Also: Coinbase IPO valuation, Stellar nodes go dark, SEC eyes BTC ETFs.

What you need to know today in crypto and beyond

April 12, 2021

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Today's must-reads

Top Shelf

STONKS! Binance is offering a Robinhood-like trading feature for fractionalized stocks, but on a blockchain. Starting with TSLA, users will be able to purchase as little as one-hundredth of a tokenized company share, receive dividends with everything settling in Binance USD (BUSD).

TWO’S COMPANY, EIGHT IS A… The U.S. Securities and Exchange Commission (SEC) is officially reviewing WisdomTree’s bitcoin ETF application, as of Friday. This is the second BTC exchange-traded fund, the Holy Grail for institutional investors looking for exposure, the watchdog is formally reviewing, with six other applications filed.

LIGHTS OUT? Several Stellar nodes went dark, disrupting their ability to validate transactions on the payments network. The Stellar Development Foundation executed a protocol upgrade and is now asking “all affected nodes” to download the new software. In other news, Dante Disparte, who helped spearhead Facebook’s Diem stablecoin project, has departed for Circle.

VALUING COINBASE: Coinbase, which expects to go public this week, is being valued anywhere from $19 billion to $230 billion. The uncertainty led CoinDesk’s Brady Dale to ask, is the exchange the Blockbuster or Netflix of crypto firms?

WEAK SIGNAL? Signal’s founder Moxie Marlinspike may have closer links to MobileCoin, the cryptocurrency tapped for payments on the encrypted messaging app, than previously reported.

– Daniel Kuhn

Introducing Unlocked 101 at Consensus by CoinDesk 2021

New to crypto? Here's a crash course. Unlocked 101 is a free educational series of sessions designed to give you the tools to navigate crypto. Sessions will be hosted May 4–20 to prepare you for Consensus by CoinDesk 2021, our virtual big-tent event.

Overheard on CoinDesk TV

Sound Bite

"We are reaching a completely new audience that may not have ever interacted with Sotheby's previously, but are completely enamored by this new medium and new collecting style."

– Max More, Sotheby’s Head of Contemporary Afternoon Auction, on CoinDesk TV's "First Mover."

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A message from CoinDesk

CoinDesk's Quarterly Review Webinar Series

The suits are here to stay, but retail isn’t going away. While Q1 saw the emergence of retail investors as a market driver, crypto caught explosive interest through non-fungible tokens from investors, celebrities and the general public.

Every Monday at 11:30 a.m. ET, crypto analysts Noelle Acheson and Christine Kim will discuss the performance and milestones of bitcoin and ether compared to macro and other crypto assets, along with important developments in the emerging DeFi and NFT sectors.

Each episode in this four-part series will reference key findings from the latest CoinDesk Quarterly Review report and a live Q&A.

What others are writing...

Off-Chain Signals

Biden Team Eyes Potential Threat From China’s Digital Yuan (Bloomberg)
What we know about Ledger and Shopify’s class-action lawsuit (Protos)
A house in Germany is being sold as an NFT, Gamestop is looking for NFT analysts, Topps is tokenizing some baseball cards
Mining firm BitRiver issues energy-backed tokens to raise $35M, Canaan reports $68M in 2020 revenue

– D.K.

Investor Momentum to NFT Boom: CoinDesk Research's Quarterly Review

Introducing CoinDesk Research's quarterly review, covering the main developments over the first three months of 2021 in Bitcoin, Ethereum, DeFi, stablecoins and – of course – NFTs.

The report presents over 100 insights on how retail investors are picking up market momentum, how Ethereum activity is not being driven by NFTs as much as one might think, how stablecoins have responded to increased activity, how DeFi is for now the realm of decentralized exchanges and more.

Download the CoinDesk Quarterly Review, First Quarter 2021.

Putting the news in perspective

The Takeaway

Certifiably persistent NFTs

Now that the frothiness seems to be coming out of the art-collectibles-gaming corner of the crypto space, it's probably a good time for the non-fungible token (NFT) industry to focus on fixing some of its core issues.

We previously reported on how the underlying content in NFTs (the image or the music or the video of which a token ostensibly proves ownership) isn't always stored reliably. "I always tell people there are two major points when launching a NFT project: own your smart contract and know where your NFT metadata lives. If any one of these platforms die, you don't want your token to disappear," Carolin Wend, chief operating officer at Mintbase, told CoinDesk by email.

Conscientiousness about the persistence of NFT content has grown but there's still not a clear best practice in the industry. There's no easy way for a buyer to verify his or her NFT content will persist into the future, and there should be.

In the analog commercial space, there's a long history of self-regulating industries that help users feel good about the things they buy. For example, an Underwriters Laboratories seal on an electronic product shows it has been checked against reasonable danger of shock and fire. Various consumables opt to be certified as Fair Trade or Organic.

Digital art and collectibles need some sort of Authentic & Persistent Data Certification. A seal that could be posted on NFT marketplaces to show that a given NFT has stored its data in a way that will persist predictably for some reasonable length of time, or that gives the user agency in further ensuring the underlying data will continue to exist.

There are two issues here: the existence of the data and verifying its authenticity.

As Kyle Tut, CEO of Pinata, a firm working on NFT storage, put it in an email, "The value of an NFT doesn't start with persistence, it starts with authenticity. A counterfeit Nike sneaker can persist for just as long as an authentic Nike sneaker can."

How the standard would work

It's fairly easy to take a piece of data and run a cryptographic hash on it that spits out a string that will always correspond to just that one chunk of data. So if someone makes a copy of any file and doesn't change it in any way, each copy will spit out that same hash when checked with the same hashing function.

So all someone needs to do is put that hash into the NFT metadata and you can forever prove that copies of a file are authentic. You've got a way to say, This is mine.

Or maybe not forever? Tut wrote, "We think creators and collectors should have the opportunity to define how long an NFT should persist. NFT persistence isn't just zero or one. It can also be everything in between." Just like copyright isn’t forever (though Disney has certainly tried to make it so).

On the Clubhouse audio chat app Thursday, participants from organizations like the NFT marketplace Rarible, decentralized storage startup Filecoin, digital art company Asynchronous Art, the decentralized web services provider Fleek and others discussed this issue of persistence and how the industry could collaborate to solve it.

"The call was pretty productive," said Harrison Hines, the founder of Fleek, told CoinDesk. He felt folks were coming to consensus that the Interplanetary File System (IPFS) would be a good way to standardize authenticating content with its hashing functionality, while still allowing flexibility around storage.

He also said the Clubhouse participants discussed a "Data DAO" model to check that NFTs are stored on one or more trustless storage networks. This could be a good way to run some kind of "Certified Authentic & Persistent" seal.

Wend said Mintbase has been working to inspire confidence by showing an Arweave logo on all its NFTs. Arweave endows files to be stored forever, and the logos link to a copy of the file on that permanent storage system.

There's a website that lets users check NFTs to see if they are safely stored, but it's still new and developing. That said, its existence helps push for some kind of unified thinking here.

Now that the pressure is off to mint every possible NFT imaginable in hopes of a giant payday, the industry has an opportunity to come to consensus about what boxes an NFT needs to check in order for trustless authentication of digital property to be trustworthy over time.

Authentic & Persistent Data Certification is a natural solution that would be simple enough to implement online, and it would benefit the entire space.

– Brady Dale

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