On The Brink with Castle Island - Weekly Roundup 09/16/22 (Merge makes it, Chainalysis crypto adoption report, Starbucks NFTs, Coinbase grades Congress) (EP.350)

Episode Date: September 16, 2022

Matt and Nic return for another week of news and deals. In this episode:  The Merge takes place without incident Will the Merge silence Ethereum critics on the left? Will the ESG narrative around crypto get louder? FTX takes a stake in Skybridge Castle Island is not an island If you make an NFT of a diamond and destroy the diamond, do you still have a diamond? CME launches Ether options Starbucks launches an NFT loyalty platform Tungsten cubes are selling off South Korea issues an arrest warrant for Do Kwon The thin line between visionary and scammer What Terra teaches us about why disclosures matter in capital markets Huobi delists privacy coins Can you take delivery of Tornado Cash-dusted Ether? Coinbase launches their Crypto Action Network Matt and Nic evaluate the ratings members of Congress are getting from Coinbase Chainalysis releases their 2022 global crypto adoption index Hodlnaut's CSW case begins The NSA Bitcoin lab leak hypothesis OTB goes live! Mentioned in this episode: Jake Chervinsky's thread on Tornado Cash Chainalysis 2022 Global Crypto Adoption Report Sponsor notes: Talos powers institutional access to the entire digital assets ecosystem via a single-point of entry. Connect directly to your preferred prime brokers, lenders, investors, custodians, exchanges, OTC desks and more, or meet them on Talos. Get started at Talos.com Subscribe to the Coin Metrics State of the Network newsletter and read their Mapping out the Merge report

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 concentrated 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. of Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And this episode is brought to you by Coin Metrics. And here is the Metrics Minute. Well, today's Metrics Minute is all about the merge. At the time of recording, it activated last night or early this morning at 244 a.m. Eastern Time and was finalized by 258 a.m. The last miner to mine a proofwork block was F2Pool. The first validator on proof of stake,

Ethereum was 347-963. I don't know who that is. All right. Congrats. Congrats to them. And that was at slot 4,700,013. When Metrics is covering the merge, so check out their coverage for more. They were doing it, they were doing the live stream on Twitter. I had to pop in and out of that, but they were up all night. Yeah, I don't know if they were streaming all night, but yeah, I mean, the merge was not coordinated around Eastern Time. I'm telling you that.

Future merges, you just said to keep it on Eastern Time, please. That would be great. Yeah, why are we doing merges on like Dubai time? Whose decision was that? It's a three arrows was really driving the ship on that one. This episode is also brought to you by TALOS. So we've got a new sponsor. They are powering institutional access to digital assets.

And so what does that mean? You can trade on TALOS through an API. You can also trade through their web-based GUI. And you can basically connect everywhere. So this is a, think of this. is a one-stop liquidity shop. So you can do spot, you can do derivatives, you can connect to prime brokers, lenders, investors, custodians, exchanges, OTC desks. You can do pre-trade, post-trade settlement. Obviously, you can trade. And they have a great leadership team. So if you are in the crypto space

engaging in any way, buying or selling, you need to be looking at Talos. So head over to talos.com to connect. That was quite the ad read, Matt. Good job. That was all ad lib. I mean, that, I don't How'd I do? Honestly, not bad. Not bad. I could say nice things about Talos all day. Some days I do. Well, we had a busy podcast week, three.

We did. We had David Hoffman talking about the merge. Yeah, he was great. David is a savage. He's just out there creating content right and left. That's what he does. He's gone so deep on Ethereum. He's like at the bottom of the understanding pit.

His knowledge is. Yeah, he's really deep. Very excited to have him on the podcast. I've been listening to Bankless, I think, since the beginning of Bankless. We also did, Sean, actually, not a frequent host on the brink, did an episode with Dan Modis of Ancibel. That was a great one. The Ancible, of course, we talked about a couple weeks ago, off-ramping assets. They're on-ramping, too, but they're off-ramping assets.

The real insight there was people might want to get dollars, get out of these cryptocurrency networks. And actually, if I look at the price, a lot of people are doing that today. Yeah. I just like that they have a sci-fi name. An Ancable is a device from science fiction literature. Oh, all right. Naples instant communication at an arbitrary distance. All right, so should we hop over to some deals of the week?

Yeah, tons of deals this week. First up, we have revolving games. They are a Web3 gaming studio. there is 25 million from Pantera, Anamoka, Polygon, and others. Next up is FTX has taken a 30% stake in Skybridge Capital. Skybridge was founded by Anthony Scaramucci. The deal also includes an option to acquire up to 85% of that business over a three-year period. So Skybridge is a fund of funds.

So interesting move here, FTX moving into the hedge fund of funds game. Next up we have the NIR Foundation. they've announced a $100 million venture fund to support Web3 culture and entertainment initiatives. I don't know Web3 culture is. I think that probably involves board apes or something. Like NFTs, yeah, on near. That's what I think that is. Next one up is BitMama.

It's a Nigerian blockchain payments business. It's a terrible name. They raised $2 million from unicorn growth capital, launch Africa, and others. This is a wild one. We've got Doodles, which is an NFT collars. collection. They raised $54 million at a $704 million valuation from 776, Acro, FTX, 10T, and others. There's been a few of these extremely hot raises just for NFT projects, moonbirds, doodles, and then obviously the apes are just a massive phenomenon. I do wonder how, what the long-term

value is there. I mean, I guess you just have to keep on pumping out NFTs. Like, it's all about the franchise. What's the fascination with putting your valuation and your press release for these deals? I don't really get it. There's no advantage whatsoever. Well, it depends who you're marketing to. Like the doodles rallied sharply after this announcement was made. So in a sense, you're basically signaling strength to the holders of the NFTs. You're showing like, oh yeah, this is a project that matters. We have your back. So I kind of get the logic in the sense that it's a very visible, very public-facing project already that like depends on hype, basically. I mean, all these PFP projects are competing on hype.

I guess that's fair enough. Next one up is North Island Ventures. This is, of course, the other island ventures, the Island Boys. So congrats to them. They have closed their second venture fund at $125 million in commitments. So big congrats to our siblings at North Island Ventures. Have we identified where North Island is? Like which, I mean, it's north of something, north of what?

I don't know. It's a really good question. I don't know what their island kind of did. Ours is, of course, in South Boston, but I don't know where theirs is. Yeah, I mean, ours is a real place. It's not an island at all. Used to be. So, yeah, that's the etymology.

It was an island and now it's connected to South Boston. People always send me pictures of it when they're flying over, flying to Logan. Do you know there's a Castle Island brewery now in South Boston that makes Salshore bar pie? I think we need to have an outing there. I mean, who's infringing on who? Were we first or did they come first? I don't know. I don't know.

But there's plenty of room for Castle Island franchises. If you're making beer and pizza, I mean, we can be friends with that. It doesn't compete. Next up we have Sin Quote. They're a crypto options trading platform. They raise $2.8 million from initializing. Polygon and others. Next, we have Onera.

This is a blockchain infrastructure business that has raised $20 million from JPMorgan and LRC Group. And this one is the deal of the week. Diamond standard. They are a diamond tokenization startup. They raised $30 million from Loflane, Horizon Connectics, and others. Remember that thread from Tasha Labs?

I think her name is where she talked about how if you have an NFT of a diamond and you smash the diamond, you still have the diamond. I do remember that. And what was, did she kind of get crushed for that tweet? Well, yeah, because it's a crazy thing to tweet. But she did, to her credit, she bought a diamond and she crushed it. She crushed it. She did a whole thing about it. I don't know what she was proving exactly, but she did do that. Diamonds are in fact not scarce. This is just one of the all-time scams in the history of precious things. That's true.

And turning a picture of a diamond into an NFT does not mean that you still have a diamond, to be clear. Yeah, no, you don't have a diamond anymore. You have a picture of a diamond. It's a concept of a diamond, yeah. Really interesting. Next one up is Sherlock. This is a smart contract audit platform. They have raised $4 million from archetype.

Then we have Infinity Exchange. They're an institutional DFI platform. They raised 4.2 million. Portofino, which is a crypto market making firm, they have raised 50 million from Koto, Valor, and global founders capital. The last year we've got Magna, a token management platform.

They raised 15 million from Tiger Global, Tusk Ventures, Shima, and Circle Ventures. Busy week on those deals, huh? and busy on the news front. All right. Well, the first thing is Ethereum is no longer proof of work. It is proof of stake. The merge was successful.

And I didn't, you know, what else can you say? It went well. Congrats to the Ethereum developers. Yeah, it seems to have gone seamlessly. I think I was benchmarking a slight probability that something would go wrong and that there was a lot more downside than upside risk. But to their credit, it would be. basically was a non-event.

Non-event for price, too. I mean, it sold off. I guess it was sell the event type of a thing, but the Fed's in the driver's seat. So maybe if this had happened in a bull market, it would have been a different story. Yeah, kind of thought it might be a bit of news selling. Markets down on the day.

But yeah, you're right. I think it's all about the macro these days. On that front, it looks like we could be getting 100-bips, 100-based points increase at the next meeting. I'll say this about the merge. Ethereum moving to proof of stake is not going to get progressives on the theorem side. I think that's, I don't know if they were expecting this, that now that the sort of proof of work, you know, attack factor has been eliminated, that everybody would just be on Ethereum side. But of course, you know, my view is it's all pretty pretextual and that the main objection, which was sometimes couched in the energy.

terms. The main real objection is just there's a set of policy types that just don't like finance occurring outside of the regulated financial system. And so that's really the ultimate objection to Ethereum. That's not going to go away just because they

did the merge. Yeah, but the ESG narrative is going to be very annoying on this front. Yeah, I mean, I'm not too worried about it. I mean, there's this White House report that came out a couple weeks ago. pretty tough on

proof of work, which is basically just Bitcoin now. Pretty flimsy attacks, I would say. And ultimately, there's not that much the government can really do about it. It shouldn't really be a priority trying to determine

what industries can do with the electricity they're buying. You know, the government doesn't really have that kind of authority. Maybe they can give it a shot, but that would be a pretty significant overreach. I would think so.

Did you see the CME news? So there's a lot of trad-fi stuff happening right now. It's a pretty interesting time to be sitting in some of these rooms because there's a lot of custody being built. There's exchanges that are being built. There's retail brokerages. They're getting ready to go live. And the CME group continues to do things in this space.

So they're the largest derivatives marketplace in the world. They have announced that they're launching options on a, here in futures, which obviously already exists in Bitcoin, but this would be the second crypto asset. This is a big deal. This is going to get more capital flowing into the space, expressing an opinion. Overall, very bullish for the industry real large. Yeah, I will say that when the CME futures first launched on Bitcoin, that was almost to the day, the precise market top. That was the top. That was the top of 2017. That was, yeah.

Yeah, but yeah, I mean, this is literal institutionalization. Yeah, and it's pretty exciting. Obviously, a lot of connectivity there with CME to a bunch of buy-side liquidity too. So it'll be interesting to see who gets active on that platform. The other kind of big name thing that happened this week was Starbucks has announced that they're doing NFTs. So they're doing a loyalty platform with NFT integrations. This will be called Starbucks Odyssey. it seems like a no-brainer, right?

This is a, that Starbucks app is probably one of the most popular apps in the entire country. And having a loyalty platform tied to a blockchain seems to make a lot of sense to me. Yeah, and their loyalty, their existing loyalty platform is super popular. It's amazing. It's very well designed. So it's kind of a huge vote of confidence in the concept of N of T's because it's super high stakes for saw a lot of critical takes on it, but it really does validate the idea of using NFTs as these kind of persistent, you know, receipts or tokens that consumers can use to engage with the brands

that they like. And Starbucks is a brand that people really like. So honestly, yeah, a huge vote of confidence for the NFT space generally and vindicates a lot of the infrastructure that's been built there already. What's your go-to Starbucks mobile order? The only thing I order is a cold brew with no sugar or anything, just the cold brew. Just the black cold brew? Yep. I'm a black ice coffee, Trenta, ice coffee. That's too bad. Not cold brew, though. I don't do the cold brew. How can you drink that much liquid? I drink it over the course of the morning. In my old age, I have a rule against drinking after 12 p.m. now. I try not to do that.

Yeah. Or else I'm up all night. Yeah. I used to laugh at people that, you know, couldn't drink coffee in the afternoon. Now I'm one of those people. Yeah, I don't do that. I've been known to throw in the occasional birthday cake pop.

Oh, that's seed oil central, not, yeah. Not good for you. I'm trying to get off of those. I find that all their food items are just packed with seed oils. It's like Dunkin' Donuts. Why do you even have food besides? donuts. The only good things that Dunkin' Donuts are the coffee in the donuts. Stop trying to do these sandwiches, like chicken sandwich. Who's getting a chicken sandwich? I used to indulge on this.

I think there's something to be said for the breakfast sandwiches they have. I don't know. They're all, they taste like you just got them at a hockey rink. They're in like, they're microwaved. Yeah, I mean, it's not quality food. That's not the point. The Dunkin' Donuts chicken biscuit. it might be the top five worst things I've ever eaten in my entire life. I remember I had one in 2014 in North Carolina and I had to pull my car over. I can't abide this.

I mean, you're meant to be a Duncan fan. I do like Duncan Donuts. I like the chocolate crellar, which they took off the menu. So now I can't really, I don't like the donuts anymore because I like the chocolate creler. They don't sell that.

But I do like the coffee. I'll have the coffee. It's not as good as Starbucks, but I do like the coffee. So that was talking Starbucks, loyalty programs. Yeah, I mean, I can't wait. I'm going to get my stamps. I don't know.

I don't think the NFTs are going to be, you're going to be able to pull them out of the walled garden. I'm guessing you won't be able to. I'm a day one user of that product. Yeah, I'm going to be, I don't know what it entails. Are we going to be able to redeem it for physical merch? Are we talking to physical NFTs here? That could work.

I'm in. I mean, I'm in. Speaking of physical merch, tungsten cubes are taking a beating, an absolute beat down. The secondary market of tungsten cubes is negligible. I did see a Craigslist posting for a 1.5 inch cube for a dollar. For a dollar. You know, cube market is not holding up. It might be actually a high beta market on top of Bitcoin.

I just don't understand how CMS hasn't got Max Long on that trade yet. there's a lot of people that misunderstood the cube hype I think and they thought we were actually buying the cubes as an investment which is insane because you're not getting the cube at the wholesale price you're getting the cube at like a 10x mark up over wholesale tungsten so well I to be clear I was buying them and still am buying them as an investment okay multi-generational well something was lost in translation over here I was buying it because it's heavy and cool. I mean, you know, that was that was always, it's heavy. It's great. Yeah, it's like a bar of gold. It's an investment that looks great. So to be clear,

the hype around tungsten cubes was very tongue-in-cheek. It was not investment advice. Okay. You were not meant to expect a return on the tungsten. That's the point. Well, you're not supposed to sell them, first of all. Yeah, don't sell the cube. You're not going to make any money. it's tungsten you can't do anything with it it's not ductile it's a brittle metal and it's very heavy and you can't melt it pretty good pretty good doorstop yeah it like it has no that cube that has no industrial use unfortunately I'll just say if anyone has one of the really large ones

let us know if you want to get rid of it because we are a bid in the market for tungsten cubes but the shipping Matt the shipping and the handling yeah no if you want to bring it to us. We're interested. You're going to have to bring it on a flatbed truck. Yeah. Don't bring it in a typical sedan. It's going to bring the floor. Yeah. Isn't CMS got there. It's on a flatbed, right? It was on a flatbed truck. It was rolled in like a piano. That's incredible.

Speaking of shilling, a South Korean court has issued an arrest warrant for Doe Kwan, who's the founder of Tara. Should we get another theme music? Like a law enforcement related theme music for Doe? I don't know. I feel like this is a very different. My feelings on Doquan are very different than my feelings on the three AC guys. I have the same feelings. It's a feeling of scorn.

Doe Quan, I don't know. He didn't lie to all the people that were lending him money. Well, I mean, he wasn't the most honest guy if we're going to be real, Matt. I don't think he was honest. I guess I'm also just probably know a lot less about his shenanigans. versus the three AC guys shenanigans. Yeah, I mean, his victims were more like retail individuals, and a lot of funds that bought the hype.

But just a lot of regular folks that believed that UST was equivalent to a dollar based on the kind of financial alchemy they were performing over there. But, I mean, there was a lot of harm done by it, especially to South Korean retail, my goodness. Yeah, the scope of this thing is insane. saying how big this was able to get. I guess there's, you know, I guess we sort of take for granted that we looked at this and just said this probably isn't going to work, but a lot of people didn't do that. A lot of smart people were into it. I mean, there's a predisposition in this industry

to have utopian thinking and to believe that some of these schemes really can work. You know, mechanism design. People like to veil schemes that they can't possibly work in all this jargon. and, you know, it's like it's possible to be extremely smart, but not very sensible. You know what I mean? So there definitely were people that bought into this. I'll say this. The line between someone who's scamming and someone who actually believes their own BS is very, it's a thin line.

Well, and I think you have to trick yourself into believing it. And maybe he did authentically believe that he could beat financial gravity. Maybe he really did. I think he thought he could do it. I think there's almost no question that he was actually. believing that he could design this thing. I mean, Elizabeth Holmes probably thought that she could, you know, design the blood testing product.

She probably really did believe that. I mean, that's how you persuade people is by yourself being persuaded. That's right. That is, it is one of those things, though. Like, it's all assessed in hindsight, whether you were scamming or you were just a visionary that had to kind of play loose with the truth a little bit while you're getting there. Steve Jobs, Elon Musk. I mean, there's a degree of this in all of the great entrepreneurs.

And you only determine it sort of after the fact. You were scamming if it failed. And if it succeeded, you were visionary. And, you know, you had to break a few eggs to make the omelette. That's exactly right. It's exactly right. So, but in this case, you probably could have known beforehand that it probably would not work. Yeah.

And who knows what this ends up in terms. in terms of the types of financial transactions that they may uncover. There could be things here, related party transactions. There's probably a lot to entangle. Yeah, I'm sure there's a lot of extraction behind the scenes. The other thing is Doquan did know that these things tend to fail, given the history of senior shares, stable coins, which he couldn't have ignored. And then also the base is cash example, which he participated in.

So, you know, when people talk about like, you know, Gensler were talking about, disclosures like you know crypto should be like normal capital markets with the disclosures that's the kind of thing that's a very common sense thing that you probably ought to disclose you know oh yeah when gensler says we like needing disclosures on these protocols 100 percent I actually think some of that was in the safe harbor proposal yeah I mean that's what securities laws are all about is being truthful about the just fundamental details of the business and And that's why I'm challenged by this idea of non-founders because you end up with fraudsters being founders

and nobody knows that and just very salient information. Or, you know, I think Tara holders deserve to know that the founder of Tara had to prior exactly the same style startup protocol, which failed. Like that would have been very salient information. I think it also would have been salient information to get information around the holdings of the early venture investors and when their lockups expired

and when they were able to take liquidity and things like that that you would get in a normal capital markets context, that strikes me as incredibly important. Even if the asset's not a security, I think we should be striving for that level of disclosure that, hey, venture fund X, Y, or Z, just rolled off and just sold $400 million worth of this thing. Yeah, especially juxtaposed against their public statements.

I mean, there's a lot of good sound reasoning behind securities laws, frankly. And on the tariffront, I mean, major funds were selling it as they were basically publicly endorsing it. I don't think you'd be able to do that with stocks. I don't know exactly. But, yeah, I mean, there's structures here that are for a reason, you know, Chesterton's fence kind of thing. All right, well, moving on, Huobi, the big, exchange has delisted seven privacy coins. So they've delisted pretty much everything. Um, among it Zcash, Manaro, Horizon. Um, not huge news, I guess, but I don't really see much of a future for

some of these privacy coins on centralized exchanges. I don't know. I'm challenged by that because, you know, if think about it, Zcash is a great example. You can have your transparent transactions or your confidential. Frankly, that's the same of the theorem. You can have your transparent. normal Ethereum transactions or you can use a privacy L2, one of those roll-ups for confidential. So I don't see that meaningful distinction aside from the fact that Ethereum isn't, you know, posited as a privacy platform. But yeah, I don't know. Maybe that's true in any, any crypto asset that has a privacy element won't survive, but that will eventually include the largest ones, surely.

I think this is just more of a politics thing, right? You're going to have regulators that are leaning on the people at some of these exchanges and it's just going to be very easy to de-list Monero. But, you know, the paradox with all this is as blockchains become more popular for real corporate entities to transact on, they'll need privacy, right? I mean, you know, you can't do payroll in a fully transparent. way you can't pay your, you know, supply chain partners or clients. It can't all be fully public and visible. You know, it wouldn't work that way. And there's other stuff like MEV,

the fact that everything's so transparent, it allows for all the significant extraction to occur. So there's very good reasons from a protocol design design standpoint and just a usability standpoint to have more privacy that are not sinister. I was having a conversation with the founder that will later air as a podcast episode this week, who is really challenged with the idea of privacy in the context of Defi primarily from a composability standpoint, believing that it breaks a lot of the composable nature of Defi, and so it's going to be very challenging to have that level of privacy at scale,

which it's a little bit depressing, right? You end up in a situation where you may be reinserting intermediaries to gain privacy. That's interesting. I never thought of the composability. The thing that challenges me on composability is actually wrong. roll-ups and sharding. You know, basically you're creating subledgers and extending or delaying settlement. And to me, composability is the number one best feature of defy.

So I think you lose it when you segregate the transactions. You put them on different ledgers. But on the privacy front, I think we will have failed if there isn't meaningful privacy on these blockchains. either at the L1 or in widely adopted pools at the L2. So I think the tornado cache thing, maybe not this protocol, but the idea is a hill to die on. I don't know how we win that back, whether it's a victory in the courts,

whether it's L1s that have privacy built in by default. There's a few emerging ones like that. Roll-ups that everyone uses that are super private. I don't know. Yeah, and there was an FAQ that came out from Treasury this week on Tornado Cash. I don't think it was all that clear. It did make it sound like they weren't going to be after going after people that had been dust attacked, but there was encouragement to go and make disclosures around those type of events.

So it was still pretty opaque to me. Yeah, Jake Trevinsky had a good thread on it. I recently received the feedback that I'm not citing my sources. with this podcast and I need to put more references in the show notes. Tough. You're accused of like plagiarizing? No, no, no, just sit, you know, calling out certain reports or things that I read and then not putting a link to it in the show notes.

Oh, I see, I see. So rest assured I shall be putting ample links in the show notes this time. But yeah, Jake is always very sanguine on these things. Apparently you can withdraw. You can, if you were dusted, you are allowed to take delivery. of those coins, we have to go through this whole disclosure process, which seems very annoying. And who's going to do that for one penny? That's crazy. 0.1eath, though. And, you know, that could be worth any amount in the future.

Were some of them 0.1. Yeah, all the dustings, most of the dustings were 0.1. I thought they were 0.01. Interesting. Yeah, it was a material amount. All right. Next up, more politics news. So blockchain association, they have launched a new political action committee. It's going to be called BA PAC. It's going to support both Democratic and Republican pro-crypto politicians. So we're getting more and more of these packs. The one I want to talk about is Coinbase's crypto action network. Did you come across this? Yeah, so tee this up. So Coinbase is doing a product upgrade here. Yeah. So, so we,

you remember how Uber used to galvanize its users against like mayors in various cities? Sure. That was the Bradley Tusk special, right? He came in there and he said, you know, put this within the product, call your local representative and demand Uber. I mean, that worked. And I cared enough about, you know, the convenience that I was totally, you know, on board. Coinbase is trying it. So apparently they have 104 million verified users, which is an incredible number. So congrats of them. That's just so many. They also tend to think that they can basically mobilize those users to demand that their local representatives and senators support crypto. And so they're building that into the app.

They have a whole rating system scores for all of these members of Congress. And it looks like they were going to be asking users to petition their local members of Congress to take a more pro-crypto stance. I mean, some of these ratings I agree with, Elizabeth Warren's just an F, that's obvious. Some of them I don't agree with. Yeah, so on the Senate side, there was, there were one or two Fs doled out. There was one F doled out on the Senate side. Brad Sherman had one, I think, on the House side, Yeah, there weren't many Fs overall. There were a bunch of A's. Stephen Lynch got an A.

I'm telling you right now, that's great inflation. The guy sponsored a bill to call all stable coins securities. Yeah, that one was wrong. I don't know who to send feedback to on this. It's given it's our hobby to grade politicians on their pro-crypto stance. That's basically what this podcast is all about. I would like to submit some feedback to Coinbase. So please give us a form.

Upgrade the app, please. I thought the grades were pretty good. Ted Cruz got an A. He's famously pro-Crypto, Cerson Gillibrand. Cynthia Lammis, of course. No surprise is there. Rob Portman, certainly deserved A. Although he had some shenanigans in the infrastructure bill.

I'm a B on Portman. Portman B, okay. Pat Toomey, the outgoing Pat Toomey, A. for sure. A and I will give him, I will give him advisor. I'll take a bet that he's going to be an advisor to a crypto business. Yeah, I believe it. That's how good of an A he is. Yeah. Ron Wyden gets an A. I think Tom Emmer should deserve an A plus in my opinion. I think he's the number on most pro crypto member of Congress. They didn't do A pluses. They didn't do A pluses and do A pluses. I came from a school that didn't do A pluses either.

Yeah. In the house, there are a bunch of A's handed out. Anthony Gonzalez, Brett Guthrie, Rokana. That's a deserved A for sure. That's an A. Yeah, that's a good A. So Blaine Lutekemeyer, here's an interesting one. He got a D. I didn't really ever, I looked and I didn't see any engagement with crypto on either side. But what he's known for is being the representative that actually. ended Operation Choke Point or precipitated its end back in 2015. Where is he from? Missouri. So he's a Republican from Missouri and his whole thing was about ending Operation Choke Point. So basically pursuing his view as financial services should be neutral.

The bank system should be politically neutral. So you would think that would get him a better grade. I think the D is wrong. Maybe he had some, maybe he was supportive of one of these infrastructure. amendments or something. Yeah, I mean, based on that sort of ideological persuasion and his advocacy on, you know, neutrality for financial services, I think that one's a miss, but maybe there's something I'm not aware of.

Well, we'll put that in the show notes. Maybe we can have a running quarterly update on people's grades. Yeah. Interim marks, too. Yeah, I don't think every representative is graded on this. Maybe they don't all have data on all of them. But impressive effort by the crypto action network. We'll see if Coinbase is successful here.

My intuition is that people, even though people have strong feelings about crypto, it's not to the point where it's an everyday necessity like Uber is and was. So I'm not sure people will be quite as motivated to actually call their congressman over this. I don't know, though. if they can make it really easy. I remember in the Uber app, it would just pop up and you would almost hit a button and it would generate like a mailing. I think that would be a really interesting idea. All right.

So you want to talk some security tokens? Okay. What do we got? All right. Let's go. Let's go. So private equity firm KKR has announced that they will be tokenizing shares of its health care strategic growth fund on the avalanche chain in partnership with securitize, basically allowing secondary trading in this thing for retail customers

and institutional customers too. So we got a tokenized fund kind of reminds me of the blockchain. Dot, not blockchain.com, blockchain capital, ICO fund thing, security token from years ago. Now, the issue, of course, with security tokens is that we don't have ATS venues approved.

We don't have custody, clarity on that rule. There's just not a lot of piping into this. But it's pretty clear to me that security tokens once the SEC allows them to be, are going to be a huge category. And I only bring this one up because this is the biggest asset manager that has really gotten behind this in size. So KKR is one of the largest altz managers in the world.

Them going to the SEC and saying, we want better access here. We want you to approve more broker dealers. We want you to get some ATS clarity. That would actually move the needle, I think. It's crazy how security tokens are back in the limelight and actually have traction now. and I hate to be the bearer of bad news,

but you know it's back in the limelight too. What's that? I've seen a lot of pitch decks this week on it. Private blockchets. Yeah, it's weird. All of the specters from 2016 are back, but maybe are actually happening for real this time. You know, it's all about timing.

It just wasn't their time back then. This time it's different on the private chains. Yeah. I haven't seen any like tokenized lettuce or whatever Walmart was trying to do. Yeah, but maybe the physical NFT thing is like the latter day reinterpretation of the tokenized lattice. I think security tokens are more security tokens on public chains are pretty analogous to private blockchain. There's shreds of that idea in it. I mean, frankly, some of the public blockchains are becoming private because there's permissioning being built into the public.

So we're coming there through a different route also. Yeah, there's a merging of those two ideas. So did you get this story that Algarand, the foundation, they have lost $35 million to Hoddle Not, which is the crypto Lenders. I'm not really sure what one on there, but that's not a headline you would see every day. I guess they're probably earning some yield with Hoddle Not. Yeah, both Hotel Notts in the news this week. The other Hoddle Not, the individual, they began their libel case being sued by Craig Wright in London. I think.

I think there's a Norway case and a London case. I think Hoddle Not is suing him in London. This one's in Norway. Yeah. So that began this week. So frankly, both Hoddle nuts in trouble. Well, did you see Craig Wright said that he stomped on his hard drive that had all the Satoshi coins?

He can't access them. Very bullish. Yeah. That's great news for Bitcoin. That's like a couple of halvings right there. I mean, I'm surprised that there wasn't. The fact that the price. didn't react on that.

It tells me that people might not believe Craig Wright. Maybe we already knew that those Satoshi coins were off the market. Well, they're sitting down in Quantica, right? In the NSA, that's right. The true Satoshi truther movement. I believe that. I'm a NSA Satoshi truther 100%. Yeah, so the theory would be that the NSA created Bitcoin

and will unleash the Satoshi coins once it becomes clear that we're moving on to a Bitcoin standard. A little far-fetched, but why not? Well, yeah, first of all, that's a good way to unite a pro-America view and Bitcoin view. So there's that angle. I think it's more that they were cryptographers at the NSA that built Bitcoin and then altruistically released the code into the wild. That's right. You're a lab leaker.

Yeah, it's a lab leak. It's the Vickin Lab leak hypothesis. I'm more of the 4D chess hypothesis. I'm more of like the prepare for the next standard. Either would be good. Yeah, an under-discussed but yet valid theory. I mean, it's a theory that's getting airtime on this podcast, at least. That's true.

That gives it validity. Conspiracy theories abound. But good luck to Hoddle-Not the lender and good luck to Hoddle-Nott-Nodd-T the Twitter person. They both need it. Interesting story this week. Here's something that I alone, I think, look forward to every year. And like clockwork, it's been delivered on my doorstep.

And I was thrilled when it came out. And I'm guessing you're talking about the Chinalysis report. That's correct. How do you know? It was either that or Boston Blockchain Week is back. in not in Boston somehow, but we'll get to that. So yes, chain analysis has released their 2022 global crypto adoption index, third year running, they've done it. And it's a doozy, you know, you wouldn't believe the level of adoption we're seeing globally. Hit me with the highlights.

Well, actually, it's not a doozy. It's not that surprising, frankly. At this point, it's very well established where cryptocurrency has a high penetration. The whole report standardized on a per capita basis, by the way. So they just want to see as a percentage of income where crypto has the highest penetration worldwide. The same countries, roughly speaking, are in the top 10. So here's the top 10 in order. Vietnam, Philippines, Ukraine, India, USA, Pakistan, Brazil, Thailand,

Thailand, Russia, China. all right so it's all the usual suspects and actually the next three are Nigeria, Turkey, and Argentina. So those are most of the names that were in prior years reports with the exception that China is back in the top 10. And so it really does show that like despite Xi Jinping's best efforts, there's still meaningful grassroots on the ground crypto activity in China. And methodologically, chain analysis is combining. bunch of different stuff. So C-Fi Valley received, retail C-Fi Valley received, so smaller payments, P-to-P exchanges, right, like Binance, P-2-P or local Bitcoins or Paxful, and then D-Fi value received. So they're actually pretty exhaustive, but then they combine this into a single

measure of adoption. Very interesting. Per capita, it really is an emerging market story. In the top 20, you're only looking at the UK and the U.S. in terms of developed markets. Aside from that, it's emerging or frontier markets. It's a Herculane task to put that report together. I'm glad they dropped that. It's always a good report. I love the report. What they did show is that global adoption has declined in terms of their quarterly index since Q1 of last year,

but not declined by that much, frankly. So, yeah, I mean, to me, this data is so compelling because it basically shows the places where crypto is experiencing a high level of penetration are places where there's issues, you know, where there are capital controls, there's high inflation, where the banks are not trustworthy, where there's not really a rule of law. And this isn't to disparage those countries, but just generally speaking, characterizing them. If it was just a developed market story, it would honestly be less interesting to me. Because then it would be like, okay, well, this is just the richest countries and there's a lot of speculation, whatever.

But it's not. It's actually an emerging market story. I love this data. I cite it all the time. Very excited that we have the new one out. All right. We'll put that in the show notes as well. All right.

So next week's podcast, we are recording live at Boston Blockchain Week. I think that's going to be our first ever live recording. So I guess it won't be technically streamed live, but we're doing it with a live audience. Let's put it that way. So basically the same exact podcast except. We'll have hecklers. Yeah, there'll be a crowd. So in Boston Blockchain Week is in Quincy because there's a very crypto-friendly politician in Quincy.

I don't know if we should say his name or not, but Quincy is very crypto-friendly as a town. It's south of Boston's where John Adams was born. John Quincy Adams or John Adams? John Quincy Adams. I mean. John Adams lived there. That tracks. But was the younger John Adams name?

Actually, John, I believe the older John Adams actually was born there as well. But I think it was Braindree was the same as Quincy back then. I should know this. I went on a field trip there when I was in second grade. So did they name it Quincy because John Quincy Adams was born there? Or was he named after the place where he was born? I should know that too. I don't know that. Man, good history lesson. Why don't we pull that up in real time? What do you even look up? Quincy etymology? You know Quincy comes with Latin quintus, meaning fifthborn.

Okay. All right. We're back. So that kind of makes sense that John Quincy Adams, maybe he was the fifthborn child of John Adams? In 1792, Quincy was split from Braintree, and the new town was named after Colonel John Quincy, who was the maternal grandfather of Abigail Adams, and after whom John Quincy Adams was also named. Quincy became a city in 1888, and it became a blockchain hub in 2022. Hang on, so let me get this straight. So we were both of those explanations were wrong. It wasn't that it was named after the guy or the guy was named out of the place.

The guy and the place were both named after the same other guy. Yeah, Colonel. Colonel John Quincy. Yeah. That's incredible. That's a history lesson. I'm sure I knew that at some point. But more importantly, maybe Dunkin' Donuts was founded in Quincy.

And the original location is still there. I thought it was Braintree. I 100% thought it. But now apparently that's a different place. Brain Tree has Dunkin' Donuts University. Quincy has the original Dunkin' Donuts, which is on Route 3A. So speaking of original coffee shops, I went to the original Starbucks the other day in Seattle. So here's the thing.

It serves the same menu that any other Starbucks does, right? I feel like it should be a special menu. But, I mean, it kind of has to because that's the rule of being a Starbucks, right? you have to serve start you can't serve like something completely else you have to serve the Starbucks menu right I guess that's true what's what's special about it has the original logo which is like a mermaid with two like tails really yeah so it's a yeah it's a mermaid I guess the current Starbucks logo is a mermaid as well you know it's kind of an interesting thing would you wait in line for two hours to go to the original Starbucks and drink a regular just like your

normal order. I mean, definitely not unless I was getting an NFT through their new Starbucks Odyssey platform. I mean, that now we're, yeah, now you're getting somewhere with this. Little call back there. All right. So next week, we'll be

live. We'll be doing it live. Yeah, I really don't know how it's going to work. I mean, normally I'm looking at my laptop and reading stuff from our newsletter. Are we going to be able to do that live or are we just going to have to memorize everything? No, I think we're laptops are or allowed. We might take some questions from the audience. So it will be around 12 o'clock next Thursday,

I guess, next Thursday in Quincy Center. So if you're in town, come down to Quincy Center. There was promised a self-by-southwest vibe. There was a Boston Globe article that said that. Yeah, it's South by Southwest vibe wouldn't be the first thing that comes to mind, but it's a good spot. Is it, so is it a ticketed event or can, you know, can Brink Nation just show up? No, Brink Nation is more than encouraged to show up. I think they should. We, I think they should show up wearing our merch, probably. Oh, yeah.

Yeah. Extra bonus points. If you, I've seen several people at conferences wearing our merch. I get very excited about that. I get very excited about that. Yeah. Someone was in touch. Do you remember the cured meets guy?

Yeah. I went, I went back and forth. with him today on email about a different topic. But I mean, he's in town. That was a great gift. That's probably my all-time favorite gift that we've received from a listener. Got you just sent a box of cured meats. I ate an MVP move.

I ate all of them. I don't think you had any. No, you didn't share any, but that was a big hit. I think I offered you some, but logistically, I think you couldn't accept them that day. I think it was something to do with the pandemic. They were great. Well, I'll never forget that. those cured meats really nourished me.

So if you're in town, come by, Quincy. We'll do it live next week. Brink Nation, better show up. All right, everyone. Have a safe and healthy weekend. We'll see you next week.