Cyber Capital | Crypto's Rise and Fall - Justin Bons | Common S3nse - 2026

[music] without, you know, more introduction, I would like to welcome Mr. Justin Barnes to the stage. Um, yeah, CEO and founder of Cyber Capital. He's going to give a talk about crypto's rise and fall and yeah, have fun, I would say.

Thank you, Colin.

All right. And hello everyone. I hope you're uh enjoying the conference so far. So the title of my talk is uh crypto's rise and fall. And uh you know one of the things I like about um this conference is very like pure in terms of the like ideology and the cipher punk roots and uh you know we're in the minority here actually like when I go to most crypto conferences that I go to just finance right like crypto has just become finance basically today.

I I can see a lot of hits nodding yes and agreeing with me. And I'm glad to hear that because I think a lot of us OGs, a lot of us cipher punks and freedom fighters didn't really sign up to uh become finance bros necessarily, right? It's it's a different p personality, a different drive. You know, nothing wrong with the finance bros either. Um I have a foot in both worlds myself.

Um, but I think [snorts] that's what I wanted to talk about today [clears throat] is like where are we today as cryptocurrency? What happened? H how do we end up here and and how do we move for further and actually accomplish our goals as a movement and and what this movement actually originally stood for and is trying to achieve. So that's what I would like to talk about. So let's start with the four.

Let's start with the rise the fall and then we're going to rise again. Okay? I think that's that's how I'm going to take this one. So I think I think a lot of you are familiar with a lot of my criticisms over the years. So uh let's start with Bitcoin.

Bitcoin was the original the first experiment, the first shot across the bow, if you will. And and what a beautiful experiment that was, right? What a what a wonderful movement. What what a wonderful set of ideas. What a what a Cambrian explosion of innovation that came after that, you know?

And and none of us would be here if it wasn't for Bitcoin. If it wasn't for that mythical individual that we call Satoshi Nakamoto, whether he was a a person, a group, an alien, a mythic god sent from the past or another dimension to save humanity. It's it's a myth. You can fill in the blanks if you want. And that's fun.

And I think that's a wonderful story. [snorts] Now, Bitcoin was meant to scale. That's the thing. Bitcoin. The title of the Bitcoin white paper is a peer-to-peer electronic cash.

On the first page of the white paper talks about how Bitcoin enables micro payments and how this can be a global system for the entire world that everyone can use and it's so cheap because we're removing middlemen and that's what makes it a competitive and compelling system. First page of the white paper. Okay. The the Bitcoin white paper doesn't describe what Bitcoin is today at all. And there's a there's a long history actually explaining why that is today.

Like Bitcoin is what we what I would describe from political perspective as a captured project. It's a project that ended up being perverted over time and it happened very transparently and you can go back and read the history. I would recommend hijacking Bitcoin for anyone who didn't actually live through that to actually understand what happened there. But I'm just going to give you the really short version because I'm not going to be here the entire time explaining the history of Bitcoin. But basically, uh, a the group of developers, a small group of developers within the development team ended up capturing the project by kicking out anyone who didn't dis agreed with them and they called that consensus.

And then they radically changed the purpose, vision, and economics of the project by not increasing the block size. And make no mistake, that's a change by doing that. And they made other controversial changes as well. So this whole idea that Bitcoin doesn't change is nonsense. They decided not to scale the system despite Satoshi saying this is how you scale the system.

Despite Satoshi saying, you know, once this is matured and scaled, normal people won't be able to run nodes out of their home anymore. They'll have to run it out of data centers. They'll be specialist. Those are Satoshi's words. That best describes Salana today, not Bitcoin.

[laughter]

Okay. And there was a strong conflict of interest because the people in charge of the project, I mean, I remember at the time, um, we had volunteer developers, okay? They were working on a billion dollar protocol and some of them were were living out of their car. Okay, that was a ridiculous situation. Um, shout out to Dash, by the way, because they have a self-funding mechanism which addresses this issue precisely in case you don't want to sell your soul to a bunch of VCs.

you know, your your choice. It's it's a free world. Um, but basically these for-profit companies, uh, these L2 companies, uh, basically approached the core developers and said, "Hey, how about you, um, take hundreds of millions of dollars worth of equity and support us and and now you're rich and uh, you know, none of this is explicitly stated, but you know, the success of these companies, I think Blockstream had an investment of about 400 million. I think Chain Cove Labs was about half a billion if I remember the numbers correctly. Um, none of these these companies would be worth zero if Bitcoin scaled today, right?

They're manufacturing a problem, not scaling the blockchain and then providing the solution which is a centralized alternative to the blockchain. The total bait and switch. I'm thinking a lot of you are clicking right now that is that not exactly what happened to Ethereum as well. It's exactly the same thing. So in Ethereum they they pivoted away from L1 scaling in favor of L2 scaling and the people making that decision were the people making money off L2 scaling companies which depended upon the L1 not scaling.

So that's history repeating itself. you know, that starts to become a bit of a problem. And uh I was I was chatting with some guys about this yesterday. I was thinking about, well, how many times have I seen this play out? At least six times now where the exact same design leads the to the exact same outcome.

So what that says to me is that this is a systemic flaw in the governance design of blockchain. That's the conclusion I have to reach. So the only solution is a uh systemic fix. We have to change the design of blockchains so that this B problem doesn't keep repeating itself and that we don't just keep shooting ourselves in the foot and we don't keep betraying ourselves because power corrupts and absolute power corrupts. Absolutely.

Like this idea that the rules of our future financial system is decided by what is essentially a type of centralized control dictatorship is ridiculous. like like if you actually like do an honest political analysis to actually understand the power structure of Bitcoin and Ethereum, they are totalitarian dictatorships who go around claiming they're freedom fighters and they want to save the world from from from tyranny. [laughter] The hypocrisy is incredible if you think about it. The Bitcoiners especially since they're not scaling their system, they're like money for the world. Do you know how long it would take for everyone in the world to do one transaction?

40 years. The queue would be 40 years long. Like it just doesn't work, right? That's not money for the world. They're all just playing pretend.

They're all just pretending to be revolutionaries. They're a controlled opposition. They're part of the problem. So the people that that shout the loudest and virtue signal the most about being cipher punks about being better than everyone else about being so superior are actually the worst offenders are actually the ones that are holding us back the most. Now a lot of us look at like governments and banks and uh North Korea arguably is a pretty real enemy.

U but our biggest enemy actually is ourselves. Like we have to look ourselves in the mirror here. Like we did this, right? Like this was our movement and what did it become? Like Ethereum became about pushing people into centralized services, centralized chains.

Like every single major L2, every single one, like counting down to the top 20 at least last time I I did this, every single one has an admin key that can steal all user funds instantly without delay. It's called an emergency security council. Okay. There's also every single one has a sequencer that can uh that can censor transactions run by by a centralized organization and then they make money off the transactions instead of you know the money going to the blockchain and making the blockchain more decentralized, scarce, secure. So [snorts] that's the tragedy.

Uh look look I I love Bitcoin. I'm I'm like from the school of 2013. So, like when I started, I was all in Bitcoin, right? Amazing. Bitcoin, it's free the world.

Bitcoin, not bombs, [laughter] decentralize all the things, all all that great stuff. Um, but it's it's we went for a civil war and it failed. Like, we lost that battle and now Bitcoin is a failed project. I mean, we can have Sailor saying it's the best thing ever and we can have Adam back back saying, "Yo, yeah, money for the world or whatever, but it doesn't change reality. It also doesn't change the fact, I shouldn't spend too much time on this, but that the entire Bitcoin network's going to collapse in six to 10 years because the security budget is unsustainable as a consequence of them not raising the block size and therefore unable to pay for long-term security.

Right? That's what's going to happen. And and and and and they're going to steer down that barrel and they're going to and then they're going to pretend like everything's fine until the network comes under attack. And when the network comes under attack um you know 51% attacks censorship attacks uh exploiting different protocols swap protocols etc. uh because once you can you know double spend you can really do a lot of harm.

Um and then once that happens the core developers will release a new piece of code and that code will increase the inflation rate of Bitcoin beyond the 21 million supply limit. Okay, they've already planned this. Peter Todd is public about this. He says security budget is running out. Maybe we'll get fees before then.

They're not. So then when the crisis hits, they're going to implement this change and it won't it won't have a 21 million limit anymore. Then what's left? Nothing, right? It's not money.

It's not scarce. And then you'll have multiple forks. You'll have a fork that refuses the change and therefore will be permanently insecure. You'll have a maybe you'll have a Blackhawk fork which be like a permission version. Um, I'm thinking maybe you'll have another fork.

I've heard people talk about this, another fork that will take the Satoshi co coins and then use that to fund the security budget. So, you're going to have like four to five versions of Bitcoin each claiming they're the real one. While while while some of them are under attack and you have potential death spirals because like if everyone wants to leave the Bitcoin blockchain at once, they can't because there's not enough capacity. If every user wanted to do one transaction now, the queue would be four months long. [laughter] Yeah, it's it's it's it's tragic.

It's it's it's it's so tragic it's funny. Um yeah, and and the same thing in many ways happened to Ethereum. Ethereum doesn't have the security budget problem. It has something else entirely like they just wasted four years on a failure of a road map which they just acknowledge. Actually, Vitalic acknowledged that the L2 scaling road map was a failure.

They didn't take back ostracizing me. I remain ostracized. That's okay. Even though I was right when I criticized them and for this conference four years ago I was like L2 scaling is not going to work. I feel very validated today now that Vitalic came out and said it failed.

Like yeah I told you so. I think I deserve that at least to say that. Um and now what's going to happen is they're going to spend the next five years five to four years on another really bad road map that's not going to go anywhere. So what they're doing is they're doing what's called a ZK EVM. And as a consequence of that, the time that it takes to compute the proof is very very long.

You need a very large array of GPUs to actually do that. So they're purposely keeping the block time slow in order to fit it within the proving time. It's like a architectural decision and the outcome of that architectural decision is that uh Ethereum is not going to speed up at all. And important to understand there's a distinction between capacity and speed in blockchain design. These are two different things.

Okay. So, uh as of today I believe Salana is about 30 times faster than Ethereum. Uh by Q4 it will be about 60 times faster than Ethereum. And by the way um at 30 times faster Salana can't compete with Hyperlquid. [laughter] So the upgrade from 400 milliseconds to 200 milliseconds is actually a game changer for Salana while Ethereum is sitting there saying you know what 12 seconds 8 seconds it's fine we don't need to be fast we're Ethereum [laughter] all right so that's that's the fall of crypto it's it's it's it's hubris it's arrogance it's the centralization of power it's it's it's our naivity to think that oh yeah we can trust the developers to do the right thing instead of you know setting up robust systems of governance that have stood the test of time right we have thousands of years of experience of dealing with human nature thousands of years history we see it time and time again if you give someone absolute power it corrupts them completely shifts their perspective and people as a whole on average there There are always exceptions to the rule because people are individuals.

But as a whole, you can predict their behavior because most people will follow their own interests. That's why crypto works, by the way. That's why capitalism works as well. It's actually a very important principle. But that means we can predict that capitalism works as a good resource allocation mechanism.

And we can also predict that every blockchain that does not implement full onchain governance will eventually collapse or like have extremely dysfunctional leadership become captured perverted etc etc. Now the good news the good news here is that crypto is an evolving organic anti-fragile free market machine. So I'm optimistic. Like Bitcoin brought us decentralized consensus. We carry that over, right?

Ethereum brought us programmability and a fantastic economic model. Um EIP1559 uh the uh tail emission plus burn. In my opinion, it's the ideal economic model and it and it solves the problem that Bitcoin has fundamentally. Ethereum fails. Now we have Salana and and other chains, other fourth generation chains, right?

I'm not a maximist. Don't be a maximalist. It's bad for your health and your wealth. [laughter] [gasps] And and Salana is bringing us scalability. Will Salana fail as well?

Maybe. We'll have to do a fourth experiment. Maybe then we'll reach the promised land or maybe a fifth or maybe a sixth. But as long as we see room for improvement, we can keep iterating. So Salana uh is doing really well on scalability.

Will it do well on governance? I'm not sure. That's why I was chatting with the Dash guys. I was like, "Hey, you guys should achieve 200 milliseconds and then you'll be uh competing with Salana and you'll have better governance." So Salana has stakeholder governance, but it's nowhere near as sophisticated in projects like Dash, Decree, Tezos.

Uh there's a lot more projects that have far more sophisticated governance. And as I explained today, I think this is the reason why we've why we keep failing. There's a the the the biggest unsolved problem in crypto today is governance. It's not that we didn't increase capacity. It's that we didn't decide to increase capacity.

It's a governance problem. And the solution from my perspective has to be stakeholder governance. I I don't see another way. It's equity governance. So if you own a piece of a blockchain because we all own part of the blockchain, right?

By holding the tokens, right? If you own a piece of that blockchain, you should have a say over that over the blockchain that you own. And that's exactly how an equity works. Like if you own a part of a company, then you get a proportional say over the decision-making process of that company. And it's perfect.

It it aligns incentives perfectly. And I always hear people say, "That's how the fiat system works." No, no, no. That's not how the fiat system works. Okay?

Governments operate on arbitrary authority, right? They can print money out of thin air. Okay? This is not at all the same thing. Proof of stake is not equivalent to the old system.

It's a false dichotomy. What proof of stake is fundamentally, it's just like proof of work. It's just a better version of it. It's faster. Sorry, it's not faster.

It's more decentralized. It's more secure. And it's more economically sound. And this is that iterative process, speed, proof of stake, scalability, better economics, and we just keep evolving. We keep moving on.

The the challenge is shaking off our past. There's still so much loyalty to the old chains. Like the number one chain today is Bitcoin. The number two chain today is Ethereum. And at least when it comes to Bitcoin, I think most people are being misled about it.

There's a documentary shooting here today that's that's talking about exactly this. So, I hope we get to raise awareness more around cryptocurrency. How am I doing on time? Okay. Okay.

We're going to we're going to wind it down. So, I'm going to end on a positive note. And do you have time for questions, Colin? Yeah. All right.

All right. I'm going to end on a positive note here. So, look, cryptocurrency is thriving. And what I said about crypto becoming finance earlier, that was always the goal. Like, you wanted mass adoption.

Yeah. Our beautiful cipher punk culture is going to get watered down. But you know what matters? What matters is changing the world, not convincing everyone to think the way we do. What matters is giving people freedom and giving them the freedom to do what they want with it.

And that's exactly what cryptocurrency achieves today. It's a free market. There's tens of thousands of cryptocurrencies out there. There's many, many good things. There's every variation possible on the theme.

So it's a crucible of evolution. It's a crucible of success. And becoming finance is part of that success. The fact that we have billions of dollars of revenue per year running through crypto, running through DeFi is a testament to crypto's success and its utility. And paradoxically paradoxically the fact that so many people believe in Bitcoin, it means that they're sold on the vision.

It's a lie. like Bitcoin doesn't fulfill what people say it fulfills, but they still are sold on it. They want decentralization. They they they want freedom. They want immutability.

They want mass self-custody. They want they want money. So like Bitcoin, despite it being like an illusion, despite it being this looming disaster waiting to happen, at the same time, it's also a validation that like the world actually wants this and the world actually values this and and we're early. We're so early because the market and and and the and it's so wrong still when the number one and number two chain are nowhere near capable of fulfilling the dream and uh and that's the opportunity of a lifetime. So thank you everyone for being here.

It's it's a really uh beautiful experience and I think you know what we do here can have like rippling effects. There's this wonderful theory called chaos theory. You famil with the butterfly effect. The idea is that if like in thousands of years uh in the past if a butterfly flaps his wings, you know, the effect of that can ripple through time and create massive changes. So like don't underestimate the influence you all have.

Like the tiniest thing you do, it can even just be one conversation you have can trigger something in someone's mind and they can go off and build something that changes the world. So, you know, be uh be kind to yourself and realize that we're doing a lot of good here. So, and thank you all for fighting the good fight with us. It's wonderful. Thank you.

Thank you very much. Spoke from the heart as always.

Questions.

Um yeah, I I think I can allow one question if not.

So optimistically, stable coins, AI agents, and DeFi plugged into agents. Is this the next level, the next layer, generation five?

I think so. I mean, but also when you look at like the stock market today, like it's all bots controlled by humans, right? So, we just swap out the bots for agents, it's not that different really. Um, and that's already happening today. The the billions of dollars of usage I'm talking about is not people buying coffees, right?

It's it's financial specialists running AI systems and algorithms and playing PVP on free markets, [laughter] which is fine. It has spin-off effects that are good for society even if it might not be as obvious. We have a very keen hand over there. Does that answer your question? Yeah, maybe one more if that's if Colin will allow it.

Of course. Of course.

Thank you.

You've mentioned um quite a few quite a few of the chains. Um I'm wondering if you're familiar with the move based chains that are upcoming and um Cedra network which is mainly upcoming. I'm just curious about your thoughts on those. I'm [snorts] not familiar with that specific network, but move language is fantastic. I I I consider it like the best VM.

It's the best virtual machine. So I mentioned uh Ethereum introduced programmability. So that's the Ethereum virtual machine. Then you have the Salana virtual machine which came later, the SVM and then you have move language which chose not to follow the same uh wording but that's fine. And it's fantastic.

It's actually in many ways it's superior to what Sana has. Um, but you know, just having better technology is not enough to win. It takes having the best economics, having a team that can support an ecosystem. I'll maybe speak to Sooie. I think this is not too much of an open seek.

I mean, Sooie is the most prominent blockchain that has the move language. Suie is better technology than Salana. Like it's it's superior. Like I can say that pretty confidently. However, its economics are horrible.

and the team has had an attitude of there's a word for this anti-competitive behavior. They've been favoring their own companies over kind of building a a real ecosystem. Uh so that type of corruption can really discourage um an ecosystem flourishing. I actually think the way that the team actually approached this despite them having the best technology, I mean they've I mean maybe they'll have another shot at it later, but they had momentum and now they've lost it, right? And I think that's why so just just having the best technology alone is not enough.

You need to you need to kind of do the whole suite of the best business development, the best economics, the best scalability. It's a it's a very hard game which means there's less real competitors in crypto today because it's uh there's only very few people and organizations that can actually pull it off on that level. Pleasure. Thank you. Okay.

Um, does anyone have any have any other questions?

No. Okay.

Yeah, I think [laughter]

let's go.

Does anyone have questions?

Questions.

I will answer any of your questions. Hands up.

There we have we have a question

from the Dash Maestro himself. This is actually probably a very stupid question, but you were very harsh on block on Bitcoin, Ethereum, but they're not even the worst offenders. [laughter] What do you make of all the meme coins of all the degeneracy that we've had? I mean, I thought that the if the fall would even be like the people that came in that just wanted Pump or something like that. No,

you don't even think that that's like even 10 times worse. It's not a stupid question at all. That's a really good question. Um, arguably it's worse. Maybe it's worse.

I don't know. But I think it's inevitable. So, you should just accept it. That's what I think. Like, look, blockchains are permissionless systems.

Okay? You cannot choose who uses it. If criminals and gamblers and degenerates start using your blockchain, it's not because it's a bad blockchain. It's because gamblers, and degenerates, and criminals are actually really good at not being biased about what technologies they like to use. Okay.

So, what's really interesting about this, if you actually look at the history of crypto and you look at when Bitcoin had the most usage, the all of the like the gambling, the crypto gambling and degeneracy was focused around what's was called Satoshi dice at the time, which is just a gambling dice game. Okay. Now, if we move forward in history a bit, we look at Ethereum. Okay. So when Ethereum had was like the leader and had the most usage was during the uh ICO craze and the NFT craze and these are also degenerate uh speculative manas and bubbles right so and today the majority when Salana today has the majority of usage and guess what is the home of meme coins and gambling it's on Salana so instead of seeing this as a type of condemnation I would actually see it as a sign of success and And I don't need to condone it.

Like I don't condone gambling. Like I'm a value investor, right? Like a memecoin is like the opposite of what I do. It's it's my antithesis basically. Like I I look for real value flow, utility.

Like by definition, that is the opposite of a memecoin. But on the other hand, like human beings are going to keep gambling and it's a free world. And you know what? Making an investment in a casino is not necessarily a bad investment either, right? [laughter] So there's a difference.

Don't invest in memecoins. Casino might not be a bad bet actually. Um and and just just you know this criticism is often about 30% of the total uh usage on Salana is from memecoins and um it's a crazy world. I don't really I suppose I try to understand it but it's it's it it exists like as a separate culture to ours. I was in a spaces the other day.

It was like a memecoin spaces and I was like they're like speaking a different language to us. they're like in their own little bubble universe. I mean, that's at least my experience coming from the more fundamental like research crypto community. Um, so, you know, more power to them, more freedom to them. I don't condone it, but it's also not a condemnation of wherever the chain is.

I mean, all the other chains wish they had those usage and fees. Oh, and something I wanted to mention and you remind me of this is that ultimately the most decentralized blockchain, the most scarce blockchain and the most secure blockchain will be the one that has the most fees. Yes. Because of the way blockchain economics works. So the more the more uh the the more the blockchain gets paid, the more it can spend on its security, the more it can spend on its decentralization.

And the way that these tail uh uh uh uh uh burn plus tail emission chains work is that the more usage you have, inflation can actually go in the negative, right? So a lot of infl lot of usage can actually lead to a shrinking supply which then increases the value which then increases participation which then makes the blockchain more decentralized. So like this is the part that I think a lot of people maybe don't understand about my thesis like how could I support Salana when it's not the most decentralized chain in XYZ uh way of looking at it. Well, I because I think long term I think if it can have the majority of fees now and and and it can maintain a lead in usage, then he's basically guaranteed to be the most decentralized scarce uh and secure blockchain and like that's what we care about, right? Then we have scalability, programmability, decentralization, scarcity, security.

What are we all complaining about? Like isn't that what we all want? So yeah, let's make it happen. [laughter]

Yes. Thank you very much.

Thank you everyone. Yes.