A Conversation About

Kinjal Shah is an investor at Blockchain Capital and co-founder of the Komorebi Collective, which invests in female and nonbinary founders in crypto. She can be found on Twitter at @_kinjalbshah.

David Phelps writes on Web3 at davidphelps.substack.com.

Jasmine Wang is the cofounder and Editor-in-Chief of Kernel Magazine. She can be found on Twitter at @j_asminewang. Disclaimers: her personal holdings in crypto are viewable at jasminewang.eth. She was part of KB4 in kernel.community, and has received an honourable mention from Gitcoin’s call for public goods proposals. She is also an angel investor in a few crypto startups still in stealth, which are not mentioned here.


This interview has been edited for clarity and length.

Jasmine Wang (JW): Let’s start with how you became interested in crypto.

Kinjal Shah (KS): I was working at Fidelity and I was put on a project that forced me to go deep down the rabbit hole. What compelled me to say I want to do this full time was a chance to fix everything that's wrong with our existing financial infrastructure, and do it in a way that would by default be more open and inclusive and transparent. That's really what I wanted to see and I was like, this is going to be the future of how we get to that.

David Phelps (DP): In 2017 when I read about Bitcoin and Ethereum, I never really understood Bitcoin. But Ethereum made a lot of sense to me. And I really saw it as the future in 2017. I had a failed company that I'd started that was doing auto pay and auto billing for freelancers. Freelancers have to handle all the pieces that are not the reason they got into the business in the first place. But trying to do that at scale, with credit card fees, was just totally infeasible. So I got into crypto as a way to disintermediate the credit card industry and really allow for more permissionless payments from anyone to anywhere in the world. That was the really big part of the discourse in 2017; there wasn't discussion of the ownership economy, it was really just about disintermediating big institutions to have easier financial transactions. Now my overall narrative would be more around ownership and collectivization.

JW: I was first introduced to crypto via the RadicalxChange community in 2019. It's a movement focused on mechanism design whose founder, Glen Weyl, has collaborated extensively with Vitalik Buterin and co-authored a paper on quadratic voting, among other mechanisms. My interest in crypto originated in its political and governance promises.

JW: Were there any moments that you felt skeptical of crypto? Was there any hesitancy?

KS: I've had so many. When I got into this space, it was 2017 and I got introduced to Web3 via Bitcoin. Bitcoin made a lot of sense to me. I grew up in a family where having gold passed down generation over generation is important. I never fully got it but my parents have their jewelry and their gold bars in a safe somewhere and I'm going to get that one day. So the concept of store value in a digital sphere made a lot of sense to me. But when I started seeing all these ICOs happen [in 2017], that was a really big moment for me, where I was asking myself, do I want to enter a space where it feels like so much of it is just about making money?

The second piece is this internal battle of being one of very few women, or very few people of color, in the room and you don't see those people around you. It's like, should I be building up a community that doesn't represent me? So I found myself in this position where to do what I want to do, I have to climb up the ranks in the world that doesn't look like me. I'm devoting a lot of my time trying to figure out how to bring others up. So that's a constant battle of, it’s not skepticism about the technology, but it's skepticism about how things can go awry, when you don't build with that inclusivity in mind.

DP: [For] a lot of people outside the US, this is not something that's accessible, this is something really intimidating. I think that [it] took me a long time to internalize that. Over time, it did make me very aware of the ways that my missionary advocacy for crypto can fall into very traditional, I think even colonialist, white guy tropes of wanting to be the savior of the rest of the world with something that benefits you the most. As exciting as it is to talk about the ownership that we're gonna have over our data, we're also talking about owning entire protocols. And those are privatized, mostly in the hands of American venture capitalists, who are crowding out anyone else from being able to invest in them. So I think that that's the thing I'm most scared of right now — that our discussion of ownership and the power of ownership is also very much masking the ways that ownership is in the hands of very few very powerful people will benefit the most from it. Democratizing opportunity doesn't actually democratize access.

JW: I completely agree. It feels like in order to make money in crypto I need to enter gated communities for curated information strategies. This makes me hesitant about investing capital in the space, because in order to succeed I need to implement strategies that I don't feel on board with ideologically. So much of the emphasis in crypto is being early on a project and being able to buy in before other folks and doing some sort of information arbitrage. Does that feel like a correct assessment to you?

KS: This entire space is so early that a lot of the information arbitrage is really a factor of — the markets are not efficient because we don't have enough capital, we don't have enough players. It's an inefficient market and people are taking advantage of those arbitrage opportunities. The thesis behind being early is just to say that if there's a little part of the world that you know, and you spent a lot of time in and it doesn't feel like a lot of other people spend a lot of time there but you want to bet on it. You should be able to do that and reap the benefits of that. That's the conversation about being early and [it’s] less about “I'm going to make 1,000x if I'm like the second person in.” That's more of the Ponzi model that I hope to see less of.

DP: Carlota Perez has this distinction between productive value and financial value, where productive value is when you get value from the things you actually produce because they have meaning in the world, and financial value is when you get value because of arbitrage opportunities and speculation and market manipulation, and sometimes the boundaries between these things are blurry.

One of my frameworks for crypto — that I think is both a very good thing and a very negative thing at the same time — is that I think it democratizes collusion. Anyone can get together and create a Discord and drive up prices on NFTs (non-fungible tokens) and do wash trading, raise up those prices, to the point that everyone is just trading with each other without losing any money of their own. This is definitely a form of market manipulation. But so is everything that involves buying with money. It's just a question of the degree and power and who's being affected by that. What if instead of using the term “collusion,” we used the term “positive sum”? Now we have this way where anyone can get together and they're able to support each other in their community, and they're able to build value for one another. There's a real opportunity for communities to come together, create their own social token that has no value and give it value. I think it's a huge improvement over what we've had before.

JW: I’m fascinated by the way crypto is leveraging language. Like within quadratic voting, you need to conceptualize yourself as an individual actor and not talk to other people about how you're expressing your preferences. This is known as colluding [and] you can't collude, that messes up the system. But there's also another term for this, which is coalition-building, which is a different framing. People are reinventing vocabulary to reorient ourselves to systems and their possibilities, and there are both dangers and opportunities there.

JW: Which is to what degree is collective ownership the goal? Do we need to think beyond current concepts of ownership?

KS: I have a couple of somewhat related points to get to the answer here. First is defining what ownership means when you're collectivizing it, and understanding the rights associated with ownership and the level of involvement. Joining a DAO where you're one of 1000 people probably implies a different level of ownership than if you're one of 15. And then the other question for me is, when does collective ownership make the most sense? Does the value of this entity grow because it is owned and supported by multiple people? Does collective decision-making make sense? I don't think I buy the theory that everything should be governed by crowds of people. So trying to delineate where the boundaries are is super important because I don't think ownership should be taken lightly.

DP: One economic model I'm obsessed with is Roblox’s [an online gaming platform] economic model. They give you all the tools you want and they give you all the land you want to build. Then you monetize, based on what you do with that. It's not even collective ownership — it's really no ownership. I just think we need to be careful that ownership is not in a zero sum system, and the question is about what you own the system you're in, and whether your ownership is taking away that right from someone else or whether it's enabling for someone else. One of the really powerful experiences I had was when Ameer [Suhayb Carter] started Crypto Cookout, where the goal was to buy Black CryptoPunks. As a white person, I asked him, should I participate in this? Do I have a place here? And he was like, absolutely, because you're helping support Black equity. By contributing to win that auction and putting in whatever money I had, I was also helping Black ownership in some ways. It's the first time in my life I've actually felt like I was an ally.

JW: At Kernel, we're interested in the role of media in getting people excited about technology, and help them orient critically and actionably to those emerging technologies. I'm curious if there were any particular pieces of media that made you interested in crypto and if you have any thoughts about how crypto’s narrative is portrayed in the media.

KS: There's a deluge of information out there. Starting in the right places can lead to different outcomes. A lot of what I spent time reading early on was like Nick Szabo’s writing or the Bitcoin white paper. Mostly very old school blogs that were talking about this technology and the potential use cases. Today, if you want to get into the Web3 space, a lot of it is on Twitter or YouTube or podcasts, and all of those resources are great, but I think going to the fundamentals and starting with some of the historical information is a good idea. Because I did that, I always had this grounding that allowed me to form my opinions early on, and take each new piece of information and measure it up against some of the early writers and thinkers of the space. More broadly, the media portrayal of crypto has been extremely hyperbolic. I'm just disappointed in how much headline-driven reporting continues to be emphasized. I wish we could have reporting that is more focused on the people, the community, and the conversations that people are having and less about things like the underlying financial price.

DP: The arguments that Marx’s Das Kapital makes in terms of how we create value out of thin air are really relevant to crypto. I think Philip K. Dick and Ursula Le Guin are always on my mind, especially works like Ubik and The Dispossessed.

KS: I try to point people away from Twitter as the first place to go. There's so much context behind what people tweet that you don't really know, like you don't know if they've invested in a project, you don't know if they are best friends with this person. A lot of that comes from time and experience, and I just don't know if [Twitter] is the place for a beginner.

My biggest worry is that it turns us all into constant seekers of upside.

JW: Tweets lack so much context. The point of long form content is so different from a tweet. You have space to posit an entire world that is alien to the reader and make them feel at home in it, and thereby unlock it as a possible world to strive towards. Whereas on crypto Twitter, I feel like there are so many different memes that you’re supposed to extrapolate a worldview from by yourself, and project your own hopes onto. I would love to see more explicit long-form articulation of people’s different philosophies and hopes for crypto. But it’s difficult to create spaces for reflection when things are so fast paced.

JW: One could claim that the tokenization of things strips them of some intrinsic value. Are you two worried about this, or about hyper- financialization more generally?

To elaborate, Vitalik just published a paper in response to Nathan Schneider's article critiquing the limits of cryptoeconomics. His concluding sentence resonated with me: “Blockchain-based contractions have a lot to offer that other kinds of systems do not. On the other hand ... blockchainized should not be equated with financialized. There is plenty of room for blockchain-based systems that do not look like money, and indeed we need more of them.”

KS: I think one of my biggest concerns about hyper- financialization is that it implies that wealth and financial assets make you valuable. We're creating this culture where when you consume something, you have this assumption that you've already also invested in it because why would you spend time consuming something that you're not owning a piece of. It basically means that you need to have enough capital to be able to show that you're serious about supporting something or consuming something.

When you think of everything as a market, it does dehumanize it. It does turn it into a game of numbers and it's very difficult to separate your success from financial success. If I were to think about how crypto could go wrong, my biggest worry is that it turns us all into constant seekers of upside, and that measurement is done primarily through financial means, and we lose this ability to understand and benefit from social capital gains or meaningful contributions that come in different ways.

JW: There's a difference between a market economy versus a market society. The world that I'm worried about is one where we relate to all others through a lens of potential upside. There are ‘others’ that we understand to be ends unto themselves, intrinsically worthy, like other humans. Some people might feel like animals are intrinsically worthy, or trees or water are intrinsically worthy, and we shouldn't financialize those entities. Applying this lens to everything feels really alienating.

One example I would give here is that in Sino culture, there is this important notion of filial duty, where because my parents took care of me, that when the time comes, as required, I will take care of them, as well as taking care of my children who will take care of me. This idea of reciprocity has so much beauty and virtue in it that would be lost if we approached it in a quantified financial way. For example, we could try to work out how much my parents spent on me until, say, I was financially independent, or even one step further, how much that money they would have earned if they deployed that as investment capital instead, or how much of my future earnings it entitled them to. If we did that I’d personally feel none of the intrinsic honor that comes with being a good daughter or a good steward. I think many people today would find applying this financial lens to their most intimate sphere uncomfortable, but I think those boundaries could shift culturally as we introduce this language and technological affordance to financialize our relationships with other objects.

We need to think about the ways that permissionless is not enough. We need to be intentional in community-building

DP: The counterpoint would be that we already are hyper-financialized. Our data and identities are already being monetized by corporations constantly, and everything we do is creating and generating gigantic amounts of actual financial value. And what we're really talking about is taking that back for ourselves, and saying like we should have the right to the financial value that we're already providing to all of these systems that are able to take advantage of it. A really simple example is if advertisers want to pay what they call customer acquisition costs to acquire the customer, those will go to the customer.

Then so much of the world we currently live in has often misaligned incentives, or even just a spectrum of incentives. The idea is that we can create these structures where we all co-own. I would like to think that there actually can be great emotional benefits to working in this kind of space, and that having aligned incentives can actually create better relationships. I would much rather not have dominant power with an organization where I'm not building sustainable relationships, I'd rather share all of that power. So I agree that there's an absolute danger here of financialization but I would like to think that the models we're building will actually create much more meaningful relationships.

JW: What do you think are the most valid critiques of crypto? What could people do about those things? And what things are you excited for?

DP: I’m really excited about creating permissionless environments where anyone can build. Permissionless meaning anyone can go out and take anyone else's smart contract and then create their own version without having to ask permission and everyone gets monetized. But the other side of permissionless environments is you have to have those skill sets, resources, and time to do it. Those are all privileges and those will correspond to economic privilege in a non Web3 world, and I think as excited as we are about building Web3 we have to remember that if we're not intentional, it will just replicate the structures of Web2 and have intergenerational economic inequality that compounds over time. If you're not actively working to change the previous system, you're just inviting it in. We need to think about the ways that permissionless is not enough. We need to be intentional in community-building, and support making crypto much more accessible to the people who really need economic opportunity.

KS: My other main critique of the space is that we put too much emphasis on speculation. [People in crypto] often say that investor protections, in the United States at least, are harmful.. I think the speculative behavior of crypto is part of the culture and it's very playful and it's really fun. But it's sometimes at the expense of security, so I think if you're looking to join this space, and thinking about ways to improve upon it, I would focus on how we make this more of a secure environment.