October 30, 2022 | Issue 39 VIEWING CRYPTO FROM OUTER SPACE We can look at crypto from different perspectives. We can focus on the details, like how Ethereum transitioned from the proof-of-work protocol to proof-of-stake. We can look at an entire area of crypto like NFTs. Or we take a 30,000 foot view and look at the broad constructs of crypto. I have done this during presentations when I discussed crypto currencies, stablecoins, NFTs, and crypto real estate in a short 30-minute presentation. However, there's another way to view crypto, from a satellite 12,000 miles high. Satellites can zoom out and see the entire field of vision or zoom in to see great detail. This week, the great Bloomberg Opinion writer Matt Levine wrote a 40,000 word story about crypto which is Bloomberg Magazine's entire issue. It is entitled, "The Only Crypto Story" and it is a satellite view on crypto. Levine, formerly a lawyer and investment banker, has a huge following because he explains complex business and finance topics with wry humor. I often laugh out loud when I read his emails. I have been reading The Crypto Story and it's wonderful. He covers crypto in four parts: 1) Ledgers, Bitcoin, Blockchains; 2) What Does It Mean?; 3) The Crypto Financial System; and 4) Trust, Money, Community.
Here is one excerpt that I highlighted: "I don’t have strong feelings either way about the value of crypto. I like finance. I think it’s interesting. And if you like finance—if you like understanding the structures that people build to organize economic reality—crypto is amazing. It’s a laboratory for financial intuitions. In the past 14 years, crypto has built a whole financial system from scratch." As real estate brokerage takes a breather from the past two years and if one of your goals has been to learn about crypto, start reading The Crypto Story. If you do, shoot me an email and let me what you think of it. I love to talk about crypto. All past issues of Crypto News for Realtors can be viewed on my website. Also, check out my YouTube videos and Podcast Crypto News for Realtors wherever you get your podcasts. Have a productive week and stay crypto curious! Rich Hopen email@example.com | 908.917.7926 PS. This newsletter is supported by home buyers and sellers in NJ who retain me as their real estate agent. If you know of anyone looking to buy or sell a home, please reach out to me.
CRYPTO NEWS ▸ How Was Venture Firm Andreessen Horwitz's Timing When It Invested Heavily in Crypto In 2021? Andreessen's 2021 $4.5B crypto fund lost about 40% of its value the first half of 2022. This was a much larger loss than other crypto funds. The Wall Street Journal reported that Chris Dixon, Andreessen's lead partner on crypto, states that crypto is still in its early stages of finding its users and he is unsure when there will be mass adoption. Dixon said, crypto “is about the political and governing structure of the internet. We have a very long-term horizon.” The firm also purchased tokens of many of the firms they funded. This paid handsomely during the crypto bull market and the firm made over 10 times its initial investment after fees.
▸ UK Prime Minister Rishi Sunak Appears Focused on Crypto Before becoming Prime Minister, Sunak was the finance minister and argued for UK to become a crypto hub. UK law makers are now focused on how to regulate stablecoins, crypto currencies whose value is tied to a stable currency or commodity, like the US dollar or the British pound. Economic Secretary to the Treasury Andrew Griffith said, "Certain crypto assets and distributed ledger technology could drive transformational changes in financial markets. The government's position is to start with those most stable, least volatile coins likely to be used by intermediaries as a settlement currency and then we will go forward and consult from there." The Labour party is bit more cautious, but acknowledged that delaying crypto laws is also problematic. Tulip Siddiq, spokesperson for Labour party's Treasury matters, said, "A delay to crypto laws risks leaving our country behind in the fintech and blockchain race. In the absence of a comprehensive regulatory regime, the U.K. risks becoming a center for illicit finance and crypto activity.”
▸ Digital Artist Beeple Builds a Digital Art Museum In Charleston, SC In March 2021, NFTs captured headlines around the world when digital artist Mike Winkelmann, known as Beeple, sold a digital collage at Christie's for $69M. The attention garnered by the sale was the catalyst for the NFT craze.
At a recent Wall Street Journal tech conference, Winkelmann announced that he is building a museum in Charleston that will profile the work of digital artists. His goal is to showcase "the actual experience of digital art, rather than the speculation surrounding it." Winkelmann wants to help emerging artists during the downturn. As reported in the WSJ, Winkelmann said, “We are definitely in a crypto winter. People are hyper focused on prices and things like that, and I think the correct focus would be who is building things that will have long term value in the space…The fundamental technology has not changed in the last six months. If you’re focused on delivering products that people find enjoyable or useful, you’ll be fine.”
CRYPTO CLASS – Blockchain Trilemma Blockchains have three goals: scalability, decentralization, and security. However, only two of these goals are attainable. Scalability allows the blockchain to process a lot of transactions. Decentralization means that the blockchain does not rely on a small number of computers. A secure blockchain means that a minority of computers on the network cannot successfully attack it. The two largest blockchains, Bitcoin and Ethereum, account for almost 60% of the crypto industry market cap. They focused on decentralization and security. Their challenge has been speed because their network of computers are vast. If instead, those blockchains were on a handful of computers, they would operate faster. But, they would lack security. A solution to scalability is to build another layer on top of the blockchains. The Lightning Network is a "Layer 2" payment system on the Bitcoin blockchain that facilitates payments without running them through the blockchain.
INFLUENCERS - People to follow Tim Draper – @TimDraper A third generation investor whose investment track record includes, Skype, Baidu, and Tesla. In 2014, Draper purchased 30,000 bitcoin for $19M ($633 per BTC) in a US government auction of bitcoin seized from Silk Road. Draper funded Twitch, a live-streaming video gaming platform, which was sold to Amazon for $1B. A not so successful investment was Draper's early investment in Elizabeth Holmes' Theranos. Draper also invested in Robinhood, Coinbase, and eShares.
RESOURCES – Books, websites, podcasts, interviews, articles, videos Bloomberg Magazine's special issue on crypto. Written by Bloomberg Opinion columnist Matt Levine.
CRYPTO WORD – REKT In the crypto community, rekt often refers to someone who has experienced a heavy financial loss due to a wrong trade or investment. For instance, let’s say Bob invests more than half his savings on XRP just after its price soared. And a week later, the price of XRP nosedived to less than 20% of the previous week’s value due to problems with regulation. In this case, Bob has gotten REKT. (From CoinMarketCap) OH, ONE MORE THING –
Thanks for reading! See you next week.