The Church of Number Go Up

Is crypto a casino? A church? A new kind of infrastructure? The answer is: yes

Crypto is having its moment in the sun following the election of President Trump. Across the board, crypto-backed candidates won Senate and House seats, Trump picked a pro-crypto Treasury Secretary, and he might even make Bitcoin a reserve asset of the U.S. government. As a result, the price of Bitcoin has hit an all-time high, and since public narrative follows price action, well, buckle up buttercup: we’re in for (at least) four more years of crypto talk! As you try to cut through the noise, the question you need to answer is the same question the industry must confront: is crypto a casino, a strict church, or a legitimate piece of computing infrastructure? Let’s dig in.

Crypto is most associated with casino culture. I’ve written about the sociology of speculation and how it shapes the crypto community, but you don’t have to get all high-brow about it to see its casino qualities. When participants instantly create meme coins via Pump.fun, to then buy and sell Moodeng tokens, that’s not an investment that expects returns. It’s a bet. Or take the fall of FTX, caused by Sam Bankman-Fried gambling with house money. But while no one at this point should be shocked to find gambling in crypto — and there likely always will be — it no longer feels like the dominant culture. As I’ve observed the evolution of crypto over the last few years, the biggest divide is this: are you a member of a strict church or not?

I didn’t grow up going to church. Only on Christmas and Easter, when my mom’s Catholic guilt won out. But I’ve always been interested in how the experience of church is collectively produced. Your experience depends on the participation of others, how they show up, and the culture of the church emerges from those interactions. In 1994, Laurence Iannaccone offered a theory to explain “Why Strict Churches Are Strong,” and it starts by recognizing the collective production of a church, or, to use Iannaccone’s language, “religion is a ‘commodity’ that people produce collectively. My religious satisfaction thus depends both on my ‘inputs’ and on those of others.”

Crypto’s early network protocols — namely Bitcoin and Ethereum — started as strict churches. As I’ve written before, both are rooted in a strict ideology of maximal, technical decentralization. Both are trying to become a kind of commodity money — where the value of the associated token is collectively produced. And both try to socially penalize free-riding. The thinking goes that in any collective project, people benefit from the effort of the group — so why not minimize their own efforts and ‘free ride’ off the work of others? (If this triggered a traumatic high school group project experience, just know that I’m right there with you.)

A strict church — or in this case of crypto, Bitcoin, and Ethereum — includes at least three traits, according to Iannaccone: absolutism, conformity, and fanaticism. He goes on to write “Strict churches proclaim an exclusive truth — a closed, comprehensive, and eternal doctrine. They demand adherence to a distinctive faith, morality, and lifestyle. They condemn deviance, shun dissenters, and repudiate the outside world.” Iannaccone argues that this strictness raises group participation, limits participation in competing activities, and reduces the free-rider problem.

The absolutism, conformity, and fanaticism of Bitcoin and Ethereum adherents are alive in the ideological nature of their beliefs. But crypto goes a step further and financializes the strict church: it’s not just that there is a high social cost to participating and a disincentive to free-riding or abandonment, it’s that the financial value of the Church of Bitcoin — and, in turn, your net worth — depends on your ongoing belief in the collective project.

Take Bitcoin — it is not a productive asset. It’s not generating yield for those who own it; its value depends on how many believe it has value. Right now, that’s quite a lot of people — including big financial institutions — so its value isn’t likely to tank anytime soon. The same is true for other crypto projects: memecoins fluctuate so significantly in price because the value of the token depends on a culture of absolutism, conformity, and fanaticism. When a memecoin loses this culture, it loses the community, and the price follows. That’s why memetic communities on Crypto Twitter castigate doubters and outsiders.

But here’s the thing: the benefits of strictness are not infinite. As Iannaccone writes:

“Increased strictness adds to the attractiveness of a church only because its benefits outweigh its costs. The benefits take the form of greater group participation, commitment, and solidarity. These benefits can be quite large, since free riding is a serious problem. But they are not infinite. They must be set against the costs of strictness, costs that take the form of stigma, self-sacrifice, social isolation, and limited opportunities to earn ‘secular rewards’ or to enjoy worldly pleasures. As a group becomes progressively more strict, it eventually reaches a point beyond which the additional benefits of increased strictness outweighed by additional costs.”

Bitcoin has successfully evolved in its strictness. In the beginning, the ideological beliefs of the early participants had to be total. Those on the outside had to be chastised and castigated. Those on the inside had to express unwavering belief. Nowadays, those norms and beliefs remain on display on Crypto Twitter — but the church has evolved to include more secular participants. Blackrock, Fidelity, and other financial institutions aren’t anything like those true, old-school believers. But now that a sufficient number of people in the network believe in Bitcoin’s value, they feel comfortable joining. It has evolved from a strict church into the Church of Number-Go-Up.

Today, the crypto industry is at a turning point. Will it remain dominated by the Churches of Number Go Up — Bitcoin, Ethereum, and memecoins — or will it evolve, mature, and become known for applications that don’t depend on collective belief or policing participation but simply deliver value to people? In contrast to Ethereum, which is ideologically rigid, there are several new “layer one” protocols (i.e. infrastructural blockchains upon which applications can build) and corresponding communities (e.g. Solana, Sui, Aptos, etc.) that are far more pragmatic and secular. The Solana community, for example, has relentlessly focused on technical performance, increasing bandwidth and reducing latency. You can see signs of secularization as developers and investors leave Ethereum for Solana and other layer-ones.

The focus on generating value over policing collective belief exists in decentralized physical infrastructure networks (DePins), which I’ve written about before. They represent a new approach to capital formation, overcoming ‘the cold start problem,’ and coordinating transactions globally. They represent an interesting direction for crypto, in which people can participate and benefit from contributing to a new kind of networked business. Since I last wrote about DePins, projects like Helium and Hivemapper have accelerated their growth, indicating that using blockchains and token incentives to coordinate participation is working for them.

Over the last twenty years, strict churches like the Church of Latter-day Saints, Southern Baptist Convention, and the Jehovah’s Witness have seen a steady decrease in membership. The reason isn’t clear. Some think it supports the strict-church theory — the costs started to outweigh the benefits. While others think the churches lost membership because they relaxed the strictness of their beliefs, activities, and expectations. If crypto wants to mature and evolve beyond its casino and strict church roots, it cannot just promise people that if they believe hard enough, the number will go up. It will be because it evolved to deliver real value for people.

As always thank you to Georgia Iacovou, my editor.