Posted on

Losing the Lambos: It's Time to Get Serious About Crypto's Big Questions

Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.


“Crypto in crisis.”

Mainstream press outlets covering battered crypto markets have frequently invoked that phrase in recent weeks. For those of us who’ve followed the cryptocurrency scene for five years or more, the natural retort is: “When hasn’t it been in crisis?”

I would suggest that crisis – or at least relentless, chaotic drama – is the natural state for an open-source technology that engages a diverse, global, leaderless community in exploring an idea that promises to reorganize the fabric of our economy.

The outcome of this grand experiment is unknowable. But if we accept that the prospect of replacing 5,000 years of centralized record-keeping with a decentralized model of computerized consensus is rife with transformative potential, then we must also accept that it will generate wild, impossible-to-measure predictions, along with rampant speculation and hype.

By extension, these will frequently also generate fear and disappointment, and, unavoidably, price volatility.

The other thing you’ll hear from crypto “veterans” – yes, just five years in bitcoinland qualifies you for that title – is that crisis, and bitcoin’s capacity to survive it, is precisely what proves its worth.

The meme most frequently used to describe this resilient quality is that of bitcoin as the honey badger. But I prefer Andreas Antonopoulos’s “sewer rat” analogy: bitcoin as a tough-as-nails subterranean rodent that has proven it can take what the world throws at it.

Our increasingly distributed, fragmented economy needs open, self-healing systems that can withstand threats. The fastest way to build such resiliency is to expose the system to those threats so that it generates self-correcting counter-responses. Bitcoin, unprotected by a corporate IT team’s firewalls, rises to that challenge.

About here you might assume I’m going to smugly argue that the latest round of crypto critics are doomed to the same fate as past naysayers, who were proven wrong by the price recoveries that occurred after prior moments of “crisis.” (These newcomers would include former Paypal CEO Bill Harris, who told CNBC this month that he saw bitcoin going to zero.)

But that’s not what this column is about.

History is not prologue. The fact that bitcoin eventually recovered from the low of $210 it hit one year after its late-2013 peak of $1,150 is no guarantee that it will rebound from its current price near $6,500 and revisit its late-2017 peak of $19,783. And, yes, it could definitely go lower.

Fewer Lambos, more education

Rather, what I’d like to talk about is how the crypto community should use this moment to forget about price fluctuations and instead engage the world in a proper discussion about blockchain technology’s potential.

Let’s have less “to the moon” and “Lambo” talk and more discussions about the promise of peer-to-peer exchange, smart contracts and decentralized applications.

It’s time to ask questions about what we want this movement to be when it grows up. What do we want cryptocurrency and blockchain technology to achieve? And embedded in that is a question about who we are. As it stands in 2018, what does the crypto and blockchain community represent?

Some serious crypto developers might submit that bothering oneself with such flimsy questions of identity is no better than obsessing with price levels, when the most important thing they need to do is write code and develop real, battle-tested functionality.

To be sure, a post-bubble period, when the speculators’ distracting hype has dissipated, is a great time for developers to get work done. It’s no coincidence that Segregated Witness (Segwit) and the Lightning Network were developed during the prior bitcoin price lull. The ERC-20 ethereum token standard was also forged in that period, paving the way for ICO boom of 2016-2017.

But the involvement of others in the advance of this technology must also be acknowledged – even those from the enterprise world, the corporate community that hardcore crypto folks tend to dismiss. The blockchain community’s identity is complex and multi-faceted.

Learning from private blockchains

During the previous bitcoin market hiatus, while bitcoin developers worked on scaling solutions amid a different kind of “crisis” – the block size debate – a wave of non-developer newcomers started getting interested in blockchain technology: lawyers, bankers, supply-chain managers and regulators.

Rising to serve their interests were a variety of permissioned blockchain platforms, including IBM’s Fabric, introduced within the Hyperledger project, and the R3 consortium’s Corda.

Fast-forward to 2018 and, while cryptocurrency investors lick their wounds and wonder what the future holds, permissioned enterprise solutions are marching ahead, moving from proofs-of-concept to real-world implementations.

In just two recent examples, the World Bank teamed up with Microsoft and the Commonwealth Bank of Australia to issue its first blockchain-based bond and Maersk and IBM announced that 94 firms have signed up for TradeLens, their supply chain, shipping and logistics platform.

Many crypto developers dismiss these enterprise-driven private blockchain solutions, which typically employ pre-bitcoin consensus solutions such as practical byzantine fault tolerance and a trusted entity to administer the network, as a retrograde solution that’s not censorship-resistant. Like them, I believe permissioned blockchains will ultimately be proven inferior to permissionless systems, much as the open internet’s greater access to innovation and bigger network defeated private companies’ walled-garden “intranets” in the 1990s.

But I also think the work being done on these permissioned blockchain solutions is immensely valuable.

Until scaling solutions such as Lightning and sharding are working at full capability, permissionless blockchains can’t introduce decentralized applications at scale with anywhere near the ease of permissioned systems, which have fewer governance and computational limitations. In the meantime, there’s a great deal of learning that we can – indeed, need – to take from how these real-world private blockchain implementations play out.

Consider what the TradeLens project might tell us. What standards and practices will shippers, manufacturing companies and customs agents adopt as they integrate smart contracts to coordinate the movement of goods across multiple jurisdictions?

Finding common ground

This cross-community learning is precisely why the “who are we?” question matters.

Believe it or not, across a diverse and even divisive community – public versus private blockchains, BTC versus BCH, maximalists versus everyone else – a common vision does exist. We just need to define that shared identity more constructively than the one that many outside of the community assign to it: that of a nerdy, fanatic cult.

(An aside: one response to Bill Harris’s derisive comment about the “cult of bitcoin’s” false claims – “that it’s instant, free, scalable, efficient, secure, globally accepted and useful” – is to point out that in post-AD Rome, Christianity was a cult. Also, why do people who made their living from the constant improvement of the internet assume that crypto technology is doomed to a static existence? Dismissing bitcoin because of its limited scalability and adoption in 2018 is like attacking the Internet in 1995 because 28 bps modems were too slow to enable meaningful connectivity – as if no engineers see the problem or are working on it. Sheesh.)

How do we get society to go beyond these simplistic representations of the blockchain community? What is the core commonality that matters within this wide tent?

To me it the common recognition that decentralized consensus mechanisms that enable groups of people to collectively assess the veracity of shared information can help society more efficiently overcome the cost of trust, an age-old human problem. They all see in this new model big opportunities to disintermediate value exchanges of all kinds and, in doing so, to open markets and unlock innovations that produce better outcomes for everyone.

Blockchains are a complex, multifaceted social technology. As such, achieving its full potential requires different types of expertise. Of course, we need a great deal of protocol development, but also UX and application design. And beyond the engineering realm, we need legal reforms, governance solutions, standards agreements, and marketing and education.

Here the 2014-2015 price lull is also instructive. At that time, bankers and lawyers, their interest piqued by the market mania they’d witnessed in 2013, took early moves toward comprehending blockchain technology. In doing so, they spurred a valuable societal debate on the challenges and opportunities it presents.

Even as a few ham-fisted regulatory solutions, such as the BitLicense, emerged and as banks undertook a clumsy, misguided attempt to co-opt “blockchain without bitcoin,” the opening of a mainstream conversation enabled sensible advocates for the technology such as Coin Center and the Chamber of Digital Commerce to establish an invaluable dialogue with policymakers and society at large.

I see potential to do even more at this time, as securities regulators grapple with how to define and manage token markets and as wide-membership industry initiatives such as the Token Alliance come with up useful frameworks for self regulation.

A time like now, with the bubble burst and the market mania subsiding, is the ideal one in which to undertake this kind of multi-stakeholder engagement.

Lamborghini engine image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

Huobi Launches Service to Build Crypto Exchanges in the Cloud

Huobi, the world’s third-largest cryptocurrency exchange platform by trade volume, is now offering a business arm to help customers build their own digital asset exchanges.

Dubbed the Huobi Cloud, the service is set up to provide clients “a one-stop solution … [to enable] its partners to build secure and stable digital asset exchanges quickly,” according to the official press release, though it did not provide specifics on what it will offer these partners.

The company goes on further to explain:

“Over the past five years, Huobi has accumulated rich and valuable [research and development], security, compliance and operational experience through its digital asset trading platforms … Huobi is looking to share its expertise and experience with the entire blockchain ecosystem and through this, develop the industry further to achieve mutual benefits for all stakeholders.”

As such, Huobi Cloud is envisioned to strike up new global partnerships in an attempt to “promote the rapid and healthy development” of the blockchain space worldwide.

The announcement comes a day after the exchange announced it was making efforts to deepen alliances within the industry through the establishment of the “Huobi Blockchain Plus Industry Alliance.”

The Alliance will focus on “community-based operations” to bring together experts and academics in the blockchain field to work together and leverage Huobi’s “ecological resources.”

These resources give members access to “jointly building blockchain labs with partners free of charge, sharing the research capability, technical capability and Blockchain Plus practical experience accumulated by Huobi Group over the past five years,” among others.

Indeed, the cryptocurrency exchange giant has been making efforts to build stronger networks for the blockchain industry in recent months. In June, after launching a new investment option for retail investors, Huobi revealed they would be facilitating an investment fund envisioned to raise $93 million for blockchain startups in both China and South Korea.

Huobi image via Piotr Swat / Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

Time to Acknowledge – and Encourage – Women in Blockchain

Michael J. Casey is chairman of CoinDesk’s advisory board and a senior advisor of blockchain research at MIT’s Digital Currency Initiative.


It’s International Women’s Day – a good time for a mea culpa to the overlooked women in the blockchain industry.

Last week, Paul Vigna and I presided over a Museum of American Finance event at Fordham University to mark the publication of our new book, The Truth Machine.

We sold a good number of books. We were very happy.

But the event could have, and should have, been different.

The lineup of speakers, excellent as it was, was entirely composed of white men. It further reinforced the idea that the world of cryptocurrency and blockchains is a male-dominated affair, and it did so before an impressionable audience of relative newcomers to the technology.

We helped perpetuate an imbalance in which the narrative, the access, the culture and thus the development and policymaking behind this technology has been steered by a small group of similar male elites. In planning the event, we’d fallen for the oldest mind trick in the book, and it had been played on us by very own minds: the bias of habit and of insufficient critical thinking.

I’m especially embarrassed about this because I’ve been preaching for some time the urgent need for diversity in the crypto community.

My concerns are only slightly fueled by stories of the ugly “bro” culture and showy displays of wealth that permeate the crypto trading community. It is sad that the “lambo” crowd in general gets so much attention from mainstream press. Relative to so many other important elements of the blockchain and crypto ecosystem, it’s a sideshow. 

The bigger problem is that in those more important realms – the areas of software and protocol development, of entrepreneurship and of policy negotiation – male voices are also overly dominant. These are the people writing the rules by which this vital new technology gets to evolve. If our economic existence is to be defined by these new, far-reaching algorithms, humanity needs as a diverse an input as possible into their development.  

There’s no a shortage of brilliant female minds in this space. Those who suggest there is are guilty of the same circular arguments rife in anti-feminist arguments everywhere: that men are simply better at this stuff, as proven by their prominent leadership positions. “Better” is defined by its own, internal parameters. Men, wielding power, set the terms of the debate.

I know loads of women providing intelligent, outside-the-box perspectives on the challenges and solutions we face across the multi-disciplinary arena that blockchain technology resides within. I work for one of them at MIT. But rather than deliver some tokenistic sample of those names, I want to instead focus here on just one woman in this industry, because he story has helped me discover the pitfalls of my own biases.

Glaring omission

Recently, I was at a birthday party for Sandra Ro (a woman who, incidentally, masterminded the CME Group’s bitcoin futures policy before departing her position as that company’s blockchain just before they were launched to pursue a new blockchain-based commodity exchange project in Africa.) The venture capitalist Jalak Jobanputra was present at that party. When I mentioned our new book, she asked whether she was in it. When I said that I didn’t think so, she politely pointed out that her name had not appeared in Paul’s and my prior book, The Age of Cryptocurrency, either.

My first thought was, well, sorry, but loads of people weren’t cited; we can’t please everyone. But after pointing out that index contained just a tiny smattering of female names, she explained why she truly deserved to be included. You see, Jobanputra was one of the very first investors in a bitcoin venture. As early as 2013 she was putting money into startups such as Blockchain.info (now known simply as Blockchain), the wallet and data services company that last year announced a $40 million new round of financing from the likes of GV (formerly Google Ventures), Lakestar and billionaire investor Richard Branson.

Like anyone’s at the time, Jobanputra’s investments were a bold bet. She saw an opportunity that only a few visionaries could spot. (I certainly didn’t see the potential of this technology at that time.) And in Jobanputra’s case, it was fueled by a passionate belief in its sweeping social impact, in particular its potential to improve the lives of billions locked out of the global financial system. (That rationale drove her to invest in another female trailblazer: Elizabeth Rossiello, who, in 2013 quit a traditional finance career that had included stints in investment banking for Credit Suisse in Zurich and London to set up shop in Nairobi with a bitcoin-based cross-border payments startup called BitPesa.)

The Age of Cryptocurrency was filled with stories of wild adventurers who’d bet big on bitcoin and on early bitcoin projects, the guys who set the foundation for all that has since come and will come.  There was no mention of Jobanputra. Yet she was surely as bold and as important as any of them. The book was well received and earned acclaim – as we hope will be The Truth Machine. But both need more stories like hers.

A vicious circle

Why did we overlook Jobanputra? A simplistic argument is that she hadn’t promoted herself sufficiently. Indeed, I only got to know her after the book was published. But that’s too easy. The reality is that we were part of a vicious circle in which structural barriers make it much harder for women investors, entrepreneurs and innovators to get their stories out and be noticed. Those barriers include being under-represented at conferences and in books, articles and media.

Those barriers often reside in our heads, reinforced by a male-dominated industry that doesn’t challenge the status quo. Well-meaning men will neglect to think sufficiently about these issues because there’s little downside to not doing so. There’s no imperative to break with that status quo. And so, we hit the trifecta: two books with underrepresented stories of women and a conference.

Importantly, women themselves are taking action to overcome these biases. Jobanputra, along with Ro, Rossiello and other women in blockchain such as CoinDesk Advisory Board member Maja Vujinovic, recently gathered in Brooklyn to set up a group called the Collective Future to advocate for diversity in the crypto industry.

But this effort will succeed more readily if men like us, who also care about diversity, start tackling their own biases.

And no doubt this column will prompt a backlash from some quarters. But for those who agree with us, this is surely the right moment to act. Unless you’ve been living under rock, you’ll know that the past year has produced a reckoning with the problem of male indifference.

The #MeToo movement is not just about egregious abusers of power like Harvey Weinstein. It’s about ordinary Joes – and Michaels and Pauls – who perpetuate the existing structure by doing too little.

Image via Shutterstock.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.