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Long Reads Sunday - Issue #15

The interesting quirk of today’s crypto space is that just below the still surface of stagnant prices
Long Reads Sunday - Issue #15
By Nathaniel Whittemore • Issue #15 • View online
The interesting quirk of today’s crypto space is that just below the still surface of stagnant prices, numerous developments are setting the stage for a very different market. One aspect of that is institutionalization, exemplified first by the news about ErisX, a new compliant crypto market backed by TD Ameritrade and designed to compete with Bakkt, and second, with the announcement of a Yale investment in Paradigm. Some of the changes are even more fundamental, and relate to how we actually understand the space around us. Take, for example, the notion of “Realized Value” as a different way to understand the total market value of a cryptocurrency, or questions of whether funds should contribute work, not just labor to build crypto networks, or this argument that the word “blockchain” itself means too much and too little to be of real use. The essays and threads this week are a reminder that there is much more to the story of a market than the price. Happy Long Reads. 
-NLW 
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ANNOUNCEMENT: Long Reads Live #2 is tomorrow night at 7pm, with guest host Jake Brukhman, co-founder & CEO at Coinfund. https://www.youtube.com/c/nathanielwhittemorecrypto
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1/ Long Reads Sunday #15. Queue the “Bitcoin-as-stablecoin” jokes. As BTC hovers at ~$6600, this week was most definitely not about price action. Instead, the story is a bubbling undercurrent of institutional activity setting the stage for what comes next. https://twitter.com/TheCryptoDog/status/1048714431041961984
2/ On Friday, news broke that Yale’s endowment, led by David Swensen, inventor of the swap (hi Bitmex), had invested in Paradigm, a $400m crypto fund led by @matthuang, @FEhrsam, @_charlienoyes. @APompliano summarized in Off The Stack https://offthechain.substack.com/p/yale-has-invested-in-two-crypto-funds
3/ While some tried to suggest the deal was being overhyped, and just another example of crypto looking for good news, @cryptorae, with a background in endowment investing, articulated just how influential top endowments and Swensen in particular are to other institutionals https://twitter.com/cryptorae/status/1048181118162202624
4/ In other institutional news, early in the week it broke that TD Ameritrade & other Wall Street giants were throwing their weight behind ErisX, a compliant crypto and crypto derivatives market to compete with Bakkt. @fintechfrank & @TheBlock__ with the story https://www.theblockcrypto.com/2018/10/03/a-slew-of-wall-street-giants-are-getting-behind-an-upstart-exchange-looking-to-offer-bitcoin-cash-litecoin-and-ether-futures/
5/ These stories matter in part because of an assumption that, if 2017 was a retail investor revolution, the next bull market was likely to be driven my institutional investors. In that group, Family Offices are a likely first mover. @davidjn79 shares recent data from polling more than 100 FO’s https://twitter.com/davidjn79/status/1047853079582920704
6/ Interestingly, @cburniske argued that bear markets are where crypto value capture gets de-risked, arguing that 2018 is de-risking the SoV use case for institutional investors. He also ponders whether governance as a value capture mechanism might be next. https://twitter.com/cburniske/status/1048576817601372161
7/ Another trope of 2018 has been that it is an “infrastructure” phase for crypto. USV’s @nickgrossman & @thedanigrant blew that apart this week with their argument that things apps and infrastructure actually develop concurrently in a reinforcing cycle https://www.usv.com/blog/the-myth-of-the-infrastructure-phase
8/ The post jumpstarted a huge amount of conversation. One dimension of that was an articulation of Bitcoin specific infrastructure - a set of projects that, for as important as they are, sometimes get crowded out by focus on the main asset https://twitter.com/arjunblj/status/1046876030630285313
9/ One of the most prominent voices helping to expand the focus on the greater Bitcoin ecosystem is @nic__carter. In this interview with @Panama_TJ he discusses..well, everything, but dig question 4 on some of the infra innovations on the way https://medium.com/@Panama_TJ/q-a-with-nic-carter-abfe63f81e7a
10/ The argument that apps & infrastructure develop in a cycle doesn’t mean there aren’t some key fundamentals that need to be built. In this great thread, @awrigh01 discusses legal primitives - the building blocks of legal commercial exchange that could become programmable https://twitter.com/awrigh01/status/1047301690561630209
11/ And of course, when we’re discussing apps and infrastructure it’s probably worth noting that what those words actually mean in the context of crypto is pretty debatable. At @cryptosprings, @amberbaldet shared a graphic for how her team thinks about it https://twitter.com/AmberBaldet/status/1047926376420921344
12/ As an aside, from all reports, Crypto Springs was a phenomenal event. For those who couldn’t attend @katherinekywu and @messaricrypto captured interviews with a slew of the attendees and released it as a podcast https://twitter.com/MessariCrypto/status/1048196112673329152
13/ Okay, back to fundamentals, we’re still early enough that we don’t even fundamentally know how to speak about overall value. @muststopmurad and @kenoshaking make a huge addition to that dialogue this week with a deep dive on “Realized Value” https://blog.goodaudience.com/bitcoin-market-value-to-realized-value-mvrv-ratio-3ebc914dbaee
14/ At the same time, our perspective has evolved as an industry. In this thread, @alexsunnarborg articulates why native payments tokens create friction - and the response was more less “Yup. Agree.” https://twitter.com/alexsunnarborg/status/1046868137818431491
15/ One of the interesting undercurrents related to token structure is the possibility of formerly utility tokens converting to security tokens to be able to offer more equity-like rights and benefits. @crypto_bobby noticed that Iconomi do this and wondered if others will follow suit https://twitter.com/crypto_bobby/status/1046410947605270528
16/ Taking a step back, it’s a good moment to remember how early we are. Referencing news that Pantera Capital’s YTD -72.7% was only performing slightly better then her “Potato Fund” of 10 random coin picks @Melt_Dem that this is part of a normal pattern for new asset classes https://twitter.com/Melt_Dem/status/1048647557273071616
17/ As things mature though, man, it this a learner’s paradise. Take for example, @danheld’s thread and essay arguing that Bitcoin’s distribution was fair. Equity of distribution and wealth concentration are massive questions, and no matter what you think, this is a major contribution. https://twitter.com/danheld/status/1047884852454862849
18/ For an even deeper historical dive, start with @yassineARK’s thread pulling out some gems from old Bitcointalk and p2P foundation threads, and then go pursue the complete @nakamotoInst archive https://twitter.com/yassineARK/status/1047978606297792513
19/ Or, if you want to go full Bitcoin fever dream check out this impromptu thread from @ercwl, composed while stuck in a dreary Scandinavian night https://twitter.com/ercwl/status/1048264363176611842
20/ One crypto theme that has been present since the earliest days - since before Bitcoin even - is the question of privacy. @AaronvanW has been writing a ton on the topic, including this recent look at two implementations of MimbleWimble https://bitcoinmagazine.com/articles/battle-privacycoins-what-we-know-about-grin-and-beams-mimblewimble/
21/ One of crypto’s best and most prolific essayists @tonysheng also took on privacy this week - wondering if systems that were partially private were doomed to capitulate to anti-privacy forces. https://www.tonysheng.com/privacy-freedom-crypto-anarchy
22/ Another gem of the crypto brain space, @QWQiao, explored the theory of the firm as an intellectual predecessor for crypto networks which combine some aspects of firms and some aspects of markets as a new way to coordinate resources. https://www.tokendaily.co/blog/cryptonetworks-and-the-theory-of-the-firm
23/ And one more from the excellent @tokendaily blog…reformed adman @WhatBitcoinDid takes a harsh, but real look at the ‘civil war’ in Silicon Valley between the ad-driven model that has paid for technology and the new tech for which targeted advertising is collateral damage https://www.tokendaily.co/blog/the-decentralised-threat-to-advertising
24/ Speaking of transforming structures, the drums of generalized mining and the notion of venture firms that add value through work not just capital continue to beat. @jbrukh wrote about adventures in staking networks https://twitter.com/jbrukh/status/1046768023196053504
25/ Staking is definitely getting even louder as a topic of conversation. @ariannasimpson dug up some info on staking-as-a-service providers https://twitter.com/ariannasimpson/status/1047086502612819969 and @crainbf got our space yapping with a tweet summary of his talk on the transition between PoW and PoS https://twitter.com/crainbf/status/1047089258299682817
26/ Speaking of conversations on the rise, governance is getting more and more of the spotlight as people zoom out and wonder how protocols will be able to adapt to changing circumstances. @VladZamfir wrote a follow up to his last governance post https://medium.com/@Vlad_Zamfir/my-intentions-for-blockchain-governance-801d19d378e5 
27/ @VitalikButerin responded, arguing against hard forks as a mechanism for editing blockchains for ethical reasons, and suggesting that sort of governance be focused on layer 2 - particularly applications that rely on oracles that can be compelled to lie https://medium.com/@VitalikButerin/i-replied-why-i-disagree-with-your-anti-immutability-position-not-the-same-as-disagreeing-with-93694b565e2b
28/ But then, of course, there’s the issue of what we even mean when we say “blockchain.” @nic__carter argues, as only Nic can, that the word means too much and too little all at once, and that as an industry as a whole we’ll be better if we eliminate the semantic short cuts https://medium.com/@nic__carter/blockchain-is-a-semantic-wasteland-9450b6e5012
29/ Phew, alright. Not bad for what seemed to some to be a boring week. If you’re interested in diving deeper, check out Long Reads Live on Monday at 7pm. Check out last week’s inaugural edition with @TravisKling below and tune in tomorrow with guest host @jbrukh https://www.youtube.com/watch?v=ZKhB0MUwWa8
30/ Thanks as always for reading. Let me know what else I missed, and what was important this week, and if you’d like to get LRS via email, sign up here: https://www.getrevue.co/profile/nlw  

 

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Nathaniel Whittemore

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