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Long Reads Sunday - Issue #21

This week was exactly why I started LRS - an endless barrage of news on top of dozens of brilliant th
Long Reads Sunday - Issue #21
By Nathaniel Whittemore • Issue #21 • View online
This week was exactly why I started LRS - an endless barrage of news on top of dozens of brilliant threads and essays.
There was, of course, SEC action against two ICOs and the follow up “plain English Guidance” (which some noticed was (perhaps purposefully?) vague.
There was the chaos of the BCH chain split, a costly fork that promised only phyrric victory.
There was a significant asset price downturn, with many different interpretations. Some took the market action as a chance to review where in the market’s evolution we are, while others pointed out the pain for crypto hedge funds.
There was a lot of talk about crypto metrics, including from Nomics’ Clay Collins and I, who wrote a long piece about the flaws of “market cap” and emerging alternatives. Others critiqued transaction count or fake exchange volume, or highlighted new thinking around the rational utility value of networks.
As if all of this weren’t enough, the community pushed out essays and threads on: understanding distributed consensus, the historical evolution of Ethereum narratives, the tragedy of the anticommons, and so much more.
Happy Long Reads.
1/ Long Reads Sunday #21. What an absurdly brilliant week. Featuring: +The End Of ICOs? +The Return Of Volatility +Hashwar +Metrics Meltdown +Essays on: generalized mining, surveillance capitalism, digital identity panopticons, + The best crypto Twitter debate ever? 
2/ BCH: “We lost our ticker, splintered our community and are hemorrhaging money trying to compete for hash power, but at LEAST we were loudest conversation in crypto this week!” SEC: “Hold my beer.”
3/ In all seriousness, the SEC action against Paragon and Airfox - despite all attempts to spin to the contrary, is a big deal. Some of the best reaction threads from crypto Twitter’s legal/regulatory crew: + @awrigh01 +@bullyesq +@prestonjbyrne
4/ Writing on @TheBlock__ @stephendpalley breaks down the action further. One important note is that these ICOs were targeted NOT for fraud, but for the failure to register as securities. In other words, the news has much broader implications
5/ Not done yet, the SEC then dropped its promised “plain English guidance” about ICOs & crypto, although @messaricrypto’s @katherineykwu noted that it sort of didn’t offer much guidance.
6/ @jchervinsky argues that the lack of clarity is an intentional strategy, and that the real game is “guidance by enforcement.” In fact, Jake argues that we’ve left the Phase 1 guidance phase and are in for a long slog of SEC cleanup, one settlement at a time
7/ Still, if SEC action with big ramifications isn’t interesting enough for you, maybe the WWE sideshow err.. BCash “Hash War” had enough to keep you interested. Best resources: +Background @AaronvanW @bitcoinmagazine +Skeptical view @StopAndDecrypt +recap @_peterryan
8/ One random media note surrounding the Hashwar…at one point, more than 4,000 people were concurrently watching a live conversation with 8+ prominent Bitcoiners. Livestreaming is going to be the crypto industry’s native version of cable TV news
9/ As @hasufl and many others noted, any “victory” in the hashwar was phyrric at best. Indeed, the costs of the war reinforce the emerging belief, supported by research from @placeholdervc and others, that rather than a no-cost governance strategy, forks have extreme social costs
10/ The other other big news this week was the return of volatility as the Bitcoin stablecoin finally broke its $6400 peg. @skew_markets takes a stab at recapping the action here while @muststopmurad cautions against thinking the worst is over
11/ @BreakerMag did a quick feature asking @TimDraper @jalak @nic__carter @APompliano @prestonjbyrne about their perspective on the price drop. Many salutes to Preston for use of the word “scuttlebutt.“
12/ Complete with understated headline, meanwhile, @Melt_Dem puts the action in the larger market context across the course of not only this year, but where in the phase of development of the emergent industry we are. TL;DR. It’s early and value flows are anything but clear.
13/ One entity that is a bit battered, let’s say, by 2018 crypto are the plethora of hedge funds that raised during ICOtour2017. @danzuller and the teams at @VisionHill_ have been doing great quarterly deep dives on HFs
14/ Family Office investor @DavidJN79 also wrote about the challenge for crypto hedge funds, arguing that 90% are destined to fail: "The resulting flood of money, like it did in traditional hedge funds, created demand for which there is no natural supply — managers who deliver repeatable, above-the-market returns after fees.” 
15/ The ability of price action to drive headlines and sentiment brings up an important question: if the metrics we revere drive the actions we take, how good are our metrics? @ClayCollins and I argued this week that the dominant metric of Market Cap has some serious problems
16/ One of the thinkers we featured prominently in that essay is @nic__carter, whose “Realized Capital” addresses a key problem with Market Cap. This week, Nic wrote another great essay about the problems with TX count as a metric
17/ @Coindesk this week released a new way to visualize and compare an array of different metrics across assets. While there was some insta-blowback, I think it’s important to differentiate critique of CD’s implementation versus a broader recognition that most of the metrics we use are game-able trash 
18/ Another metric that we use all the time despite broad recognition of just how manipulable it is is volume. @Travis_Kling has been beating the drum of our need to look past fake volume, and got an assist from @BitMEXResearch
19/ One of crypto’s most cogent thinkers when it comes to exploring and articulating valuation metrics @cburniske also wrote about how much more exploration we have to do, nothing that we’re still arguing about both models and inputs
20/ That said, @cburniske also highlighted @HASHCIB work to define a rational utility value for crypto networks. This is another example of something @ClayCollins and I saw while researching the market cap piece - the rate of innovation in valuation/metric thinking is incredibly promising
21/ Of course, valuation metrics aren’t the only area where crypto is still grasping to catch up with itself. One of the most shared and most valuable essays this week came from @iam_preethi. You’re just 27 minutes away from a real understanding of distributed consensus.
22/ "Generalized Mining” - the set of participatory network building activities around a cryptoasset - has been one of the most discussed topics in crypto lately. In this post, @CambrialCapital dives into the key question which of these activities are and aren’t appropriate for crypto funds to engage in
23/ Another phenomenal post published on Token Economy was @Felipether’s “Visions of Ethereum,” a historical treatment of how the Ethereum narrative has evolved over time in the spirit of @nic__carter and @hasufl’s “Visions of Bitcoin”
24/ Not wanting to leave all the action to us renegades, the IMF’s Christine Lagarde spoke extensively about “the case for new digital currency.” @APompliano put her remarks in context
25/ Whatever you think of @cz_binance & crew, they represent one of the most fascinating business case studies in the crypto era. @lawmaster gives them the deep dive treatment, Twitter-summarized here
26/ Crypto Twitter also saw some great debates this week. In the “are blockchains/NFTs valuable to games” you had @GodsUnchained showing off gameplay while @mikeBithell wrote this scathing dismissal of the game-blockchain “true ownership argument
27/ A post from @martyBent meanwhile kicked off a sprawling, multi-day conversation with @AriDavidPaul and @MustStopMurad at the center of it discussing the real impacts of inflation, Cantillon effects, and so much more. Crypto Twitter at it’s absolute finest:
28/ @AriDavidPaul actually extended some of the ideas from that conversation around sound money into their own thread, which, by the magical power of ideas to spark more ideas, generated its own great conversation
29/ If you’re at all interested in any sort of economic theory, I can’t recommend @AlpenSheth piece exploring the tragedy of the ‘anticommons’ - the places where too well defined ownership rights thwart robust economic activity - enough.
30/ Speaking of tragedy, @AABerwick’s incredible investigation on the link between Venezuelan “fatherland card” - used to monitor citizen behavior - and Chinese telecoms is an absolute must read
31/ That wasn’t the only massive read on surveillance this week. @MarechalPhD connected the dots between targeted advertising, data collection, and the potential for massive abuse of the collected data
32/ The macro context of Web 2.0 monopolies isn’t lost on the crypto community. @arjunblj highlighted this essay on Facebook’s sovereign-level power while @melt_dem shared @superwuster’s piece and wondered about whether populist reaction against mega corps could lead to demand for decentralized models
33/ Personalizing the macro context @ljxie shared this story about how her parents came to understand the value of cryptocurrencies in the context of real problems of currency controls & potentials for asset seizure
34/ Finally, for peak long read, two great @naval features. @eriktorenberg released a recent @cwclub live conversation as podcast and @CantHardyWait did this bomb recap of the Naval-@nntaleb convo at Blockcon
35/ This week was the epitome of why I started Long Reads Sunday. In the long run, the news will fade. The strength of crypto is in the people who pour their hearts and minds into big ideas and big opportunities each week.


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Nathaniel Whittemore

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