Bits and stuff: September 9th, 2018 – crypto, caution and codex

After two weeks off (partly spent in Cincinnati for a family wedding), I have come to the conclusion that even a full time job reading quality crypto articles would not be enough to keep up with the worthwhile ideas and analysis. I am grateful to @nlw for introducing me to stuff I would probably miss otherwise – if you’re not following him, you should. And the curation emanating from the @Messari team is also an eye-opener and a time-saver.

And meanwhile, I continue to struggle with the overwhelm, while really appreciating being able to work in SUCH a compelling sector.

Cincinnati at night
Cincinnati at night

(Anyone else out there often have 25 tabs open at the same time?)

— x —

To add to the list of “great bitcoin articles for beginners” – I get asked for these quite often, and most of the ones I used to learn are now out of date – here’s one by Nic Carter that explains the basic concepts clearly. As a bonus, it refutes, almost point by point, one of those all-to-frequent pieces in the mainstream press (this one from The Washington Post) that – while they may have some good criticisms – show a fundamental lack of understanding. (Looking at you, The Economist – although with a less severe glare.)

“Bitcoin is designed to solve the double spend problem for digital cash, and to provide a predictable monetary policy. It does that very well, it has done that for the last nine and a half years, and it will continue doing that for the foreseeable future. Demanding low volatility on top of that is farcical, and betrays deep ignorance about the tradeoffs inherent in monetary systems, and the way that financial markets work more generally.”

— x —

Speaking of media missteps, the misplaced attention drawn to Goldman Sachs’ plans to set up a crypto trading desk is indicative of the intense level of attention given to institutional interest in cryptoassets. I believe that the slump in the bitcoin price when the article came out alleging that their plans were being shelved is coincidental – the report was denied shortly after, and the rebound didn’t come until a few days later. So, the market movement probably didn’t have much to do with that.

Nor should it. Goldman’s plans are relevant, but not material. The original article said that the trading desk launch was being delayed, not cancelled (“moving down the list of priorities”, or similar language). But that implies that they had a fixed timeframe in mind, which I doubt. Opening a “physical” bitcoin trading desk before you have crypto custody sorted out does not make strategic sense. The development of that business line is apparently still on track.

(I have an issue with the differentiation of “physical” bitcoin from bitcoin derivatives – it’s not physical!!! But should we use “actual”? “Real”? Searching for a better idea…)

— x —

Here is a mind-blowing podcast from Epicenter (which I usually find quite hard going) about a potential new economic system. Glen Weyl talks about his book “Radical Markets”, in which he draws a more equal society that removes the monopoly of ownership through self-taxation and option to buy. While I don’t see this happening (because of human nature and the structure of power), the ideas are intriguing, especially the part about how pseudonymity leads to oligarchy.

And the idea of quadratic voting: each citizen gets a certain number of votes (which could be linked to income) to “spend” on issues that they care about. Instead of one-vote-takes-care-of-everything, which distorts influence, people can have more “skin in the game” and more influence in the issues that matter to them.

— x —

After that, the article by Nuval Noah Harari in The Atlantic about democracy has a deeper resonance – how its durability is not obvious, especially given the redistribution of power via technology (such as blockchain):

“We tend to think about the conflict between democracy and dictatorship as a conflict between two different ethical systems, but it is actually a conflict between two different data-processing systems. Democracy distributes the power to process information and make decisions among many people and institutions, whereas dictatorship concentrates information and power in one place… However, artificial intelligence may soon swing the pendulum in the opposite direction. AI makes it possible to process enormous amounts of information centrally.”

— x —

Leonardo Da Vinci’s notebooks online. Seriously.


(From the Victoria and Albert Museum.)


Bits and stuff: decisions, derivatives and decentralization – August 19, 2018

Yet again cryptoland enters ETF fever, although this time with a twist.

Barely a month after publicly dismissing the Winklevoss’ application for a bitcoin ETF, and just two weeks after postponing a pronouncement on the VanEck SolidX bitcoin ETF petition, next week the SEC is supposed to announce its decision two more proposed ETFs – ProShares Bitcoin ETF, and ProShares Short Bitcoin ETF.

These are different, in that the underlying asset in both is not bitcoin itself, but bitcoin futures. Specifically, the bitcoin futures that trade on CME and/or Cboe, two regulated markets.

A significant detail is that the futures in question are cash-settled. That is, no actual bitcoin changes hands, which removes the thorny problem of custody from the table.

That aside, will the transparency and oversight be enough to quell the SEC’s concerns of price manipulation?

Perhaps, but there’s another problem, quite a big one, that is likely to lead to a rejection: the relative lack of liquidity.

Although the bitcoin futures in question trade on regulated exchanges, the volume is still relatively low, about 7% of bitcoin volume. The concern is that, if the ETFs are well subscribed, they could dominate the futures markets.

Why is that bad? Concentration of volume in a handful of buyers and sellers is never good for a market’s reliability – erratic behaviour (for whatever reason) can produce volume spikes and price swings that could send ripples of uncertainty throughout the whole market, which is relatively volatile anyway.

Another factor against it is that it does not have measures to prevent retail investors from piling in. It’s unlikely that the SEC will be comfortable with that.

Obviously there are more issues taken into account than just these mentioned. And it will be illuminating to see what justification for a rejection the SEC chooses to stress.

(And who knows, maybe I’m wrong and it will get approved. But I don’t think so.)

One thing we can be sure of: the proposers of bitcoin ETFs are not going to give up easily. Nor should they. The barriers to approval will be worn down with time. And the first to market will enjoy not only massive publicity, but also a fair amount of demand.

As Winston Churchill allegedly said: “Success is going from failure to failure without losing your enthusiasm.”

— x —

This article on ethereum-based collectibles by Brady Dale veers between the endearing and the ludicrous. You thought CryptoKitties were strange? Check these out. (I’m tempted by the dancing crystals.)


— x —

The more I dig into bitcoin swaps, the more confused I get.

First of all, the ICE recently announced that it is developing an exchange that will allow regulated trading of bitcoin swaps. This was greeted with jubilation by the crypto media, because (finally!) institutions will have a regulated venue on which to get exposure to bitcoin.

Only, LedgerX has been doing this for ages. And they are regulated by the CFTC, as a registered swaps execution facility.

Why is the ICE idea so much “better”? I don’t know. Perhaps the liquidity will be higher? Perhaps because of name recognition?

And on the ICE proposal of 1-day swaps. If I understand it correctly, I commit to buying bitcoin tomorrow at a set price. How is this different from buying bitcoin with 1-day settlement? Delayed settlement is already a feature of most investment asset markets. This could be interpreted as a “reshaping” of bitcoin to suit institutional habits. While the inflow of liquidity would be good for the sector, it does seem to sort of defeat the point of bitcoin.

— x —

I was on the Blockchain Insider podcast again last week! So much fun seeing Todd McDonald, Martin Bartlam and Anthony Macey again. Simon Taylor, as always, was a stimulating and original host.

BI ep 59

— x —

Maybe it’s confirmation bias, but I’m seeing more thought going on about what decentralization means, and whether we really want it (or can achieve it in a socially acceptable form).

This tweet thread (with valuable external links) is definitely worth reading.

Meltem Demirors took Sarah’s analysis further:

And I’m looking forward to seeing the results of this, from Angela Walch:

— x —

While not ostensibly about crypto or blockchain, this article by Zeynep Tufecki speaks to the dangers of not thinking about not thinking about longer term consequences of supposedly “liberating” technologies… (so maybe it is a bit about crypto).

— x —

Bear market or not, the crypto sector has never been more interesting.

Bits and stuff: platforms, podcasts and predictions – August 5, 2018

I was in London this week for a bunch of reasons, one of which was the Global Digital Finance round table, in which representatives from the cryptoasset industry (entrepreneurs, executives, regulators) discussed how to bridge the gap between the “new finance” that blockchain-based assets promises, and the regulators who have to protect their constituents.

It was awe-inspiring to be in the room with such smart people, and there will be some interesting work emerging in the coming weeks. Watch this space.

You can find out more about our goals here – download our papers and offer constructive suggestions! Consultations are open until the 30th of August.

— x —

The news that Intercontinental Exchange (ICE), the owner of the NYSE, was developing a crypto asset platform caused a big stir in the media, but little movement in the bitcoin price.

The platform will offer a federally regulated marketplace for cryptocurrencies, that also takes care of clearing and storage. This is a potentially big deal for institutions, given ICE’s reach and reputation.

It is also developing a second layer to facilitate settlement. The idea is that bitcoin trades between Bakkt clients would settle instantly with a simple change of ownership on the ledger – not actually on the blockchain.

Yet the bitcoin price fell after the announcement. Why, when the press gushed that this would provide an outlet for the “flood of institutional money” that was waiting for regulated infrastructure?

Could it be that the market is so pessimistic that even this can’t generate some excitement?

Could it be that claims of a “flood of money” are not credible?

Or could it be that this news is not as good for the community as the media would have us believe? Rather than decentralized finance, not controlled by anyone and with no counterparty risk, bitcoin is becoming increasingly absorbed by the incumbent system. While that may be necessary to satisfy institutions’ requirements, it may at the same time make bitcoin less attractive as an investment.

Leaving aside the centralization and counterparty risk this implies, if bitcoin is to be “digitized” like share certificates, and ownership changes hands on a ledger rather than in “real life”, then what’s to stop it from becoming the base for lending, collateralisation and fractional reserve banking?

While this may inject liquidity, it will also increase fragility and risk, while lowering volatility and returns. In such a scenario, why would institutions want to invest?

Then there’s the involvement of Starbucks, that allegedly will encourage development of bitcoin-based consumer payment mechanisms.

This sounds like a totally different target and mechanism – not to mention the fact that there has not been a demonstrable demand for this service, at least not in most jurisdictions where Starbucks operates.

The press release says that “Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks.” I cannot fathom why clients would want to do that.

On the positive side, this could trigger a new wave of innovation – “standard” financial services could add breadth to bitcoin demand, and encourage development of a new type of ecosystem. Ever the optimist – but I can’t help but feel disquieted by this announcement.

(The New York Times reported back in May that Softbank was originally going to be involved in the deal, but they have since backed out – anyone know why?).

— x —

My colleague Adam Hart wrote an eye-opening report on how the main cryptocurrency data sites have been misreporting bitcoin volumes and origin. A deep dive into the numbers revealed that bitcoin trading in Japan had been grossly overstated, since Bitflyer and others were bundling cash delivery derivative trades into the bitcoin trading figures, while other exchanges were not.

Adam and his team pointed out their findings to CryptoCompare, who almost immediately changed their calibration.

The figures now show the US dollar easily in the lead as the highest volume pair when it comes to bitcoin trading.

Intriguingly, Adam’s report then goes on to ponder the possible effect this simple data change could have on the US regulatory approach to cryptocurrencies.

“The dollar’s role in this exchange ecosystem extends the reach of the U.S. government. Just as the dollar’s preeminence in the international financial system gave U.S. regulators the leverage they needed to shape global anti-money laundering (AML) practices in the wake of 9/11, the dollar’s importance in global fiat-to-cryptocurrency trade could give them outsized influence as governments around the world mull new regulatory frameworks for cryptocurrencies.”

Good reporting, interesting insight.

— x —

Caitlin Long published a compelling article on why cryptoassets cannot be “financialized” (ie. spun into new financial assets) – they’re bearer assets, not debt-based (which means they are usually held and controlled by the owners, vs. shares which are centrally deposited and the owners hold a digital IOU). This means that the financial system cannot use them to spin off other financial assets, because the financial system does not hold these assets – bitcoin investors do.

— x —

Goldman Sachs published a report that went negative on cryptocurrencies, predicting that they would not appreciate much in 2018.

The overall conclusion from the report (not just the part about cryptoassets) is that market sentiment rules, and market sentiment now is particularly fickle. Since we are in the unusual paradigm of having strong fundamentals that are equally positive (economic growth, controlled inflation) and negative (domestic politics, geopolitical tensions), the market moves according to whatever investors choose to focus on.

This is not new, and is generally how markets work. What is new is the unpredictability of the flip-flopping – market volatility is way up.

Back to the (brief) cryptocurrency comment, the negative outlook is based on the failure of bitcoin and peers to act as a good currency, since they are neither a medium of exchange, a unit of account nor a store of value. Some of that is debatable, but even if it were true, it overlooks that cryptoassets can (and most do) have value outside of the potential role as a currency. It also overlooks the underlying shift in what a currency is. Traditional definitions evolve, as do expectations.

What perhaps stung the most was this dismissal: “We believe that they garner far more traditional media and social media attention than is warranted.”

That reminds me of the story of the man on the hill who didn’t believe reports that the water was rising because he was still dry.

— x —

Bloomberg ran an intriguing hint at a shift in the hype cycle, pointing out the slowdown in corporate blockchain spending, and referring to unkept launch promises:

Notice that most of the big announcements these days are about infrastructure, not use cases.

— x —

There was an ear-shattering amount of great cryptoasset podcasts this week:

Blockchain Insider, with me! And Vinay Gupta and ING’s Stéphane Malrait – we discuss the SEC’s rejection of the Winklevoss ETF, BBVA’s blockchain trial, assassination markets, insider dealing and a whole lot more.

An Intelligence Squared podcast (always worth listening to) called Blockchain: Quantum leap forward or digital snake oil? – with Primavera di Filippi, David Gerard and others – some head-nodding parts and some eye-rolling parts.

The Bitcoin Knowledge Podcast, with Caitlin Long – with fascinating insight into good vs. bad financialization, the ICE platform and the culture clash between crypto and institutions.

Cryptonetworks and Cities: Analogies, by the a16z crypto team – intriguing thoughts about ecosystems and organic development.

Cryptonetworks and Decentralization: Building Blocks, also by the a16z crypto team.

Laura Shin’s Unchained, one of the best episodes so far, with Jill Carlson and Meltem Demirors.

— x —

I’ve just finished reading “The Watchmaker of Filligree Street” (charming), in which the protagonist has synethesia, which means that he “sees” sounds through colour. Running down a staircase was a yellow. A human voice is gold. Silence has a “silver hem”.

So I was transfixed by these paintings by Melissa McCracken that represent music genres and that hum with movement, life and what feels like a message.

This is jazz:


This is pop:



(by Melissa McCracken, via Colossal)

Bits and stuff: reports, rejections and restructuring – July 29th, 2018

This is why I didn’t post anything last week:


Also, much less pleasant, this:


Almost done.

I re-read Dalia Blass’s letter to representatives of the asset management community. The head of the SEC’s Division of Investment Management spelled out, in easy-to-understand detail, why ETF approval was unlikely to happen any time soon.

To summarize:

  • Valuation – how can we be sure that the price reflected on the exchanges is accurate, given the often wide discrepancy between venues? How will forks and air drops be accounted for?
  • Custody – how do cryptoassets fit into the 1940 Custody Act, which requires that investment advisors and funds use “qualified custodians” for “securities and cash”, or submit to random inspections in the event of “self custody”?
  • Liquidity – do cryptocurrencies meet the new fund liquidity rule, which says that “illiquid” assets cannot account for more than 15% of a mutual fund or ETF portfolio?
  • Manipulation risk – how can cryptocurrency markets address the issue of investor protection?

While the sector is making progress on all of the above fronts, it’s a slow process and it doesn’t look like we’re anywhere near answers with the level of confidence and clarity that would make the SEC comfortable.

This week the bitcoin price started to rally on rumours that a bitcoin ETF was about to be proved by the SEC. Given the above, that conclusion seemed like a long shot, because the underlying issues have not been addressed, and it is unlikely that the SEC would backtrack on its requirements.

And sure enough, on Thursday the SEC ruled against the rule modification that would allow the listing of the Winklevoss Bitcoin Trust, for reasons very similar to its first rejection.

But one of the commissioners published a strongly-worded dissent, urging the SEC to “let the markets decide” (I paraphrase, but that was the gist). The letter accused the SEC of being:

1) inconsistent (other approved commodity funds had as little market transparency and risk of market manipulation),

2) anti-innovation (by insisting on waiting for market maturation, it is delaying that very market maturation), and

3) overstepping its remit (the SEC should not be deciding on the validity or suitability of the underlying markets, investors should be able to do that).

While it’s exciting to see such a liberal (and public) dissent, on re-reading, some things start to niggle.

Peirce accuses the SEC of making a call on the underlying market. This may be partially true, but not in the way it is implied – the “worth” of bitcoin is not under scrutiny. What the SEC objects to is the opacity of exchanges and the vulnerability to manipulation (which even the crypto community suspects).

We are told that other commodity-based ETFs have been approved without liquid or manipulation-free markets, yet we are not told how big those ETFs were, how systemic the markets are and what other regulation is in play.

Peirce’s dissent should not be a surprise – before being appointed to the SEC by President Trump, she was a Senior Research Fellow and Director of the Financial Markets Working Group at the libertarian-leaning Mercatus Center, where she often spoke out against excessive financial regulation.

— x —

Bloomberg ran an article profiling a US government official’s stance that Congress needs to bump cryptocurrency regulation up the list of priorities.

It cointained what is definitely my favourite quote of the week:

“Everyone’s trying to figure out whether it’s fish or fowl,” he said. “It turns out it might be a platypus.”

— x —

Edan Yago published a powerful op-ed on CoinDesk, in which he asks if the cost of KYC/AML regulation – which goes beyond the monetary expense of compliance to include the lost potential in abandoned (= unprofitable for banks due to the onerous requirements) markets.

“Perhaps they do frustrate the odd terrorist or oligarch (though apparently not very much). However, the question that is never asked is, at what cost?

Is it worth the more inconvenient, more expensive service we are all subjected to? Is it worth the exclusion of poor or marginalized people? Is it worth the entrenchment of the banking system?

Is it worth the massive troves of private information collected by every financial company and frequently stolen by hackers? Is it worth the creation of a massive, semi-privatized, global surveillance system?

It had better be. Otherwise, what a tragic, heart-breaking waste.”

— x —

This deep and thought-provoking report by research boutique Autonomous Next is definitely worth going through. A cornucopia of interesting titbits and observations, backed up by empirical data that highlights intriguing trends.


Some of my favourite slides:

Slide 6:

autonomous next 6

Slide 18 – token technology is evolving:

autonomous next 18

Slide 21 – an unusual taxonomy:

autonomous next 21

Slide 30 – my favourite part, the philosophy:

autonomous next 30

I could go on, because there is just so much in this report to digest… but that would take up too much space.

You can download the report here.

— x —

CoinDesk’s State of Blockchain Q2 was also released this past week. It contained some gems such as slide 22:

SOB slide 22

You can view the whole report here.

— x —

Mind-bending. And all sorts of other bending as well. (By Vladimir Tomin, via Colossal.)

Bits and Stuff: personal, private and puzzling – July 15, 2018

The past few weeks I’ve been moving my Dad into a full-time care residence, and packing up the family home. Oh, and packing up and moving out of my home because the floor caved in and needs reconstructing (the joys of living in an old building). So I’m sure you understand that I haven’t been really “in the zone” – hence the sporadic inputs here and the absence from Twitter.

I won’t pretend that all this is just something I take in my stride – you know, just get it done and move on. There have been days I spent weeping, days I couldn’t think, and sometimes they overlapped. Watching my father’s Alzheimer’s take over has been gut-wrenching, and the toxic combination of worry, anger and then guilt at being stupid enough to feel cross about something that’s nobody’s fault… I’ve always thought I was tough. It turns out that I’m not.

And while a family home of 40 years is just a combination of things, they are so imbued with memory that the unravelling and disposing of things that were once part of a loving environment… it’s hard. While they can be distributed amongst family, friends and charity, they lose their meaning when out of context, and represent a fragment of something, an unfinished sentence.

And dismantling my mother’s pride and joy – her beautiful apartment, with murals on the wall, lamps lovingly draped and ceilings tented with her favourite fabrics – has been like losing her all over again. Only this time it seemed more final. And while I don’t believe in ghosts or the afterlife, I can hear her anguish. Oh wait, maybe that’s mine.

Anyway, it’s almost over – the family home is now half empty, we have an offer for it, and my Dad seems happy. He called me last night, not long after I arrived back in Madrid, to say how lovely his residence is and how grateful he feels. My father is, and always has been, a profoundly good man. And when he told me that he’d played some cards with new friends (“although I’m not sure I’ll remember who they are,” he said jokingly), I felt a big weight lift off my shoulders.

While our building is being fixed, we’re temporarily living in a rented apartment just off the Plaza Mayor in Madrid. I’m writing this from a breakfast-strewn table in the country’s largest square, built in 1577. Early in the morning before the tourists and beggars descend, while the waiters are still putting out the tables and the mimes are getting into their garb, it’s peaceful and magnificent.

I’m looking forward to getting back to work next week with, for the first time in ages, a clear head. There is a lot about to go down in the blockchain world, so buckle up.

plaza mayor

— x —

In spite of total London gridlock, I did make it over to Aldgate to participate in this week’s Blockchain Insider podcast, with my colleague Joon, Simon Taylor and Sara Feenan – it’s a good episode, masterfully stewarded with fascinating topics. You can download the episode here.

— x —

Custody seems to be becoming one of the sector’s obsessions, at least from the pool I wade in. I often hear how the institutional investors are on the sidelines, eagerly awaiting reliable and regulated services that can custody their soon-to-be-massive crypto holdings.

And then we get breathless headlines announcing the launch of institutional solutions from the likes of Coinbase, and the bitcoin price doesn’t move. We also hear of smaller startups expanding their crypto offerings (Ledger and BitGo have both announced an ambitious expansion of assets to be included in their crypto solution.

While I’m sure many traditional investment institutions are interested in adding some crypto assets to their holdings, I doubt it’s as significant (yet) as is being implied.

And, I also doubt that the big ones will want to use the likes of Coinbase, Ledger and BitGo. To us in the blockchain world, those businesses are “blue chips”. But not to the traditional asset management world. They’re more likely to want to wait for names they feel comfortable with, like State Street and BNY Mellon.

And it is as yet unclear whether these firms will offer the additional services that traditional custody solutions provide: managing capital increases, dividends, stock splits and reporting, to name a few.

Will the traditional custodians set up crypto services? Probably – State Street is reportedly exploring the idea. But it’s complicated in terms of technology and regulation – while current rules in most cases can apply to cryptoassets, when it comes to custody, not so much.

And I worry that the enthusiasm for these necessary services is creating micro-bubble that will destructively explode when one supposedly “safe” option turns out to be not so reliable. The honey pot of billions in custody will be a temptation for brilliant minds, and technology can be slippery. Just ask any bank.

I hope I’m wrong, and that the rapid development of crypto infrastruture will further legitimize this nascent asset class. True, bitcoin was not born to be an asset class, and that saddens me a bit. But money flowing into the sector will support the development of new ideas and encourage a gentle nudge towards a financial system that looks increasingly different from the old one.

I fear, though, that unrealistic expectations will derail good intentions, and disappointment will slow down what is undeniably valuable research into a new type of financial plumbing.

— x —

This is interesting: crypto trading used as a loss leader for Robinhood, an online investment brokerage. Why not offer free crypto trading in the hopes of onboarding more users? A race to the bottom, with reliable exchanges getting squeezed, will end up with a less liquid market and less choice for consumers. Not ideal, and with crypto trading relegated to the status of “unprofitable perk”, Robinhood’s continuing interest in the business – once it has wiped out a lot of the competition – is not guaranteed.

A more optimistic interpretation is that a fast-growing investment platform that incorporates cryptoassets into its offering could lend legitimacy to the nascent asset class.

— x —

There were a couple of crypto-bank stories this week, although it’s too soon to claim that they indicate a narrowing gap between the two.

The Litecoin Foundation took a 9.9% stake in WEG Bank AG, a tiny bank based in a small town in Germany. The stake was acquired from TokenPay (a crypto-to-fiat payments firm which targets merchants), which itself has acquired another 9.9% and plans to acquire the rest of the shares if it gets regulatory approval.

Well, that’s one way to get a bank account.

Or maybe not. Small banks generally don’t have great access to liquidity without depending on other financial institutions, who may baulk at the idea of helping to facilitate crypto payments. And the regulator’s stance on the deal is still unclear. (Leigh Cuen of CoinDesk wrote a good analysis of the deal’s complexities.)

And Binance took a stake in Malta-based Founders Bank – which isn’t a bank. That it is allowed to call itself one says more about lax financial regulation than about the increasing “professionalisation” of the crypto space.

Founders bank claims that it will “will become the first stable and high tech banking solution not only focused on founders, but also owned by them, bridging the gap between traditional financial world and innovative crypto companies.” Hunh??

— x —

This freaks me out, and yet I find it enchanting. (By Janaina Mello Landini, via Colossal.)

Janaina Melo Landini


Bits and stuff: moving, markets and more conferences – July 1, 2018

It’s been a crazy week so this update will be short because now that conference season is OVER (until September, anyway), I have to:

  • Pack up and move out of my apartment in Madrid (building work)
  • Help my dad move out of the family home in London (moving into a residence, sniff)
  • Pack up and sell the family home in London (heartbreak)

…not to mention start a new project at work (more information on that soon).

All within the next couple of weeks.

I’m not whining, but if you detect a note of overwhelm in there, you’re not wrong*.

(*reminds me of a phrase from the series “Billions” that stuck with me – “we are not uncertain”)

— x —

The Network Forum post-trade conference in Vienna was awesome. Low-key (no media) and high-level (all the major banks and FMIs were there), with a surprising depth of blockchain knowledge and exploration.

The Blockchain Expo in Amsterdam was diluted and haphazard. I chaired the Transforming Financial Services track, which had some good speakers (Richard Crook from RBS, Carlos Kuchovsky from BBVA and Ville Sotiu ?? from Nordea were excellent) and a couple of interesting panels (with representatives from BNY Mellon, Santander, etc.). But, there was also a fair amount of hype and superficiality.


I would love to participate in more of the former and less of the latter – but, going forward, will probably end up participating in less of both. Got some real work to do.

— x —

This article by Alexandra Scaggs for FT Alphaville is one of the most important that I’ve seen in a while, in that it addresses not only the increasing centralization of tech services, but also how we manage to delude ourselves that things will be different going forward.

It’s especially interesting given the parallels that can be drawn with the cryptocurrency world, vis. Coinbase and Circle’s recent expansion announcements.

Centralization is an inescapable feature of capitalism. Even stiff regulation won’t stop it, as – like life – the markets will find a way. Capital flows to where the efficiencies are (or will be), and that implies eventual centralization. Even well-meaning blanket rules like the new GDPR end up enhancing what they set out to avoid.

More on this later, so much to talk about here…

— x —

Nicholas Bette gave us an insight into some of the issues that blockchain applications for the real estate sector will have to overcome – and, no surprise, the list can be largely exported to other sectors as well.

— x —

If you were in any doubt as to how intertwined politics and the markets have become, take a look at this twist to the tale: Nigel Farage of the UK’s far-right UKIP party could be in trouble for market manipulation. It’s not so much that politicians manipulate markets (we sort of knew that), it’s that they can do so, intentionally, for financial gain.

And not just the politicians. Here we have hedge funds offering polling organizations vast sums of money for a sneak peek at polling results.

We knew that capital markets were never the fair, level playing field they purport to be – but this seems extreme, and insultingly blatant.

It’ll be interesting to see if this story goes anywhere.

— x —

The launch of a crypto fund by veteran venture capitalist firm Andreesen Horowitz sends an intriguing signal, but not one that most people think.

First of all, it’s not necessarily the boost that the bear market has been eagerly awaiting. $300m – the initial amount of the fund – is a lot of money, but still only just over 0.1% of the total crypto market cap. And, Chris Dixon’s post detailing the strategy emphasizes that it’s an “all-weather fund” that will invest “consistently over time, regardless of market conditions”. In other words, it’s not going to pour all of the capital into the crypto market within the first few weeks.

Second, they’re not pouring money into cryptocurrencies, with a view to acting like one of the many crypto hedge funds already out there (and which have been, on the whole, doing poorly so far this year). They’re not planning to trade crypto currencies to gain the maximum short-term return.

It turns out that the fund will invest in both tokens and the companies behind them. And the plan is to hold, not churn.

What’s also interesting is the reason behind the launch. Venture funds can’t invest more than 20% of their capital in “liquid” assets such as cryptocurrencies, which limits the number of investments a traditional fund can make.

Going around this limitation by setting up a dedicated fund is a strategy that other funds dabbling in crypto could imitate. With fewer constraints, it’s likely that the amount of institutional or family office money backing these ideas will increase. A rising tide and all that…

— x —

Game of Thrones fans, brace yourselves – this is chocolate sponge covered in silver chocolate filled with strawberry coulis that oozes which cut. By chef Ben Churchill (via MyModernMet).

by Ben Churchill, via MyModernMet
by Ben Churchill, via MyModernMet

Bits and stuff: June 17, 2018 – bitcoin, banks and bubbles (the real ones)

Earlier this week I was in Dublin, moderating at MoneyConf. Here’s one of my panels (via MoneyConf’s Facebook page), on cryptocurrency exchanges, with Adam White of Coinbase, Marcus Swanpoel of Luno, Nejc Kodric of Bitstamp, and Charlene Chen of BitPesa.

The best part of the event? Catching up with friends and acquaintances, and the wonderful people I got to know (you know who you are).

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Remember all those articles that gleefully pointed out that the bitcoin price was manipulated? One thing is for sure: in statistics, things are never as simple as they at first appear to be.

Aaron Brown in Bloomberg dove into the accusatory paper, and points out that their conclusions are not, well, conclusive. The data is tenuous and the evidence relatively scant. While there may have been manipulation, we can’t assume that it accounts for all (or even most) price movements. And while it is dangerous to make assumptions on which systemic decisions may be based, we do need to continue to dig further, and use the information gleaned as a guide to where to dig next.

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Check out this and 12 more jaw-dropping photos of winged creatures, on National Geographic. They make time stand still.

image by Bret Charman, via National Geographic
image by Bret Charman, via National Geographic

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Bloomberg’s Matt Levine writes about the statement that William Hinman, director of the SEC, made at an event this week, in which he dismissed the notion that ether could be considered a security. Perhaps it was in the beginning, he says, but it isn’t any more.

“There have been reports that the SEC is skeptical of the idea that crypto startups could sell tokens packaged in security wrappers in limited offerings solely to accredited investors, with the promise that those tokens will eventually be unwrapped and usable by everyone. Hinman’s speech suggests that the SEC has gotten over that skepticism.”

Note the word “suggests”. We don’t know for sure. And the subject is still damn complicated. Is ethereum “decentralized”? One could even make the argument that bitcoin is run by a “handful” – does that make it decentralized? What about Ripple’s XRP?

The statement was greeted with glee and astonishment from the opposing factions on Twitter – CoinDesk gave a good summary of the different interpretations.

And some are even rubbing their hands at the increasingly likely prospect of ether futures on a regulated exchange.

My concern is that we are all assuming that Hinman was speaking for the SEC – even though the print version of his remarks carries the disclaimer: “This speech expresses the author’s views and does not necessarily reflect those of the Commission.” Maybe that’s a standard disclaimer that doesn’t mean much. Or maybe it’s a significant detail that was omitted in the spoken version?

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Unrelated, the best part of the previously mentioned Matt Levine newsletter of the 15th was a bit further down, in a section talking about presidential pardons:

“What a sad lot of moral nullities these people are.”

A memorable sentence if ever I saw one.

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There were some surprising announcements from the finance sector this past week. Surprising because they are talking about imminent launches of production-ready blockchains doing useful things.

In South Korea, a national consortium of banks will roll out in July a blockchain system for managing identity.

Suning Bank in China is testing a blockchain platform that will allow several banks to share a database of account holders with bad credit scores. No release date was specified, but it sounds as if launch is relatively imminent.

While not exactly finance, here’s an interesting real-world test: Switzerland’s crypto city of Zug is trialling a voting system based on uPort’s blockchain, in which residents can participate in an online poll which, in beautiful circularity, asks them about the blockchain voting system (and other local matters). It’s not a huge test, and results will not be binding (it’s just a survey), but it is public.

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This was a satisfying takedown of economists pretending they understand crypto and therefore know better than everybody else (because economists are known for their systemic awareness and accuracy, right????).

“At a high level, the flaw in their positions is: ‘I know finance, crypto is finance, so I know crypto.'”

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Bubbles, bubbles and more bubbles: a captivating video of Melody Yang and her art. “A language that anybody understands.”

Bits and stuff: June 10, 2018 – votes, vegetation and vantage points

Switzerland votes today on whether or not to ditch fractional reserve banking. Citizens are being asked if they support the Vollgeld initiative, which would limit money creation to the Swiss central bank.

This is more than a step towards mitigating the threat of bank runs. It tantalizingly dangles the possibility of an entirely new economic model in front of a watching world

It’s worth noting that the central bank does not want this proposal to go through. This is a good sign, I suppose – as with royalty, better to have power thrust upon you, than to actively seek it.

Why is it against the plan? Because it would leave the central bank controlling the money supply, and that, it argues, was shown to be a bad strategy 20 years ago. Also, the central bank would rather not get involved in politics, thank you very much.

A further consideration is the impact it would have on Switzerland’s competitiveness. At a time when dependence on traditional banking services has left the economy fragile, the reduced lending and possibly reduced growth would further put it at risk.

An interesting twist is that the centralization of digital money that this implies – combined with the country’s bid to become a centre for cryptocurrency businesses – seems to further entrench the growing conviction that cryptocurrencies are not money, or at least, are not a threat to central bank money.

Staying with central banks, there was a flurry of blockchain-related announcements this past week that indicates progress on use-case research.

The South Africa Reserve Bank announced the completion of a 14-week trial that managed to settle the country’s approximately 70,000 daily payment transactions within two hours, while preserving anonymity.

The Bank of Thailand is looking into developing a central bank cryptocurrency for interbank settlement.

China’s central bank has finished work on a blockchain-based system that digitizes cheques, which are still a significant tool for domestic business finance.

On a more bearish (or realistic?) note, the Dutch central bank said that it’s blockchain trials indicate that the technology is promising, but not yet practical for payments.

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“Modernity is alienating, and it has been alienating for a great while; look at an Edward Hopper painting if you think this post-industrial misery has come about only since the Internet was invented.”

Andrew Solomon in The New Yorker, trying – like all of us this week – to make sense of the senseless.

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I gave a keynote talk at the OpenExpo 2018 event in Madrid on Wednesday, in which I talked about how blockchain development would go nowhere without open source platforms, and open source platforms are going to depend on blockchain development for growth.

In the talk, I referenced an article from the Financial Times a few weeks ago, that I’ll mention here because it’s so damn intriguing. The opposite of open-source has to be patents, and here are some interesting statistics:

  • In 2017, 406 patents were filed that related to blockchain technology – that’s more than one a day on average.
  • More than half originated in China (which presented more than double the number of US applications).
  • The most prolific patent application presenter in 2017 was MasterCard. Hmm.
  • In 2017, 607 patents were filed that related to cryptocurrencies. On average, that’s way over one a day.
  • The most prolific cryptocurrency patent application presenters over the past five years were IBM, Gemalto and Intel.

On this last point, what do these three companies want with cryptocurrencies? IBM is a strong proponent of open source development – it was one of the original contributors to Hyperledger’s Fabric, and has led development on several Hyperledger tools. Intel is also a prolific Hyperledger contributor.

But those are blockchain platforms, not cryptocurrencies. Again, hmm.

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This is captivating: miniature gardens in trucks (via Colossal).


An exercise in design, botany and whimsy, this festival is an annual event sponsored by the Japan Federation of Landscape Contractors.


First of all, who thought of creating gardens in little trucks, more commonly used for construction work?


Second of all, that person deserves an award for creativity, because gardens in trucks should definitely be a thing. Mobile oases. Contained fantasy. Urban nature.

(Images via Colossal)

Bits and stuff: June 3rd, 2018 – funding, frocks and frills

Given the rush of conferences, airports and hotels over the past few weeks, I didn’t have the time and mental space to update here. I even considered taking a longer break, to catch up with research and longer-form writing. But then I discovered that I missed it, so I’m back, after a useful gap of distance and perspective. No commitments, obviously, because work is getting intense (more on that some other day) and I keep promising myself to find time to read more fiction and watch more old black-and-white movies. But meanwhile, hello, it’s good to be here…

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Whoever said ICOs were going to replace venture capital? This week we saw that venture capital was very much alive and kicking…

Several major venture capital investments were announced, a surprising number for just one week:

CLS, a major forex settlement provider, invested $5 million in R3.

Paxos raised $65 million (wow) in a Series B round.

And supply chain management firm Tradeshift (not technically a blockchain company, but heading there) received $250 million in Series E funding (led by Goldman Sachs and others).

It will be interesting to see what their next steps are. Last week it launched a trade finance platform with blockchain capability (as well as traditional payments, an intriguing hybrid). $250 million is a LOT of money – and one rarely hears of Series F funding, so… are they done fundraising? Will the funded developments go live and generate cash flow any time soon?

And we were told of a handful of new investment funds focusing on blockchain startups:

Huobi announced a partnership with Chinese investment firm NewMargin Capital and South Korean securities firm Kiwoom Securities on the creation of a new investment fund dedicated to blockchain startups in China and South Korea.

On the same day, Binance revealed plans for a $1 billion fund to invest in blockchain projects and in other funds.

And Japanese mobile game maker Gumi launched a $30 million fund to invest in blockchain startups, via both equity and tokens.

This is just based on perception, but it feels like there’s more money than ever pouring into the sector. New vehicles are needed.

Speaking of that, Huobi (who has been particularly busy of late) launched a cryptocurrency ETF (exchange-traded fund) for retail investors – but you can only buy the fund with cryptocurrencies, so I don’t see how it will help encourage retail investors to venture into a market they are already into.

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While I was in New York in May for Consensus 2018 (I’ll post links to my panel videos as soon as they’re up), I spent part of a rainy Sunday at the Metropolitan Museum of Art, one of my favourite places in the world.

Generally I’m predictable and head straight for the Temple of Dendur, the Frank Lloyd Wright and the Tiffany glass collection in the American Wing. This time I took a detour through the medieval galleries and my mind was blown.


As well as the usual strangely hilarious sculptures and breathtaking windows and grilles, they were hosting an exhibition of Fashion and Catholic Inspiration. Gorgeous dresses and headpieces, with religious iconography, in the middle of the medieval galleries?? A perfect setting. Gautlier, Dior, Dolce & Gabbana, Chanel, Givenchy… modern and traditional, sober and glitzy, all melded with an evocative music piece that made you feel part of something big. It moved me to tears.


Why? Because it opened a window of understanding of why iconography matters, and why fashion matters. They are both shared languages.


But what most got me was the exhilarating sense of continuity through the ages. Symbols endure, form matters, and art has always taken many shapes. I’ve never been “into” fashion, but seeing art and fantasy come alive on a female form (or male, sure) broadens the scope of the enjoyable. I am a convert, and I am in awe.


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Vermont added its clamour to the states positioning themselves as blockchain friendly, as its governor signed a bill allowing for the creation of so-called “blockchain-based limited liability companies”. (Does this mean that they can now get bank accounts?)

Wyoming still seems to hold the lead, though, with the first “utility token bill” – which expressly acknowledges the designation as utility token (ie. exempt from SEC regulation) some digital assets that meet certain conditions.

Writing more about this (which I’d love to) would require a full essay rather than a humble blurb, so I’ll leave it at that for now… except to say that we are likely to see much more of this as states realise that getting businesses to domicile in their jurisdiction is profitable, and safe if regulation is passed and followed.

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Bailey Reutzel turned her playful eye to Twitter crypto scams – apparently anyone who’s anyone has had a scam account created in their likeness. They say it’s an even better mark of legitimacy than the elusive blue check mark.

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Bits and stuff: May 6th, 2018

A brief update this week, as I need to focus on prepping for CoinDesk’s Consensus conference in New York in just over a week. See you there?

Last week at Collision in New Orleans was epic – the best thing about these events is the people you meet. My panel was apparently one of the most attended in the entire event – it was pretty basic, since the audience was “general tech” rather than crypto fans, but most of the audience held some, a major change from similar conferences a year ago.

You can see it here.

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Great street art in New Orleans:

New Orleans street art

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Nathaniel Popper of the New York Times wrote an interesting contribution to the growing literature on blockchain standards… with a twist: blockchain as geopolitical tool. Blockchain as national strategy. Blockchain as power play.

“The Russian interest in the normally wonky technical sessions has caused concern among other delegations, who worry that individual countries could push standards that would make the security of the blockchain technology vulnerable to surveillance and attack.”

The Russian aims seem obvious:

“Another delegate who had a separate conversation with the head of the Russian group remembers a slightly different wording: ‘The internet belonged to America. The blockchain will belong to the Russians.’”

And the potential consequences are worrying:

“One of the Russian delegates to the I.S.O. blockchain group, Maxim Shevchenko, gave a talk last summer in Russia in which he spoke about the country’s goals in the I.S.O. group. The bullet points on the slide included “possibility to influence the technology” and ‘implementation Russian standards and solutions worldwide.’”

Blockchain technology development has for some time been used as a tool to attract funding and investment, but generally at the margins. The game seems to be intensifying.

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Ripple seems to be coming under increasing public scrutiny… Apart from its curious declaration before the UK Parliament…

“We didn’t create XRP … What we do have is we do own a significant amount of XRP, it was gifted to us by some of the open-source developers that created it. But there’s not a direct connection between Ripple the company and XRP.”

… you have an investor suing it because it might be a security. Since XRP is currently not used (with one exception) in cross-border transfers, its future value depends on Ripple’s success in getting it used. Therefore, it could be considered a security in that its value depends on the efforts of others.

“The development of the XRP Ledger, and the profits that investors expected to derive therefrom, were, and are, based entirely on the technical, managerial, and entrepreneurial efforts of Defendants and other third parties employed by Defendants.”

If XRP does get designated a security, it was not registered as such, and so would face some legal and economic problems. But that designation is not clear: it’s an open-source token, freely traded by many. Ripple’s recent efforts to boost its value, however, leaves a trail of breadcrumbs that isn’t going to help its defense…

Preston Byrne’s thread highlighting the inconsistency of Ripple’s stance regarding its token XRP is scathingly brilliant:

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Karen Hao wrote one of the most thoughtful and thorough pieces that I’ve seen on the prickly subject of “women in crypto”. Definitely worth a read, whatever your gender.

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The news that Goldman Sachs will start trading bitcoin futures is intriguing, in that (in spite of what several headlines implied) they are not touching the underlying asset, actual bitcoin… because it’s unlikely that the OCC would be ok with banks holding cryptocurrencies. In most of the rest of the world, it’s either expressly forbidden, or “advised against” (which is pretty much the same thing).

But, as we’ve repeatedly seen, derivatives are fine… even though they are usually more volatile than the underlying asset.

Rather than boost bitcoin’s liquidity, this will boost the liquidity of hedging strategies… which could support the price of bitcoin itself, if more institutions decide that the enhanced hedging facilities (increased liquidity on the acknowledged exchanges) make a crypto strategy less expensive.

Meanwhile, Barclays is denying reports that it is also planning to launch a crypto trading desk… although, if I understand correctly, its CEO was talking about the underlying asset, not derivatives. Where Goldman goes, others are sure to follow.

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This is kinda cool in terms of increasing crypto’s diversity: the number of bitcoin developers is increasing, as is the number of submissions and pull requests on GitHub, apparently a result of education efforts.

“’One of the things that surprised me is what kinds of people take my class. I expected it to be all developers,’ said Song.

But as it turned out, participants ranged from teenage girls to hedge fund managers and retirees.”

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