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Long Reads Sunday - Issue #13

There were some moments this week that felt like the headier days of 2017. This similarity was not on
Long Reads Sunday - Issue #13
By Nathaniel Whittemore • Issue #13 • View online
There were some moments this week that felt like the headier days of 2017. This similarity was not only in the dramatic price growth during Ripple’s rip, but the fact that no one had more than passing theories to explain it. At the same time, even in that excitement there was a distinct 2018 twist to it. Rather than retail investors pumping ICOs whose white papers they had barely glanced at, the speculation immediately turned to questionable volume on exchanges. It wasn’t just XRP that had people talking about exchanges either. Take louder community critiques like Travis Kling on Pompcast or Nic Carter’s Medium piece from earlier this month and then add in a delightful dose of regulatory intrigue courtesy of the NY Attorney General’s report on exchanges and you’ve got the emergence of new market narrative. 
Of course, that wasn’t all that was going on this week. Bitcoin learned of what could have been a cataclysmic bug; a bunch of different groups announced projects around collaborative token ecosystem funding; there was some interesting movement around open standards for security tokens; and finally, a great little debate about whether something like the Gemini Dollar - basically, a better, more globally liquid USD - was actually a better market fit for what the world wanted out of a reserve currency than something that was totally outside the seizability and temperability of state-level actors. Happy Long Reads. 
ANNOUNCEMENT: For those of you interesting in a more visual format, look out for Long Reads Live - a guest-filled video conversation around crypto’s most interesting news & ideas. Coming soon. 
SEPTEMBER 23, 2018
1/ Long Reads Sunday #13. What a week it was. We saw: XRP surge and (momentarily) flip ETH; a massive ratchet up in scrutiny around exchanges; more non-action action around ETFs; a significant Bitcoin bug and so much more. Get your coffee black and steaming, it’s long reads time.
2/ Firstly, damn XRP. Ripple went crazy this week, doubling its market cap between Thursday and Friday and bringing back echoes of 2017. Part of the reminder of those heady times was that no one could (convincingly) explain the price action with news. @crypto_macro pointed to a couple of the better attempts at explanation. 
3/ One part of the XRP surge story seems to have been significant volumes on BitMex. If 2017 was the year of altcoins buying on Binance et al, 2018 has been all about leveraged trading, shorts, and perpetual swaps on Bitmex.
4/ Bitmex is one of the major topics of what many have called one of the best podcasts of the year with @Travis_Kling and @APompliano. They discuss how retail $ gets killed by quants; the decoupling of US & Asian ICO markets & how wash trading artificially increases volume
5/ Scrutiny of exchanges is a growing market narrative, and got a major kick in the pants with the NY Attorney General’s Virtual Markets Integrity Initiative report, released this week and summarized below.
6/ Now, if you’re wondering why a state-level attorney general is getting involved, and what the context for the report is, @katherineykwu and @MessariCrypto have you covered. They shared this grimoire of essential info via their new newsletter “Unqualified Opinions”
7/ Of course, not everyone was all that impressed with the report. Jesse Powell, CEO of Kraken - one of three exchanges cited for potentially operating illegally in NY.
8/ Ultimately, growing scrutiny of how different entities in the crypto ecosystem is going to make the industry better. To some extent, its about self-regulation and arming crypto buyers with the information they need to vote with their feet. In this, the best piece this year is @nic__carter’s “Dark Underbelly Of Cryptocurrency Markets”
9/ The NYAG report wasn’t the only regulatory intrigue bubbling. People are still waiting with baited breath around a promising Bitcoin ETF. For a full background on how ETF decisions get made and what the hurdles are, @jchervinsky summarizes here:
10/ On the flip side, there was also some positive regulatory movement, in the form of a set of proposed bills in Congress that would create “safe harbors” for 1) non-custodial use of cryptocurrencies and 2) tax penalties for people who benefit financial from hard forks.
11/ Maybe the most interesting ETF/institutional Bitcoin news this week was a letter from a number of prominent voices including @christophera @kanzure @CaitlinLong_ @anguschampion @ckayakr urging the SEC to treat Bitcoin and crypto in a fundamentally different way, avoiding “commingle” of assets among other things
12/ Another big piece of Bitcoin news this week was the disclosure of a vulnerability that could have allowed a hostile entity to shut down part of the network or event create new BTC beyond the 21m hard-cap. The Bitcoin Core developers CVE report on the bug:
13/ There has been a tremendous amount of conversation about the bug, ranging from measured to hysterical. Seems to me that the most thoughtful parts of the BTC community are more interested in learning lessons and improving.
14/ One more good thread related to the bug - this time about how the marketing of Bitcoin as sound money might actually make it more likely to be subject to attack. H/t to @saifedean for this thread:
15/ For anyone who is interested in the current state of thinking in the Bitcoin community, I can’t recommend following along with the talks at Baltic Honeybadger 2018. Hashtag is #bh2018, livestream is and @kanzure is literally live transcription it. 
16/ One big announcement from #bh2018 is the announcement of @TheB_Foundation - a self-funded org to support Bitcoin development and education. There has been some mixed reaction (particularly around the word “marketing”) but there are enough heavies involved that it’s one to watch
17/ Speaking of self-funding mechanisms, check out, an open source DAO for token ecosystems to use to coordinate funding around the development of public infrastructure. Really interesting experiment in resource coordination.
18/ These sort of resource coordination DAOs bring new dimensions to the idea of “community” in cryptoasset networks. @SpencerNoon has been riffing on this topic quite a bit lately, including this thoughtful thread
19/ The idea of community and network building is also influencing how people are thinking about venture financing itself. There is a growing conversation about “generalized mining” and how investors can participate in other network building activities beyond capital
20/ As investment into crypto matures, the space is developing a better sense of its own dimensions. @VisionHill_ just released a report on benchmarking in crypto that breaks down many of the categories of investing.
21/ Of course, one of the challenges with any sort of investing and network participation in crypto is the lack of rights and recourse available through tokens. For my money, some of the most interesting thinking today is around security tokens that allow for more equity like properties. See @brucefenton’s talk at #bh2018
22/ One example of this is ERC-1404, a new open standard for security tokens. The goal of the standard is to allow the simplicity and interoperability of an ERC-20 token with an added ability to enforce transfer restriction, enabling news types of compliance
23/ The sum of these conversations around new security token standards and new approaches to public funding via DAOs is: damn, we’re still so early. One other conversation that is both early and fascinating - how mergers will happen in tokenized networks. @VladZamfir sparked a great conversation on this:
24/ A line of logic in many speculative crypto M&A conversations is that they won’t work because the community could simply fork away. But what are the real costs of forks? @cburniske sums up some interesting recent research from @alexhevans: “value can’t be forked as easily as people think”
25/ Just a couple more provocateur threads before we wrap.
26/ First, god bless @kylesamani @TusharJain_ & MultiCap for keeping the conversation lively. Before XRP went haywire, they got the whole space debating whether the Gemini Dollar was actually the best market fit today for a cross-border liquid global store of value
27/ From my experience learning in active and post-conflict zones in the Balkans, Middle East and East Africa, even if they are right about GUSD, there is simultaneously a different and unique importance in a digital asset that can’t be seized.
28/ Just as I was finishing, @jbrukh went Electric Kool-Aid Acid Test with thoughts on “stateless smart-nations.” All joking aside, I’d be surprised if virtual “nations" didn’t end up competing with physical national affiliation in our life times.
29/ For your speculation pleasure, the latest project to claim to be able to out-Bitcoin Bitcoin comes from one of the godfathers of the space, David Chaum. @Adam_Tache summarizes his prezo from Consensus Singapore. Color me skeptical but intrigued.
30/ And lastly, an LRS announcement. I’ve seen such amazing engagement around the ideas here that it’s time to take it to the next level with Long Reads Live - hosted video guest conversation around the big events & ideas in crypto each week. Coming soon.


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Nathaniel Whittemore

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