The Breakdown

That’s a wrap! The World Economic Forum is over, and the key ideas coming out of Davos for our industry are: 1) a continued ‘blockchain, not crypto’ narrative; 2) a believe in the inevitability of cashless futures (without much concern about the negative implications); and 3) the rise of CBDCs.  On the CBDC front, the WEF put out a toolkit for governments that are considering their own currency; Japan announced a project to explore a digital currency as a counterweight to the influence a digital yuan might bring China; and a BIS study says 1 in 10 governments anticipate having a digital currency within 3 years.  Finally, we close asking prolific bitcoiner and artist Brekkie von Bitcoin about the state of bitcoin art and why even the hardcore financially-minded folks in the space should care.

There is an ongoing debate in the crypto community about where mainstream adoption. One point of view is that it will be the slow steady acceptance of digital assets. On that front, Bakkt president Adam White said in Davos yesterday that the company is on track to launch their app this year.  Another perspective is that the main use case of crypto is to enable otherwise censored transactions. Lending credence to this perspective is the case of Pornhub, which saw payouts to its more than 100,000 performers blocked unexpectedly by PayPal in November, and which announced cash outs via Tether (USDT) today.  In this episode, @nlw breaks down these two arguments and asks whether they’re mutually exclusive.  Also discussed is the new BCH mining group (cartel?) insisting on a 12.5% block reward dev fund, as well as interesting insights and data from research from CoinDesk and The Block today.

News broke yesterday that the Libra Association had seen it’s 8th high profile defection, this time from the telecom giant Vodafone. In today’s episode of the breakdown, @nlw argues that Association members are far less of a factor in Libra’s success than key regulatory questions around domiciling, the value peg, and the US’s fear of a Chinese digital currency.  Also in this episode, Square Crypto announces its plans for a Lightning Development Kit while Square also announced a new patent that could make crypto easier to use. In regulatory battles, meanwhile, both the Blockchain Association and the Chamber of Digital Commerce have filed amicus briefs around the SEC-Telegram lawsuit.

Ever since announcing their fourth round of grants, Gitcoin has been a major subject of conversation across the Twittersphere. In addition to all the excited buzz from both technical projects and media creators vying for grants matched based on E. Glen Weyl and Vitalik Buterin’s quadratic funding model, there has been controversy. Some of that controversy has been from outside the Ethereum community, pointing to Consensys and Ethereum Foundation support as an example of centralization. Some of the controversy has come from within, as debates rage about what is or isn’t an acceptable use of “public” resources.  No matter what one’s position, it’s hard to deny that Gitcoin is one of the most interesting experiments in open source funding to date. Listen as @nlw askes the projects founder Kevin Owocki about the history of the project, the controversy, and what makes this round of grants such a big jump forward.

The World Economic Forum kicks off today. CoinDesk and The Block both have representatives there. Numerous panels relate to topics around the industry. At the same time, the centralized power structure is something of an anathema to the world crypto is trying to build. The question is: should crypto even care? 

A single long-form episode with all daily episodes of The Breakdown along with a TL;DR on the week: Monday - Tokenized NBA Contracts & The Hunt For Crypto’s Killer App Tuesday - Mati Greenspan on the Technical and Macro Roots of Bitcoin’s Price Surge Wednesday - Why DeFi Is Surging As The Market Pumps Thursday - Why ‘Crypto Dad’ Is Building the Digital Dollar Foundation Friday - Tyrone Ross On The Next Million Crypto Investors

One man. Three piping hot takes. In this special interview episode of The Breakdown, financial advisor and crypto advocate Tyrone Ross shares his thoughts on: Why Financial Advisors are the key to bringing in the next wave of crypto investors Why DeFi is an even bigger deal than you think - and not just to the hackers and entrepreneurs building on it Why Square’s CashApp - not Binance, not Coinbase, not any one else - is the most important company in Crypto 

As Libra continues to spur discussions among regulators around the world, and China’s digital yuan comes ever closer to fruition, the U.S. Federal Reserve seems disinclined to look seriously at a digital dollar. Ex-CFTC Chair Chris Giancarlo - aka “Crypto Dad” - isn’t waiting around. He has teamed with Accenture to launch the nonprofit Digital Dollar Foundation.  As crypto continues to evolve, it does so in sometimes divergent directions. Gemini announced a new insurance company designed to make big institutions more comfortable with the space. Zcash, meanwhile, released an updated SDK to make it easier to shield transactions via mobile. Can the privacy-preserving side of crypto co-exist, ultimately, with the sanguine institutional side?  Finally, we revisit our discussion of personal tokens and ISAs, as well as look at the latest research from Coinmetrics on whether bitcoin is behaving like a safe haven asset.

Crypto tokens weren’t the only thing that saw a major pump yesterday. The total value locked in DeFi ascended to new heights. While part of this can be explained simply by the rise in ETH price, it also reflected traders turning to DeFi platforms as a way to get more exposure to the market action without selling their core assets.  For all the exciting price action, not everything is pointing in a positive direction. These market moves don’t seem to reflect new market participants, for example, and anecdotally, times remain tough for projects trying to fundraise.  In our final segment, we look at a blockchain conference in North Korea that the UN suggests simply attending may violate international sanctions, an Iran-focused hedge fund that uses cryptocurrency to work around international restrictions, and ask whether this sort of activity presents a narrative risk to the industry as a whole?

Bitcoin is up more than 8% in the last 24 hours. BSV, meanwhile, is up nearly a whopping 100%. The question is, of course, why? Is it some larger macro context? A pump-and-dump? Or just the crypto markets being as crazy as they are. The Breakdown invited guest Mati Greenspan, former e-Toro analyst and now founder of Quantum Economics to give his take.  We also look at two stories around the growing crypto derivative markets: the launch of the CME’s options on bitcoin futures and CFTC Chair Heath Tarbert’s comments yesterday that regulated derivatives will bring legitimacy to the space. Finally, we look at a just-released Investor Alert from the SEC on IEOs.