The Ledger: When Blockchains Took New York City By Storm

Conditions were ripe for a squall: The week’s main event, Consensus conference, tripled in size over the year prior, drawing roughly 8,500 people to Wall Street’s home. The confab’s organizers had relocated the summit from the Marriott Marquis to the allegedly more spacious Hilton Midtown in a futile attempt to accommodate the surge in attendance this year. In a venue so crowded, one could scarcely traverse the floor without rubbing elbows, literally.

Anyone who is anyone—in the odd and unexpectedly ascendant cryptocurrency universe, that is—was there. Jack Dorsey, CEO of Square and Twitter, spoke of his hope that Bitcoin will one day become the Internet’s “native currency.” Fred Wilson, the Union Square Ventures investor, and Balaji Srinivasan, newly appointed chief technology officer of Coinbase, the biggest U.S. Bitcoin exchange, pontificated on the future of money, entrepreneurship, and fundraising. And two former JPMorgan Chase executives unveiled a new startup, Clovyr, that aims to help businesses dabble with blockchains. (You can read more about the ex-bankers’ project on Thursday of next week, when a feature I penned for our Fortune 500 issue publishes online.)

Incredibly, the main stage sessions were a sideshow compared to the week’s after-hours activities. On Monday night, cryptocurrency giant Circle’s cofounders hosted a dinner at Gramercy Tavern, where they answered questions about their decision to accept an infusion of capital from Bitmain, China’s biggest Bitcoin miner. The investment marked up the company’s valuation to nearly $3 billion. At the private dining room table, I sat next to Jim Breyer, an early Facebook investor, who politely declined to reveal the content of his recent discussions with David Marcus, Facebook’s new blockchain lead, despite my prodding.

On the next night, I made my way to a Snoop Dogg concert hosted by Ripple, stockpiler of XRP, the world’s third-most valuable cryptocurrency by market capitalization. En route, a Zeus-like bolt of hot plasma—larger than any I had seen in my life—crashed down Avenue of the Americas, and briefly illuminated the city; I forged onward. On stage at a venue in the West Village, the “Gin & Juice” crooner passed around what appeared, from my vantage point, to be a lit blunt. “Wanna get fucked up?” he asked an obliging crowd.

Yet even this paled in comparison to the next evening, when I boarded the Cornucopia Majesty, a luxury party ship that cruised through the Hudson River gloom. Decentral, the Canadian cryptocurrency shop that sponsored the soirée, treated its guests to an outlandish welcoming video. The clip featured a computer-generated avatar of Anthony Di Iorio, a cofounder of Ethereum, the second biggest cryptocurrency network next to Bitcoin, blasting off while using a cartoon penguin as his jet pack. Throughout the evening, partygoers wore light-up bracelets that pulsed in synch with the DJ’s electronic dance music. Two lucky individuals would leave that night with keys to brand new Aston Martins as part of a raffle.

“Look at this!” marveled Nolan Bauerle, CoinDesk’s director of research, while gesturing at a mass of people bobbing and grooving on the dance floor. “Two years ago there were no parties.” But after an explosion of cryptocurrency prices this winter, a set of newly minted millionaires has reason to celebrate.

The blowout continued to thump underfoot at the climax of the voyage, when the ship turned its bow in view of Lady Liberty. She stood, unflinching, in the harbor as the heavens spit wind and rain on her. I recalled, while meeting her gaze from the rooftop of the yacht, what Erik Voorhees, a longtime Bitcoin bull and CEO of Shapeshift, a cryptocurrency exchange, said on stage at the Hilton a day prior. “Here we are two miles from the Statue of Liberty,” he told the audience, “and you cannot sell CryptoKitties in the state” without a BitLicense, a stringent piece of regulation particular to New York. “That’s the absurdity of what’s happened here,” he said.

Somehow, floating in the storm-churned waters around Manhattan on a booze cruise funded by ethereal Internet money, this suggestion of absurdity seemed misplaced.

THE LEDGER'S LATEST

The Long Road to Understanding Cryptocurrencies by Adam Lashinsky

Twitter CEO Jack Dorsey Hopes Bitcoin Will Become the Internet's Own Currency by Don Reisinger

Cryptocurrency Exchange Circle Valued at Nearly $3 Billion After Poloniex Deal by Robert Hackett

Investment Giant eToro Plans to Launch in U.S. With 10 Cryptocurrencies by Jeff John Roberts

Here's Why Zcash Is Soaring While Bitcoin Languishes by Lucinda Shen

What Is a Security Token? Harbor's CEO Explains by Polina Marinova

Caveat Emptor: Major Cryptos Are Still in Negative Territory for 2018 by Chris Morris

DECENTRALIZED NEWS

To the moon... JPMorgan Chase appoints a crypto strategist, while ex-JPMers launch startup. China's biggest Bitcoin miner pumps millions into Circle—and looks to dominate AI. European investment giant eToro crosses the pond with 10 cryptos in tow. Coinbase caters to Wall Street, and gets a shiny WaPo profile. Soybeans on a blockchain. Hacked exchange may be resurrected. Digital Currency Group's Genesis Trading nabs a New York BitLicense. VC Lightspeed set to go crypto. China ranks coins. A Lambo movie featuring Alec Baldwin is in the works. 

....Rekt: Howey Wowie! SEC parodies coin scams. Pope warns of "speculative transactions of virtual wealth" in a bulletin. Fed Gov says "no" to central bank crypto. PayPal finance chief says crypto is too volatile. So many ICO frauds. Plus, cocaine and burlesque dancers.

BALANCING THE LEDGER

Coinbase VP Adam White dropped by Balancing The Ledger to talk about the cryptocurrency exchange’s latest products, the process for listing more coins, blockchain week, and the billions of Wall Street capital waiting to be invested in crypto.

BUBBLE-O-METER

This year's Consensus conference ballooned to roughly 8,500 attendees. That's triple the size of last year's show. Given its $2,000 ticket price tag, the conference is presumably netting $17 million in ticket sales alone, as CNBC first calculated. That doesn't even include sponsorships and showroom floor-rent revenues.

MEMES AND MUMBLES

A horse is a horse, of course, of course, unless the horse is this weirdo. Bill Lee, a prolific tech investor (and Al Gore son-in-law), tweeted this image last week, juxtaposing expectation versus reality for blockchain companies conducting ICOs, or initial coin offerings. I'm reminded of the folks on HBO's "Silicon Valley" referring to their scraggly troupe of engineers as "stallions."

FOMO NO MO'

Don't miss out: When Bitcoin first arrived on the scene, early adopters could "mine" the stuff on their home computers. Soon people devised purpose-built machines that won out. So new cryptocurrency designers cooked up algorithms that might defeat the hardware makers and their all-powerful Application-Specific Integrated Circuit (ASIC) chips. In this enlightening Medium post, David Vorick, lead developer of Sia, an Airbnb-like service for data storage, assesses the state of the cryptomining industry, and explains why offense will always get the best of defense.

At the end of the day, you will always be able to create custom hardware that can outperform general purpose hardware. I can’t stress enough that everyone I’ve talked to in favor of ASIC resistance has consistently and substantially underestimated the flexibility that hardware engineers have to design around specific problems, even under a constrained budget. For any algorithm, there will always be a path that custom hardware engineers can take to beat out general purpose hardware. It’s a fundamental limitation of general purpose hardware.

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