What is a transaction?

also, public markets, and an unusual explainer

“The art of progress is to preserve order amid change and to preserve change amid order.” – Alfred North Whitehead ||

Hi everyone! Happy Fed Day! It feels crazy that this is even a thing we get excited about, that we find drama and meaning in the words of a central banker, but here we are…

On Monday, I wrote about what really matters in today’s meeting – spoiler, it’s the updated economic projections.

Below, I dive into how different blockchain transactions are from traditional transactions, and why that matters for overall adoption. I also share an explainer with unusual significance, and some brief thoughts on public markets.

I won’t be able to do a recording today, apologies! I will include today’s text in tomorrow’s audio.

Production note: The holidays are upon us, and this newsletter will be taking next week (23rd-28th) off. Back on Monday 30th! I hope you all get some downtime as well – it’s going to be a crazy Q1.

IN THIS NEWSLETTER:

• What is a transaction?

• An unusual mainstream explainer

• Public markets

If you’re not a premium subscriber, I hope you’ll consider becoming one! You get ~daily commentary on markets, tokenization, regulation and other signs that crypto IS impacting the macro landscape. As well as audio, relevant links and music recommendations ‘cos why not.

WHAT I’M WATCHING:

What is a transaction?

One of the aspects I find most exciting about crypto assets and blockchain technology is how it forces us to rethink what we thought we knew. It teaches us about the weak hold of language, about how form doesn’t always fit function and how, when you poke deeper, things generally don’t become clearer, they become more confusing. Personally, I enjoy that, but most hate it, which is why the easy thing to do is to assume definitions are solid and never change.

Take “money”, for instance. I used to work in traditional finance, I thought I understood it, but it turns out I was just conflating money with numbers that I moved around. It wasn’t until I started to research Bitcoin that I realized I didn’t understand money at all, and I am certain most in traditional finance today still don’t.

It’s not that the crypto ecosystem is any better at questioning the terminology we use. We accept that the definition of “money” is being prodded and stretched, but we happily use “blockchain” even for systems that have neither blocks nor chains. We say “stablecoin” even though we know fiat currencies aren’t stable. And we assume everyone understands what we mean by “transaction”.

This last point may seem like a stretch, because we need a term to cover the exchange of one asset for another. But when you poke at this concept, you’ll see how vague a word it is. And in finance, details matter.

(image via Bloomberg)

Definitions