This week was a snapshot of a Gartner hype cycle featuring two innovations at very different stages. Global digital currencies are at the very beginning of the cycle, while cryptocurrencies are perhaps still coming down from the peak of inflated expectations. Forward movement on Libra continues apace, and more and more people are discussing the ideas around digital money, whether central bank digital currency or a global version not tied to any particular country. Meanwhile, on the crypto side, Bakkt Bitcoin futures finally launched, but volume was low, and the infamous SEC lawsuit against Kik finally wore the company down; it closed.
On Unchained, I had an engaging discussion with Spencer Bogart of Blockchain Capital, the first VC firm to attempt to disrupt itself by tokenizing shares of its third fund. We dissect that experiment, explore the economics of the Lightning Network, which at the moment don’t look very promising, and discuss a phenomenon very much in his wheelhouse: ETFs. (Bogart used to work at ETF.com.) Despite the lack of mainstream interest in crypto, Nick Tomaino of 1confirmation tells us on Unconfirmed that he is still bullish about pure crypto and, in fact, does not believe Libra will be important in the long run.
This Week’s Crypto News…
After facing months of skepticism, if not downright hostility, David Marcus of Calibra this week published a blog post this week explaining why Libra is not built on the existing financial system. While it doesn’t address a number of concerns people have about the structure of Libra or the governance of the Libra Association, it at least makes a case for blockchain technology, and internet money broadly. And Facebook COO Sheryl Sandberg will be testifying before Congress.
Paul Vigna and Dave Michaels of the Wall Street Journal wrote a thorough piece exploring the ways that central bank digital currency or other types of digital currency, such as Libra or a global digital currency, could affect the dollar. Not only could banks suffer, but USD’s global dominance could also wane. Unsurprisingly, an ex-Fed official does not find non-USD-pegged global digital currencies compelling. Plus, this Crypto Twitter tweet storm makes some interesting arguments for why cryptocurrencies won’t become money used on a mass scale.
After a number of delays due to regulatory issues, Bakkt’s long-awaited Bitcoin futures launched. The contracts are the first to be physically, not cash, settled, which is a superior product, but trading was anemic. The firm, which has partnered with Starbucks, is looking to offer a product for merchants next year.
Kik, the messaging app that is fighting a legal battle against the SEC for having an ICO or what the SEC views as an unregistered security offering, closed this week. Seventy developers were laid off, but 19 remain to focus on the Kin token. (Back in 2017, Stefano Bernardi had a prescient post about centralized companies pivoting to tokens.) Shortly after the closure of Kik was announced, CoinDesk fell for a hoax in which a Telegram user posing as Ted Livingston claimed he was drunk and said he wasn’t going to go to jail over this. The real Livingston was on an international flight at the time and has a different Telegram handle.
As Jake Chervinsky puts it, the kind of win Ripple’s going for is more of this nature: “it doesn’t matter if I did the bad thing you claim I did; the law says you can’t do anything about it.” Larry Cermak of The Block has an epic thread full of charts, graphs and screenshots that addresses the question of whether or not XRP is a security: check it out and judge for yourself.
A Crypto Twitter explanation replete with an Oscar Isaac gif.