Paper & Blocks

In Sapiens, Yuval Noah Harari argues that what separates man from beast is the ability to tell stories.

The ability to speak about fictions is the most unique feature of Sapiens language. It enables us not simply imagine things, but to do so collectively. We can weave common myths such as the biblical creation story, the Dreamtime myths of Aboriginal Australians, and the nationalist myths of modern states. Such myths give Sapiens the unprecedented ability to cooperate flexibly in large numbers.

Common myths bestowed Sapiens with the gift of co-operation, and co-operation was the superpower Sapiens used to become earth’s most dominant species.

It is hard to see through the fog of everyday life, but most of our modern systems, from the economy to a Friday night sports league, rely on a large numbers of strangers co-operating successfully to achieve a shared objective.

Through common myths, people cultivate community.

Community is… What?

Communities are groups of people who develop a shared sense of belonging and identity around which they can coalesce.

They form around common interests.

That interest could be a goal (scaling a start-up), a place (your local neighborhood), an idea (Buddhism) or a circumstance (cancer support).

Communities are also fractal. Whether you zoom in, or zoom out, you can find something that resembles community.

Through the geographic lens, we are part of a global community tackling systemic issues like climate change or inequality; we are part of a national community setting the agenda for healthcare, education and law; we are part of a municipal community building safe and well-functioning cities; and we are part of a local neighborhood that contributes to the amity of everyday life.

An individual can have different levels of affinity for each layer of the stack, but ultimately, people are part of multiple communities at various levels of locale.

Co-operation = Progress

When it comes to the common myths shared by these fractal communities, there is one thing that ties them together: progress.

Communities exist to get things done. Sometimes that is an intrinsic goal, like the feeling of belonging and support for members. Often, however, it is an external objective like growing a company, spreading a fashion trend, or winning a championship.

Co-operation leads to progress. When it comes to examples of large-scale human co-operation and achievement, it is easy to think about companies as the default way to get things done. Companies exist as part of a broader corporate community stack:

• Industries are tied together by the value they create in the economy. They make progress by expanding their reach, removing societal barriers, and fostering healthy competition.
• Within industries, companies coalesce around a common idea or strategy. They make progress by growing their market share, often by either becoming more efficient and lowering costs or by differentiating and delivering innovation.
• Within companies, lines of business exist to create the specialization needed to operate effectively. Whether across function, product of channel, lines of business make progress on a relative basis on measures of their strategic importance.
• Within lines of business, people specialize to form communities of practice (people informally bound together by shared expertise and passion for a joint enterprise like marketers, accountants and lawyers). Their progress comes from making their shared function more effective.
• Communities of practice often consist of teams. Teams often have a distinct set of objectives that ultimately tie back to the stack above.

In situations of strategic coherence, progress at the bottom of the stack of contributes to progress at the top. An effectively executing team can help lead to an effectively executing company. Similarly, good neighborhoods can lead to better cities and better cities to better states.

However, if coherence falters, and the goals of the bottom of the stack fall out of line from those at the top, conflict can ensue. Not to sound too kumbaya (because there is something to be said about healthy competition and the art of creative destruction), but generally, this scenario can be counterproductive.

The Magic Ingredient for Community: Belonging

Communities can be strong, but they can also be delicate.

The degree of strength often depends on the overall sense of community. In the 1980s, social psychologists David McMillan and David Chavis published a theory where they describe a sense of community as “a feeling that members have of belonging, a feeling that members matter to one another and to the group, and a shared faith that members’ needs will be met through their commitment to be together”.

More directly, a sense of community breaks down into four components that are listed out in David Spinks’ great book, The Business of Belonging:

• Membership: A shared sense of personal relatedness. This consists of:
  • Boundaries: How do people become members, and what are the boundaries keeping others out?
  • Emotional safety: By building boundaries and including the right people, you create trust and a feeling of safety.
  • A sense of belonging and identification: Members must feel like they fit in and that this is “their community.”
  • Personal investment: If members contribute or make sacrifices to the community, it enhances their sense of community.
  • A common symbol system: Sharing a symbol like a sports team jersey or a brand logo creates a sense of community.
• Influence: A sense of mattering. Members must feel like they have influence in the community while, vice versa, the community has influence over its members.
• Integration/fulfillment of needs: Members get what they hoped to get by joining. A community, like a product, needs to solve a problem for its members in order to make it worth their time and contribution.
• Shared emotional connection: A story that bonds members together, whether that be common goals or shared experiences.

Belonging is the result of communities strengthening each of the four factors above.

Crypto Communities

Beyond geographic communities and corporate communities, crypto is foundationally built on the community construct.

Modern day crypto emerged from Libertarian roots.

Born out of the shared story that privacy is a fundamental human right, a community took shape that combined philosophies from the fields of cryptography, economics and computer science to create the world’s first digitally scarce asset.

That innovation—digital scarcity—was the key ingredient needed to spread crypto far and wide. Scarcity is fundamental to community formation. It is required to create a sense of identity and exclusivity. Those that hold a crypto asset are clearly a part of a community. Those that do not, are clearly outside and NGMI.

Digital scarcity is a community formation superpower and it checks off the four criteria required for a strong sense of community:

• Membership: Asset ownership creates clear boundaries for community members (who is in vs out), with a common symbol system and a clear personal investment/sacrifice (via the allocation of capital). All of this acts to help create a shared sense of personal relatedness between members.
• Influence: By way of their decentralized nature, most crypto communities encourage participation from their members (in fact, DAO governance and engagement is a hot topic today). Formally, members are able to have influence, and be influenced by others, through their participation in DAOs or other governance mechanisms. Informally, members are also able to project their influence outside of the community through their various evangelical activities (have you been on crypto Twitter lately!). In both cases, asset ownership is generally the proof point required for participation.
• Integration/fulfillment of needs: The rewards for joining crypto communities are varied and can be as specific as token rewards or as ephemeral as the feeling of contributing to the advancement of new financial technology. Regardless, the ownership of an appreciating digital asset is often at the centre of helping to meet the needs of community members.
• Shared emotional connection: This is where crypto particularly shines. There is a lot of emotion in crypto communities, often because there are strong shared stories about what the project or community stands for. This can be amplified via asset ownership. At the extreme, this leads to maximalism and tribalism. But at the right level, this shared narrative is the glue that holds most of crypto together and attracts new members to join.

One Becomes Many

The power of digital scarcity was exemplified by the rise of bitcoin between 2008 and 2014.  

But communities do not stay static. They evolve and undergo mitosis, dividing into sub-communities. For example, as it grows, a start-up company eventually branches into lines of business and communities of practice.

Similarly, due to the open-source approach embedded in their DNA, crypto protocols also ‘fork’ and spin-off new versions.

Bitcoin was the OG crypto community (if you exclude the precursory days of Hashcash and b-money). Staying close to the original libertarian principles, some community members eventually wanted to take bitcoin in a new direction. From nearly day one, different versions of bitcoin were explored. The eventual path taken, pushed forward by Colored Coins in 2012, was to add a programmability element to blockchains. Following their crowd sale in 2014, Ethereum eventually took this torch and ran with it, splitting the OG community into factions along the familiar lines of ‘money crypto’ and ‘culture crypto’.

The birth of Ethereum was significant for a variety of other reasons. In particular, it provided a new ERC-20 launchpad for Initial Coin Offerings (ICOs) and new tokens to easily find their way into the world. Following the ICO boom has been the emergence of alternative layer ones (L1s), DeFi, layer two scaling solutions (L2s), NFTs, culture crypto, web3 and beyond.

Bitcoin has pollinated crypto communities across five layers (and counting):

• Crypto Fundamentals: Belief in self-sovereignty and digital scarcity innovation
• Protocols: Base layer blockchains (L1s and L2s)
• Domains: Money crypto, tech crypto or culture crypto
• Applications: Decentralized applications built on blockchain rails from gaming to DeFi
• DAOs and NFTs: Governance, mission, or culture-based communities that organize around asset ownership

Strength Through Diversity

The beauty of communities is that they are not mutually exclusive. An individual can, and often is, a member of multiple communities at the same time. Working on a Product development team in the financial services industry means that I am part of the innovation community of practice, the Product line of business, and the bank’s corporate mission—and I identify with each of these communities, from top to bottom. Yet, I also move horizontally, also counting myself as part of the marketing and strategy community of practice, and the distribution line of business.

In crypto, everyone appears to be a part of the same overarching community. That is, most maintain some belief structure around the crypto fundamentals of self-sovereignty and/or the innovation that digital scarcity can bring to the world. From there, sub-communities are a bit more divided between the choice of blockchain and choice of domain (money crypto, tech crypto and culture crypto). From there, the communities fracture further, all the way down.  

This pollination of new sub-communities creates diversity.

In the corporate sphere, while businesses in the same industry may operate in unique ways and stand for different things, they all ultimately drive toward the same goals. For example, Interactive Brokers is built for sophisticated active traders aiming to maximize their profits. Cash App Stocks is built for the app’s 40 million users, many of whom are underbanked and are looking for a simple way to invest spare change. They are both part of the broader ‘brokerage’ vertical in the U.S. financial services industry driving toward the goal of increasing asset ownership and growth amongst U.S. households.

This diversity in approach creates power.

It attracts multiple people who would never be a part of the same micro community (individual company) into achieving the mission of a common macro community (brokerage industry).

The open-source and decentralized nature of crypto means that the macro community has fragmented quickly into thousands of unique sub-communities. Those sub-communities (at the app, DAO and NFT level) are able to appeal to a broader audience of potential members covering a massive surface area in the economy. Today, ex-bankers, gaming company executives, luxury goods makers, and content creators are all finding their way into crypto communities. Their individual efforts move their individual communities forward (DeFi, GameFi, Digital Fashion, DeSo). Their collective efforts move the entire crypto industry forward.

Community is Competitive Advantage

Community can’t be copied. Your functionality and technology can be replicated, but it is hard to copy the identity and emotional investment that an established community has. To summarize the above, community is a competitive advantage for crypto in three ways:

• It creates belonging through asset ownership, aligning incentives to grow the industry
• It expands the surface area of crypto’s appeal, pollinating new sub-communities across the economy
• It aggregates the efforts of individual communities to advance the industry as a whole

Money doesn’t do anything productive in the world, people do, and crypto is the ultimate enabler of people and their communities all the way down.