Hello from Ethereum’s DevCon Three conference! Real Ventures is in Cancun for the annual gathering of the best and brightest in the Ethereum ecosystem. We’ve seen some great presentations and met many interesting people. In particular, Vitalik delivered an amazing presentation of his vision for the future of the platform yesterday (see picture below) that preserves a conservative development path while allowing for rapid experimentation. There’s no doubt that things are moving at a mile-a-minute in the world of Ethereum.
Regulatory arbitrage has long been predicted in the crypto world. Because of the disruptive nature of this technology, experts have suspected that governments would eventually impose restrictions which would compel crypto innovators to move to more favorable regulatory climates. We’ve seen this with the BitLicense in New York (where users are often blacklisted from crypto services), and now it’s happening in Asia, where Chinese entrepreneurs are going to other countries like Japan and South Korea. It will be interesting to see how this evolves over time - once the disruption becomes powerful enough, will governments attempt to reach across borders to enforce their laws?
The price of Bitcoin has been on an absolute tear in the past week, hitting over $7,300 on some exchanges. It has been hypothesized that this massive influx of capital is in anticipation of the upcoming fork, where anyone who holds Bitcoin will find themselves receiving “Bitcoin Gold” for free in an amount commensurate with their holdings before the fork - in other words, free money. The CME futures announcement (see below) is another bullish factor. It’s also (highly) possible that the price rise is primarily fueled by speculative investors, which is a perfect recipe for a bubble. Regardless, it’s amazing to see such a large amount of money flowing into the ecosystem so quickly.
Exchange giant Chicago Mercantile Exchange (CME Group) will begin trading bitcoin futures this quarter. This is a big deal. Bitcoin futures on the CME will give many investors, including institutional investors, exposure to bitcoin without having to worry about details like securing private keys.
Coinbase, America’s largest bitcoin exchange, added a record 100,000 users in the last 24 hours. It’s always interesting to follow the growthrate in Coinbase users as this is the primary on-ramp for new users in the crypto space and it’s a fairly reliable leading indicator for future increase in price. This particular jump in users corresponded with CME’s announcement for Bitcoin futures.
We haven’t yet found good articles that sum up the amazing innovations we’ve seen so far at DevCon Three, so we’re going to save this information for next week’s brief. Suffice to say, there’s a lot to be excited about.
Note: this is highly technical. The first version of the Casper Proof of Stake specificaiton for the entire protocol (not just every 100th block as in Casper the Friendly Finality Gadget) has been released. While far from complete, this is the first real look at what the architecture for the Ethereum protocol might look like in 3-4 years.
Folllowing on the heels of Tezos, Bancor, one of the most successful initial coin offerings in the short history of digital tokens, is proving to be a dud for investors. This is another project that we did not want to touch at the time.
Celebrity endorsements are helping start-ups raise big money in initial coin offerings. But it is not always clear what they are selling, and the people they’re selling to are often retail investors who have no idea what they’re buying. This shows all the classic signs of bubble-oriented thinking, and the SEC isn’t very happy (see below).,
The Securities and Exchange Comission in the U.S. has issued an official statement warning celebrities who endorse ICOs that their actions might be illegal. Floyd Mayweather, Paris Hilton, and many others have used their social media channels to promote token sales - almost always ones that aren’t legitimate.
GDAX, the cryptoasset exchange owned by Coinbase, has released a 5-page evaluation framework that they will use when considering whether to include new tokens on the exchange. Currently, only Bitcoin, Ether, and Litecoin can be traded on GDAX. Many users have requested support for more tokens (there are over 1,100 in existence), but Coinbase has always taken a cautious approach to any changes. Regulators have already signaled that exchanges can and will be held liable for supporting illegal activity (such as facilitating trade of unregistered securities), so this conservative approach makes sense. If you’ve ever wondered how to separate legitimate tokens from.. others, this framework is a great place to start.
Blockstream, a Real Ventures portfolio company, announced Simplicity, a new functional programming language for smart contracts. This language provides versatility and improves safety for Bitcoin (although it can also be used by other blockchains), which are welcome improvements to these protocols. Importantly, this work is entirely open-source and available for everyone in the ecosystem to use.
Clearing and settlement, trade finance, syndicated loans, payments, and identity are five areas that the Financial Times has identified as ripe for improvement by blockchain technology. These changes are evolutionary rather that revolutionary, but they are nonetheless highly impactful for efficiency and transparency in legacy financial infrastructure.