Unbreakable agreements

The internet is a truly global, real-time communication system. Cryptocurrency extends that digital revolution to the economic realm. The world is still coming online.

Network upgrade#

Sharing money via traditional systems is slow, expensive, and fragile. Creating an LLC in the United States takes weeks, costs hundreds of dollars, and requires ongoing maintenance. Resolving conflicts through the legal system is ruinously expensive, inefficient, and doesn't work across borders.

Blockchains fix this. In seconds, for pennies, you can create unbreakable global agreements that minimize mistakes and fraud. Blockchains offer the strongest property rights available, with rule of law directly embedded in code. You can own what you own, and verify that you own it.

As email is to the fax machine, crypto transactions are to wire transfers. As the email address is to snail mail, crypto smart accounts are to traditional bank accounts. Making it easy and cheap to share money will increase experimentation, innovation, and productivity.

Economic prosperity is not just about having ample funds: it's about reliable systems for using, moving, and protecting those funds. In fact, such trustworthy systems are a prerequisite to wealth.

Entrepreneurs create the growth that improves living standards across the globe. To pursue their ambitions, builders need to know that their assets and agreements are secure. Consistent, fair business standards result in a better world for all market participants, be they buyers or sellers.

The primitive is the protocol#

Consider what a protocol really is: a clear set of rules used to structure complex interactions. Everyone uses protocols — language itself is one. These frameworks of shared rules allow communities to function at scale. Some are written down, others are organic, but they all help people work together smoothly.

A protocol's job is outputting a defined form that is knowable and persistent, therefore predictable, which can be handled according to set procedures. Take driving on a highway. You know what the signs mean. You've memorized the rules. The road itself is built to support those rules. You can drive confidently because you're able to predict what other drivers will do.

Imagine the same kind of standardization applied to how money moves around the world. When people say "code is law," they're getting at something important: crypto networks create universal rules of engagement that anyone can plug into, regardless of where they are or who they bank with.

We're already seeing this in action:

The most obvious use case [for stablecoins] is cross-border money flows, particularly to countries that are underbanked and have unstable currencies. Scale AI, for example, which hires and needs to pay data labelers around the world, uses Airtm, which is built on Bridge, to pay contractors in stablecoins; Scale AI wires money to Airtm, and the contractors get stablecoins on the other end immediately, with no cross-border complications or slow-downs.

— Ben Thompson of Stratechery

Accelerating trust#

What we call "smart contracts" are really self-enforcing agreements that guarantee the participants' promises to each other. In this paradigm, "signing a contract" means executing the agreement, not merely pledging to do so. The ability to renege is removed.

A few key consequences:

• If the internet was the printing press turbocharged, then crypto is the legal system turbocharged.
• Multisigs are turbocharged LLCs, while DAOs have the potential to become turbocharged public C-corps.
• In the future, every group will use public-private keys to:
  • make collective decisions,
  • manage collective finances,
  • communicate authentically in a sea of fakes and bots.

Crypto "doubles down on the features of capitalism as we already know it," @long_solitude of Zee Prime Capital wrote. "More money, more trading, more upside, and faster. Crypto is propelling us further along a path we've known and walked since the late Medieval Ages when capitalism began to take shape."

His boiled-down bullet points are similar to ours: the key advantages of cryptocurrency are "Permissionless capital formation" and "Global consensus over a distributed ledger of financial assets."

Hard like diamonds#

This unfolding future is made possible by the property of crypto networks that Josh Stark termed "hardness" — the ability to make particular outcomes probable enough to count on.

"Human civilization depends in part on our ability to make the future more certain in specific ways," Stark wrote.

"Hardness" is defined as the capacity of a system to make something very likely to be true in the future. Hardness is most useful where it is customizable or programmable — where humans can choose something specific we want to be true in the future.

Traditional finance builds hardness through institutions and legal contracts. Decentralized finance builds it through blockchain technology. While both approaches have their place, blockchain hardness offers unique advantages:

• Truly global, transcending national borders.
• Accessible to anyone with an internet connection.
• Programmable and adaptable.
• Enables novel means of coordination.

We envision a world in which both individuals and businesses have access to truly global payments, where makers and artists can rely on unbreakable agreements encoded in smart contracts.

This world already exists, at the edges of today's conventional systems. It is not, as they say, "equally distributed." Splits is dedicated to building a future where digital property rights are as robust and universal as the internet itself.

This transformation won't happen overnight. But with each technological advancement and each new use case, we're moving closer to a more efficient, accessible, and equitable global economic system.

Progress happens at the fringes, which is where crypto continues to expand the realm of the possible. See you onchain.

Our thanks to Jihad for feedback on this essay.