Tech Brew Ride Home - State of Crypto With Coindesk's Brady Dale

Episode Date: March 10, 2019

Sometimes the bonus episodes are for getting news in areas that I might have missed or might not have made our show, but I still find interesting. This week I reached out to Brady Dale of Coindesk, because I know he’s a listener and I knew he could give us some more background on Facebook’s recent moves in crypto, but also some other crypto news we haven’t gotten to and just the state of the crypto-space generally. Sponsors: LinkedIn.com/ride Tiny.website Subscribe to the Premium, Ad-Free Podcast Feed! Learn more about your ad choices. Visit megaphone.fm/adchoices

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 a weekend bonus episode of the TechMeme Right Home. I'm Brian McCullough. Sometimes the bonus episodes are forgetting news in areas that I might have missed or might not have made room for on our show, but I still find interesting. This week I reached out to Brady Dale of Coin Desk because I knew he was a listener and I knew he could give us some more background on, for example, Facebook's recent moves in the crypto space, but also some other crypto news we have a

gotten to and just the state of the crypto space generally. Thank you Brady Dale of Coin Desk. What is the general state of crypto right now in the sense that again this is not my space. I kind of observed it from afar, but a couple months ago it seemed like the sky was falling. Bitcoin was flirting with $3,000 or something like that. Just on a basic pricing level, have things stabilized a bit across the board? I think they have, you know, I don't watch price super frequently. We have a couple of reporters who are really good at doing that. I mean, the sky is a little bit falling, but it's not going to fall.

I guess the crux of it is it's just not going to fall all the way down. You know, everyone who I focus on kind of the startups in the space. And those that were here through the last contraction, I'll say that, you know, this is just not nearly as bad as it was last time. Like no one, no one seriously thinks, like there was a chance the last time, there was a big contraction that crypto was just going to go away. And no one seriously thinks that this time, but it is, you know, it's crypto winter. You said that the sky is still falling a little bit. What did you mean by that?

Well, I just, you know, there hasn't been, there hasn't been anything that's made the general public excited about crypto again. So, you know, the mean in Crypto land is that there, it's this Biddle moment, is what they, as opposed to Hoddle. So everyone is, everyone who's still in is focused on building things that the public or, you know, that other crypto companies or, you know, enterprise wants. But no one has really built that thing that has been, you know, useful in a widespread way and gotten outsiders excited again. So it's just all very inwardly focused. And as long as it's inwardly focus, it's going to feel like it's small and like maybe it's even kind of shrinking. What about the ICO market? That seemed to cool as well.

Have ICOs started rolling out the door again? I mean, not. I mean, they never entirely stopped. There are still ICOs around and people are proposing big ICOs. One of the, a spinoff company from one of the biggest ICOs of 2017. Bankor is I think it's underway. They spun off a company called Liquid Apps. It's going to be doing another very long token sale.

But that's the exception more than the rule. Generally what we're seeing right now is companies that are raising money in crypto are doing it the old fashioned way and are selling equity in their companies. Well, that is a change from at least 18 months ago, though. Yeah, for sure. You might have heard, I said on the show recently that, I had assumed that, you know, when the prices cratered, Wall Street would have assumed that this was a fad and walked away from it like a spent potato or boy, that's a tortured metaphor. But it seems like maybe the opposite has happened that there have been like actually a couple of really interesting projects that have actually launched and are continuing to go forward from huge Wall Street banks and institutions.

So can you tell me a little bit more about that? Even if it's not on the consumer side and the mainstream side, is crypto and blockchain finally getting traction on Wall Street? Well, when we did our consensus of invest event in November, there was still plenty of potential investors there. I think the biggest news for me in the institutional space was Morgan Creek, which is an investment firm here in New York that has been making this argument to institutional investors for a long time, they convinced two relatively small public pension

funds in Northern Virginia, both in the same town, but separate funds. One, I think, for police and one just for general public employees. They convince them to invest in their next round. And it was it was they were major investors in this crypto funds round, but it was like it was like a rounding error, you know, to the amount of money that these two firms had. But that's this, this fellow Anthony Compliano, if you follow crypto Twitter, you might see him. You know, he's kind of one of the big voices on crypto Twitter. He's, this is an argument he's been making to crypto funds for a long time. And I think what Wall Street's interested in, crypto, um, doesn't tend to move with the rest of the market, which is nice as a hedge for, uh, for, for, for, folks on Wall Street. So even if they don't think this is stuff is all going to, you know, go to the moon, as they say in Critcho, they do see that it moves in it by a different pattern, which helps them, which helps people on Wall Street balance risks. But I also think probably, you know, a lot of folks have seen this has been going on for 10 years. It hasn't gone away.

The price does generally trend up. So at this point, they are probably all thinking that it's time to start putting, you know, small amounts of money in early on that hope that it'll, it'll have like a giant return. So everything we're seeing suggests that that is where folks are moving. And I think, you know, look for a lot more institutional investors to make a bunch more small bets in this space over the next year. Well, let's talk about something that I definitely have mentioned on the show, which is Facebook's crypto efforts, which seem to be pretty serious.

So what are you all hearing about what Facebook is doing right now? Yeah, so the big news on that came out of the New York Times last week, Nathaniel Popper and Mike Isaac had a story on it. And that was actually something that we had been looking into a wealth at the same time. You know, if you call around crypto folks in Silicon Valley, you talk to enough of them, and this is sort of what I spent all last week doing. They'll all tell you that there's just lots of rumors swirling about Facebook. And those rumors aren't based on nothing. It's very clear from talking to my sources.

Facebook is talking to lots of people, you know, from what we hear, if you're going to talk to Facebook, you get invited. You have to, like, go to their space and sign all these NDAs. You know, they don't, no email gets sent. It all happens, you know, in their specific building, their specific blockchain space. But they're clearly talking to a ton of people. They're looking, you know, they've already made one acquisition. You know, we've heard rumors that they've floated lots of other acquisitions. So what we're, the rumors suggest, and my, particularly my reporting on my own suggests, it seems pretty clear they're building a,

they're going to release a stable coin like Bloomberg reported at the end of last year. Folks I've spoken to tell me pretty confidently that they think that's right. And the other thing, you know, what Popper and Isaac wrote last week in New York Times was that they've already started talking to exchanges and that we could look for whatever their crypto product is to come out in the next six months or so. So my reporting suggests they're not going to do this alone. So they're looking for people to like go and to launch with them in some way. So, you know, if anyone out there knows more about that, I mean, we're very curious to figure out kind of what kind of partners they're looking for and what those partnerships mean.

But it sounds like when Facebook goes live, they're going to do this with someone significant in the space in some way. Why, though? Like, if they're talking to people like exchanges, why do they feel like that is necessary? And maybe I'm thinking about this wrong. If this is just going to be some sort of payments thing that could immediately be used on WhatsApp or something like that, in theory they wouldn't need an exchange,

or is they're thinking more broad where, even though, yes, we will be able to, our users will be able to use this, but then also for it to gain traction, we need it to be out there in the broader world as a currency. Yeah, I mean, I'm guessing that's right. And keep in mind, you know, there's also, I can't remember who reported this, but it won't just be, the thinking is it won't just be WhatsApp

because the idea is like WhatsApp and Messenger and Instagram Messenger are all, like, it's all merging together, right? So it's all those things. So it's a giant amount of space. But yeah, I think they want to like have a real, currency that exists beyond their platform because that allows them to have way more power and way more reach and make themselves much more attractive. You know, they're not the only major messaging company that has a cryptocurrency

either. You know, Line is also dabbly in this space, too. And it doesn't seem like Line has gotten a huge amount of traction with it. But I think, you know, probably that does put pressure on Facebook to win here. And I guess I think Facebook's. giant threat in the world is also the fact that Wii chat is so far ahead of them. And my guess, you know, on payments in their in their methony app, and my guess is Facebook thinks the only way it can it can one-up, we chat is by having something that is a value,

you know, beyond its own platform. So it has an even wider network effect. That's interesting. But I, I'm just guessing here. Yeah, sorry. No, I never considered that this was maybe a defensive play on Facebook. part. Yeah, it seems like it has to be, right? I mean, this is where this is a, this is a way in which that's a giant moat that we chat has and there's nothing to stop that moat from expanding

further out, you know, it can just keep growing the better they get at it. So obviously that seems like that's a threat to Facebook over time. What do people in crypto think about Facebook coming into this space? Folks are pretty guarded about it. I will, say, you know, one source I spoke to said that they were invited to, you know, take on a bigger role, kind of be seen as, you know, putting their endorsement on, on what Facebook was doing. And I was, they refused because they believed it would have enormous reputational harm for them, you know, I think folks, I think the folks who are resisting Facebook's overtures, you know, whomever they are.

in crypto, there's this, there's this idea of decentralization, like, you know, the public will own everything we create eventually, and it'll be truly decentralized, and folks just don't buy that that is a vision that Menlo Park is really going to embrace. And so I think that's the general attitude. On the flip side, I think, you know, to a certain point, if Facebook really, really wants you, they can make it extremely hard to say. know eventually. So I think we should look for some probably some big players to partner with them eventually. Just, you know, who knows who those will be. Well, I mean, but they'll probably get a lot of

criticism for it. Right. Okay. So that's what kind of what I'm asking is just culturally even. So there are certainly the people that would be like, oh, no, we don't want the board coming in and and taking over crypto. But then also there's the certain segment of the space that feels like, you know, hey, this would maybe validate what we're doing here and would validate the technology and maybe even take it mainstream. Is there any sort of like even cultural back and forth like that in the community? I'm not seeing it yet. I mean, anyone who speaks openly about anything Facebook's doing as far as I can tell is pretty, they're highly questioning it. I could have missed somebody out there, but I don't think in general folks are super excited to see this happen. And

I don't think folks really buy that whatever Facebook does will, like, sort of be the vision that folks had for crypto. You know, I mean, it might be like on a blockchain on some level, but it isn't, it isn't really like more broadly leveling the playing field. I mean, we could be wrong. But I do think that's the vibe of people in the community right now. So there hasn't. So there hasn't been yet that big headline making aqua hire where, oh my, if she's getting on board with the Facebook project, then maybe this is serious and maybe we should take this seriously.

Like that, we haven't reached that level yet. No, we haven't, but I do think we should expect to hear of some more notable acquisitions and aqua hires. I think those are coming. I have a feeling that there's some deal that have been signed we just don't know about yet. Okay, before I let you go, give me a couple of random crypto news items that I either have missed or I wouldn't have covered on the show. Tell me about this Melinport thing that we were talking about offline. Yeah, sure. So on Friday, this company Melinport, which was one of the first initial coin offerings, they only raised like $2.9 million, I think, which ultimately proved to be tiny compared to IOT.

They just announced version one of their protocol and they're dissolving the company that built it and turning it over to this board, which the company that built it, you know, picks the members of the board. But it is a dissolution of a company. So it's a sort of a level of decentralization, which is a lot of these companies promise. And what Melimport is is a way of starting a hedge fund and running a hedge fund on a blockchain, specifically on Ethereum. And the argument is that running a hedge fund now, if you have less than $200 million, is prohibitively expensive because there's all these consultants you have to bring in to be compliant with different regulators around the world. And that's all very, very expensive.

But you can effectively answer all the questions regulators need answered if everything is just done on the blockchain, you know, like the auditing to be instant because everything is all just seen there. And so if they can just, they've built the technology now, if they can convince regulators that, you know, this covers all the things regulators want. Launching a new fund could be, could be much cheaper. So it's cool. They finished it. I don't think it's really done.

It's not fully production ready yet, but version one is ready. And they're going to have, you know, more people work on it after the decentralization. But it's an important moment because, you know, the promise of crypto companies is they would eventually. turn the things they built over to the public in some way, you know, they were quote-unquote decentralized. And there haven't been many examples of that actually happening yet. You know, auger, the vetting platform kind of did it before, too. So the fact that this is really happening is an example of one of these companies, you know, kind of honoring their promise they made. So it's a big moment. Yeah.

Final question. And again, this is me being outside of the space. So if I, If I hear something enough times, then maybe it makes me think maybe I should pay attention to it. And something that I've heard over the past couple months is mumble-wumble. Mimble. Mimble Wimble. See? That's how outside of it. So is Mimble Wimble something that I should be paying attention to?

Is that something that's interesting or just even tell me what it is? So Mimble Wimble is, I'm not the one who did a lot of reporting on this, but I've just sort of been generally interested in. And I couldn't explain a lot how this works. But as I understand it, it's privacy preserving technology for running, for, you know, running new cryptocurrency. One of the big misnomer's about Bitcoin is that it's private. It's not really, I mean, it's sort of private, but it's not really private, especially for anyone who's, I sort of determined to sort out who you are on there.

You can. And then, like, once they do find out who you are, they can sort of track you all over the place. So it's not very private. So Mimble Wimble is a way. of making is a technology for preserving privacy. There's been two implementations of it. There's been beam and grin. I think the one that people have been the most excited about is grin. And, you know, to quote a great woman, it's funny how money changes situations. They tried to, they tried to launch grin in the same way Bitcoin was launched and have it be completely fair

and even participate in any way they wanted to. And there was no, what's called pre-mines. There was no pile of tokens made that were given out to different people because they had contributed money or contributed work. None of that happened. No tokens were made until the protocol really started running. But the problem with that is that worked fine in Bitcoin because no one cared about crypto. But now that these things are worth something, when Grim launched all these people with money through mining power at it because they wanted to get that first rush of coins. And it was very hard to. to have like a fair level playing field

as it started as intended because the world of crypto has just changed and people are chasing the cash. So anyway, that's all on the side. The point is people think that with Mimble Wimble, we might have another shot in having like a truly private and truly equitable cryptocurrency that moves that privacy, Neil Ford, kind of beyond where Bitcoin and Ethereum able to take it. And if it's launched the right way and it spreads fast enough, it could be

decentralized enough that maybe regulators will really view it as a currency and it could really be treated like cash on the internet. So that's the hope. It's all of that is a long way off. But it hasn't actually launched yet. Well, no, I mean, Grin is going. Yeah. You can get Grin tokens now. Yeah, Grin's up and I think beams up too. Grin's been the one I've a little bit more interested in because it's been, it's had sort of a more cypher-punkky launch. Like a lot of the people who did the initial work, like weren't even saying their real names and stuff for a long time.

So it's just been a little bit more fun that way. But yeah, they're both going. And I think grin seems to be a little bit more of the buzzier one because of that. You know, it's been a little more pure. And that's made people kind of excited. So, you know, we'll see where it goes. But yeah, it's out there. It's just a long way.

And so, like, a lot of people are really using it. It gets adopted and it's easy to work with and stuff. A lot more has to be built. Hey, quick reminder that you didn't need to hear that ad break in the middle of this conversation because now an ad-free version of the show is available for $5 a month. Listen to the end of Friday's episode for more information on this, but also check the last link in the show notes to this show today to show some love to the podcast and to also get the show ad-free

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