Exploring the transformation of value in the digital age

By Michael J. Casey, Chief Content Officer

Nov. 5, 2021

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The almost religious zeal of the rapidly expanding teams of people now building and investing in non-fungible token (NFT) projects feels similar to what I discovered when I first started to attend Bitcoin events in 2013. But it’s already on a scale and moving at a pace far greater than that.

That’s the theme of this week’s column, which includes some reflections on the wild experience of this week’s NFT.NYC conference. After you’ve read the newsletter, you can also get a deeper dive into the topic in this week’s “Money Reimagined” podcast. Sheila Warren and I chatted with CoinDesk Studios’ Sam Ewen, an avid participant in NFT communities, about the energy that was evident in New York this week.

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Rachel Sun/CoinDesk

It’s hard to find words to describe the crypto phenomenon that New York is witnessing right now.

This week’s NFT.NYC conference, which was first held in February 2019 as a quirky curiosity before an audience of a few hundred early enthusiasts, was spread across six venues, with three days of programming covering 600 speakers. Some 5,500 tickets were sold – with space limitations leaving 3,000 more on the waitlist – to attendees who traded 700,000 speaker and sponsor swag NFTs.

There were 15 different NFT-themed billboards in Times Square. There were parties, dinners, EDM raves and digital art galleries around town, many of which boasted NFT-promoting film and music stars. And there were countless newly created projects promoting everything from royalty solutions for musicians to whisky-backed NFTs. It was a carnival of innovation, a sprawling celebration of possibility.

But what is it all pointing to?

The most striking aspect of all this is how rapidly this industry has sprung up, seemingly out of nowhere, spawning new business models and inventions built on top of those new ideas. That’s what makes the evolution of this space so difficult to predict.

Continue reading this column here.

–Michael J. Casey

The phrase “Code is Law” is often tossed around in the decentralized finance (DeFi) industry. The argument goes that DeFi is able to self-regulate because code is intended to be used exactly as it's written. As CoinDesk reporter Andrew Thurman said, “Where one man might see an exploit, another may just see ‘crypto trading’.”

Under this self-regulation, the hacker of Indexed Finance is willing to argue in court that his or her permissible exploit of the DeFi protocol should be considered a fair-game, arbitrage trade. As the industry grows in size, the exploits grow more serious, with Cream depositors losing $130 million last week. Shortly after, it was announced that Aave had a similar vulnerability and tens of billions of dollars in deposits were at risk.

Triple digit yield and price appreciation have been enough to bring $256 billion in total value locked into DeFi and there are no signs of slowing down. Could the current growth rate be sustainable with inherent risk stemming from exploits and counterparty concentration becoming more obvious?

DeFi developers will undoubtedly learn from their mistakes and the industry will naturally become safer over time. However, the Aave vulnerability showed investors that no protocol is 100% safe. While it may stand against the ethos of DeFi, smart contract insurance and regulation could become key in onboarding the next generation of risk-averse DeFi users.

-- By Teddy Oosterbaan, CoinDesk research analyst

BlockBank has officially launched its all-in-one AI-powered super application, combining the best of DeFi and CeFi to streamline users’ access to fiat and crypto financial services.

Key functionalities of the V2 application include:

Cutting-edge AI technology
Debit cards
Custodial and non-custodial wallets
In-app swaps (using Uniswap and Pancakeswap)
Tiered staking program (earn up to 20% APY!)

Download the application on Google Play or the Apple App Store and visit https://blockbank.ai/ for more information.

Illustration: Rachel Sun/CoinDesk

The contest to be America’s most bitcoin-friendly mayor is on. Miami’s Francis Suarez had the crown this year after a series of crypto announcements, high profile endorsements and a massive Bitcoin conference. But now NYC’s new mayor, Eric Adams, wants in.

After the investor Anthony Pompliano challenged politicians to take pay in Bitcoin, Suarez was quick to say that he would take his next salary in BTC:

Only for Adams to say he would take the next three months pay that way:

With that, industry veterans took the opportunity to bash New York’s controversial Bitlicense regime, which has caused several crypto companies to leave the state:

And for others to point to Bitcoin’s environmental profile:

You can say that paying salaries in bitcoin is a bit of a stunt. But the way these mayors are fighting for BTC bragging rights is proof of how far crypto has come.

--Ben Schiller, features and opinion editor

The big news in the world of stablecoins this week was a new report from a coalition of U.S. financial authorities. Our chief insights columnist David Z. Morris described the proposals (from the Presidential Working Group on Financial Markets, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency), as "a welcome acknowledgment of the validity of stablecoins as a potentially useful financial and technological innovation." But he cautioned that regulating this market too quickly would be a mistake. And it's not up to regulators to protect people from their own failings. "I am personally very worried that financial instability could lead to the rapid and chaotic unwind of stablecoins, with serious consequences for crypto-assets up to and including bitcoin. But regulators shouldn’t be in the business of preventing people from losing money when they make risky bets," he said.