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Daniel Roberts

[roberts on crypto header]

Last week, an important person in my life asked me, in a cautious tone, if they could ask me a question about my new job_. _(I joined _Decrypt_ on March 1 after spending a decade at legacy media outlets.) I had a feeling I knew what question was coming. The person's question came out like this: "You didn't take the job because you _believe _in that stuff—like, you agree it's ridiculous, and you don't think it's _real_, right?"

Well, Bitcoin is certainly real. But I understood what the person meant: Am I a true believer, a crypto crazy? Do I think Bitcoin is going to replace the US Dollar? Do I pray at the Church of Crypto?

No. And I didn't join a cryptocurrency news site in order to pump coins. (I own less than 1 Bitcoin, which I bought back in 2014 as a reporting tool—I believe crypto journalists should own a little bit to play with because they need to test out the exchanges and products they write about.)

I suspect any journalist who has covered crypto for a few years believes, at the very least, that the technology is interesting, exciting, and potentially transformative. Crypto is cool, even for non-coders. (I still remember the thrill of playing with the 21 Bitcoin Computer, a handheld mini mining rig—really it was just a souped-up Raspberry Pi—from Balaji Srinivasan's company 21, which he later rebranded Earn and sold to Coinbase.)

I have heard the same person say to me, "When I hear the word crypto, my eyes glaze over."And that's perfectly fine. Bitcoin skeptics still abound, and I understand their skepticism. Bitcoin didn't exist, and then it did, and 11 years isn't so long in the big scheme of things. For a lot of people, it's hard to see how something created out of thin air by a pseudonymous person in 2009, that you can't physically touch, could be worth $60,000. (And who's to say what the 'right price' is for Bitcoin?)

But I do believe something has changed in the last few years, since the mania of late 2017, when many onlookers viewed Bitcoin as a punchline: a larger number of people than ever before at least acknowledge that Bitcoin is something that exists and will continue to exist. They may dismiss it as boring, or nerdy, or stupid, or avoid it as an investment, but it's clear that Bitcoin isn't about to vanish or collapse tomorrow.

FRAUD, TULIPS, RAT POISON, TURDS

Sure, we all know the most famous negative sound bites. Nouriel Roubini has repeatedly called Bitcoin a Ponzi scheme. JPMorgan CEO Jamie Dimon called Bitcoin a "fraud worse than tulip bulbs." Berkshire Hathaway CEO Warren Buffett said Bitcoin investing is "not really investing," and his respected longtime business partner Charlie Munger has called Bitcoin "rat poison" and "turds." Saudi Prince Al Waleed bin Talal called Bitcoin "another Enron in the making."

LSE Economist: You Don't Want to Live in a World Where Bitcoin Succeeds
But those sound bites were almost all from a few years ago, mostly in 2017 amid the notorious ICO boom, when crypto startups made millions through "initial coin offerings" of tokens that, in most cases, served no purpose and had no product behind them. Apart from Roubini, none of those folks have repeated their sentiments at any time recently.

Jamie Dimon has repeatedly walked back his comments, saying in 2018 he regretted calling Bitcoin a fraud, and saying in 2020 that it's "just not my cup of tea" and that "very smart people" are investing in it. His own bank just filed with the SEC to start offering a "cryptocurrency exposure basket" to clients. His rival bank, Goldman Sachs, is relaunching its Bitcoin futures trading desk this month.

As for Prince Al Waleed's comparison to Enron, billionaire investor and Dallas Mavericks owner Mark Cuban earlier this month, in an interview with _Decrypt, _said pretty much the opposite: He raved that if industries like healthcare and insurance start embracing blockchain record-keeping, "There'd be no Enrons. You wouldn't have the level of fraud that you have now."

Cuban isn't the only celebrity businessperson who has suddenly gone gaga for crypto. Lindsay Lohan, Paris Hilton, and Ja Rule have minted NFTs, blockchain-based tokens that represent digital collectibles. Musicians including Kings of Leon, Grimes, Shawn Mendes, Aphex Twin, 3LAU, and Deadmau5 have all followed suit.

Perhaps that list makes crypto look more gimmicky than serious, but if you'd prefer serious Wall Street investors, take your pick of these hedge fund names: Bridgewater's Ray Dalio; SkyBridge's Anthony Scaramucci; Ross Gerber; Paul Tudor Jones; Stan Druckenmiller; Bill Miller; and Cathie Wood of ARK Invest have all gone long on Bitcoin in the past year. Or how about these publicly traded tech companies that have bought up Bitcoin for their balance sheets: Square; Tesla; MicroStrategy; Meitu; and Aker ASA are all now holding.

The point is: It's no longer so easy to say they're all wrong, and dismiss Bitcoin out of hand.

MUSK, DORSEY, SAYLOR

Sure, you hear some folks say that Elon Musk (Tesla), Jack Dorsey (Square), and Michael Saylor (MicroStrategy) were already crypto-inclined, and are hardly representative of the mindset of other CEOs. And some people still point to the crippling 65% price crash of February 2018 as reasoning for why they expect the same to happen again.

Another "crypto winter" is absolutely possible. But the next time that happens, having now seen what happened after the first big crash (the price eventually rebounded to its previous $20,000 high, then tripled), I bet more people will hold on, and not panic-sell.

And it's not going to zero. That's long been another popular sound bite of Bitcoin bears: that the world's first and largest cryptocurrency could "crash to zero." It has never gone back to zero since it started, and it's extremely unlikely.

Certainly there are concerns about Bitcoin's energy usage that are fair to point out, though the Ethereum blockchain is attempting to move to a "proof of stake" model that should hypothetically do away with expensive mining rigs that suck up energy. And the potential price bubble in the NFT market, along with new concerns over ownership, threaten to detract from the promise of Bitcoin. (Some are comparing the NFT explosion to the ICO boom.)

Can NFTs Change How We Value Music?
But Bitcoin is likely to remain. A report from Deutsche Bank this week crowns Bitcoin "too important to ignore." I'd frame it differently: ignore it if you wish, but you should also ignore anyone still telling you that Bitcoin is going to collapse.

_This is _Roberts on Crypto_, a weekend column from Decrypt Editor-in-Chief Daniel Roberts and Decrypt Executive Editor Jeff John Roberts. Sign up for the Decrypt email newsletter to receive it in your inbox in the future. And read last weekend's column: Bitcoin and Uncle Sam: It's Complicated._


Editors' Picks

bitcoin

Roberts on Crypto

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Bitcoin (BTC) is a peer-to-peer cryptocurrency, originally described in a 2008 paper by the pseudonymous Satoshi Nakamoto. Launched in January 2009, it was the world’s first cryptocurrency, and remains the most popular, with the highest market capitalization of all cryptocurrencies.\r\n\r\nBitcoin was built on several key innovations. Firstly, Nakamoto guaranteed that Bitcoin transactions were immutable, by recording all transactions on a distributed ledger known as a blockchain. Secondly, he ensured Bitcoin’s scarcity by capping the total number of Bitcoin in existence at 21 million. Finally, the community was incentivized to verify transactions by receiving rewards in the form of “mined” Bitcoin for checking the accuracy of the blockchain.\r\n&quot;}" data-sheets-userformat="{&quot;2&quot;:803,&quot;3&quot;:{&quot;1&quot;:0},&quot;4&quot;:{&quot;1&quot;:2,&quot;2&quot;:14281427},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;11&quot;:4,&quot;12&quot;:0}">Bitcoin (BTC) is a peer-to-peer cryptocurrency, originally described in a 2008 paper by the pseudonymous Satoshi Nakamoto. Launched in January 2009, it was the world’s first cryptocurrency, and remains the most popular, with the highest market capitalization of all cryptocurrencies.</span>

Bitcoin was built on several key innovations. Firstly, Nakamoto guaranteed that Bitcoin transactions were immutable, by recording all transactions on a distributed ledger known as a blockchain. Secondly, he ensured Bitcoin’s scarcity by capping the total number of Bitcoin in existence at 21 million. Finally, the community was incentivized to verify transactions by receiving rewards in the form of “mined” Bitcoin for checking the accuracy of the blockchain.

Bitcoin

Bitcoin (BTC) is a peer-to-peer cryptocurrency, originally described in a 2008 paper by the pseudonymous Satoshi Nakamoto. Launched in January 2009, it was the world’s first cryptocurrency, and remains the most popular, with the highest market capitalization of all cryptocurrencies.

Bitcoin was built on several key innovations. Firstly, Nakamoto guaranteed that Bitcoin transactions were immutable, by recording all transactions on a distributed ledger known as a blockchain. Secondly, he ensured Bitcoin’s scarcity by capping the total number of Bitcoin in existence at 21 million. Finally, the community was incentivized to verify transactions by receiving rewards in the form of “mined” Bitcoin for checking the accuracy of the blockchain.

The 21 Inc personal bitcoin computer. (Image: March 2016, Daniel Roberts)

In brief

Insights into the biggest events shaping the crypto industry.

News

Bitcoin hasn't changed. But recently, the narratives around it have. While skeptics still dismiss it, at this point it's obvious it's not going away.

Daniel Phillips

Bitcoin has mostly gone "up and to the right" for much of its existence, with its price climbing from essentially zero to as high as $60,000 in under a decade. The original cryptocurrency is now one of the largest currencies in the world, and in its short lifespan has become one of the most profitable assets of all time.

Despite this growth, Bitcoin’s detractors have long argued that it's only a matter of time before it collapses back to zero. 

Former Bitcoin Cash proponent Calvin Ayre stated in July 2020 that Bitcoin is worthless, while Berkshire Hathaway CEO Warren Buffett told CNBC that he views all cryptocurrencies (Bitcoin included) as worthless. (Buffett's business partner Charlie Munger has called Bitcoin "rat poison" and "turds.")

> hahaha....and many likely will as BTC drops to zero since it is worthless unless it can scale and I don't see this ever happening.
> 
> — Calvin Ayre (@CalvinAyre) July 14, 2020

But in recent months, there's been a flood of institutional investment in Bitcoin, with companies including MicroStrategy, Tesla, Square, and Aker ASA buying Bitcoin for their corporate treasuries. Meanwhile, Bitcoin exchange-traded products have boomed, with the launch of Canada's Purpose Bitcoin ETF marking the first such product to be established in North America.

> MicroStrategy has purchased an additional ~262 bitcoins for ~$15.0 million in cash at an average price of ~$57,146 per #bitcoin. As of 3/12/2021, we #hodl ~91,326 bitcoins acquired for ~$2.211 billion at an average price of ~$24,214 per bitcoin. $MSTRhttps://t.co/QIQP30rv2q
> 
> — Michael Saylor (@michael_saylor) March 12, 2021

Such institutional investment is widely thought to have prompted Bitcoin's current bull run, and it's viewed as proof that the coin, which now has a market capitalization of over a trillion dollars, is here to stay.

But what would it actually take for Bitcoin to lose 100% of its value? As it turns out, a lot.

COULD BITCOIN REALLY CRASH TO ZERO?

In 2018, two Yale University economists (Yukun Liu and Aleh Tsyvinski) published a report titled 'Risks and Returns of Cryptocurrency,' in which the authors examined the risk of Bitcoin collapsing to zero in the span of a day. 

By using Bitcoin's historic returns to calculate its risk-neutral disaster probability, the authors found that the likelihood of an unspecified disaster crashing Bitcoin to zero ranged from between 0% to 1.3%, and was around 0.4% at the time of publication. For comparison, Tsyvinski stated that the euro (EUR) has a 0.009% chance of the same, in an interview with _YaleNews_.

Others argue that Bitcoin will eventually crash to zero because it lacks intrinsic value. But supporters retort that Bitcoin is backed by consumer confidence and mathematics. Even though Bitcoin is often framed in opposition to government currencies, both Bitcoin and "fiat" currencies like the US dollar (USD) and Pound sterling (GBP), which were once backed by gold (which has intrinsic value), are now backed by no physical commodity. Of course, some would argue that the US dollar, at least, is backed by debt.

COMMON ARGUMENTS AGAINST BITCOIN

One of the most commonly-cited arguments for Bitcoin’s eventual demise is that it’s actually an elaborate scam, cooked up by some nefarious entity or group with the aim of parting users from their hard-earned money.

One of the most recent examples of this can be seen in a post by iOS developer Gaurav Sharma, which argues that Bitcoin is actually a modified Ponzi scheme.

He argues that far from being decentralized, the development of Bitcoin is actually controlled by a central committee of developers, which he claims only benefits the powerful. This overlooks the fact that anybody competent can submit a Bitcoin Improvement Proposal (BIP) for consideration, and the entire protocol can be forked with relative ease if undesirable changes are made.

With Bitcoin, all nodes and miners are free to choose which client they run—the client with the most combined work automatically becomes the canonical chain. As a result, the Bitcoin unit on these chains will almost certainly still have value, due to the computational work and resources involved in maintaining the integrity of the network.

Another common argument made by Sharma—and numerous other skeptics, including Warren Buffet and Mark Cuban—is that Bitcoin is simply overvalued because it has little or no utility. It can, however, be argued that Bitcoin’s utility is actually directly related to the number of users.

This has been seen with the advent of additional use cases for the cryptocurrency, with the cryptocurrency initially being used for peer-to-peer barter, before online trading became a thing, and now there’s an entire ecosystem of DeFi tools that expand its utility even further.

A similar phenomenon is described by Metcalfe's law, which states that the value of a network is proportional to the square of the number of connected users. And with the number of Bitcoin wallets growing exponentially, Bitcoin’s utility is growing even faster.

FRINGE CASE SCENARIOS

If Bitcoin were to truly crash to zero, it would mean either that it became impossible to trade Bitcoin or exchange it for goods and services, or that buy-side liquidity fell to zero for some reason. One of the only plausible scenarios that could cause this is Bitcoin being banned by all world governments, potentially rendering it illegal to own or use—as is already the case in a handful of countries.

This would also require taking down the entire Bitcoin network, rendering all nodes offline—including the ones in space—and making it impossible to set up new ones. Theoretically, this would make it impossible to transfer Bitcoin and would prevent underground trading, likely rendering Bitcoin worthless—but this would be nearly impossible to accomplish. The decentralization and global spread of network nodes is the entire value proposition of the Bitcoin blockchain.

The Day Someone Created 184 Billion Bitcoin
Another possibility is that Bitcoin could simply be superseded by a better cryptocurrency or a similar alternative payment system, rendering it obsolete (and therefore worthless as a payment method or store of value). But this scenario would likely take several years—perhaps even decades—to play out.

Whatever the case, it appears likely that Bitcoin will always retain _some _value, either as a collector's item or as a historic artifact for future generations. 

A similar phenomenon was observed relatively recently when the Reserve Bank of India (RBI) demonetized Rs 500 and 1,000 notes in November 2016 due to a massive increase in counterfeit notes. Although authentic Rs 500 and 1,000 notes can no longer be used as legal tender in India, they still retain some value as works of art or as a curiosity.

_Editor's note: This article was first published in September 2020, and was updated in March 2021 to reflect Bitcoin's rising price and the influx of institutional investors._


calvin ayre

crash

debt

US dollar

warren buffett

It's unlikely that Bitcoin's price could ever drop to zero—but possible (Image: Shutterstock)

<ul>
<li>Despite reaching a peak of over $60,000, Bitcoin detractors argue that it's just a matter of time until its price crashes to zero.</li>
<li>A 2018 report by two Yale economists places the odds of Bitcoin crashing to zero at around 0.4%.</li>
<li>Sending the price of Bitcoin to true zero would be a monumental task and could be near-impossible.</li>
</ul>

Though extremely unlikely (in the near term), it is technically possible for Bitcoin to crash to zero.

Jeff John Roberts

[roberts on crypto header]

It's been almost two months since President Joe Biden took office and, for Bitcoin believers, his arrival has brought modest good news.

Most notably, the Biden Administration appears to have called off a campaign by the former Treasury Secretary to impose onerous new rules on the crypto industry, a campaign many saw as an anti-crypto vendetta. Meanwhile, Biden's choice to lead the SEC is a former MIT blockchain professor who may not pursue pro-crypto policies, but clearly understands Bitcoin deeply.

This is a departure from the Trump Administration, whose members, including the former President himself, often expressed outright hostility to Bitcoin and crypto. But the US is still a long ways from developing policies to encourage crypto innovation. The law here is a mess as different agencies pursue competing, or even contradictory, regulations. And Congress, which passed laws in the 1990s to help the country lead the world in Internet technology, seems content to let other countries take the lead when it comes to crypto.

So what's going on? Why have US lawmakers and regulators failed to embrace one of the most transformative technologies of this decade? The short answer is "it's complicated."

I recently spoke with a longtime Justice Department lawyer who prosecuted high-profile money laundering cases, including those involving Bitcoin. He conceded that US crypto policy has been dysfunctional, with parts of the federal government trying to encourage Bitcoin-style innovation while others parts try to shut it down.

The lawyer attributed this dysfunction to the outsized role national security agencies have had in shaping the US view of crypto. People in these agencies have looked at crypto and Bitcoin entirely through the lens of the country's war on terrorist financing. He noted that, since the passing of the Patriot Act in 2004, the Feds have turned the US dollar into a "strategic weapon" to push foreign policy goals.

Ironically, this decision may have hastened the rise of competing currencies to the dollar, including Bitcoin and other cryptocurrencies. As the _New York Times _noted this week, the "weaponization of the dollar" has angered Europe and led governments there to explore financial tools that would make them less dependent on US currency.

What Biden's $2 Trillion Stimulus Package Means for Bitcoin
China, meanwhile, has taken the lead in issuing a crypto-version of the yuan through its central bank. The country's new digital currency is partly an extension of its sprawling surveillance state, allowing the Communist Party to better track how people spend money. But as the former DOJ lawyer told me, it is also a new form of soft power for Beijing, which wants to use the convenience of blockchain-based money to rope other countries into trade deals that don't use the dollar.

All of this means that the failure of the US to develop a coherent crypto policy could undercut the country's geopolitical influence sooner than later.

It is not too late, of course, for the US to win the crypto era like it did in the early Internet era.

Many of the world's top crypto companies are based in Silicon Valley, and America's relative freedom compared to China's totalitarian regime will ensure the dollar isn't going away anytime soon. And paradoxically, Bitcoin has also inadvertently strengthened the US dollar given how Satoshi Nakamoto's currency isn't especially practical for day-to-day transactions. As the lawyer notes, "even North Korean hackers who steal Bitcoin cash it out into dollars."

Still, the Biden Administration had better start making crypto policy a priority, treating crypto as part of the race for innovation, rather than as a threat to be snuffed. Current assumptions about national currencies are shifting fast, and the US needs to be prepared for an era for when crypto is the dominant form of money.

As for the DOJ lawyer, he left the government some years ago. He now advises a crypto startup.

_This is _Roberts on Crypto_, a weekend column from Decrypt Editor-in-Chief Daniel Roberts and Decrypt Executive Editor Jeff John Roberts. Sign up for the Decrypt email newsletter to receive it in your inbox in the future. And read last weekend's column: Why the NBA Is Built for the NFT Craze._


government

regulation

France to Auction Seized Bitcoin Worth $34.5 Million.  Image: Suttrestock

The U.S. government has dragged its heels on a clear regulatory framework for the cryptocurrency industry, and it could become a big problem.

[roberts on crypto header]

You'd be forgiven for scratching your head (or maybe shaking it in dismay) at the explosion of NBA Top Shot, the blockchain collectibles platform where collectors have spent $255 million in the past 30 days to buy digital NBA highlight clips.

On Top Shot, buyers line up to get in on "pack drops" and bid for "moments" like, say, a Steph Curry buzzer-beater or a LeBron James statement dunk. They've been called digital trading cards, but that isn't quite right, because they're videos, not static images. A video of a Zion Williamson block sold for $100,000 in January.

And it's all on blockchain. Top Shot is part of the rise of NFTs, or non-fungible tokens: virtual assets that can't be duplicated, divided, or stolen. The tech pitch: thanks to blockchain (a decentralized, publicly viewable, tamper-proof ledger), the virtual item you own is verifiably scarce, typically one of a very small batch or, in some cases, one of a kind.

NFTs have also emerged in art and music; Kings of Leon released three NFT versions of their new album on Friday. But Top Shot is by far the hottest NFT marketplace right now, with 65,000 active traders in the past week, according to DappRadar, compared to 12,000 traders on OpenSea in the past week and just 300 on the third largest, CryptoPunks.

Top Shot accepts US dollars, so while its tokens are built on a blockchain, you don't have to understand that or ever care about it, if you'd rather not.

Even without the blockchain element, it's a strange thing for most people to understand. The most common question: Why would I pay to "own" a digital video that I can watch on Twitter, Instagram, or YouTube?

That's completely fair, and hard to answer convincingly. NFT believers like to say, well, you can view a work of art online, but that's not the same as owning it. Skeptics retort: If I own art, I can hang it on my wall. What can you do with a Top Shot moment, other than tweet it out or sell it for a gain?

Dallas Mavericks owner Mark Cuban is all in on NFTs. In an interview this week with _Decrypt, _he told me you have to "get over that perception that I have to physically be able to touch it, and realize that's more hassle, the joy of ownership is really what matters."

Mark Cuban Says Dallas Mavericks Are 'Talking About' Blockchain for NBA Ticketing
Try telling all that to a skeptic. It still doesn't make much sense. And right now, the wild prices are alarming to those on the outside.

"This is what kills Bitcoin," the investor Ross Gerber of wealth management firm Gerber Kawasaki told me this week. "This is what kills it every time. Last time was the ICOs. Whenever things start going well for Bitcoin, the criminals just come around like flies on poop. NFTs are just another way to rip people off."

Cuban isn't the only rich celebrity who has embraced NFTs: Lindsay Lohan and Paris Hilton are some of the others. So are NFTs only for rich people with too much money to play with?

Not in the case of Top Shot. And here's where the NBA comes in.

Top Shot, developed by Dapper Labs, has the complete backing of the NBA. The clips are approved and amplified by the league, which adds a feel of authenticity and trust. And with the Top Shot marketplace on fire, the NBA is doubling down.

As NBA All-Star Weekend tips off, the annual Rising Stars game is canceled due to the pandemic. Instead, the NBA released this year's roster as a Rising Stars Top Shot pack, which comes out on Sunday. (And the demand for a separate Seeing Stars pack drop was so great, Top Shot delayed the release from Thursday night to Friday morning.)

If all of that isn't enough NBA blockchain buy-in, _Sportico_ reported this week that the NBA has set up a Blockchain Advisory Committee, made up of franchise owners including Cuban, Joe Tsai, and Vivek Ranadive, to "explore ways to integrate blockchain across the league's business."

What other pro league would do this? What league possibly could? Only the NBA, I'd say, for now. It's the social media league, the league that was praised for encouraging the outspokenness of its players long before the George Floyd protests woke every other league up.

NBA All Star Weekend to Capitalize on NFT Craze
This is clearly a long-term commitment from the league, with more to come. Imagine when they start to add vintage footage to Top Shot, like "Havlicek steals the ball!" or Michael Jordan walking on air, with his tongue out. Think what that will do for the market.

NBA players are pumping Top Shot along with the league office, which further fuels fan excitement and engagement. And despite all the hand-wringing over the price surge, many of the Top Shot faithful appear to be young people who love the NBA. They're not buying these as an investment to flip for profit. They're buying because it's something cool, new, and fun.

> Look who i just added to my teammates showcase 👀 @EvanFourmizz https://t.co/m3Fp6fUXv0
> 
> — Terrence Ross (@TerrenceRoss) February 23, 2021

Major League Baseball would kill for this kind of red-hot popularity online. In fact, MLB launched a crypto collectibles platform back in July 2018, MLB Crypto Collectibles. It didn't catch on. In 2019, it rebranded to MLB Champions, and it still hasn't caught on. The MLB collectibles are cartoon bobbleheads, and on OpenSea right now, the market for them is dead.

Could the NFL try crypto collectibles and have the same massive success? Perhaps, but it's hard to see that league doing it. The NBA and NFTs are a match made on NBA Twitter, so even if I'm not about to buy one myself, I don't see the market collapsing any time soon.

Expect the Top Shot frenzy to rise in lockstep with the rabid popularity of the NBA.

_This is Roberts on Crypto, a weekend column from Decrypt Editor-in-Chief Daniel Roberts and Decrypt Executive Editor Jeff John Roberts. Sign up for the Decrypt email newsletter to receive it in your inbox in the future. And read last weekend's column: Coinbase is the Next Facebook. Really._


Mark Cuban

dapper labs

mark cuban

NBA Top Shot

nfts

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;First described in a 2013 whitepaper by programmer Vitalik Buterin, Ethereum (ETH) is a cryptocurrency and blockchain platform that allows developers to create programs and run smart contracts using its native language. It can thus be viewed as a virtual computer, whose resources are paid for using Ether.\r\n\r\nIn 2020, Ethereum began the transition to Ethereum 2.0, in which its proof-of-work consensus mechanism is replaced by a proof-of-stake model. The aim of the upgrade is to increase Ethereum’s scalability and security.\r&quot;}" data-sheets-userformat="{&quot;2&quot;:547,&quot;3&quot;:{&quot;1&quot;:0},&quot;4&quot;:{&quot;1&quot;:2,&quot;2&quot;:14281427},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;12&quot;:0}">First described in a 2013 whitepaper by programmer Vitalik Buterin, Ethereum (ETH) is a cryptocurrency and blockchain platform that allows developers to create programs and run smart contracts using its native language. It can thus be viewed as a virtual computer, whose resources are paid for using Ether.</span>

In 2020, Ethereum began the transition to Ethereum 2.0, in which its proof-of-work consensus mechanism is replaced by a proof-of-stake model. The aim of the upgrade is to increase Ethereum’s scalability and security.

Ethereum

First described in a 2013 whitepaper by programmer Vitalik Buterin, Ethereum (ETH) is a cryptocurrency and blockchain platform that allows developers to create programs and run smart contracts using its native language. It can thus be viewed as a virtual computer, whose resources are paid for using Ether.

In 2020, Ethereum began the transition to Ethereum 2.0, in which its proof-of-work consensus mechanism is replaced by a proof-of-stake model. The aim of the upgrade is to increase Ethereum’s scalability and security.

NBA player Stephen Curry. Image: Wikimedia

The frenzied market for NBA Top Shot blockchain collectibles makes perfect sense for the NBA. But could any of the other big leagues pull it off?

We all see it, right? Cryptocurrency is having a moment again.

It last had a mainstream moment in late 2017, followed by the infamous crash in 2018. But that was, in hindsight, mostly mania and hype.

This time looks different, and dare I say more mature and more enduring. This time it's Joe Main Street _and_ Wall Street buying in. The current run has been driven by institutions, but not just investment firms. Square, MicroStrategy, and Tesla loaded up. Notable hedge fund heads changed their public tune on crypto.

But Bitcoin hasn't changed. The perceptions merely changed, as former skeptics decided it's time to reexamine crypto. The narratives changed, and crypto is an industry driven by narratives. (Remember when big banks were all talking up "blockchain without Bitcoin?") The pandemic created a perfect storm for crypto adoption, as bullish narratives converged with a retail investor revolution.

And people have a lot of questions. Is Bitcoin really a form of currency, or merely digital gold? Is crypto mining bad for the environment? What's the deal with these wild auction prices for digital collectibles (NFTs)?

_DECRYPT_ IS HERE TO ANSWER ALL YOUR QUESTIONS. We are here for people at every level of crypto understanding, whether you're starting from zero (see: What is crypto?) or you're deep down the rabbit hole of DeFi investing, yield farming, and staking.

We cover daily crypto news for the folks that live and breathe this stuff (and lately, there's a flood of daily news, from Tether and Bitfinex settling in New York to Coinbase preparing to go public); we answer specific questions we keep hearing from newbies (Why does Coinbase have 3 different apps?); and we present handy explainers in our excellent Learn section.

What is Crypto?
I first wrote about Bitcoin in 2011 at _Fortune_. Senators Chuck Schumer (NY) and Joe Manchin (VA) had written a letter of concern to then-Attorney General Eric Holder asking him to look into Bitcoin after _Gawker_ (R.I.P.) ran an exposé on Silk Road, which used Bitcoin as its form of payment.

Since then, regulation has become a buzzy topic in the crypto industry, but has developed at a snail's pace—as regulation does. Multiple government agencies, including the SEC, CFTC, and IRS, all appear to want some jurisdiction over crypto regulation. There's also a fascinating push-and-pull between the Wall Street types who welcome more regulation, and the original Bitcoin true believers who were attracted to the space specifically because it wasn't regulated and was outside of government reach.

And since then, media coverage of crypto has evolved. Legacy media outlets have assigned more reporters to the crypto beat, new crypto news outlets have launched, and existing crypto news outlets are staffing up.

But the crypto news space has two pervasive problems: too many of the articles are written in an insidery, jargon-filled tone aimed at those who are already experts; and too many writers in the space are shills for the coins they cover.

We aim to be your go-to place for clear-eyed, discerning coverage of crypto: the good, the bad, and the baffling.

_Decrypt_ made some hiring moves in February. I joined as its new Editor-in-Chief, after a decade of covering crypto and sports business at _Fortune_ and then _Yahoo Finance_. (Fun fact: I collaborated with _Decrypt_ on an investigative story about the SEC's quiet crackdown on ICOs back in 2018, not knowing I'd come join the site three years later.) Jeff John Roberts (no relation!), formerly of _Fortune_ and _GigaOm_ before that, joined as our Executive Editor; his recently published book about Coinbase, _Kings of Crypto, _makes him the leading expert on the red-hot company. (If you ask Jeff, Coinbase is the next Facebook. Really.) Alanna Roazzi-Laforet, a former Condé Nast digital sales exec, became our publisher. Matt Hussey, another co-founder and our former Editor-in-Chief, is now heading up the sales side. We join the existing excellent _Decrypt_ team.
[Daniel Roberts, Jeff John Roberts, Alanna Roazzi-Laforet and Matt Hussey]Decrypt Editor-in-Chief Daniel Roberts; Executive Editor Jeff John Roberts; Publisher Alanna Roazzi-Laforet; and Head of Sales Matt Hussey. Images: Decrypt
To call out just a few of Decrypt's recent engaging features: read Adriana Hamacher on what happened when a digital artist made $900,000 from buyers who thought they were buying Banksy pieces; Scott Chipolina on the man who put up Bitcoin billboards in every U.S. city with a Federal Reserve Bank; Tim Copeland's nuanced analysis of Elon Musk's public journey toward Bitcoin understanding; and Jeff Benson's examination of Janet Yellen's (bearish) comments about Bitcoin.

We're bringing on big guests: see our extensive new video interview with Mark Cuban, who talks DeFi and his obsession with NFTs; listen to NBA star Spencer Dinwiddie on our Decrypt Daily podcast; and read our interview with Miami Mayor Francisco Suarez, who told us he's planning to personally buy some coins. We've got more big interviews to come.

We're also actively participating in the industry we cover with our reader token, which rewards you for reading and learning with _Decrypt_. The token has been in an invite-only beta, but will very soon open to the pubic for our first "season," sponsored by Filecoin. Just download our beautiful mobile app. It's our hope that we can help spur the advent of Web3, when tokenization reduces the friction of paying for digital news content. And make sure you subscribe to our daily email newsletter.

To the 4.6 million people who came to _Decrypt_ in February: Thank you, and buckle up, because it's all likely to get even crazier. And to all the newly curious: Welcome to crypto.


crypto

decrypt

Crypto is having another mainstream moment. Decrypt is here to cover every angle of it, whether you're a Bitcoin beginner or a DeFi degen.

[roberts on crypto header]

As Coinbase prepares to go public in the coming weeks, early reports suggest the company will be worth around $104 billion. That figure has led Bloomberg and Axios, among others, to note that the cryptocurrency giant's public listing will be the most valuable of any U.S. tech company since Facebook.

At first blush, the comparison between the two companies is far-fetched. Facebook is a household name around the world and has over two billion monthly active users, while Coinbase still occupies a relative niche, slinging Bitcoin for a core client base of crypto hobbyists. The company has signed up over 40 million customers but, as its public listing paperwork revealed, only 2.8 million use it in any given month.

Those who buy shares in a public offering, however, are not betting on the present. They're betting on the future.

In the case of Coinbase, buying in at a $100 billion valuation is a wager that the company will grow into a colossus that will one day pull in the profits to justify its eye-popping price tag. And right now such a wager—though risky—is not so far-fetched.

Just as Facebook went from a silly platform for college kids (anyone remember "pokes"?) to a mainstay of our online lives, Coinbase is poised to be much bigger than just Bitcoin.

In time, the company is likely to become the backbone of a new financial world. That world will be built on a new technology stack of blockchains and digital tokens, and Coinbase's mastery of this tech means it is poised to disrupt banks and stock exchanges. Indeed, a hint of its ambitions can be found in its recent paperwork, which alludes to plans for a digital currency of its own.

If all that's too abstract for you, consider the financial figures Coinbase just posted. For starters, the company is profitable: It made $322 million last year and, based on the recent Bitcoin bull run, is likely to exceed that in the first quarter of 2021 alone. That's remarkable given that 85% of companies that go public these days are losing money, and that other one-time stars of the unicorn set are losing it hand over fist. (Looking at you, Uber and Airbnb). And unlike the other buzzy public listings of recent years, Coinbase is built to be a bank. And banks make money.

Then there is the Andreessen Horowitz factor. The venture capital firm, and its eponymous partner Marc Andreessen, is one of Coinbase's biggest backers, and has a track record of selecting startups that have the potential to ride network effects and create a virtual monopoly in an emerging field of tech. Fifteen years ago, one of those bets was Facebook. Today, it is Coinbase, which not only has an enormous first-move advantage, but has also been on an enormous M&A spree that is letting it acquire potential competitors before they become threats. That strategy, of course, is the very one Facebook has long pursued—gobbling up the likes of WhatsApp and Instagram and other would-be challengers to its empire.

Andreessen Horowitz's similar stamp on Facebook and Coinbase don't just extend to business strategy. Andreessen himself has long been a mentor to Mark Zuckerberg and, in the last two years especially, has exercised an outsized influence on Coinbase's CEO, Brian Armstrong, as well. Today, the firm and its founder have also put all their chips in on crypto, and it's a safe bet they will be a hidden hand guiding Coinbase for years to come.

All of this doesn't mean, of course, that Coinbase is on a glide-path to enjoying Facebook-style domination.

Coinbase Listing's Biggest Risk Factors: Another Crypto Winter
The company is overly reliant on trading commissions for its revenue—commissions that will come under pressure as other companies like Robinhood and Square fully lean into crypto too—and has struggled to develop other popular products or income streams. Meanwhile, Coinbase will also have to navigate cyclical shocks. Unlike Facebook-style social networks, which people use constantly, the emerging crypto industry has been marked by crazy booms (like the current one that took Bitcoin to $50,000) and long stretches of "crypto winter" where prices and trading activity fall off a cliff. While Coinbase has a cash hoard that will see it through the next winter, the downturn—and the scrutiny that goes with being a public company—will increase the pressure for Armstrong to show his company is more than a one-trick trading pony.

Despite these red flags, the clamor to snap up Coinbase shares on the private market suggest the smart money (and some stupid money) believes the company is built to last. When its shares hit the public markets in the next few weeks, they will likely enjoy a pop that has accompanied other recent public listings—and likely an even bigger one since, like Tesla, it will have the support of an army of fan-boys and crypto true believers.

Just like Facebook a decade ago, victory is Coinbase's to lose.

_This is the inaugural edition of _Roberts on Crypto_, a weekend column from Decrypt Editor-in-Chief Daniel Roberts and Decrypt Executive Editor Jeff John Roberts. Sign up for the Decrypt email newsletter to receive it in your inbox in the future._


Brian Armstrong is the Founder and CEO of Coinbase

Brian Armstrong

coin

coinbase

Facebook

Coinbase CEO Brian Armstrong. Image: Coinbase

<ul>
<li>Coinbase stock is poised to soar when it debuts, because the company is built to be a bank—and banks make money. </li>
<li>Coinbase will face lots of potential hurdles, but it also has influential backers who will ensure it remains focused, and grows bigger than just Bitcoin.</li>
</ul>

Coinbase is a rare profitable unicorn, and will offer public investors a chance to buy into the crypto craze without having to buy Bitcoin.

Forkast.News Staff

It’s hard to think of an economy with more to gain from dropping its inhibitions and embracing cryptocurrencies than Asia’s third-largest.

India is the site of one of today’s liveliest — and most perplexing — debates on digital mediums of exchange. One moment, the Reserve Bank of India is banning commercial lenders from dealing with such assets. The next, the Supreme Court swoops in to save the day — and the market for blockchain-related enterprises. Now, Prime Minister Narendra Modi’s Finance Ministry is mulling laws to protect the primacy of paper money.

The real story is how change-averse politicians are, tying one limb behind India’s back as a real crypto arms race unfolds in the world’s most dynamic economic region. Here are five reasons why India needs a crypto revolution, and now.

CHINA, CHINA, CHINA

As India tries to stop the clock on financial innovation, the hands are turning faster than ever in Beijing, Shanghai and Hangzhou. And in ways that are compelling even the Silicon Valley to look frantically over its shoulder. China’s big advances in global payments are leaving Group of Seven members like Japan in the dust, never mind cash-centric India.

True, Chinese President Xi Jinping has his own love-hate relationship with the blockchain universe. Donald Trump, too. One of the juiciest tidbits from John Bolton’s book _The Room Where It Happened_ is the former U.S. national security advisor’s take on President Trump’s resistance to bitcoin. Trump, in Bolton’s telling, told the U.S. Treasury Department to “go after bitcoin” amid fraud concerns.

Chalk India’s reluctance to fear of losing control over its vast financial system. In its quest to protect New Delhi’s power and fiefdoms though, Modi risks keeping India out of game-altering playing fields everywhere. Ashish Singhal, chief executive of exchange CoinSwitch.co, thinks India “has the potential of becoming one of the largest crypto markets.” Why cede all those potential jobs and all that wealth creation to China?

Binance Holdings, the biggest cryptocurrency exchange in the world by trading volume, is even joining the Internet and Mobile Association of India crypto lobby. CEO Changpeng Zhao has publicly said he is keen to have Binance “contribute our part in shaping the Indian blockchain industry for sustainable growth and development.” What say you, New Delhi?

INDIA'S REMITTANCES QUANDARY

The coronavirus pandemic has been a reckoning all its own for one of India’s biggest industries: shipping labor abroad. As Covid-19 devastates economies everywhere, Bangladesh, Indonesia and the Philippines are seeing historic drops in cash that workers send home. This money is crucial to consumption and filling government coffers.

India’s addiction to remittances is particularly acute. In 2019, Indians wired $83 billion home at an estimated average cost of 6%. As jobs in Dubai, London and Singapore grow scarce, the US$12 fee for remitting $200 matters more than ever to families struggling to pay for food, shelter and health care.

Distributed-ledger technology would greatly increase the efficiency of these inflows and vastly cut costs. Adoption would cut myriad middlemen and women out of the transaction. India’s labyrinthine system often persists to serve only itself. Nothing would upset this antiquated apple cart faster than cryptography.

Ripple has even stepped forward with a report proposing a new legal framework for digital assets in India. The way forward, argues Sagar Sarbhai, Ripple’s top regulatory official in Asia and the report’s co-author, is creating an infrastructure that is “technology-agnostic, principles-based, and risk-adjusted, in order to provide clear regulatory guidance that can manage and mitigate any associated risks.” Let’s hope the RBI gets on this challenge soon.

TAKING ON CORRUPTION

This middlemen bureaucracy model, or “License Raj,” is a central pillar of India Inc. For all of Modi’s big talk of structural reform, his team has done little to get under the hood of a long-neglected economic system.

On the surface, India’s battle against graft is getting traction. New Delhi ranks 80th in Transparency International’s corruption perceptions index, the same as China. That compares to 90th place in 2010. But Modi was first elected in 2014 to unleash a good-governance Big Bang on a murky political and business culture. And the coronavirus has produced all too many examples of government resources and donations vulnerable to graft and extreme profiteering on Covid test kits.

One of India’s main challenges is with “black money,” the estimated $1 trillion-plus of cash evading the tax system. Blockchain technology, regulated by India’s government and the central bank, could make it easier to track and harness that capital. It would become harder to navigate around the banking system and regulators. Money-laundering and terror-financing would be easier to detect. The most transparent and trusted exchanges would drive out bad ones.

CENTRAL BANK POLICY

Since the 2008 global crisis, central banks from Washington to Frankfurt Tokyo embraced quantitative easing in a big way. After 12 years of sub-zero interest rates, monetary policies have lost potency. Now, as coronavirus fallout decimates global growth, central banks are pushing even more aggressively into the unknown.

Blockchain technology could help Indian policymakers and peers elsewhere gain greater traction. The trouble with fiat money is that it’s subject to consumer and business psychology. When central banks drive rates to, or below zero, many customers withdraw cash and literally stuff it under mattresses. By sharply reducing the supply of notes and coins and replacing them with digital money, monetary authorities can manipulate the amount of cash in circulation with greater force and results.

Securing digital payments is even more important, of course. The fiasco at German payment-processing firm Wirecard AG, which can’t find over $2 billion missing from its balance sheet, is a cautionary tale about getting the regulatory toolbox right. Even so, central banks in London, Washington, Beijing and elsewhere are eyeing new solutions to a very old problem. India could put itself at the vanguard of experimentation.

DOLLAR’S DAYS ARE NUMBERED

For years now, officials from Beijing to Moscow to the Organization of the Petroleum Exporting Countries (OPEC) have been keen to find an alternative to the U.S. currency. The U.S.-China trade war and Trump’s provocations are intensifying the search. Certainly, U.S. government debt surging past $24 trillion doesn’t instill great confidence.

Beijing recently began piloting a People’s Bank of China-issued digital yuan. Should tensions with Washington go further awry, President Xi Jinping wants to be ready with a Chinese alternative to the dollar-centric Western financial system. Xi is hoping China’s new e-RMB could become an Asia-wide digital currency to head off Facebook’s own ambitions.

At some point, Mark Zuckerberg’s “Libra” will come online. That specter has central banks around Asia — including the Bank of Japan and Monetary Authority of Singapore — working up their digital payment systems. India wants to be part of this conversation. Experts also argue India could be an Asian leader in the DeFi, or decentralized finance, space with some leadership from Modi’s government.

Since 2014, the prime minister has talked a great game of structural reform, but delivered only modest tweaks. Few revolutions have greater potency to raise India’s global footprint and generate more inclusive growth than crypto. A leading position in Asia is New Delhi’s for the taking.

 This story was produced in collaboration with our friends at Forkast, a content platform focused on emerging technology at the intersection of business, economy, and politics, from Asia to the world. 


India

Narendra Modi

Shaktikanta Das

Flag of India painted on raised fist. Image: Shutterstock

<ul>
<li>India's stance on blockchain and crypto is uncertain at this time, and is best described as a regulatory vacuum </li>
<li>Despite that, there's a strong need for crypto in the country to disrupt a cronyistic and ossified system</li>
<li>Policymakers will have a big decision on their hands when India's parliament re-opens</li>
</ul>

In brief:

India could reap greater economic growth, cut down on corruption and more if it adopts a more progressive stance on cryptocurrency.

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