The TCB Report, #002 — March Madness
The March Madness (Regulation Gets Pushed Forward and Numbers Go Up)
[note: still playing catchup. April’s report should be published by in a couple weeks.]
March Madness is the nickname given to the American Men’s College Basketball tournament, for how unpredictable the results of a game can be, with upsets and last-second, game-winning baskets. It’s also an appropriate label for how the month of March has turned out in the crypto space. The Russia/Ukraine conflict has forced many nations, specifically those of the West, to speed the pace of definition, regulation, adoption, and lawmaking. The pace has gotten frantic. (We’ve also seen CBDCs getting more attention — eyes open.)
The numbers-go-up portion has nothing to do with prices, (which generally went sideways until the last two weeks of the month). No, dear reader, our NGU has to do with adoption numbers: the numbers of family offices, investment funds, corporations, banks, retail investors, and people coming into the space for the first time. This is across-the-board, using pretty much any metric of activity and participation. I subscribe to several newsletters, scan through about a dozen different crypto-centric news sites, and have several targeted google alerts set up, and to sum it up, the adoption curve is continuing to go steadily higher. People are finding new utilities for code, from DAOs, to DeFi, to NFTs, and ways to apply blockchain technology to existing real-world applications. It also helps that the acceleration of laws, regulations, and legal definitions of digital assets are helping to create clarity for individuals and organizations where interest already exists.
As far as I read recently that there is an estimated five billion people using the internet and only about 100 million people who own digital assets (my guess being as high as 200 million.) That’s a lot of room for growth. So sit back and let’s sort through where this adoption is taking place.
CBDC — as part of the drive of adoption by national governments, the push to implement CBDCs is ramping up. The details we need to examine are: 1) how will this be utilized and who will be able or required to use them? (individuals, businesses, banks, governmental bodies, or any combination of these, and will they be used for daily transactions, cross-border remittances, payroll, accounts payable settlement, etc.) 2) will it be made the sole currency of use or will people be allowed to used other forms of currency (dollars, euros, yen, etc?) 3) how will usage be tracked, traced, and administered? (see also China and the social credit system network where everyone’s digital existence is tied to their online ID. 4) how programmable is it? Can an account be cut off, have funds added and removed, and programmed for specific spending categories with expiration dates to spend it by? All these features are doable.
I’ve said it before in the weekly updates and on Twitter, that combined with a Chinese-like social credit score model, whoever is in power will have access to a tool to control and influence a population on a scale never before seen, and if we reach that point, it will take a nation-wide consensus or an enlightened leader to say “no” and reverse course. The digital control grid is a very real possibility. Don’t ever let it get that far. And for the people in the back row who couldn’t hear me: DON’T EVER LET IT GET THAT FAR.
[Late add-on- it was just reported that in the US Senate, Senator Ted Cruz introduced legislation that would create a digital Dollar, but forbid a central-bank operated currency (CBDC.) I doubt it would pass, let alone make it out of the committee stages (where hearings are held, and there is time to make changes to the language,) but it will serve to establish that there are voices who oppose the centralization of money, and that the people who advocate for a centralized money network, there will be resistance to their proposals. That’s a good thing.]
I feel fairly certain that the use case of “one ring to rule them all” will be wrapped in with practical and benign everyday use cases. Watch closely. Eyes open.
ADOPTION
Every few days I see yet another article about a bank or investment firm getting involved with digital assets, either offering custody service and/or trading. It’s usually a just Bitcoin and Ethereum, but as the space evolves and as the education and sophistication of the customer base grows, so will the assets available to them. In Europe, ETP (exchange traded products) are getting listed on the major stock exchanges, giving retail investors and institutions derivative products to get exposure to digital assets, even if it is just a proxy on the price. The plus side to this, is that these funds must purchase the underlying assets that are tracked [Read: buying demand.]
DEFI
Cardano’s defi ecosystem is growing. It’s currently under USD $1billion in TVL (total value locked), but expect that to grow. There seems to be a lot of people enthusiastic about the platform. (I personally like the project partly by Charles Hoskinson’s vision, and also because unlike a lot of other platforms, the IOHK team driving a lot of the core development does not pursue a “move fast and break things” approach. Slow and steady with clean execution- I like that. (Such an approach also has the advantage of letting the faster-moving platforms make a lot of the mistakes for them.)
And defi hacks from faulty code continue. Millions every week. Be careful out there.
Metaverse/Web3
Corporations recognize how this space will have lots of attention and they want to grab a share of it. We’re still in the formative stages, so a lot of news is just who is jumping into this space. It’s still worth it to follow who jumps in, who gets financing (and from whom,) and how the platforms are evolving.
NFT
Another space getting losts of attention and activity. As a low-technical knowledge on-ramp, NFT art is also benefitting as an avenue for community engagement. I could not list the sports teams, corporations and media celebrities that are jumping into the space, but at this point, it’s safe to say that NFT art has taken root and will only evolve from here. If you want to follow the inside track, I highly recommed you follow Blockworks, and Arca finance. Their reporting and analysis are on the cutting edge.
Another good recap report of weekly NFT news is on Bitcoinist.
I’m wrapping up the report here, since at the time of publishing it is late April.
Be well, everyone. Question everything (including yourself.) Talk to you soon.
-Brian
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