV to merchandise to buying Chipotle on the real estate developed around the arena. Of course, this is augmented by national TV money allocated across teams evenly. At the end of the day, the operating revenue for the team comes from the fans in the city of the team. They’ll be cheering for the team before and after whoever owns it today. Despite the fact they finance the operation, they hold no power in team decisions. Unlike other private businesses earning revenue from the city’s population there are no other options for professional basketball, football, baseball teams, or hockey teams (unless you’re in NY or LA).

Since professional sports teams enjoy a monopoly on fan attention and wallet share in the cities where they exist, fans should have a tool of accountability at their disposal to remove leadership no longer serving the interests of the team or the fans. Fan bases shouldn’t have to sit through multiple decades of Donald Sterling, Daniel Snyder, or Vivek Ranadivé. It shall be called “The Sports Public Option”. Catchy, I know.

In the same way you can gather enough signatures to put a proposition on the ballot, cities should be able to do the same thing to remove owners and interview different leadership for their teams. Or, they should have the option of raising enough revenue to publicly own the teams themselves since owners of professional sports teams provide little to no value to their teams, and beg for publicly financed stadium money. My mistake. I implied they might provide a little value to teams. The fact is they provide absolutely no value. They hire the people who make the decisions and then the only thing they might do is become a pain in the ass to the people they hired, the fans, or more likely both.

Fans deserve an option to hold owners accountable when they are an anvil around the neck of a city’s team.

People who wanted to see great competition were frustrated. People who wanted see the most competitive basketball were frustrated because the OKC Thunder with Kevin Durant played an incredibly competitive, slugfest of a Western Conference Finals that went to seven games and might be one of the greatest NBA playoff series in history. (It was a decade ago. Do I really know that for sure? In retrospect, it felt that way and if someone asked me whether it really was an all-time great series, I’d say yes…and I wouldn’t doubt it.)

I do not fault Durant for leaving OKC. I’m just upset at him for taking away the chance to see at least another series like that. Durant had every right to go to the Warriors. On the flip side, I as a fan can demand professional sports rid itself of forces tearing down its competitive fabric.

The two biggest threats to professional sports competition are billionaire owners and gambling. Since billionaire owners like preferential treatment, I’ll start with them.

There are 122 major men’s professional sports teams in the United States. Those 122 teams are owned by billionaires, a bunch of Green Bay Packer fans (publicly owned), and Vivek Ranadivé (not a billionaire. Did I write not a billionaire? I definitely meant not a billionaire) Those teams operate at the sole whims of the majority controlling owner. If that person is an incompetent (**cough cough”** Vivek), your team will most likely be bad. You have no recourse for removing the owner from the team other than a supermajority of owners, in most leagues, voting to remove them. As a result, there is a superficial advantage enjoyed by teams with competitive, smart, and, which Vivek Ranadivé certainly isn’t, super wealthy owners. Those franchises enjoy multi-decade runs of chasing the playoffs and having the chance to win titles. Teams stuck with bad owners (Vivek, again) fumble around in mediocrity never enjoying any sustained success.

Added to the problem is the wealth of owners exists on a long spectrum. Steve Ballmer is at the top, with more money than the GDP of several countries. The Waltons are pretty far up there. Matt Ishbia has a few billion. As a result, a team like the Dodgers dominates because they have a wealthy competent owner in Mark Walter, who invests in every level of the organization. At the bottom of the spectrum is the definitely not my guy, Vivek Ranadivé, Majority Owner of the Sacramento Kings. Somehow he’s managed to tear down the team just about every year without completely bottoming out, and is now fielding what might be the most depressing collection of NBA players who do not fit together and will struggle to win.

The competitiveness of the NBA is lesser for his extreme stupidity and horrible decision-making, the same way it is because of Steve Ballmer’s bottomless khaki dress-pant pockets.

Gambling is a different beast. The insatiable desire of professional sports to gobble up as much revenue as possible is why it’s back. Gambling on sports directly affects the integrity of the competition. And the scope of that problem is massive. In the days of the Black Sox, the effect on the integrity of the game was clear. Players were willing to throw games because they felt like they deserved more money. Players were paid a tiny fraction of what they are comparatively paid today. While that’s less of a threat today, the majority of players make low 7 figures which can evaporate quickly given your individual set of circumstances. Beyond the players, the risks are everywhere.

The officials, the clock operator, the coaches, the medical staff. The developmental call-up. Think of any of the hundreds of people who interface with the game or players in some way: they are a threat to being on the take and ruining the integrity of the game. Gambling serves no purpose for the sake of the sport. It creates revenue, but for whom? DraftKings? Professional sports leagues can afford to drop a few sponsorships in the name of upholding the integrity of the sports they administer.

All I’m asking for is to see the most competitive representation of sports devoid of superficial advantage or intent to undermine the integrity of what I care most about: competition.