Medium is one of the richest sources of information in the crypto + blockchain ecosystem. However, it is very difficult to surface signal amongst all the noise. We share a list of the most interesting pieces we’ve discovered on Medium from the past week — or from the archives. To receive more of The Block’s analysis, insight, original content and curation, visit us at The Block!
We begin this week’s journey across crypto Medium with a look back at what is widely recognized as the GOAT Bitcoin Medium post. If you haven’t spent the 45 minutes getting acquainted with Vijay Boyapati’s masterpiece, set aside some time this evening for an incredible read. It’s a terrific antidote to any bear market feelings you may be having.
Jimmy Song has a terrific piece that looks at Bitcoin’s current status as a fantastic store of value. He explains why Bitcoin is rarely used for payments today — there are many more convenient methods of consumer payments and merchants have little interest in holding Bitcoin. He closes with the following conclusion…
Most people value Bitcoin for its scarcity. Ergo, anything else is a nice-to-have, not a must have. Lots of options exist for method of payment, but very few for store of value and none that are as confiscation-resistant as Bitcoin is.
As Bitcoin adoption grows, merchants will start demanding Bitcoin as a store of value in lieu of any other currency. This is already happening to a degree in places like Turkey, Iran and Venezuela. When a large part of society wants Bitcoin as a store of value, only then will the method of payment use case emerge en masse.
As the price of Ethereum has declines 60%+ during the Summer of 2018, many have questioned whether there are other blockchains that can support Dapp development. EOS is an oft-mentioned candidate — but so is the grandaddy of them all: Bitcoin. Katerina Stroponiati gives an update on Rootstock, a smart contract platform utilizing the Bitcoin blockchain.
The Rootstock Infrastructure Platform (RIFOS) is a network that would allow deployment of applications on Bitcoin’s blockchain:
The RIFOS is game changing for the whole blockchain ecosystem for many reasons. Developers will be able to deploy applications on top of BTC, consuming ready-made services for data storage, name resolution, oracles and payments (using their home-built Lighting network called the Lumino Payments Protocol).
Hasu makes a strong case that Bitcoin’s exposure to Tether is “grossly exaggerated.” The study calls into question mainstream media assertions about Tether’s liquidity and trade volume: “we find that Tether (USDT) makes up for only 29% of Bitcoin’s liquidity while USD makes up for 57% and EUR for 14%. USDT’s influence is, in reality, a far cry from the 80% (WSJ) and 62% (CMC) figures.” Furthermore, Hasu believes that Tether has sufficient collateral and that the risk of a liquidity crisis is overstated.
According to Hasu: “In times when Shapeshift, one of the last exchanges still resisting KYC/AML procedures, is capitulating to US regulation, we see Tether as one of the last heralds of “open finance.” In conclusion:
In spite of the never-ending hubbub surrounding Tether’s emission and unclear backing, it is these authors’ opinion that the threat it poses is vastly offset by the services it renders. Its solvency appears to no longer be in question, and while the public and the media are right to contemplate the possibility of authorities bringing USDT trading to a halt, they should not dread the aftermath.
For indeed Bitcoin’s liquidity is widely distributed beyond USDT, and, as importantly, among exchanges. We’ve far outgrown the MT.Gox era when a single player held such a sway over the market that its collapse set us back three years.
The prolific and talented thinker John Backus wrote a tremendous piece in May drawing comparisons between today’s blockchain protocol competition and the file-sharing competition of 15 years ago. The vectors of competition — and ultimate characteristics of success are likely not what you would imagine them to be.
In July, Max Mersch offered a framework in response to the focus on store of value as the predominant marker of cryptocurrency value. Per Max:
MV=PQ is a seductively simple economic identity, but its applicability to the crypto market is far from validated: the directionality of cause and effect; the assumed equilibrium state; the impact of speculative transactions; the composition of aggregate velocity; and the effect of distribution of holdings have not yet been sufficiently well analyzed.
Max and the Fabric Ventures team are hot on utility tokens:
Utility Tokens are core to our investment thesis. These are tokens that implement a skin-in-the-game mechanism for communities to coordinate around a network. Individual users and other entities need to stake/hold them in order to:
Provide profitable future work to the network
Influence information & content in the network
Participate in the governance of the network
Build & maintain a data footprint for reputation, credit or other purposes
Gain access to goods and services provided in the network
In closing, Max pushes for DCF valuation as a reasonable way to assess utility (work) token value: “MV=PQ is not relevant to work tokens — instead one would use a future revenue based analysis (DCF or similar).”
Pierre Rochard wrote a terrific overview on Bitcoin governance this summer. The governance process is extremely well defined, robust and consistently enforced.
We’ll end the week on a lighter note. Nic Carter has done the world of Bitcoin critique a great service, introducing a handy 12-sided dice to help you and Paul Krugman with your next “Bitcoin is the ultimate ponzi scheme” thought piece. Do yourself a favor: buy the dice, give ’em a roll, let the word salad flow!