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Long Reads Sunday - Issue #22

With the price of Bitcoin dipping below $4,000 and ETH (temporarily) in the double digits, the feelin
Long Reads Sunday - Issue #22
By Nathaniel Whittemore • Issue #22 • View online
With the price of Bitcoin dipping below $4,000 and ETH (temporarily) in the double digits, the feeling that crypto has entered what could be a long, cold winter has finally set in. 
There is plenty this week to support that sentiment. This long essay on the crypto crisis, for example, or this post about why many crypto hedge funds are likely to shutter their doors. There is the immensely value destructive hard fork of BCH and the pondering about the challenges of governance in other cryptonetworks. 
Then again, even in deep winters, there are reasons for hope. Take this interview with the SEC’s dissenting opinion on a Bitcoin ETF; or this thread about actually interesting projects in crypto; or this article about processing 20,000 content micropayments via Lightning over the last 7 months. 
Taken together, these pieces tell the story of an industry that may be struggling around current prices and the real world implications those prices have, but a mind space that is still flourishing and developing. If you find the right way to stay warm, you might even find the winter to be its own type of beautiful. Happy Long Reads. 
-NLW
PS. I’ll be looking into some formatting / alternative newsletter hosting in the weeks to come to avoid the wall-of-text below. Thanks for your patience.
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1/ Long Reads Sunday #22. Bitcoin under $4k. Ethereum hovering near double digits. The coldest Thanksgiving in 100 years seems, in retrospect, an inauspicious sign as we settle into what might be the first of many cold crypto winter long reads. 
2/ Kicking off the new mood, @Melt_Dem wrote this tome about what she calls the crypto crisis. This is a detailed look that incorporates the macro perspective and is a must-read to understand the current investor mindset. https://medium.com/coinshares/the-truth-about-the-crypto-crisis-7a38125983d5  
3/ Earlier in the week, @APompliano dug into yet another reason that crypto hedge funds were likely to capitulate the longer crypto winter goes: high water mark clauses that make it unlikely that most fund managers will receive performance fees. https://offthechain.substack.com/p/icos-and-crypto-fund-managers-are
4/ Adding a bit of theatrical flair, @CryptoHayes dramatized the probably-not-so-fun conversations happening between crypto hedge fund managers and LPs everywhere. H/T to @twobitidiot https://twitter.com/twobitidiot/status/1065253332351107073?s=21
5/ On the other end of the opinion-data spectrum, there were a couple more analytic reports out on funds this week as well. @MerschMax_ surfaced this crypto fund landscape report from @fmoulin7 https://twitter.com/MerschMax_/status/1066387014524768257
6/ @jamie247 and @OVioHQ were back with another quarterly research report. Q3 this year showed the transition from the boom - with annual crypto VC investments up 316% from 2017 - to the bust - with total ICO capital raised down 74% in Q3. https://outlierventures.io/research/state-of-blockchains-q3-the-professionals-have-moved-in-with-vc-investments-soaring-to-all-time-high/
7/ One temptation in brutal markets is to adjust every narrative to match the doom and gloom. But sometimes the data doesn’t match. @TheBlock__’s @lawmaster takes to task the narrative that ETH price drop is being driven by ICO selloff. https://twitter.com/lawmaster/status/1064909187208089600?s=21
8/ Over in the world of Ethereum-beyond-the-price, core dev @lrettig discussed the challenge of finding the balance of transparency and efficiency in the context of an open governance model. https://twitter.com/lrettig/status/1066000268188372995
9/ Governance was also the subject of this long read from @Steven_McKie and @m_t_prewitt, exploring both the ideas of legitimacy and authority within blockchain communities as well as comparing the relative conservatism of BTC, Zcash and Ethereum https://medium.com/amentum/blockchain-communities-and-their-emergent-governance-cfe5627dcf52
10/ Part of the reason we’re seeing more conversations around governance is that the mentality of “governance-by-fork” has been damaged. For example, @Alistairmilne pointed out how value destructive the BCH fork has been. https://twitter.com/alistairmilne/status/1064986084101316609
11/ Speaking of value destruction, check out this thread from @DoveyWan on Chinese miners shutting down mining capacity as it becomes more economical to reduce the costs than to continue. https://twitter.com/doveywan/status/1064878600594305025?s=21
12/ Of course, the context for the shutdowns is Bitcoins falling price. But the price reason for that fall continues to be the subject of debate, exemplified by this exchange between @nathanielpopper and @real_vijay https://twitter.com/real_vijay/status/1065378331233738752?s=21
13/ Of course, even in the midst of winter there are pockets of invincible summer (yes, I just stole every emo band’s favorite Camus line). Check out @Tuurdemeester’s thread on uplifting Bitcoin stories from Thanksgiving Day. https://twitter.com/tuurdemeester/status/1064245409965637634?s=21
14/ There are more true allies emerging all the time. Check out @PeterMcCormack’s interview with SEC Commissioner @HesterPierce, author of the recent dissenting opinion about a Bitcoin ETF https://twitter.com/PeterMcCormack/status/1066314729151504385
15/ Also, for real, can we get a big set of claps for @PeterMcCormack’s @WhatBitcoinDid which is consistently one of the best researched and most thoughtful podcasts available and is just celebrating its one year anniversary? TY for all the work, Peter! https://twitter.com/PeterMcCormack/status/1066694498925903873
16/ Despite his caution around inevitable crypto winter features like fund shut downs, @APompliano is a prototype for the short-term-bear(or at least, realist?)-long-term-bull, as witness by his interview on @cnni https://twitter.com/apompliano/status/1066058486851739648?s=21
17/ Speaking of long horizon thinking, @hasufl and @zhusu have teamed up once again for a new series for Bitcoin skeptics. This piece is a spiritual successor to their piece earlier in the year on evangelizing bitcoin and I’m excited to read the full series https://medium.com/swlh/why-bitcoin-3fdee2328759
18/ @udiWertheimer sparked an amazing thread by pointing out the role of ICO trading in increasing Bitcoin’s prominence last year and asking what people believed the next catalyst might be. https://twitter.com/udiwertheimer/status/1065339845051068417?s=21
19/ On the topic of ICOs, after the SEC actions a couple weeks ago, many declared the ICO party dead once and for all. @KyleSamani argued that it had, in fact, it had been dead for all of this year, and there is a new compliant ICO party soon to begin https://twitter.com/KyleSamani/status/1064522213318115328
20/ For those who still want to be inspired amidst the gloom, @SarahJamieLewis just came straight for it with this thread on “actually interesting cryptocurrency things.” Lots of privacy tech highlights here. https://twitter.com/sarahjamielewis/status/1066532446894612480?s=21
21/ Last week, I posted @mikeBithell’s thoughtful thread poking holes in the NFT/blockchains for games narrative. @AriDavidPaul responds, basically, that sunk costs in today’s games are an attack vector for tomorrow’s new titles to add more value. https://twitter.com/aridavidpaul/status/1064377519682523137?s=21
22/ When it comes to the global landscape, there are also reasons to be buoyed by progress. In a new essay for @TheBlock__, @iamjosephyoung writes about the improvements in South Korea’s exchange market and regulatory environment https://twitter.com/iamjosephyoung/status/1066059903368744960
23/ Of course, one of the most bullish long term indicators comes from focusing strictly on the top executing projects exploring opportunities simply unavailable in previous paradigms. Case in point, @frothcity and @foamspace https://blog.foam.space/foam-the-importance-of-time-synchronization-3934755ccc4e
24/ I’ve been keeping an eye on the Moloch DAO project - an open source approach to communal funding for shared protocol infrastructure. @austingriffith shared a Turkey day screencast playing around with it and explaining the game theory that drives it. https://twitter.com/ameensol/status/1065761905170468864?s=21
25/ That category of exciting blockchain projects doesn’t necessarily just mean new tokens, either. @La__Cuen wrote on @coindesk about how @alexbosworth’s yalls.org has process 20,000 micropayments with Lightning in the last 7 months https://twitter.com/La__Cuen/status/1065987673679060992
26/ It’s hard to remember around all of the urgency around price that we’re still exploring the most basic fundamentals of new ways to organize and transact value. @cburniske makes that point in his latest: Cryptonetworks are not companies. https://medium.com/@cburniske/cryptonetworks-are-not-companies-a307ad6a61ae
27/ Taken together, these pieces tell the story of an industry that may be struggling around current prices and the real world implications those prices have, but a mind space that is still flourishing and developing. If you find the right way to stay warm, you might even find the winter to be its own type of beautiful. 
28/ Happy Long Reads #22!  

 

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Nathaniel Whittemore

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