With every cryptocurrency conference, conflagration or clambake, a new “State of the Industry” is harkened for the crypto world — and Consensus: Invest (held last week in NYC) delivered exactly that.
This was no small-time get together. Rooms were packed. People listened. Excitement was in the air. Here’s what went down.
The Price of Bitcoin
As the conference wound into post-event drinks mode, Bitcoin freight-trained past $10,000. Yes, people were discussing Bitcoin’s price, and yes people oft-discussed if Bitcoin was “The One”.
But Bitcoin and it’s price — as a testament to the depth of this industry — was really only a tiny fraction of the discourse. There’s, of course, chatter about Ethereum; about seemingly unlimited number of other altcoins and ICOs; about technology limitations and opportunities; about regulation; global market movements; Institutions; data solutions; security and crypto safekeeping.
Enter into any single conversation, and it feels like you’re trying to jam 100 lbs of cryptocurrency shit into a 2 lb nylon, logo-covered conference bag. To solve this, most people spray-splatter their crypto POVs as fast as possible, regulating you to trying to make sense of dialogue at 1.4x the speed.
Ya, it feels schizophrenic, but that’s not what‘s important.
Here’s what is: the industry thrives not because Bitcoin’s price keeps going up; it thrives because there’s an unlimited amount of shit to talk about.
The Suits Are Coming, the Suits Are Coming!
Consensus:Invest was held in New York City. In the middle of Times Square.
The energy was electric, but also…punch-you-in-the-face aggressive.
Zero-apology shoulder bumps and well-practiced oblivious line cutting was rampant.
Compared to the last event I went to in laid-back San Francisco: Less jovial smiles, more serious stares.
The “Suits” gave it away: wealth managers and equity traders have caught on that this is the future of finance. Whether for self-preservation or curiosity or just plain greed, those who spent their corporate lives inside the bowels of traditional finance institutions have realized this is a break-free moment. One where they can utilize their years of day-trading equities, shorting, hedging, and iron-condoring to great advantage.
The finance folks realize the potential in front of them: to apply their craft in a new, tangential industry that is booming with possibility.
They’re sprinting toward the crypto light as fast as they can.
Custody, It’s a Thing.
Every hallway conversation ultimately ended up stuck in the dead end corner of custody.
There’s no debating the fact that the Institutions — Fidelity, JP Morgan, Goldman, pick your poison — have billions of dollars to invest into Cryptocurrencies. While some may be investing off balance sheet, not a single Institution is going to invest client assets into cryptocurrencies until there’s a reputable custody solution.
Smaller funds can get away with homebaked solutions that offer encrypted, air-gapped, single-IP-access databases or 2-sig wallet solutions; but the Institutions need something more robust, something capable of passing the sniff test of hundreds of compliance officers and the eye-of-Saron level gaze of the SEC.
One potential is Xapo, who has a sophisticated custody solution with one major problem: it isn’t “Qualified”. Meaning, the regulators just aren’t committed to their process and so the Institutions…well, they ain’t got no time for dat.
The Institutions Awaiting Crypto Custody Solutions
[Editor’s Note: Mike Novogratz stage-praised Xapo CEO Wences Casares as “Patient Zero” for spreading the crypto gospel. Kudos to that alone.]
But the crowd was electric about potential solutions on the horizon. There were whispers that Fidelity was about to release something. And that Goldman was getting close? And Circle? They may be on the verge of eating the world, and custody is a huge part of that.
While custody isn’t solved just yet, it seems imminent. And with that one thing is for certain: Once the Institutions get comfortable, the floodgates of investors will truly open.
The Data, No, It Never Lies
Chris Burniske (cburniske) from Placeholder VC never, ever disappoints.
He led a presentation that satisfied those investment manager’s seeking alignment to the traditional equity environment.
“Crypto assets are as innovative as equities were 400 years ago “ — cburniske
If you look at 2016, Twitter and oil have same level of volatility as Bitcoin — cburniske
Of course, Burniske — practically pulsating with meme fodder at every turn — didn’t just offer quotes befitting of a quarterly earnings call. He spoke to those gathered for a football tailgate bash — with rabid fans rallying around the figurative keg of crypto knowledge, as analytical anthems pumped out of a window-tinted, mud-splattered nearby Ford F-150.
“If you want to buy a kilo of cocaine, you’re better off using cash than Bitcoin” — cburniske
Bitcoin isn’t the Eggman. It’s the Platypus.
Burniske’s praise-be quotes may only have been outshined by some seriously righteous analysis by Blockchain Capital’s Spencer Bogart.
First: no BS, this guy is one of the best presenters I’ve ever seen. If there’s one reason the crypto space is ballooning it’s because of the crispness of delivery by the thought leaders. The brightest minds in this space can present their facts and philosophies with an off-the-cuff confidence that will hypnotize even the most strong-minded.
Spencer noted we were still in the first inning; his Harris Poll data proved that millennials were leading the charge of interest and ownership in crypto assets, while your grampappy’s investment advisor was pretty much frozen in a state of traditional bond-buying yesteryear.
But this data merely served as foreplay to the homerun analogy of the year. Bitcoin: the Platypus of the cryptocurrency world.
Bitcoin: the Platypus
According to Bogart, the reason Bitcoin (and crypto) is so damn fascinating is that — like the Platypus — it is a somewhat unidentifiable mishmash of many tremendous, unique things that shouldn’t fit together — but somehow do. The Playtpus, it has webbed feet with claws; a venemous spur; a beaver tail; they’re milk producing; duck-billed; otter-furred.
For those seeking to define what Bitcoin: yes, it’s a store of value; yes it’s a payment network; yes it’s a 3rd party disintermediary; yes it’s decentralized; yes it’s a cryptographic wonder.
And yet — much more importantly — it’s all of those, together.
Bitcoin is an incongruous force of nature.
The takeaway? Bitcoin’s beauty is that you can’t peg it to just one thing — and while each characteristic on its own is special, together, well, that’s a platypussian miracle.
Spencer Bogart’s Platypus/Bitcoin Analogy
When you Pop the Froth of a Bubble, Will you Find the Filth of a Fraud?
Finally, let’s shatter any notions that this crew of people are as head-in-the-sand naysayers of reality on the level of…say….Trump supporters.
They’re not. These folks recognize reality when they see it.
Every. Single. Person. Knows. This. Is. A. Bubble.
Yes, much of it harkens back to the go-go salad days of the Internet in 1994 or 1996 or 1999 (no one seems to be sure which era we are actually in).
Mike Novogratz shined this up pointedly: “This is the largest bubble of our lifetime.”
The Cryptocurrency Bubble, it Will Pop.
Ok, so bubble are not, is Bitcoin and it’s cryptocurrency brethren somehow fraudulent?
Is it a fake? Have we all been Madoff’d on a global scale? This thesis is easily dismissed, pointing to mathematical facts and checks and balances from peer-to-peer global footprints.
On the bubble front: everyone respects that the bubble WILL burst.
And that dark days will indeed follow.
But if you have the nerve, the tenacity, the wherewithal to hold on and survive through the dark, nuclear-winter days post cryptocurrency bubble-burst, you’ll most certainly arise into the heavens, where you’ll be guaranteed entrance into the halcyon days of the golden hereafter.
See you at the next clambake.