Tech Brew Ride Home - Fri. 08/13 – The Growing Power Of Stablecoins

Starting point is 00:00:00 On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Friday, August 13th, 2021. I'm Brian McCalla today. Disney reported some surprisingly strong streaming numbers. A recent Nvidia keynote included a virtual replica of its CEO. What if USDC becomes a stablecoin de facto backed by the U.S. Fed? And in the weekend long-reys suggestions, why stablecoins generally have become the linchpin of the crypto universe? Here's what you miss today in the world of tech. Disney Plus beat its Q3 subscriber estimates reaching 116 million subscribers versus 114 and a half million, which was expected. This came out during Disney's earnings call yesterday, where the Mouse House also revealed that ESPN

Starting point is 00:01:17 plus subscribers rose 75% year-over-year to 14.9 million subscribers, and Hulu grew 21% year-over-year to 42.8 million subscribers, quoting TechCrunch. Disney also topped expectations across the board with 17.02 billion in revenue versus the 16.76 billion expected and earnings per share of 80 cents above analysts' expectations of 55 cents. Even Disney Parks were back in business. Quote, Our direct-to-consumer business is performing very well, with a total of nearly 174 million subscriptions across Disney Plus, ESPN Plus, and Hulu at the end of the quarter, and a host of new content coming to the platform, noted Disney CEO Bob Chappek, in a press release. Across Disney's direct-to-consumer business revenues grew 57% to 4.3 billion, and its operating loss declined from 0.6 billion to 0.3 billion, thanks to improved results from Hulu, including subscription growth and higher ad revenues. These gains were offset by a higher loss at Disney Plus attributed to programming, production, marketing, and technology costs that were somewhat mitigated by increases in subscription revenue and success of the Disney Plus Premier Access release of Cruella, end quote. You may not have seen this, but back in April, NVIDIA CEO Jensen Huang did a remote video

Starting point is 00:02:41 keynote speech for the company's big developer conference from what looked like the kitchen of his house, which in COVID times may not be that weird, but still seemed, you know, a bit informal. Well, it was even more informal than that because Huang didn't even give the keynote, at least part of the time. InVita says part of its April keynote was led by a virtual replica of CEO Wong, created by scanning Wong and then training an AI to mimic his gestures, quoting motherboard. On Wednesday, Nvidia revealed in a blog post that its CEO did not do the keynote presentation at the company's GTC conference in April. At least part of it was actually led by a virtual replica of Wong, created by digitizing Wong with a truck full of DSLR cameras,

Starting point is 00:03:27 and then animating him with the help of an AI, according to the company. Wong's kitchen, which has become NVIDIA's venue for speaking to customers and investors since the beginning of the pandemic, was also entirely computer-generated. It's not clear exactly which part of the keynote speech features CGI Wang, which is what makes the replica so impressive. But if you jump to this part of the presentation, you can see Wang magically disappear and his kitchen explode into multiple different 3D models. To create a virtual Jensen, teams did a full face and body scan to create a 3D model, then trained in AI to mimic his gestures and expressions. and applied some AI magic to make his clone realistic.

Starting point is 00:04:06 Envideo wrote in the blog post, Digital Jensen was then brought into a replica of his kitchen that was deconstructed to reveal the holodeck within Omniverse, surprising the audience and making them question how much of the keynote was real or rendered, end quote. After this article was published, Nvidia updated its blog post clarifying that, quote, only 14 seconds of the hour and 48-minute presentation were animated. The company also published a video on Wednesday talking about how they made

Starting point is 00:04:32 the GTC keynote, which included a section on the making of Virtual Wong and his virtual kitchen. Omniverse is a platform that incorporates various tools for engineers to create animations, which the company calls a metaverse for engineers, end quote. Circle has announced it intends to become a bank, fully regulated by the Federal Reserve, OCC, and FDIC, which could make its USDC stable coin a de facto central bank digital currency. It's a bit arcane, but this could really be a huge deal, quoting Axios. Circle's dream is to become a narrow bank, one that eschews fractional reserve banking entirely and instead places all deposits on reserve at the central bank. Only banks can open accounts

Starting point is 00:05:24 directly at a central bank, which credits them with pure money. In Circle's case, the depositors would be holders of USDC, and the collateral backing up USDC would be the money on deposit at the Fed. would pocket for itself the interest that the Fed pays on bank reserves. If the dream were to become reality, then Circle would effectively be issuing a cryptocurrency backed by the Fed itself. For all intents and purposes, a central bank digital currency or CBDC. If Circle was allowed to do such a thing, then presumably other banks would be too, and they would rapidly start competing with each other to pass through most or all of the interests that the Fed pays on reserves. Buying those stable coins would be tantamount to having money on deposit directly at the Fed, end quote.

Starting point is 00:06:10 Stable coins, which I long thought were this weird sort of boring corner of the crypto universe, are all of the sudden becoming the linchpins of the entire crypto ecosystem. In fact, more on that in a second. Before I make the point that I want to make about stable coins in the Longreeds section coming up, let me give you this follow-up story about that big defy hack that happened earlier this week. because it'll lay the groundwork for the point I want to make. The hacker has reportedly given all the money back, and the company involved in the hack is even paying them what it is calling a bug bounty.

Starting point is 00:06:51 But listen to the detail about a stable coin known as Tether at the very end of this. Polly Network, the cryptocurrency platform, which lost $610 million in a hack earlier this week, confirmed on Friday it had offered the hacker or hackers a $500,000 bug bounty. In a statement, it thanked the hacker. who it dubbed a White Hat, sector jargon for an ethical hacker who generally aims to expose cyber vulnerabilities, who had returned the bulk of the funds for, quote, helping us improve Polynetworks security, end quote. The network also said it hoped Mr. White Hat would contribute to the blockchain sector's continued development upon accepting the $500,000 reward, which it had

Starting point is 00:07:29 offered as part of negotiations around the return of the digital coins. The statement did not specify the form in which it would pay the $500,000. It said the hacker had responded. to the offer, but did not say if it was accepted. A lesser-known name in the world of CryptoPoly network is a decentralized finance or defy platform that facilitates peer-to-peer transactions with a focus on allowing users to transfer or swap tokens across different blockchains. The as-yet unidentified hacker or hackers appear to have exploited a vulnerability in the digital contracts Polly Network uses to move assets between different blockchains, according to blockchain forensics company Janalysis. According to Friday's statement, the hacker has returned,

Starting point is 00:08:09 $340 million worth of assets and transferred the bulk of the rest to a digital wallet jointly jointly controlled by them and Polly Network. The remainder held in tether was frozen by the cryptocurrency firm behind the stable coin. Quote, after communicating with Mr. White Hat, we have also come to a more complete understanding regarding how the situation unfolded, as well as Mr. White Hat's original intention, the statement said without giving further details. Poly Network announced the hack on Tuesday, but the following day said the hackers had begun returning the digital coins they had taken, end quote. Time for the weekend long read suggestions, and as promised, here's a look at the sudden

Starting point is 00:08:51 growing power of stablecoins from the great Joe Wisenthal. That recent defy hack that happened this week, turns out they ended up getting all of their money back, but that was partially because stablecoin tether was able to freeze parts of the hack in its tracks. Stablecoins suddenly have an outsized power in crypto markets because they are the default. to do a lot of swapping between coins. So they're sort of the only people in a decentralized land who can throw their weight around like, well, sort of like a central banker might in order to keep markets on the up and up. Because of this, stable coins can become kingmakers, quoting Joe. Back in 2019, Haseeb Qureshi and Leland Lee argued that from here on out, there will be no more

Starting point is 00:09:36 contentious hard forks of the Ethereum network. The argument is simple. A coin like Tether or U.S. DC is a claim on a dollar's worth of assets sitting in a bank account somewhere. You therefore can't have a network split and a coin reside in two networks, creating a situation in which two competing coin owners have a claim on the same dollar. Whichever chain the stable coin issuers choose is the winner, since that's where the real value will lie. As Joe Light has reported, regulatory scrutiny of stable coins and the claims they make about their holdings is rapidly ramping up in DC. And you can see why. For one thing, they're very big. According to data from the block, their total AUM is now over $110 billion. But also, as their size grows, so does their power. They're the one entity that can reverse transactions. And in theory, they can even decide the fate of otherwise decentralized networks by throwing their support behind this or that chain decision. There's no reason to think that their power within crypto will do anything but grow anytime soon, end quote. Also, you might have noticed that NFTs have roared back into people's focus this month. Maybe you've seen.

Starting point is 00:10:42 board apes. Maybe you've seen pudgy penguins or zombies. First, a quick update on the state of play in NFT land this late summer of 2021 from Kevin Rose in the New York Times, quote, Community NFTs are group projects. They're released in sets of unique but thematically linked images that can be bought and sold individually. Buying a community NFT typically entitles you to certain benefits, including membership in a shared Discord server or access to a private Telegram channel where you can talk with other owners. The biggest perk, though, is getting to change your Twitter profile photo to your NFT, marking yourself as part of the in-crowd. The first community NFT was the Cryptopunks, a series of 10,000 pixelated characters that was sold starting in 2017.

Starting point is 00:11:27 They became a luxury status symbol with single images selling for millions of dollars and paved the way for other community NFTs, including the Bored Ape Yacht Club, a group of 10,000 cartoon primates that now sell for upwards of $45,000 a piece. The way I describe it to my family members and friends is like people buy supreme clothes or they buy a Rolex. Clayton Peterson 23, one of the founders of Pudgy Penguins, told me in an interview. There are all of these ways to tell everyone that you're wealthy, but a lot of those things can be actually faked. And with an NFT, you can't fake it, end quote. So along those lines, earlier in the week, Packing McCormick had an essay that got a lot of chatter, delving into all of this using the analogy of status monkeys. Essentially, the NFT craze right now is about,

Starting point is 00:12:16 again, signaling to folks that you're rich. Quote, NFTs are social capital with skin in the game. It's investment as a status. There are only 10,000 cryptopunks and apes, and within that limited set, there are some that are particularly valuable and therefore high status. Owning a crypto punk or a bored ape and often displaying it as your Twitter or Discord or Telegram profile, file pick says something about you. They say that you were either early or you're rich or you were early and now you're rich. Using high-priced things to increase social capital is not new. Look at fine art, expensive cars, yachts, private jets, handbags, or any number of scarce things that very rich people buy to signal status. It's just that NFTs are even more legible and public.

Starting point is 00:12:59 NFTs also have utility as investments as tickets for access to discord groups and even as something that you can hang digitally on your wall. Over time, NFTs will give owners access to events and unique experiences as they evolve and infiltrate a wider audience. Already, buying a board ape gives owners access to the board ape yacht club. NFTs like Axis provide real utility. Ownership means employment for tens of thousands of people. Meibits from Cryptopunk creator Larva Labs come with 3D models and animations and could be used as characters in games, end quote. Next, a startup that I've been meaning to read up on and learn more about, Forbes looks at how Figma has become design's hottest startup valued at around $10 billion,

Starting point is 00:13:43 quote. The test version of Figma's product took years to launch, and many frustrated employees quit before it did. Asking questions is great, Fields' mentor Wiener told him, but not at the cost of trusting your own instincts. When it came to charging for Figma, Fields' intuition told him to hold off and keep tinkering with the product. But when a user at Microsoft warned that Figma's adoption was slowing at the tech giant because of doubts that a free startup could be trusted, Field acted faster. Going back into research mode, he opted for a model, inspired by Australian software outfit at Lassian, of simple tiered pricing of $12 or $45 per editor, many users still opt for the free version. Later, when some big-name customers, notably Google, asked for volume

Starting point is 00:14:25 discounts, Field jumped on the phone to explain why Figma wouldn't budge. people come around and understand, or they don't, and they don't go with us, he says. Today, with $200 million in fresh funding, Figma must decide how to prioritize international expansion. Already 80% of users are outside the U.S., and its latest round included global-minded strategic investors such as Brazil's base partners, potential acquisitions. It has bought two startups, including one that revamped Figma's mobile app, and new features to help it achieve its goal of becoming an end-to-end solution, end quote. And finally, one of the great holy grails of science and technology is fusion, the way the sun powers the entire solar system.

Starting point is 00:15:06 If we can do fusion ourselves here on planet Earth in an affordable way, i.e. you get more energy out than it costs to make the energy going in. Then we would have unlimited nuclear power without any of the drawbacks of nuclear power, like, say, the risk of meltdowns or radioactive waste. we'd have virtually unlimited power that has no carbon or pollution issues. See what I mean? The literal holy grail. If anyone ever cracks so-called cold fusion, it would completely transform the global economy, the very trajectory of the human race even. For 50 years, the hype cycle and the investment cycle in Fusion Tech has waned and waxed. It's on the upswing again in recent years, and the New York Times has a tantalizing piece asking is a well-funded startup founded by MIT scientists. getting close.

Starting point is 00:15:56 Quote, more than two dozen private ventures in the United States, Europe, China, and Australia, and government-funded consortia are now investing heavily in efforts to build commercial fusion reactors. Total investment by people such as Bill Gates and Jeff Bezos is edging toward $2 billion. Some of the startups and consortia are building powerful lasers to generate fusion reactions and others are exploring new kinds of fuels. Most of them are professing a similar vision, that they will be able to prove that their technology can produce competitively priced electricity this decade, and build commercial plants to feed electricity into power grids soon after 2030. Commonwealth's new magnet, which will be one of the world's most powerful, will be a crucial

Starting point is 00:16:36 component in a compact nuclear fusion reactor known as a Tokomac, a design that uses magnetic forces to compress plasma until it is hotter than the sun. The reactor looks like a donut-shaped jar surrounded by magnets. Soviet physicists originally envisioned it in the 1950s. Commonwealth Fusion executives claim that the magnet is a significant technology breakthrough that will make Tokomac designs commercially viable for the first time. They say they are not yet ready to test their reactor prototype, but that the researchers are finishing the magnet and hope it will be workable by 2025. The scientists in Massachusetts hope that this month they will demonstrate a magnetic field that is almost twice the strength of the magnet's plan for

Starting point is 00:17:17 use by a global consortium of the European Union and six other countries that is assembling a reactor in France. The consortium hopes to begin generating electricity at the site in 2035, end quote. Ooh, Friday the 13th, spooky. This weekend, by the way, Ride Home Plus subscribers are getting an interesting raise episode, including a look at OpenC, maybe the biggest unicorn in all of crypto at the moment. And everybody will get access to the Twitter space where Chris and I talked about Samsung's new foldable and flippable phones. And in the second half of that episode, we basically talked to half of the founding and engineering team behind one password. It kind of happened by accident. But if you want to hear about the strategic engineering and product decisions that

Starting point is 00:18:08 go on behind the scenes of a high-profile unicorn, definitely listen to the second half of that. Talk to you on Monday.

Tech Brew Ride Home - Fri. 08/13 – The Growing Power Of Stablecoins

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