Crypto, CBDC, NFTs, and more

Simone Brunozzi
8 min readMar 30, 2022


One of my past jobs was about simplifying complex things; the “crypto” movement desperately needs A LOT of simplicity right now.

Let me give it a try. Basics first, and some proposals at the end.

What is crypto?

I don’t like the usual answers. To me, it’s an incentive framework.
The killer app, for now, is to allow inventors/creators of a new technology to quickly create an incentive/reward scheme, by letting millions of users “invest” or “vote” into a certain technology or brand. A crypto token can go from zero to billions of dollars in a matter of a few months — unheard of until today. Instead, I don’t see crypto as an alternative to a stable fiat currency. I doubt that crypto will somewhat replace a fiat system.

How is crypto used today?

Not as digital money. It is used as a speculation tool, or a lottery/casino if you will. Most people buy certain tokens early on hoping to profit later, often meaning when the token starts trading on major crypto exchanges such as Coinbase, Kraken, Binance, etc.
Prove me wrong, happy to listen to counter arguments. In particular, show me an example of a relevant crypto project that does not involve any form of speculation.

So, crypto is…

Mostly a casino, but with tons of cool tech and innovation happening under the hood. You go in, play your cards, hope to come out richer and happier. You can lose everything. Tens of millions of people “invested” in crypto so far. The majority of those have lost money; or, they might have earned money based on the current valuation (today, March 30th, 2022: BTC at ~$47k, ETH at ~$3,400), but the endgame might not be nice to them.

This is not the full picture. As said, under the hood, crypto is also where a lot of technical experimentation takes place. In a way, it is a huge challenge to the current, established, slow-moving monetary system, which is feeling a strong push to innovate. Almost as if competition has finally arrived.

New financial tools, faster and better financial instruments, will be built as an indirect consequence to huge sums of money being invested in crypto right now.

What about NFTs?

NFTs are mostly misunderstood. NFT stands for “Non-Fungible Token”. Let’s start with a Fungible Token. No, let’s start with “Fungible”. What does it mean?

A $100 dollar bill is “fungible”, in the sense that you don’t care about a specific $100 bill, as long as it’s “a” $100 dollar bill.

If you want to care about a specific $100 dollar bill, or if you want to clearly identify it among many others, then the “serial number” of a specific $100 dollar bill is important, and you can use it to uniquely identify that banknote.

What confuses people when going from the banknote example to crypto tokens, is that Blockchains do not use the concept of a banknote, but instead they use wallets and public ledgers. Banknotes do not exist. A bitcoin does not exist, really. (this concept alone usually surprises most crypto enthusiast)

Imagine a giant book, or a ledger, orbiting Earth, fully visible from every corner of our planet. This book contains pages (blocks), and a new page is created every 10 minutes or so. A page contains lines that describe the transfer of a number of BTC from one wallet to another. No banknotes are involved. That’s what we see when we look at the Bitcoin blockchain.

Back to NFTs now.

This is a Bored Elon token. Under “details”, the Contract Address (0xd07dc4262BCDbf85190C01c996b4C06a461d2430) refers to the address where the contract is deployed on the Ethereum Blockchain.
The Token ID (140082) refers to this specific NFT (in a way similar to how you can identify a banknote by its serial number), using a specific token standard (ERC-1155).

NFTs are created through a minting process which includes the creation of a smart contract, and they become part of an immutable block in a certain blockchain (usually Ethereum, but it could also be Tron, Tezos, Eos, etc).

NFTs can then “change hands”, or be sold, from one wallet to another.

The information in an NFT usually includes the creator of the work, other parties’ entitled to royalties each time the NFT is sold, and the ownership history of the work.

However, Ownership and Copyright rights are not necessarily the same.

If you buy a digital asset, such as an NFT representing a piece of art or the book of a Dune film adaptation, you don’t necessarily own the copyright for that art.

So, how are NFTs useful? In my view, they are mostly used as a specific form of the aforementioned casino. In this case, you don’t speculate on a nascent crypto technology, but you speculate on an artist or on a piece of art, hoping that its value will greatly increase in the future.

NFTs enable a speculative art market.

They might be used for many other things, such as digitizing real estate (disclaimer: I’m a former founder and current investor). But if we observe the CURRENT use of NFT, it’s still, again, about speculation, and little else.

Happy to be proven wrong. Be nice and patient, and explain it to me in the comments.

The problem with crypto

Crypto is ~12 years old, and Ethereum was released in mid 2015, ~7 years ago. It’s a short time, but it’s also a long time. At this point, I would expect the intrinsic characteristics of this new technology to have emerged and having started to add value to the world. If there’s any value to be added.

Unfortunately, I don’t see a lot of value right now. I was a crypto enthusiast, but I’ve always been skeptical of the huge pile of BS on everyone’s mouth about why and how crypto would be amazing. The finesse of the tech part is a piece of art, and one should admire how Satoshi Nakamoto (or a group of people at Trinity, or Vili, or Paul, or someone at Lantiq, or all of the above) have put together a combination of other technologies to solve ONE specific thing in a unique way: the infamous Byzantine Generals problem. Or, how you ensure that a majority of (possibly hostile) entities can enforce the veridicity of a public ledger, and how do you let anyone participate in the network without permissions, but just by brute computing capacity. As said, brilliant work.

But after a dozen years, what do we see? Speculation. Speculation. Scams. Some amount of money laundering, but not as much as the media would like us to believe. And that’s it. No huge real-world problem has been solved, or mitigated, by the use of cryptocurrencies.

Most “value creation” being advertised left and right is that it doesn’t represent a paradigm shift, nor a substantial improvement, over what could have been done before (or could be done NOW) with different instruments.

Mobile phones, for example, add incredible value. Compared to a computer or a laptop, wehave them with us all the time, always connected (browse, email, etc), and can use them to take pictures, make payments, etc.

This creates opportunities for different experiences, and for new products to exist. Uber, Instagram, Maps, would not make much sense for a desktop-only computing capability.

What is it that I can do today, in 2022, with crypto, that I could not do ten years ago? Or, what is it that I can do significantly better with crypto?

Help me here, because I don’t see much.

I go back to my “incentive framework”, as a start. I can bring resources to an idea, through the creation of a token and its sale, to execute on the idea. My idea can go from zero to Billions in mere months, not decades.

We’ve never seen this speed before, for sure.
Is this the seed of something great? Or is this going to end in a burst? Time will tell.

The confusion with Digital Money

Digital money already exists. You log in to your online bank account and see some numbers on a screen. That money is digital.

Not only. Banks exchange vast sums of money by sending bits around, not paper notes.

Can you “program” that money? Not really. It is still managed in sylos, using principles from decades ago. The structure “on top” of digital money is still expensive, slow, and cumbersome. And doesn’t allow other parties to do much.

Can crypto be the “programmable money” that we dream of? It already is, in a way. But the underlying “money” part is not USD or EUR, it is instead a volatile, poorly secured, crypto token. Its governance is often shaky. Its adherence to compliance is constantly challenged. And as much as we can hate compliance and regulation, a good dose of it is actually healthy for an economic system to have stability and durability.

Can a fiat currency be made “programmable”? Probably not at the speed we would like to.

When Internet came along, private companies invented a myriad of services on top of it, and made it an incredibly powerful combination of tools. If we kept it as an extension of some government agency, it would have gone almost nowhere. If the web weren’t a protocol, the world would be a difference place today. Thanks, Sir Tim Berners-Lee and team, by the way.

Crypto is the equivalent of an energetic private sector, opposed to a slow and cumbersome government. Huge potential, but shaky foundations.

Where crypto could go, where crypto should go

What any government (US Government; European Union; etc) should do is simply “regulate” this framework, and let a thousand initiatives blossom. There’s no reason for the “money” part to be decentralized. There’s a TON of reason, however, to keep it “permissionless”. The permissionless part is what makes different team and projects interact with each other with very little friction (and what made the web explode in usage in just a few years in the early 1990s). For it to be permissionless, it should be federated: any government should be able to participate; any fiat currency should be able to be added. And private companies should be able to build ON TOP of this.

I don’t see a future where, instead, the current “decentralized” crypto takes center stage. Being decentralized is a huge compromise; it makes everything else expensive and complicated. Crypto has a ton of security issues. It has a ton of governance issues. Crypto should take out the “libertarian” or “anarchist” part, accept that some form of centralized control should be part of the game, and move on from there. Which, by the way, is already happening. On-ramp and Off-ramp are usually done through a (centralized) crypto exchange, such as Coinbase, Kraken, Binance. Most popular crypto projects need to use centralization in order to control things, even if it’s unpopular to admit that.

But that’s again a huge problem, because… Quis custodiet custodies?

Quis custodiet custodies?

A quick example: Ronin validators compromised.
Ronin is an Ethereum side chain created by Axie Infinity, a wildly successful (in terms of revenues) crypto game built by Sky Mavis.

Ronin was indeed centralized, and controlled by 9 validator nodes. The attacker took control of the majority of these nodes (5 out of 9, or more precisely, 4+1 out of 9 — the “+1” being controlled by a friggin’ DAO), and then simply stole $625M. Congratulations to the attacker. Now go and enjoy your tropical private island. Oh, don’t forget the mixer, first.

(side note: I don’t know anything about this specific incident, but I’m always inclined to think of an inside job, as a first suspect)

But without the anarchist, crypto is less fun!

I know, I know, crypto would become less fun, less of a wild west. And perhaps millions of people would not lose significant amounts of money trying to chase the next lottery ticket. Please, let’s be real. It shouldn’t be mostly a Ponzi scheme. It should be something better.

Closing statement: I’m curious to know where I am mistaken in my reasoning. I’m sure that this is only the start of a conversation, and I’m sure that with everything going on at the moment, I am missing some critical parts. Comments are welcome. And again, be nice :)



Simone Brunozzi

Tech, startups and investments. Global life. Italian heart.