Generations of warfare and business correlate closely. However there is a lag between them, war is roughly one cycle ahead of business. War adapts more readily to advancements in strategy, making it an informative leading indicator in domains that are adversarial and competitive.
I believe this makes it an excellent proxy not just for business, but also DeFi.
This is the second part of a three-part series on generations of warfare, business, and crypto. I recommend you first read Part 1 to see the evolutionary cycle that this piece builds upon.
Picking up where we left off….
3rd-gen business was the professional manager and conglomerate era. Mega companies led by a professional-manager class that resembled variations of Mad Men. 4th-gen begins to reverse that, and is roughly the generation business is currently in.
4th-gen business, AKA the entrepreneurial era, began in the late 90s. Startups — which incorporate the Blitzkrieg maneuver strategies of 3rd-gen war — proliferate and are distinctly faster, quickly assimilating to market conditions that are increasingly technology dependent. The shift from bureaucratic professional-manager structures (oligarchical hierarchy) to the ‘eccentric founder and leader’ one (monarchical) allows startups to act more efficiently and with less bloat.
Backed by venture capital, 4th-gen products rapidly get to market and find PMF in new categories, which begins to unbundle business previously dominated by large corporations.
Swiftly circling and undercutting legacy companies and playing a game dominated by speed: strong parallels to 3rd-gen warfare.
4th-Generation Warfare (one cycle ahead)
4th-gen war is defined by the participants in the war and their objectives, rather than how the war itself is fought. This generation is led by decentralized nonstate actors who are able to put up serious resistance or even repel centralized state militaries. The internet and mobile devices allow advanced coordination and information sharing without the large, slow-moving processes of state armies. The lines between combatants, civilians, war, and politics become blurred. Classic guerilla warfare.
The September 11th 2001 attacks are a prime example of a highly effective 4th-gen assault. Terrorism, rebels, militias, etc. performing hit-and-run strikes and sabotage are apt examples. The state then struggles to retaliate as the guerillas do not occupy territory.
Fighting states also means waging war with propaganda and disinformation. Psyops and false flags are no longer a CIA monopoly, as nonstate actors also spread their own disinfo by way of social media, dank memes, and fake news.
In contrast to 3rd-gen warfare, which mobilizes societies and had a “win at all costs” mentality, the guerilla combatant wins simply by not losing. They don’t have to defeat the state, they merely have to stay in the game. This is how 4th-gen goals and interests are advanced and remain visible. As Henry Kissinger said “The conventional army loses if it does not win. The guerrilla wins if he does not lose.”
3rd-gen DeFi ends when the US requires crypto teams to be fully doxxed with registered presences in Western states. As the West continues to target devs who haven’t committed crimes, DeFi builders refuse this proposition. The space will go dark.
4th-gen is the ‘Vietnam farmer’ phase of DeFi. For the same reason the US hasn’t really won a war since WW2 and has continually lost to the likes of Vietnamese farmers and Afghan insurgents — who don’t actually win, but simply stay in the game exhausting a larger foe — the SEC and regulators will succumb to the same pitfalls. The US military is built to go after Russia, China, Germany, and other large, centralized adversaries that occupy territory. The SEC is built to go after the same: Goldman, Deutsche Bank, Credit Suisse, Barclays, etc.
Regulators not designed to go after tens of thousands of anon devs and millions of users across the globe with no central location. The resources and competence simply are not there.
In 4th-gen DeFi, we are all Vietnam farmers.
4th-gen will be marked be a persistent presence of low-intensity warfare. Regulatory assaults will escalate from more ideological attacks on non-core infrastructure (eg Tornado Cash, Mirror Protocol, Ripple) to core ones like banning staking services in an effort to weaken Ethereum, shutting down stablecoins to destabilize DeFi, making you register as a business/broker if you run an ETH node, and other belligerent nonsense. I expect the likes of Lido, Rocket Pool, and Circle’s $USDC to all be targeted. Expect nonstop legal games to try to choke off additional capital from going onchain and to weaken onchain security.
The state will also go after companies that provide services to DeFi projects. Cloud computing and internet infrastructure giants (AWS, Cloudflare, etc.) will begin to treat crypto clients the same way banks do, arbitrarily shutting down accounts they suspect are associated with crypto out of fear regulators may target them for aiding money laundering, or whatever legal justification the state uses to exert pressure.
Out of necessity, projects like Filecoin, Urbit, and Render will then transform from neat projects we support but don’t really use, to core parts of the DeFi decentralized stack.
As DeFi is attacked with random arrests of builders and disinformation campaigns to smear users as criminals, DeFi will begin to act not only defensively, but offensively. Aided by AI tools and cryptographic anonymity, mercenary cypherpunk teams will begin spreading their own propaganda and cyberattacks, going after politicians and regulators that have openly abandoned the law. Crypto’s Blackwater will take shape and it will be well-funded. In 4th-gen DeFi shots are not just absorbed, they will begin to be returned.
State’s will arbitrarily seize assets of those suspected to be affiliated with DeFi and hold them indefinitely in “guilty until proven innocent”-style policing, acting like a Mafia and abandoning the facade of legal due process (the US already selectively does this with Civil Asset Forfeiture). In response to the state’s brazen, openly criminal cartel behavior, you’ll see retaliation against banks and government financial infrastructure.
OpSec will become a critical component of literally anything online/onchain. VPN providers will likely be targeted and their servers seized (exposing which ones really have “no logs” policies). All DeFi anonymizers/mixers will be OFAC sanctioned.
The DeFi community will finally be disabused of the idea the state will allow its disintermediation with money and control of financial infrastructure. Pragmatism will not reign supreme when the US is faced with losing its monetary hegemony and control over financial infrastructure.
This concludes part two. In part three I’ll review 5th-gen warfare and extrapolate where both business and crypto are headed from a tactical and ideological standpoint. 5th-gen business has not yet arrived, so you will get predictions for both DeFi and business environments that are predicated on 5th-gen war and my personal experience working in DeFi spaces. Crypto supply chains, citizen renouncements, laptop guerillas, and decentralized societies are just some of what you’ll see.
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