On The Brink with Castle Island - Weekly News Roundup 08/07/20 (Microstrategy's Bitcoin position, Square's big Q2, ETC reorgs) (EP.110)

Episode Date: August 7, 2020

Nic and Matt cover deals and the news of the week. In this episode: Are we in a bull run or is fiat devaluating? Africa volumes growing on Paxful BCH contemplating redirecting block rewards to fund developers Electric Capital raises 110m Casa adds a direct buy bitcoin feature Dapper labs raises $12m with participation from multiple NBA players Matt's scoop about the Microstrategy Bitcoin position Grayscale files a form 10 for their Ethereum Investment Trust Whether Bitcoiners should try to appeal to goldbugs Why the world needs Bitcoin hardware that demonstrates UTXOs held Is DGC the biggest company in the crypto industry? Square's monster Q2 for Bitcoin Goldman has a new digital assets lead ETC keeps getting 51% attacked

Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of Concentive Easing. You print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called a Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And I am looking at the price of Bitcoin on the Coin Metrics mobile app right now. What's the price right now? The price of Bitcoin right now is 11,772. This is going to be my new price checking app. Brand new. They just released it today.

Yeah, it's actually pretty good. So they update the prices every 15 seconds. and they put a bunch of their on-chain data. You can look at charts for a bunch of different on-chain indicators in here. So it's kind of market and network data, mobile package, check it out on the app store, Coin Metrics. Yeah, take some screenshots, share them on Twitter. They're very shareable, these little cards here.

You know what I noticed? Actually, Bitcoin Active Addresses are through the roof. That's not really getting a lot of press. They're at three-year highs. the last time active addresses were this high was in the euphoric days of late 2017. Yeah, and I saw that the number of addresses, both on Bitcoin and Ethereum, holding at least $10 worth of the underlying asset is at an all-time high by millions. Yeah, so these things are just getting continually more dispersed,

and they're far more dispersed than they were in 2017. So they're just reaching more and more people. I mean, it's not a perfect heuristic because exchanges, can hold many addresses and so on. But directionally, it's good. It's a move towards decentralization of supply, of control. It's a lot of people that are not ready for this bull run. When it goes, that number keeps on going up parabolically, things get a little crazy.

Steal yourselves emotionally. Although my contention is that actually this, this is not a bull run yet at least. It's just Bitcoin has stayed pretty much flat in real terms and it's just the denominator, which is collapsing. Dollar part. Well, Bitcoin against gold doesn't look as good as Bitcoin against dollar. That's for sure. Yeah, not remotely.

Yeah. Compare Bitcoin against gold. Assume that gold is kind of our stable measuring stick, which is a big assumption. And Bitcoin is pretty much just, you know, trundling along. Nowhere near, it's 2019 highs. Whereas in dollar terms, Bitcoin looks great. So in my opinion, that tells you more about the dollar than it does about Bitcoin. Right.

So we had a busy week, a bunch of good podcasts this week, and you wrote an article, too. So we had the Canicord guys on. We taped this a few weeks ago. So we had Pat McAvoy and Michael Graham from Canacord. Pat's on the trading side. Michael's on the equity research side. And Canacord is a big global investment bank, and they're very active in crypto. So Pat leads their trading operations.

They are very active trading, GBTC. and a number of the other gray scale products. And then Michael is on the equity research side. And they put out great reports looking at on-chain indicators for crypto assets. So this was a fun conversation. I think, you know, Kandakort is going to be very well positioned as the M&A landscape kind of heats up here, too. You know, there are not a lot of investment banks that have put in the time to

understand the space and really build credibility, but they're one of them. Yeah, they kept the faith during the bear market and they stayed active in the crypto market. a lot of those kind of other boutique shops or investment banks just deserted it entirely. So if it heats up again, they're going to be the first protocol here. Yeah, there's going to be a lot of tourists coming into this industry. But you got to remember who's been around during the dark times. And then you had a fun one with Paxville CEO, Ray Yusef. Yeah, that was a wild conversation.

So, I mean, people don't know this, but Paxville is probably the biggest P-to-P marketplace right now. their second biggest region is Africa, whereas Africa volumes are pretty small and local bitcoins. So something interesting is going on there. I was trying to figure it out. And Ray, his story is crazy. So Paxville didn't take venture financing, but they're a pretty big company now, fully bootstrapped. And Ray had a string of 11 failed startups before starting Paxville, which can you imagine you're starting for the 11th time? I'm going to do this again.

That's crazy. And he was homeless when he started Paxville. He started it. He was a local Bitcoin's trader. He's like, I got to make this better. He made Paxville. Man, that sounds like a movie. Yeah.

And his whole objective all along has been bringing Bitcoin to Africa. And now finally, Africa volumes are actually, they're growing really strongly. Nigeria, Ghana, South Africa, Kenya, the main country. So it's a pretty, pretty wild story. And these P2P exchanges, to me, like, there's some of the most important Bitcoin infrastructure out there. Yeah, so it's local Bitcoins in Paxville are really the two behemoths. The biggest ones for sure.

Yeah. I mean, there's also local cryptos, which does a bunch of different coins. There's Hoddle, Hoddle, which uses multisig. But, yeah, you know, important businesses, they did, they've all added KIC now, which is, or at least logo Bitcoin's impactful have, which people are mad about, but there's really nothing you can do about that. And then you wrote an article this week for CoinDesk around the patronage model in Bitcoin, so how developers are getting sponsored. Yeah, so you know, that thing where you write something that's like really obvious and everyone knows, but just writing it down is useful.

Yes. So in Bitcoin, you know, everyone knows the Bitcoin's actually pretty well funded from a development perspective. I mean, there was some belly aching about funding public goods and so on. But if you're a core developer and you're sort of important within that technical community, you can probably get funding these days. And there's probably a couple dozen organizations that do the sponsorship now. So I call it patronage because these organizations are not expecting anything in return for the most part. They're just sponsoring developers for the sake of supporting Bitcoin. Maybe their business relies on Bitcoin or maybe they're just philanthropists, right? And, you know, a few years ago it was concentrated among a much smaller set of core

funders. And now it's become way more dispersed in those Human Rights Foundation credit tax deductible fund that regular folks contribute to to fund Bitcoin development. Square Crypto has been issuing grants right and left. You can use GitHub grants to support people like Luke Dash directly. So the funding landscape looks great right now. And the point of the article was that, look, it's just as well we didn't do this expedient measure of diverting protocol rewards to some development fund, which would basically have led to corruption and insider dealing and allegations of unfairness. And it would have reduced the social scalability. of Bitcoin, it's absolutely for the best that Bitcoin kept the money neutral, didn't divert the

protocol to fund some developers, and instead organically just developed over time, and now we're in a position of really great strength. Yeah, it's surprisingly, that's a somewhat controversial opinion in the industry, you know, particularly around, you know, discussions around Ethereum competitive protocols and things like that that are just getting off the ground. Yeah, I mean, and Ethereum. Ethereum has the Ethereum Foundation, which ostensibly existed to pay for public goods, but it's very untransparent, to be frank. Like, there's not a lot of disclosure happening. And now, of course, Ethereum is developing kind of a similar situation where there are lots of

organizations that are funding development, especially with ETH2. But still, like, there's a big pool of money there, which is very unclear what it's being used for. And I do think it reduces the social scalability. I don't think it's worth it. Diverting rewards or having that pre-mine to pay developers, I don't think it's worth it. I haven't been keeping up on Bitcoin cash at all, but to hear that they were looking or they are looking at potentially siphoning off some of the block reward to fund developers, that's crazy. Yeah, and that's what happens when you are a smaller project and you don't

have enough traction and you are kind of mortgage to like one or two charismatic developers. you don't have that big dispersed community. So those developers, they're the ones that generate like the PR hits for the project, right? And so they can threaten to cut off that supply of, you know, new development, which is effectively PR. And so they're in a very strong position of bargain relative to the community and say, hey, we deserve four or eight or 10% of all new rewards. And this is right now, Bitcoin Cash is basically being extorted by a couple developers. I mean, TBD on whether they kind of resolve.

resist this. But yeah, they're in a position of weakness relative to these, these bigger developers. Well, you hate to see it. Well, let's move on to some deals. So the reason why we do this deal section is so that folks know who's raising money and, you know, generally these companies that have money end up hiring people. So if you're looking to enter the space, you're looking to get involved with the company, these are the companies that are newly funded. And these are the funds that are newly funded. So there's a ton of them this week. Did you see the list? Yeah, things are popping off in the crypto industry. Yeah.

So the first one is actually a fund. So electric capital, which is a crypto VC fund started by Avichal Garg and Curtis Spencer. They raised $110 million for their second fund. So congrats to these guys. And this is great. So they brought in a bunch of institutional investors, a couple of endowments that have never been allocated to the space before. So really impressive fundraise. And it's great to see funds like this sort of expanding the pie for.

for everyone, you know, bringing in some of this capital that previously has just been on the sidelines. That's an impressive raise for a second fund, for sure. The next one is Pixelmatic. So this is an online gaming company, started by Samson Mao. They raised $3.1 million. It's a SAFT. So the idea here is that it's a, it looks like it's converting into a security token, if I understand that correctly. Yeah, and I think it's on liquid. And Samson Mao has a, he has a gaming franchise, which they're building. I believe it's called Infinite Fleet. And so this is a token relating to that game, which is going to be released.

So lots of kind of liquid elements there. Interesting. And then Wire, which is a payments processing company, they announced a Series B led by Pantera with participation from Boost, Fifth Era, nice capital, Crack-in, OKX, and a bunch of others. So Wire, congrats to them. And Wire is the, they're the ones that will power a lot of those kind of buy Bitcoin products with a credit card or debit card on any of those.

You know, maybe you have a Bitcoin wallet on your phone. There's a button to buy Bitcoin. Odds are it's going through Wire. Speaking of that, did you see that CASA released their Buy Bitcoin feature? I bought some Bitcoin on my CASA. Yeah, which is powered by wire. So you can now buy Bitcoin into your kind of secure multi-sig, you know, Kasa setup, which is pretty cool. It works with Apple Pay too, which is so cool. It's incredibly easy. Yeah, we're in this new area where you can buy directly into your hardware wallet without going through an exchange, which is pretty cool.

All right. Let's keep on going. Hedge it, which is, see what they did there with that name, Hedge it. It's an Ethereum platform for trading options. So they raised a half a million dollars from FBG Capital and NGC. A lot of Ethereum stuff this week. So Reflexer Labs, which is a decentralized finance project that's built on Ethereum 2. They raised $1.7 million from Paradigm, Standard Crypto variant. Robert Leshner was in that one. And then we have Dapper Labs, which is the team responsible for CryptoKitties.

They raised $12 million from USV, A16C, Coinbase Ventures and a bunch of NBA players, Spencer Dinwiddie, Javail McGee, Aaron Gordon, Garrett Temple. They're coming out with it, or they've already come out with an NBA game. Fred Wilson actually blogged about it a couple days ago, but very cool. These guys originally, so this is the CryptoKiddy's team. They were originally building on Ethereum and then started their own blockchain. And then the last one is IDEX, which is an Ethereum exchange. They raised $2.5 million from G1 Ventures in borderless capital. borderless capital is the algorithm fund actually idex was one of the first dexes they got traction on

ethereum way back in the day and then dexes kind of went out of favor and now we're in the era of automated market makers which are way way bigger than any of the the v1 kind of dexes ever were but i believe idex has actually just launched a new a 2.0 version of their decks so so as usual just a lot is going on and there's a bunch of companies in that defy ecosystem that are getting funded so you know i continue to say if you close your eyes for a week you just you wouldn't even be able to tell what's going on in that space yeah defy is like a boom within a boom it's like a little boomlet within the crypto industry which itself is booming but defy is so kind of distinct that as you say like it's easy to miss it because it's incredibly arcane and east

it's hateric from the outside. The way that I keep up on it is I just make it a point to listen to several podcasts a week, just covering it. I think the bankless guys do a really good job on their podcast of keeping me up to date. Otherwise, it'd be like someone speaking a foreign language to you talking about it. Yeah, and we're like,

we're not going to be the place to explain these defy concepts to you, unfortunately. You come here for the hot takes and for the news and, you know, for the interviews, not really, we're not the defy guys. No,

that's not us. Which of these DFI projects have you personally used? I'm going to put you on the spot right now. I mean, I've used a bunch of the dexes. Would you call that DFI? Yeah, that's DFI. Yeah, I mean, I've experimented with a bunch of those. I used to use radar pretty regularly when it first came out.

The main ones I've used are compounded makers, so pretty boring. I haven't really tried any of the new stuff. Yeah, Uniswap actually really seems to be the place where it's all happening right now. Yeah, so Uniswap, this is late breaking, but we'll include this next week. They raised some money too. I didn't get it into our newsletter on time, but Uniswap definitely, I would agree with that sentiment. Yeah, Uniswap is the darling of Defi, especially because with a lot of the dexes, there are oracles, and you have to inject outside information, which is obviously a critical point of centralization,

and it's always an allegation that, you know, regulators or whatever can use to say it's not decentralized. Uniswap has no oracles. It really is just a set of smart contracts, which is much, it's kind of truly D. You know, it's the D in DFI. It's opt-in, you know, you can still use Uniswob v1 if you want. To me, that's one of the more impressive projects that they are actually kind of genuinely committed to decentralization.

It is really opt-in. Yeah, yeah. So more on that next week, for sure. All right, so I want to talk about this. I came across something pretty crazy this week and I tweeted about it. And I'm not a big Twitter person, but I got a lot of engagement on this tweet. I don't know if you saw that. I did. I did. Congrats on the engagement. It feels good. It does feel good. It's a little dopamine hit. I can see why you're always tweeting. You know, it's like there are a lot of people

talking about this. So here's what caught my eye. So last week, there's this company called Micro Strategy. It trades on the NASDAQ under MSTR. It's about a 1.2,000. billion dollar market cap company. They focus on mobile software and cloud-based services. I think they do like white-labeled apps and stuff like that. So they had a Q2 earnings call last week and their CEO, this guy, Michael Saylor, announced that the firm is going to diversify its cash assets to include a bunch of stuff, including Bitcoin, which is pretty crazy. So I'm going to just read you a few quotes from this article. So our capital allocation strategy going forward is to return a portion of this excess capital to our shareholders and invest a portion in assets with

higher return profiles and cash. Accordingly, today we are announcing a capital allocation strategy under which we plan to return up to 250 million to our shareholders over the next 12 months. In addition, we will seek to invest up to another $250 million over the next 12 months in one or more alternative investments or assets, which may include stocks, bonds, commodities such as gold, digital assets such as Bitcoin or other asset types. He went on to say, and this is a little bit of a word soup here, but he goes on to quote Jerome Powell, just basically saying, we're not thinking about raising interest rates. And he goes on to say, and that being the case, if you have a large dollar value and you're hoping for any kind of return on them, that's faded. Gold, silver, and

Bitcoin are showing strength. So this is pretty wild. So this is a publicly traded company with the CEO coming out and being like cash is trash here. I'm going to start putting the company balance sheet into Bitcoin and gold. I mean, you have to imagine that micro strategy is now going to become somewhat correlated to Bitcoin. Yeah, I mean, it's sort of like is this thing turning into like a mini hedge fund that expresses a long position in Bitcoin or something. But it's pretty clever. And I've actually, so there's a few things that I've been thinking about for years and, you know, saying them occasionally. One is that stuff like this would start to happen where you just have, you know, balance sheet assets that might be diversified into things like Bitcoin. We've already seen a bunch of crypto companies do this.

And, you know, it's pretty risky. There have been some companies that have really gotten themselves in trouble and brought their runway way in. So it's definitely not something that we advise to our portfolio companies. But, you know, it's something that I think a lot of entrepreneurs have an appetite for. This guy, Michael Saylor, started the company, right? So he's been CEO and chairman for the past 20 years. it's now publicly traded. So that's one.

The other is that just accept, and it's tied into this, but just accepting Bitcoin as a payment option for goods and services and then just keeping a little bit of that Bitcoin on the balance sheet, I think is how you would do this if you're running a business. Yeah, I guess since the guy is the original founder, he can kind of use the earnings calls to soapbox a little bit to talk about the Fed. This honestly feels more like a small act of rebellion than a prudent capital allocation to be candid.

Because honestly, if I was running a public company, I probably wouldn't be treating the balance sheet like an asset management business, you know? Well, so I think that this is pretty fascinating. But the other thing that was crazy is so he says all this, right? And then they open it up to questions from the analysts, not a single question about Bitcoin. Now, like, it's as if they didn't even hear them.

They're like, hold on, just to clarify, like, can we dig into your OPEX assumptions, product revenue? Can we talk about that a little bit? It's nothing about like, hey, you just made headline news here with this Bitcoin thing. Can you tell me a little bit more about it? It's like, no, we didn't even hear you. But you were actually the tipster on this. I mean, crypto Twitter wasn't aware of this until you surfaced it.

So clearly, you've been trawling through, you know, some pretty. extensive quarterly is here. Well, you know, I just like to do my homework and read, you know, read these quarterly earnings reports for these microcap companies. It's, you know, I've got nothing better to do. So, Grayskill has filed a Form 10 with the SEC for its Ethereum Investment Trust. So if that was approved, that would make it into an SEC reporting entity. And I believe that would narrow the window for the maturation of the new placements into making it on to, to the public markets. Is that correct?

Yeah. So things are about to get really wild here for grayscale, I think. So Bitcoin Investment Trust is already registered as an SEC reporting entity. They've applied now for the Ethereum investment trust. So my understanding is that would take the window into six months on the maturation. So maybe we're going to, you know, we'll have some impact potentially on the premium to Nav. Maybe. I think the bigger picture thing here is that.

This just opens up the window. There are institutional investors that cannot invest in things that don't report with the SEC. So they just cannot put money into things that don't fit into this description. And so this will expand the pie of just addressable institutional capital that can participate. So that's a big deal. I think Gray Scale is about to go on this crazy national ad campaign. I don't know if you saw Barry's tweet. It said, Are You Ready?

Gray Scales, National Ad campaign kicks off next week with a TV ad on CNBC, MSNBC, Fox and Fox business, we're going to bring crypto to the masses. Things about to get nuts. Their last campaign, the drop gold campaign, if you recall, was kind of well produced. Like the video was kind of very entertaining. But I honestly thought it was very wrongheaded. No disrespect to our friends at Grayscale. But honestly, we should be friends with the gold bugs. We shouldn't be turning them away. Gold bugs and Bitcoiners are basically the same thing. just that gold bugs tend to be a bit older. But they all have the same kind of premises,

and they've all been totally vindicated in the last six months. Well, I think that it got the point across, which is put this in the same category as gold. So in terms of feeding a narrative, I thought it was very effective, and above all else, it got people talking. So that's what you want. I like gold. I'll just go ahead and say it.

Call me a boomer. I'm a bitcooner, and I also think gold is pretty neat. and the problem I have with Bitcoin is you can't touch it. There's no analog element. But with gold, you buy some bullion, like, that's physical. It's very heavy. It's the same way it is tungsten. I also like tungsten.

Someone should come up with like a Bitcoin necklace to allow you to show off your coins. That's what I've been saying. Completely unironically, 100% serious. one thing that gold is very good at is as external display of wealth. And it's, you know, it does both store value, but it's also a way of signaling your value to society externally. And it's kind of cheap to verify someone can, well, obviously, you know, you can have gold-plated materials and so on. But, you know, in certain cultures, like it's very common to signal your wealth with gold jewelry ostentatiously. And of course, people are going to say, well, this is bad obsec, but whatever, this is a human

behavior. So why not allow bitcoins to signal their ownership of Bitcoin? I know a lot of you are going to say this is a terrible idea. So Bitcoin's all about privacy and concealing your wealth. But for a certain sector of the population, there are some people out there that actually do want to signal their ownership of Bitcoin. So where is the hardware that proves somehow that you own a UTXO with X amount of Bitcoin in it. That's a product that I honestly think would do well if you could figure out how to cheaply demonstrate to a third party that you own some Bitcoin. Request for startup. Yeah, it's a weird one. I fully grant that it's a very weird idea. It's a Kickstarter. You look at all the above ground gold in the world, significant fractions, something like $2 trillion of that is held in jewelry form. And I consider

that part of the investment gold bucket. To me, jewelry is still part of the investment bucket because jewelry is an investment. And if you want to cash it in, you can always melt it down or sell it. So I want to stay on DCG here. I think people are just going to be shocked when this company goes public. I think that DCG is the biggest company in crypto right now, I would argue, you know, bigger than Coinbase, bigger than any other company. Grayscale just eclipsed $5 billion as assets under management. So they have this asset, management franchise. They have the venture arm. And then they have Genesis, of course, which is the trading desk. And so they came out with a great report this week. I mean, just talk about a

source of alpha. The stuff that they put out in these quarterly reports is unbelievable. So they did $2.2 billion in loan originations in the quarter. They did $5.25 billion in spot market volume, and they did $400 million in derivatives volume traded. That derivatives desk just got started a couple months ago when Josh Lim joined. So that is staggering. I think people will be shocked to see how big this company is. Yeah, I wonder where there would be priced today. Barry was saying they were getting SPAC and trust. I'm not even sure the biggest SPAC could afford them. I think the biggest SPAC is this Bill Ackman-Ton-Tin, Pershing Square Tontine Trust or something. It has a really strange name. I think Barry's tweet was just that there was a crypto-specs are being contemplated.

I don't know if he was talking about DCG. I don't think he was saying that. But DCG kind of flies below the radar, right? Everyone's talking about IPOs for Coinbase and BlockFi and, you know, all these great infrastructure companies. But I mean, jeesh, this company is getting huge. So they put out some really good, just really good charts here too, which talks about like how people are using options, how these specific trades are getting put together.

It talks about call underwriting that's happening. So you have Bitcoin holders that are selling out of the money call options, generating 20 to 30% analyzed yields. So trades that I wasn't really aware of that are happening. It just shows you that the market infrastructure here is maturing and that the participants are just getting a lot more sophisticated. So it looks like a real market here. I would never sell a Bitcoin call option because you're cutting off like the exciting part of the return profile by doing that. You sold a call option in 2017, you know, you missed out on a huge chunk of the return. Yeah, well, that's just you, man.

Yeah, that's right. So another company that's doing pretty well in terms of Bitcoin is Square. So they reported their Q2 results. And there's always people have issues with the accounting. Apparently Square has to account this way. So it's not their choice. That's kind of my understanding the situation. But basically, for Q2, Square had 875 million worth of Bitcoin volume on the platform.

Of course, their sort of revenue attributable to that was much smaller because they're taking the spread on each trade. But the bar chart of their volume over time is just staggering. It's skyrocketed in Q2. Yeah, every quarter of this comes out, and it's a huge have-line number. So $875 million and people say that's revenue. It's actually not revenue. So just calm down, but still good. It's up 600% year over year, but they take, you know, a percentage or two off of that clip.

So they probably... Yeah, but I think it's an interesting number because most people, you know, people on the square cash up are not actively trading. So that number is not, you know, directly comparable with coin base volume, for instance. people are using the square cash up just to buy Bitcoin for the most part. I mean, some amount of selling too, but you have to imagine the ratio is way skewed towards buying. So to me, that's an indication of just constant buy pressure for Bitcoin. Did you see that there's two bills that were signed into law in Russia related to crypto? Yeah.

So I guess if they pass, you're not going to be able to use Bitcoin to pay for anything. anything in Russia, but are still going to be able to hold it as an asset. Yeah. So one of the bills says that, you know, it's taxable as property and that you can hold it as an asset. You just can't use it to pay for goods and services, which to me just makes it sound like there's going to be a robust black market there. And then the other one stipulates that digital securities are legal.

They just need to be registered with the, the, the country with the Bank of Russia, which, yeah, that's what we have here. So if you look at P-to-P volume in Russia, it's actually down from its highs last year. So don't know what happened. So moving on, a group of investors, they're suing status, which is a $100 million ICO project that was allegedly fraudulent. Now, the only problem here with this lawsuit is that they can't find the team members. They can't serve them papers because they don't know where they are or who they are. Crazy. I don't really understand that because I feel like the people behind status are known individuals.

Well, if you go to ICO bench, I mean, there's a bunch of names. Who knows if they're really truly like their names and who knows where they're living now? So apparently these people just got out of Dodge. Status was one of the really high-profile ICOs in 2017, if you remember. I do remember. It's like a web browser, right? Yeah, it was meant to be a browser for Ethereum or browser for DAPS. And that was one of the ICOs like Bancor, which was over in minutes, which, you know, because you had whales basically buying up the whole allocation

and looking to sell it right away. I always thought that was a bad ICO model because you'd end up with small handfuls of individuals that paid lots of gas prices. owning owning everything. Yeah, so tough break for those status investors, for sure. Did you see Goldman announced a new crypto asset lead? Or I guess I would actually, let me walk that back. They announced a new head of digital assets.

Very different. I never liked the digital assets phrase, though, because pretty much all assets are digital already. So, you know, that's my issue with that. So it's Matthew McDermott. He's their new digital assets lead. It sounds like they're working on some stuff. They made reference to their own coin, you know, exploring fiat tied tokens, exploring commercial viability of security tokens it looks like. So we'll see. You know, it's, you know, Goldman is a not a monolith. There's a lot of different groups. Some groups put out, you know, fud about Bitcoin. That's like four years out of date. Some groups work on POCs around private blockchains. Some groups don't do anything with Bitcoin, but we'll see where this goes. I'm optimistic about this new round of information about Goldman.

So, I mean, every couple of years, it seems that we hear something about Goldman's, you know, crypto efforts. And I think this is going to be the one. I think they're going to start getting active in the market again. I mean, I don't know exactly in what capacity. But, you know, the writing's on the wall here. I think if you specialize in, you know, structured products or complex derivatives, you should love crypto, quite frankly. You know, you can create codified, automated versions of super complex derivatives.

So their business has a fit here, in my opinion, or at least parts of it. I think there's so many pieces of this industry where their business would fit. I mean, just look at how successful digital currency group is. you know, they're basically building something that looks and feels a lot like Goldman on the Genesis trading side. Yeah, I mean, we're talking about a new asset class. So asset managers should, in theory, love it. But they've been a little slow to jump on board. So good luck to the group over at Goldman. Hopefully we'll see them doing some stuff in the market soon here.

So the last thing I want to talk about and get your take on is tough times with Ethereum Classic. They had another 51% attack. Actually, were they attacked twice this week? Two extremely long reorgs. So I guess explain what happened here. Well, the latest analysis is that some attacker spent a couple hundred thousand dollars renting GPUs for TherM Classic, built up a longer chain, made some double spends on a couple exchanges, and, you know, published the reorg.

and was able to dupe exchanges and made off with $5 or $6 million. So spend $200 grand to make $5 million. It's a good ROI. And the issue is that Ethereum Classic is worth a fair amount. It's worth something like $800 million, but the security spend is low, and also the market for hash rate for Ethereum Classic is very liquid. You can rent GPUs on nice hash.

And so people have started to notice that, when, you know, nice hash prices start to spike, that's probably an indication that something is amiss because someone is buying a lot of hash rate. So a lot of these smaller kind of second-tier GPU-mind proof of work coins are probably going to be exploited time and time again. My guess is that exchanges delist them or put extremely long confirmation requirements, which we've seen some exchanges do. And fundamentally, you know, if you're a second-class citizen in the proof-of-work world, you're probably screwed. I mean, you should realistically have A-6. So you can't be on chat 256 if you're not Bitcoin. And similarly, Ethereum Classic is on the same thing as Ethereum. So that's

just not a stable, equal, or brim. Well, it has a different algorithm from Ethereum, but, like, it's all the same thing because they're all GPU-mined. So, It's all fungible from that respect. The point is, like, smaller GPU mine coins in a world where you can rent large amounts of hash rate on GPUs are probably doomed. And, you know, I don't think the solution is to move to prove a stake, as lots of people have been saying, because that basically just means signing over control of the coin to whoever happens to own the most coins or, you know, the custodians or the exchanges, effectively, as we saw with Steam. You know, so moving to proof of stake, it's not really a solution. It's just kind of accepting defeat and then cartilizing the coin. So, you know, I don't see a frantic switch to proof a stake as being a solution that's kind of just accepting defeat and saying, okay, fine, we're just going to put like this organization in charge of the coin.

Yeah. All right. Well, it was a busy week. And I think we're going to have more updates next week just in terms of some deals that are happening. It looks like there's been a few announced already today. So a lot going on, and we will see you all next week.