Long Reads Sunday #82

$10,000 BTC and $1B in DeFi. Not a bad little February week.

Happy $10k Sunday, fam.

Yes after teasing all week, BTC finally broke through that big 5-digit psychological barrier. On the one hand, it’s just a number and could easily reverse at any time. On the other, price milestones create context for precoiners to become newcoiners.

As we dive into our top 5 themes from the past week in bitcoin and crypto, let’s remember that it’s on us to help newcomers discover all the reasons that price is just the beginning of what makes this space so interesting.

Well, that and some classic stories are okay too! Happy Long Reads - NLW


This Week on The Breakdown podcast

If you’re just going to listen to one episode of the breakdown this week, make it my conversation with Dan Held on how the narrative, infrastructure, and audience of bitcoin have evolved since the last time we were at $10k.

The week's full episodes:


LRS | The 5 Themes That Defined The Week

Theme 5: The Sociological Impact of Coronavirus

There is a strange dissonance everywhere when it comes to the Coronavirus. It is at once the most talked about issue in the world, and yet at the same time feels under-covered - as if the magnitude of its potential impact hasn’t fully settled in.

One interesting thematic connection for many bitcoiners is the validation of the injunction “don’t trust, verify.” This is perhaps the first crisis where broadly speaking, people’s instinct is to be skeptical not only of the official government line, but also of the viral ‘leaked’ videos and media coming out of China.

In many ways, it’s much too early to start talking about bright sides. If there is one blinkering through, however, it must be the martyrdom of Li Wenliang, the 34-year old doctor who tried to warn the world about Coronavirus before anyone else, only to be censored and eventually contract and die from the disease himself while trying to help the afflicted.


Theme 4: Project Funding and M&A

$10m for Lightning Labs. Sony joining the $14m+ round for tokenized security platform Securitize. Bakkt acquiring Bridge2 to build out its consumer offering.

If price is one way to judge a market, VC and M&A activity is another, and man, was it an absolute banger of a week.

One bit of news in this area I think is particularly interesting is ICE’s play for eBay. Markets are eating the world, and ICE - which owns leaders in the traditional financial markets (NYSE) and the new financial markets (Bakkt) might also soon own a leader in the consumer secondary markets. It’s all just value flowing with someone to help along the way.


Theme 3: $1B locked in DeFi

DeFi hit its own huge psychological milestone this week, crossing $1B locked in DeFi just 878 days after hitting $1M. Like the bitcoin price, I tend to think that the most important part of these sort of milestones is that they unlock interest from new categories of participants.

Of course, they also create context for important discussions. In DeFi, one of the central questions is whether the “decentralized” right there in the name can actually live up to its promise.

Still, the most interesting content around DeFi this week wasn’t actually even about the $1B milestone, but a debate on the merits of the endeavor as a whole between the skeptical Udi Wertheimer and the more bullish Haseeb Qureshi.

Who do you think won?


Theme 2: The Fed Joins The Game of Coins

“Because Facebook has an active user network of one-third of the global population, the company's Libra global stablecoin project has imparted urgency to the debate over what form money can take, who or what can issue it, and how payments can be recorded and settled.”

Since the launch of Facebook’s Libra - and, more to the point, China’s responding the launch of Libra by slamming their foot down on the gas of their own digital yuan - governments around the world have been discussing central bank digital currencies. For some - like the 6 central banks in a working group convened by the Bank for International Settlements - it’s a research exercise. For others - like Cambodia, who is poised to release their CBDC this year - it’s a strategic imperative.

The Fed has more or less stayed out of the frame. When asked by Congressmen about a digital dollar last year, they basically said “who cares?”

We saw something of an about face this week when, at a conference at Stanford, Fed governor Lael Brainard said that the Fed was actively researching CBDCs.

Meltem had the best thoughts on the subject.

What’s clear is that the conversation about central bank coins is only going to expand as the US gets more involved.


Theme 1: Safe Harbors for Token Projects

As Crypto Dad heads off to focus on his Digital Dollar Project, Crypto Mom is here fighting for crypto projects to have the ability to start up, sell and distribute tokens without worrying (initially) about being dinged for securities law violations.

TL;DR SEC Commissioner Hester Peirce has proposed a new 3 year safe harbor period for token projects that would allow them to build and try to get to “sufficient decentralization.”

Much of the response was extremely positive - particularly from folks who had tried to solve this problem previously.

Interestingly, the critiques tended to split sharply.

The real question is whether there’s any hope of this proposal being accepted. Many observers think that SEC Chair Jay Clayton is simply too rigid for anything like this to come into being while he’s in charge.

That said, I have Coinlist CEO Andy Bromberg on The Breakdown tomorrow discussing the proposal, and his optimism is that Commissioner Peirce wouldn’t spend her time fully fleshing this out in proposal form if she thought there was no chance.


Best of the Rest

There were a few threads that deserve a read even if they don’t strictly fit into one of the big themes of the week. '

Coinbase CEO Brian Armstrong on what happens when payments are as cheap and ubiquitous as messaging
Blockstack moves to reward stakers with bitcoin
Why bitcoin is poised to become “super-collateral”
Eric Meltzer on what makes Handshake such an interesting project
The Block’s Larry Cermak on the numbers behind the shift in sentiment

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