Bitcoin Sign Guy

This is an entry in CoinDesk’s Most Influential in Blockchain 2017 series.


“If I talk like this, am I loud enough to be heard?”

It’s an ironic statement from a man who became famous without saying anything at all.

Steps from San Francisco’s gleaming City Hall, the internet sensation better known as “Bitcoin Sign Guy” struggles with a microphone as he tries to recall the day when he boldly thrust out a yellow legal pad behind a sitting Federal Reserve chair and became perhaps the crypto world’s most famous meme.

But whereas he made the decision to take out a pen on that now-infamous July day (going from idea to action in little more than 30 seconds, he says), he’s less natural when talking about the particulars.

What was he doing there? Who did he work for? Those are the things the Connecticut native is “trying to speak around” as his first-ever interview begins. And his caution initially shows, on camera at least, in clipped sentences and careful wording.

“I really was not prepared for this,” he says, squinting into a California sun.

Indeed, despite assurances, Bitcoin Sign Guy is still noticeably uneasy about his identity. A recent college graduate (from a university he doesn’t name) and staffer at a crypto hedge fund (that we’re told we can’t disclose), there are specifics about his life he wishes to keep behind the curtain. And he’s not without his reasons.

Given his claim to fame is interrupting a meeting between some of the world’s most powerful people, it’s safe to say it wasn’t exactly well received by all. In addition to feeling compelled to apologize to his then-employer (an undisclosed think tank), he admits he was even escorted out by staffers, an incident caught on C-SPAN, too.

“They actually did apologize, but I’m not sure it was sincere,” he recalls.

But if Bitcoin Sign Guy is unwilling to step fully into the spotlight, one topic lights a spark in the conversation. A self-described anarcho-capitalist, he’s every bit the bitcoin believer the internet could hope for, denouncing monetary policy as an oppressive “instrument of statecraft” and declaring the first and most well-known cryptocurrency destined to resign fiat money to the history books.

Asked directly if there was a larger message to his scribbled sign and its simple statement – “Buy Bitcoin” – Bitcoin Sign Guy is more assured in his answer.

He tells CoinDesk:

“I view cryptocurrencies as a new monetary paradigm that’s here to directly challenge the easy money created by the Federal Reserve. I believe this will have full political and social repercussions.”

Man of the people

But more impressive than his words, written or otherwise, is his resolve to put them to action.

Not yet 25 years old, Bitcoin Sign Guy is not only buying bitcoin, he believes he’s part of a growing number of global citizens in the midst of something that’s never been possible before the advent of cryptocurrencies – rejecting the economic system they were born into.

The Venezuelan bolivar, the Zimbabwe dollar, he believes, are already “falling away into bitcoin,” something he’s convinced will happen to the world’s weaker currencies over time. But if he seems to get carried away at times (we argue whether his perceptions of those countries are accurate), it’s because he’s already living in that future.

While he acknowledges he still uses the U.S. dollar (calling it a better “unit of account”), he estimates he now holds “99 percent” of his net worth in cryptocurrencies.

“I plan to hold my bitcoin long enough so that when I dispense with it, I won’t be converting it back into U.S. dollars,” he contends.

In this way, Bitcoin Sign Guy sees his actions in Washington, D.C. as less of a prank and more of a call to arms he hopes others will follow. A student of politics and philosophy, he places no small emphasis on choice and the ability of people to make it freely.

He tells CoinDesk:

“The sign was definitely an endorsement. Buy it, make the economic and political decision to take your money out of the monetary system.”

The break-in

But if money and politics are intertwined for Bitcoin Sign Guy, we’re soon given a stark reminder of how for some, it’s a more practical concern.

Back at the car, Bitcoin Sign Guy and I are left staring dumbstruck through a hole where the right rear window of his BMW used to be – that is before someone spotted my computer bag, busted the glass and scattered sharp bits across the sidewalk.

Amongst the shards lie two books, “Capitalism, Socialism and Democracy” by Joseph A. Schumpeter and “Anatomy of the State” by Murray N. Rothbard. Both, it seems, attracted little interest from the thief.

“Shows you how popular my political philosophy is,” Bitcoin Sign Guy jokes.

Stuck in solace for my lost belongings, the quip hardly registers, and I barely notice when, growing alarmed, Bitcoin Sign Guy begins frantically fumbling for his own possessions.

The more than 7 BTC he received from proving his act to the Internet? It turns out the private keys to them are in an air-gapped computer in the trunk. In a twist of irony, the thief may have stolen a $1,700 laptop, but they’ve left behind a far bigger score.

But if Bitcoin Sign Guy is nervous about the brush with his financial loss, it’s only temporary.

Before long he’s on the phone with the San Francisco Police Department, pointing out nearby surveillance cameras that might be able to be tapped for evidence.

“I believe you were saying something about the state?” I ask, coming to.

“Well, I was going to suggest we hire a private eye,” he retorts.

Ever the optimist

En route to a nearby police precinct, I listen to the wind rattle through the back glass while Bitcoin Sign Guy puts on a playlist to cheer me up. He’s hardly dissuaded, even as his tank hovers just barely above ‘E’.

Already, it seems, he’s found a silver lining. Though I’m less predisposed to it at the moment, before long he’s talking up bitcoin’s virtues to our cameraman, using it as an example of the cryptocurrency as a form of secure, sound money.

“If the bitcoins in my backpack were stolen, I’d spring to Best Buy, buy a new computer and install the old bitcoin software and recover my wallet,” he explains. “All wouldn’t be lost.”

Maybe it’s the droning synths, the jetlag or the thought I’ll soon have to carry out that same purchase, but as we go on, it seems like Bitcoin Sign Guy and I are in a state of constantly undermining each other’s expectations. He likes Fleet Foxes, I prefer Father John Misty. He’s seen the new “Blade Runner” four times, I hated it.

“Would you die for bitcoin?” he asks me at one point. I’m unsure exactly how to respond.

But if I’m an underwhelming anarcho-journalist, Bitcoin Sign Guy can be an excessive evangelist. Back at the hotel, we’re rearranging chairs for a second video shoot when the inquisitive visitor points out the bitcoin message scrawled on the nearby whiteboard.

Within a few sentences, Bitcoin Sign Guy is calling currency a “collective illusion,” before explaining the gold standard and the dangers of fractional reserve banking.

“Basically, it’s just the faith in the Federal Reserve not to debase the currency by printing it a lot,” Bitcoin Sign Guy tells him. “Have you ever heard of quantitative easing? They just printed a ton of money, devaluing the money that you own …”

On the B-list

But even if Bitcoin Sign Guy isn’t able to convince the hotel employee to break the chains of his current economy, the day isn’t done with its surprises.

We’re finally underway with filming when entrepreneur and author William Mougayar stumbles through the door. There to host the second annual Token Summit, an event focusing on crypto tokens and ICOs, Mougayar initially seems taken aback by the scene.

Nominated in two categories of our “Most Influential,” I have to break the news he wasn’t a winner. And as I talk up the series, I can sense Mougayar, who meets Bitcoin Sign Guy under his real name, seems confused (and maybe a bit offended) by the selection.

We carry on small talk about the conference, its speakers and sponsors, as Bitcoin Sign Guy takes out a piece of yellow paper and begins recreating his big moment for the cameras. And it’s not until then that Mougayar’s attitude seems to change.

“Is that?” he says, putting his hand to his mouth, craning his neck and motioning to his friend. “Ooh. That’s him.”

Smiling and laughing, it seems, Mougayar finally understands, his changing expression an acknowledgement of what made the Bitcoin Sign Guy prank such a rare, uniting moment in a year otherwise defined by hostility, in-fighting and successes that still largely confound industry insiders.

“Nobody cared who I was until I put on the mask, til I held up the sign,” Bitcoin Sign Guy jokes later on. A play on a line from “The Dark Knight Rises,” it seems curiously apt.

Behind the mask

But as we continue, it seems there’s tension between the man and his mask, between a young idealist who wants to make a mark and the symbol that will forever bear his likeness.

Since the hearing, Bitcoin Sign Guy has donned that July day’s outfit (complete with seersucker blazer and pink tie) a few times, helping raise money for what he considers worthy causes (advocacy group Coin Center and ICO project Tezos).

But still, he remains anonymous, in name. And because of that, there are downsides, like Mougayar’s rebuff for one. It cuts to the core of one of the struggles of the day: whether or when Bitcoin Sign Guy will ever reveal himself.

He even seems to go back and forth on the interview we’re conducting, and how it will boost the profile of his already plentiful online persona.

“I just am cautious,” he says. “I should have prepared more for this interview, but I guess my main concern is that I would share these views, and they would be ridiculous.”

It’s a rare moment of self-doubt for someone who throughout the day has remained consistent in espousing and affirming his ideals. But then again, reflection seems on tap as the wind whines again through the window glass.

“I just don’t want to be cornered for the rest of my life as the guy,” he says.

That’s the trade-off, it seems, for the artist and his creation.

But as we trade goodbyes, there’s one thing I’m convinced of – if Bitcoin Sign Guy is conflicted about his past, he’s also the living symbol of its bright future, the embodiment of an audacious next generation of crypto enthusiasts just now emerging and a reminder of the struggles and sacrifices yet in store.

Want more? Hear Bitcoin Sign Guy’s story in his own words:

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Original artwork by Luis Buenaventura II, creator of the CryptoPop website. Click here to view more by the artist, and to check out the official CoinDesk Most Influential T-shirt.

Video by Ali Powell at 40 Thieves Films 

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Source: Coin Desk

Jamie Dimon

This is an entry in CoinDesk’s Most Influential in Blockchain 2017 series.


Any publicity is good publicity, the saying goes.

And with a disruptive technology like cryptocurrency, sometimes even negative comments from a powerful incumbent can be bullish signals … particularly if they’re coming out of the right mouth, like the big one belonging to Jamie Dimon, CEO of JPMorgan Chase, the largest bank in the U.S.

A banker lionized in the business press for his leadership during the 2008 global financial crisis; the personification of the Wall Street elite; the bellwether of the Davoisie, with a Queens accent like President Trump’s (and a similar penchant for making provocative, headline-grabbing statements), Dimon regularly talked smack about bitcoin in public appearances throughout the fall of 2017.

It all started on September 12, when Dimon called bitcoin a “fraud.”

Yet, while bitcoin’s price dipped right after he dropped that f-bomb (part of a one-two punch to the market, along with China’s crackdowns on initial coin offerings and exchanges), the largest cryptocurrency by market cap quickly resumed its climb.

In subsequent talks, Dimon called bitcoin “worthless.” He warned that the run-up “will end badly,” and that “stupid” buyers (including his daughter) would “pay the price.” And, he predicted, governments will eventually shut bitcoin down.

All while, of course, paying the obligatory lip service to blockchain technology as something separable from the currency.

Still, the bitcoin price kept rising into five-digit territory, where it remained even after a sharp late-December correction.

For some, this confluence of events was a classic example of the Streisand effect – the phenomenon where attempts to suppress something only bring it more attention.

“I don’t think there was much of a better advertisement for bitcoin than for Jamie Dimon to be denigrating it on public television,” says Daniel Masters, a former JPMorgan commodities trader who defected to the crypto space and now runs Global Advisors Bitcoin Investment Fund PLC in the U.K.

Masters added:

“If he was aiming to undermine the digital asset world, he actually effected the exact opposite.”

Conversation starter

To be sure, correlation is not the same thing as causation, so it’s hard to draw a straight line from Dimon’s remarks to the rally of late 2017.

“I assume that most of the institutional traders involved in cryptocurrency trading today, in late December, were already well aware of what cryptocurrencies were before, during and after his comments,” says Tim Swanson, director of research at Post Oak Labs. “But since none of the exchanges publish any public data on the demographics of their users, it’s really going to be guesswork as to proving his comments brought in new buyers.”

But this much is clear: Dimon got Wall Street talking about crypto this year.

“It made everybody research bitcoin over their weekend, and I think they realized that there’s something here,” says Matthew Rozak, co-founder of the tech startup Bloq and founding partner at Tally Capital, adding:

“Bitcoin and crypto, just by its nature, is this shiny new object that lends itself well to speculation and trading and all the form factors that Wall Street loves.”

And among Dimon’s C-level peers, not all the talk was reflexively negative.

For example, Lloyd Blankfein, Dimon’s counterpart at Goldman Sachs (another surviving icon of the 2008 crisis), expressed a more open-minded view in early October on Twitter.

“Still thinking about #Bitcoin,” he wrote. “No conclusion – not endorsing/rejecting. Know that folks also were skeptical when paper money displaced gold.”

Curious Lloyd

For Caitlin Long, who, like Masters, is a bitcoin aficionado and Wall Street escapee, such a nuanced response was a reassuring sign.

“Lloyd was publicly saying, ‘hey, don’t dismiss this so quickly,'” Long, the president and chairman of Symbiont Inc., a vendor of enterprise blockchain technology, says.

Dimon’s comments “touched a nerve for me, personally,” she continued. Four years earlier, when she was running the pension business at Morgan Stanley – but dabbling in bitcoin on the side – “I had to keep my head down because I was afraid I would get fired. I knew there were a lot of people within the compliance department of the bank who were steadfastly opposed to this.”

So when Dimon said he’d fire a JPMorgan employee “in a second” for trading bitcoin, her worst fears about Wall Street’s stance toward crypto were confirmed.

“When Jamie Dimon slammed that door shut and threatened to fire people, what message was he sending to employees about curiosity and innovation?” Long contends.

In that light, for Blankfein to merely refrain from judgment was “quite a statement from Goldman,” she says. It was “a signal to employees that it’s okay to explore the new and different.”

Supporting that take – although Blankfein later indicated unease with bitcoin’s volatility – by late December rumors had resurfaced that Goldman was forming a bitcoin trading desk.

This time is different?

Of course, Dimon has made similar remarks in prior years, but conditions have changed since, for instance, the time he predicted bitcoin’s demise in November 2015.

For one thing, the price of bitcoin had climbed more than tenfold since then, to over $4,000 the day of the “fraud” remark. And the entire market capitalization (admittedly, an imperfect indicator) of all cryptocurrencies had swelled from $5 billion to $141 billion over the same period, according to CoinMarketCap.

But perhaps more importantly, the worldwide cryptocurrency community had blossomed, volatile as ever but resilient and, some say, increasingly self-reliant.

“You’ve created thousands of bitcoin and ethereum millionaires. When they do what they’ve done in the digital asset universe, they do not go back,” Masters says. “People are not cashing out these digital assets back into fiat money,” but rather investing in new blockchain projects through initial coin offerings (ICOs).

“We have this incredible richness and diversity now in the digital asset space,” Masters continues. “This space is jettisoning from the legacy system completely.”

To Masters, it is unsurprising that Dimon would be so hostile to a technology designed to make the legacy financial system redundant.

“This guy is a dinosaur living in the old world,” Masters says of his onetime boss, adding:

“He has a very large walled garden, he’s paid [tens of billions] in fines to maintain his walled garden and he does not want anyone to remake the financial industry, and that’s what’s happening.”

In this interpretation (no doubt shared by many bitcoiners), Dimon and the other “Masters of the Universe” who cast doubt on cryptocurrency, such as Allianz’s Mohamed El-Erian, are the financial services industry’s equivalent of cab drivers lobbying their local governments to ban Uber.

“These people have made and continue to make a lot of money from a captive audience in a very clunky old system,” Masters says.

The enterprise strikes back

But perhaps this is uncharitable. Because, for a centuries-old institution with sprawling global operations cobbled together from countless mergers, JPMorgan Chase is fairly innovative.

From partnering with nimbler fintech startups to using APIs to share data more securely, to embracing public cloud computing, JPMorgan has taken bold steps on Dimon’s watch – again, “bold” by the standards of lumbering, heavily regulated megabanks.

And of course it’s building Quorum, a private blockchain for smart contracts, in a project led by another of CoinDesk’s Most Influential People in Blockchain of 2017, Amber Baldet.

“It’s not as if Chase doesn’t hedge their bets incredibly well,” says Sam Maule, the managing partner for North America at the fintech consulting firm 11FS.

Granted, none of this is likely to impress cryptocurrency users, whose minds are continually blown by truly next-gen fintech advances like ring signatures, atomic cross-chain swaps and time-locked contracts.

But there may be a simpler explanation for Dimon’s bitcoin-bashing than simple reactionary Luddism or rent-seeking.

‘Triggered’

At the Money2020 conference in October, Baldet, JPMorgan’s blockchain program lead, was asked about her CEO’s constant disparaging of the same currency that spawned the technology she’s working on.

She explained it in very human terms.

“What Jamie’s responding to is people on panels who continually ask him, ‘what do you think of bitcoin?’ at an outsized rate to what else is happening out there in the macroeconomic world of finance,” Baldet says. “It can just be a little triggering to be asked the same thing over and over.”

And speaking of triggering, the apoplectic reactions on social media and online forums of some in the bitcoin community to Dimon’s remarks suggest that even trolls can get trolled.

It “shows how much bitcoiners really do care about outside perception, especially from large banks,” Swanson says. “Because deep down bitcoiners want external validation for their worldview, and they can only rely on retail investors for so long. The big surge, to come, is if/when regulated [financial institutions] start trading coins like they trade other wares.”

JPMorgan would not make Dimon available for interviews for this report, but he gets the last word here. Because lost in all the lapel-grabbing, black-and-white headlines were a couple surprisingly nuanced and (for him) appreciative comments about bitcoin.

At the Delivering Alpha conference in September, just before saying that the currency was good for nothing but speculation for people living the U.S., he admitted:

“If you were in Venezuela or Ecuador or North Korea, you’re better off, probably, using bitcoin than using their currency.”

Wait, what was that? Digital currency empowering people living under oppressive regimes?

Not since Citicorp’s Walter Wriston predicted the twilight of sovereignty has a gray-haired New York banker sounded so cypherpunk … even if only for a few seconds.


Original artwork by Luis Buenaventura II, creator of the CryptoPop website. Click here to view more by the artist, and to check out the official CoinDesk Most Influential T-shirt.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Source: Coin Desk

2017: A Defining Year for Cryptocurrency Regulation

In a year of soaring cryptocurrency prices and countless initial coin offerings, it’s perhaps unsurprising that, over the course of 2017, regulators worldwide stepped in to define how they would oversee what had been to date a legally murky environment.

From China’s crackdown on exchanges to the SEC’s report on The DAO, 2017 was perhaps one of the most significant years to date on the regulatory front. Indeed, the year saw regulators from many of the world’s leading economies issue investor alerts and cautionary statements about financial use cases for the tech.

The past two months especially have seen growing activity on the ICO funding model, as seen by bans in major Asian countries to enforcement actions in North America.

In this article, we look at some of the big policy shifts from the past 12 months – many of which may have set the stage for further industry-defining developments in the year ahead.

The People’s Bank vs bitcoin

It was the first week of 2017 and China’s “Big Three” bitcoin exchanges – OKCoin, Huobi and BTCC – were being warned by the country’s central bank.

That warning about staying compliant with “relevant laws and regulations” was followed in February by a freeze on withdrawals and the creation of new trading fees – both of which were measures imposed by the People’s Bank of China in a stated effort to curb the risk of money laundering. And after months of waiting, exchanges ultimately returned access to funds to users in late May.

Officials in the world’s most populous nation ultimately ordered those cryptocurrency exchanges to cease trading and shut down in mid-September, which combined with BTCC’s closure effectively ended the “Big Three” ecosystem and pushed trading activities within China to over-the-counter markets.

News of the pending shutdowns came just days after the country stopped ICOs within its borders, saying the campaigns operated by “illegally selling and distributing tokens.”

Where 2018 will head remains to be seen, though commentators on state-owned television in China have said in recent months that OTC cryptocurrency trading may be deemed against the law as well.

The DAO report

Rumors had circulated for months that the SEC would move to define how it would regulate ICOs. Yet the agency played its cards close until late July, when it declared that U.S. securities laws could be applied to some token sales depending on the nature of the token itself and the manner in which it was offered.

The funding model, through which the sale and distribution of cryptographic tokens would be used to kickstart work on a new blockchain network, was at the heart of The DAO, the now-defunct funding vehicle that raised millions of dollars in ethers in 2016 through the sale of DAO tokens. It collapsed later that summer following a debilitating exploit, sparking months of infighting, recovery efforts and, ultimately, a split in the ethereum blockchain.

According to a report published by the SEC in July, the DAO tokens were securities under U.S. law, though the agency said that it had declined to pursue any enforcement action related to the sale.

The SEC wrote at the time:

“…the Commission deems it appropriate and in the public interest to issue this Report in order to stress that the U.S. federal securities law may apply to various activities, including distributed ledger technology, depending on the particular facts and circumstances, without regard to the form of the organization or technology used to effectuate a particular offer or sale.”

The agency’s statements are significant because they sparked a host of similar warnings and publications from other regulators around the world.

The SEC itself would go on to warn about celebrity endorsed ICOs and public-stock scams that use the funding model as a way to entice investors. The agency has also pursued civil lawsuits against ICO organizers since July through a newly-created unit focused on digital investigations.

Putin’s edicts

putin, russia

CoinDesk readers are likely familiar with the long-running saga of cryptocurrency regulation in Russia.

And while recent statements from senior lawmakers suggest that Russia’s State Duma may finally approve rules governing the trade and issuance of cryptocurrencies, statements from earlier this year from president Vladimir Putin are arguably more impactful for the tech’s future in the country.

In late October, the Kremlin published five orders from Putin focused on various uses for the tech. He ordered new registration requirements for cryptocurrency miners, the application of securities laws to the initial coin offering (ICO) funding model and research into how the tech could be used as part of a digital payments ecosystem in the Eurasian Economic Union.

Echoing moves by other countries in the past year, Putin also ordered the creation of a regulatory “sandbox” for companies that use technologies like blockchain to develop new products and services.

While the orders undoubtedly nudged forward the work on legislation around cryptocurrencies, Putin’s edicts have arguably advanced efforts to integrate the tech into the Russian state government infrastructure. They also came months after the Russian leader briefly met with ethereum creator Vitalik Buterin.

Other leaders in Russia have pushed the idea of using blockchain for public-sector purposes as well. Prime minister Dmitry Medvedev, for example, ordered government officials to begin researching uses of blockchain last spring.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in BTCC.

Images via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Source: Coin Desk

Charlie Lee

This is an entry in CoinDesk’s Most Influential in Blockchain 2017 series.


Strange as it might seem, Charlie Lee stills pays for parking.

On the sun-streaked streets of San Mateo, California, the man affectionately known as “Satoshi lite” feeds the meter before walking up to the front of the famed early-stage startup incubator Boost VC. The locked glass doors seem not to care they’re reflecting the face of litecoin, the $12 billion cryptocurrency that’s now one of the world’s oldest, largest and most well-known.

Once inside, though, the reception to Lee is much different.

There, venture capitalist, comic book junkie and occasional podcast host Adam Draper is quick to begin picking Lee’s brain on everything from virtual reality’s potential to the success of the viral ethereum app CryptoKitties.

“It’s one of the most impressive products I’ve seen,” Draper gushes.

Leaning back in one of the many chairs that dot the complex, Lee is slower to respond, at last referring to a tweet in which he lauded “crypto collectibles” as a worthy blockchain use case.

It’s the beginning of a pattern with Lee, whose every real-life comment seems to have a digital analog. Over the course of two interviews during the day (one with CoinDesk, the other with Draper), he’ll continue to refer often to social media, where his nearly 500,000 followers have made him one of the most beloved figures in crypto.

But his digital fandom has been all the more remarkable as its grown during a time when the technology’s pantheon of early adopters has largely been torn down, tarred and feathered, or if nothing else, exited the year all the worse for engaging in such public tactics themselves.

Even during the thick of 2017’s scaling debate, with bitcoin supporters at arms in a daily message board war over the technology’s roadmap, Lee seemed to rise above the fray.

That’s not to say he demurred or watered down his opinions – far from it.

Whether he was arguing Ripple isn’t a cryptocurrency, trolling bitcoin’s rival blockchain bitcoin cash or speaking out against speculation in the litecoin market (he would go on to sell all of his holdings), Lee appeared to walk some unseen tightrope of taste.

But if there’s some magic combination, some code of blockchain ethics he’s tapped into, Lee isn’t forthcoming with his secret. Asked just how he gets away with such an outspoken persona, he still seems to have the right answer.

“I get a lot of abuse, too,” he says.

Origin story

Spend some time with Lee, though, and it’s clear what’s endeared him to so many – his clarity of expression, his modesty and his belief in the virtue of work.

Walking past walls lined with Draper’s favorite superhero slogans, it’s perhaps easy to think of these attributes as Lee’s own superpowers. And if that’s the case, Lee’s origin story begins at the end of 2016, when he finally found a purpose for litecoin, a project he seems to have started absentmindedly in 2011 and later, almost abandoned.

Created while he was working as a software engineer at Google, Lee made litecoin by simply copying bitcoin’s code (with some slight modifications designed for merchants).

But if litecoin caught on in those early days, it wasn’t for its tech. Widely heralded as the “silver to bitcoin’s gold,” it was largely the marketing that cemented both litecoin and Lee, as the slogan arguably succeeded better than any targeted toward promoting cryptocurrency (at once defining both the project and its relation to bitcoin).

So, as bitcoin rose to $1,000 at the height of its inaugural mega-bubble in 2013, litecoin followed suit, closely tracking the movement with its own rise to near-$50 a pop.

From there, though, Lee’s magic touch was largely allocated to other projects. Soon after, he would join San Francisco-based bitcoin startup Coinbase, a business that would become so consistent as to have gained recognition as the “blue chip” of the world’s most volatile market.

By mid-2015, litecoin’s future was unclear, and its market, almost inactive.

“I definitely wasn’t paying a lot of attention to [litecoin] during the time I was at Coinbase,” he recalls, believing the decision was due to the nascent state of the market at the time.

Looking back, however, he says that litecoin “wasn’t ready” to grow, and that the most crucial thing he could do for the crypto ecosystem was to help bitcoin succeed.

“I thought the most important thing was to let people own bitcoin and hold bitcoin,” he says.

The archenemy

But like all heroes, Lee was called into action by a foe, and in the world of bitcoin, there perhaps hadn’t been one more sinister than the technology’s struggle over its technical roadmap.

By the start of 2017, the fight that had split the developer community since 2015 had gone from bad to bleak. Almost daily, conspiracy theories seemed to emerge in which industry figures were accused of undermining the cryptocurrency for personal gain.

New funding was non-existent and development was languishing, with the market’s leading solution, a code update called Segregated Witness (SegWit), stuck in a political gridlock and unable to garner consensus.

A somewhat complex and poorly understood concept, SegWit required bitcoin users, businesses and miners to update their software to boost transaction capacity. And despite fits and starts toward approval (due to how the proposal was coded, it required a certain percentage of miners to lead the way in the software change), by the start of 2017, any consensus on the matter was beginning to seem unlikely.

“I saw bitcoin was having this scaling debate and there was all this FUD against SegWit, and I thought it was unfair and that I could do something about it,” Lee recalls.

Step one in that pursuit was quitting Coinbase. What needed to happen next was more difficult – convincing the litecoin community that SegWit was “the path forward” that could boost its market and spark a revival. And there’s reason to believe the community was persuaded.

On the news that litecoin would push through the scaling proposal, the markets responded, breaking out of the sub-$5 doldrums the cryptocurrency had been locked in since 2014 and rising back to $50.

“People bought into that and traders bought into that,” Lee says.

But despite the community buy-in, Lee wasn’t able to convince litecoin’s miners (many of whom were also large bitcoin miners) to embrace SegWit quite so easily. Most notably, the final agreement required what was effectively an eight-hour Skype call with litecoin’s developers and miners.

But in the end, the tactics worked, and within a month litecoin’s code had upgraded to SegWit.

With great power…

But it’s what happened next that appears to have had the largest and most lasting effect on Lee.

With litecoin’s efforts as an example, leading stakeholders soon sought to change bitcoin’s code through a similar effort, with investor Digital Currency Group gathering industry luminaries in New York to strike a deal. What emerged from the meeting of some 50 startups and miners was the controversial “New York Agreement,” an attempt to strike a compromise that would both pass SegWit and upgrade the protocol to allow for 2 MB blocks.

What’s perhaps been undersold about the event, though, is how much it was modeled after Lee’s own approach to scaling litecoin, a fact that’s not lost on Lee given the results in both instances were far from analogous.

While litecoin’s meeting helped galvanize a small and growing community, the New York Agreement divided and angered bitcoin’s user base. The technology’s developers not only boycotted the proceedings, but soon began speaking out against its branding as a kind of coercion.

Like many other developers, Lee describes the attempt in retrospect as tone-deaf to the core philosophies of the bitcoin movement, even if it was well-intentioned.

“They did have a meeting with most of the miners and the businesses, but that is just kind of part of the community. A lot of users follow developers, since developers are doing the job of keeping the network secure and everything. So, it failed because of that,” Lee says.

And as he did on Twitter, in interview, Lee advocates that the meeting exposed bitcoin to a new kind of attack vector, one that could be corrupted as the industry grows (and attracts even more powerful enemies).

“If governments can tell all the miners to change bitcoin into something different and that just works, then bitcoin is too fragile,” he says.

A great responsibility

As a side effect, it appears Lee is now acutely aware of the impact of his work and words. Indeed, during the interview he routinely references past statements, seldom treading on new ground.

Sharpening his chopsticks in a nearby noodle shop, Lee admits he’s erred in judgment in his public statements in the past. He’s been thinking a lot as of late about one particular tweet. Made just before the news China’s regulators had moved to take domestic exchanges offline, he quickly pulled a remark attesting it was true.

However, before the Chinese government made that news public, Lee’s statement led to a stir that some believe pushed down the bitcoin price.

“I was telling the truth, but the truth caused the market to correct. People found out the truth from me first, and they sold,” he says. “A lot of people got hurt.”

As the conversation continues, we settle into a somber pace.

Question. A pause. An answer. A drink of tea, the sound of a cup set down and onto the next. In between, Lee is as careful with his noodles (hovering them cautiously over his spoon before each bite) as he is with the conversation.

But when Lee finally asserts, the topic of choice is compelling – a recent Reddit post in which an unknown user told the story of a man who allegedly committed suicide after selling 10,000 bitcoin too early.

“That’s pretty sad,” Lee says, and, while he’s not sure if it’s true, he seems to find a larger truth in what the story is seeking to convey.

Unlike past topics, he seems to linger on the point.

“I can totally see that though,” he says. “You had, what, 10,000 bitcoin, and you just sold them for whatever reason. Now that’s like $100 million.”

At first, I don’t think much of the remark, although later it occurs to me Lee is finally letting his guard down, at least providing the answer to a question that’s long plagued the interview – namely, why he’s so unwilling to break his constructed narrative.

The answer, revealed then, is that for Lee, cryptocurrency is a serious matter, an issue of life, liberty and death.

“It will always bug you, the fact that you had $100 million and you made the wrong move,” he continues.

Higher calling

In no time at all, though, Lee is back at it again, this time in a Boost VC backroom that seems to double as part storage closet, part recording studio.

Like much of the Draper establishment, the room feels not unlike any friend’s basement you had in college, kegerator in the corner and the floor strewn with Nintendo cartridge games.

Now answering questions for a Boost VC podcast, Lee is back on script, with the conversation retreading again – Lee is concerned about ICO incentives; believes bitcoin is the most important cryptocurrency; and is overall optimistic about the state of the industry.

That said, the conversation isn’t without its new moments. Of note is the tinge of nostalgia now that the bitcoin price is up above $10,000. Although, Draper does most of the talking on the subject.

“Five years ago that wouldn’t be a conversation, it was, ‘My friends might be interested in purchasing some of this.’ This conversation is being well received now, and it’s being had by every crypto person and high net worth person and presidents and prime ministers,” Draper says.

“It’s fascinating,” he continues, as Lee passed an opportunity for response.

Somehow even a conversation about superpowers doesn’t turn up much interest. Lee’s answer? The ability to go back in time to buy more bitcoin.

With the podcast wrapped, the conversation spills into the hall. Lee lingers with Draper, myself and our cameraman for a few moments, just long enough to seem polite.

We’re on the steps when he turns and declares, “I need to go now.” Back sheathed in sunlight and heightened on the stairs, there’s a certainty gravity to the statement.

Quite simply, when Lee turns to leave, you believe he’s needed elsewhere.

Want more? Charlie Lee talks his philosophy toward cryptocurrency.

[embedded content]

Original artwork by Luis Buenaventura II, creator of the CryptoPop website. Click here to view more by the artist, and to check out the official CoinDesk Most Influential T-shirt.

Video by Ali Powell at 40 Thieves Films 

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Source: Coin Desk

Where Are All the Quick Wins for Blockchain?

Tom Klein is the founder of BusinessBlock, a consulting firm focused on creating real blockchain value for organizations and driving operational excellence with early-stage technologies.

The following article is an exclusive contribution to CoinDesk’s 2017 in Review.


Do you really want to wait until 2022 for blockchain to benefit your organization?

In 2017, much of the focus was on vision setting, long-term projects and the sizzle of cryptocurrencies. We also got CryptoKitties, a star of 2017 blockchain usage that is cute and fun, but of limited benefit.

As someone who joined the community because of the technology and social impact, the vision is compelling, but nowhere near sufficient to sustain this ecosystem until 2022-2024, the time when most predictions of meaningful production applications are settling.

The question for 2018, then, is more tangible: How do we get real cost savings? Improve the customer experience?  Increase revenue? Decrease risk? Arrive at stakeholder benefits more quickly?

Bite-sized success

First off, we need to make the entire blockchain ecosystem more actionable, more real, even better – simpler! Maybe because this is a technology-led community, most blockchain discussions get more complicated rather than simpler.

With simpler, quick-win, use cases, there is an opportunity to move organizations from research and into action.

You might think, there are already plenty of use case lists, just get going! True, there are plenty of lists, but they lack actionability. They are too high level – it’d be almost the same as telling a salesperson to “just go sell something” without the context, the training, the experience and the technology underpinnings for them to be successful.

My company is helping to change the process by thinking this way: “What benefit can we bring using existing blockchain technology in 3-6 months?”

Though we certainly don’t have these simpler, quick-win use cases nailed down yet, we have identified four patterns where we believe there can be 2018 value:

  • Decrease digital storage costs while learning blockchain
  • Improve trust and usability of recorded data
  • Next generation business process management and integration
  • Speed up and reduce costs of payments.

The goal of this list is to combine the fundamental values of blockchain, existing technology and real organizational needs. The first pattern on the list is a perfect example. Hardly anyone would say that storage is visionary and while it’s cheap, the continual expansion of data, necessitates better solutions.

With Sia, Storj, and others, you can reduce your costs over AWS – a practical benefit from a blockchain.

Another quick win example is a private equity administration blockchain developed by Northern Trust. In its solution, the company looked at how to leverage the trusted data resulting from using blockchain. Their blockchain leverage turned into reduced costs and duration of transactions along with increased transparency for audit and compliance.

Giving up control

In addition to simplifying the use cases, we need to address the proverbial elephant in the room: everybody wants the benefits of a blockchain but is hesitant to dive in because of competitive and control concerns.

These are valid concerns, and we’ve already seen these issues manifested in the bitcoin community. Since we won’t eliminate the concerns directly with blockchain, a better way to speed adoption is to create a set of patterns to follow.

For example, take a look at a simple hierarchy of business network models:

  • Public data + Own Organization + consumer
  • Vertical value chain with dominant origin or end point
  • Complementary Proprietary Data/Contracts/SLAs + Own Org + consumer
  • Complementary Proprietary Data/Contracts/SLAs + Own Org + Proprietary Data/Contracts
  • Competitors via alliances, consortiums and direct relationships

The model at the top is the easiest way to get started since it has the fewest direct participants while the one at the bottom is the most difficult because these are your numerous, direct competitors.

Not surprisingly, each of these models has examples. Public data is the key to the first model, whether it’s flight departure times or from a governmental entity. The second has many examples (Tencent, Daimler, Cargill, Bloomberg…) where a dominant organization can drive or forestall change within a business network.

The third and fourth are about disruption – both avoiding it, and creating new combinations to improve a customer’s experience. And finally, there is the straightforward combination of direct competitors working to create some sort of new standards.

Like a lot in blockchain these days, these patterns and models are only the beginning.

Feel free to use them as a guide to prioritize your thinking, minimize blockchain readiness objections and get to the nuts and bolts of creating a real blockchain project. Meanwhile, we’re working on enhancing these patterns with specific scenarios to make them even more actionable.

We can see a better world using blockchain. Let’s get there faster by focusing on creating simpler, more practical, use cases. We may even get to the world-changing visions more quickly.

Slow and steady wins the race? CoinDesk is accepting original submissions to its 2017 in Review. Email news@coindesk.com to pitch your idea.

Binoculars via Shutterstock

The leader in blockchain news, CoinDesk strives to offer an open platform for dialogue and discussion on all things blockchain by encouraging contributed articles. As such, the opinions expressed in this article are the author’s own and do not necessarily reflect the view of CoinDesk.

For more details on how you can submit an opinion or analysis article, view our Editorial Collaboration Guide or email news@coindesk.com.

Source: Coin Desk

Naval Ravikant

This is an entry in CoinDesk’s Most Influential in Blockchain 2017 series.


Ask Naval Ravikant his proudest accomplishments of 2017, and he mentions a 37-part tweetstorm about blockchains, networks and markets – almost in the same breath as his business activities.

“I’d been thinking about the problem for a while. I went to sleep, woke up in the middle of the night, 3 or 4 a.m, and I just regurgitated that entire thing on Twitter,” the founder of San Francisco-based AngelList tells CoinDesk.

The thread began with a bold prediction: “Blockchains will replace networks with markets.” Then it laid out a sweeping view of human history, in which money (along with religion, corporations, roads and electricity) are all different kinds of networks, in the sense that the more people join one, the more valuable it becomes to all participants.

Markets of the 20th century were the first networks that were both open to all comers and meritocratic, yet with limited applications, Ravikant wrote. And now blockchains would “port the market model into places where it couldn’t go before.”

Thinking back on it all, Ravikant says:

“At some level, my brain had been working on the problem of, ‘What does this all mean?'”

It’s a fitting response, since Ravikant’s influence on the blockchain space this year – laying the groundwork for the emergence of a new token economy – has been intellectual, as much as it’s been financial or political.

In all three dimensions, his impact has been profound.

Blueprint for ICOs

Take for example Ravikant’s 2014 blog post, “The Bitcoin Model for Crowdfunding.”

That essay, “I think it’s fair to say helped lead to the later concept of token launches and ICOs,” said Ravikant’s friend Balaji Srinivasan, a board partner at the VC firm Andreessen Horowitz and the CEO of Earn.com.

In it, Ravikant describes how cryptocurrency could serve not only as an alternative store of value and medium of exchange, but also as a way startups could raise money without jumping through the usual hoops.

“Bitcoin is more than money, and more than a protocol,” Ravikant wrote. “It’s a model and platform for true crowdfunding – open, distributed and liquid all the way.”

This vision became reality across the globe in 2017 – but not without a bit of controversy.

Startups and software developers raised more than $2 billion through ICOs, an eight-fold increase over the previous year, according to CoinDesk’s ICO Tracker. But beginning in the fall, regulators from China to Washington D.C. began cracking down on the frauds and unregistered securities offerings among these transactions.

Hardly a Pollyanna, Ravikant readily acknowledges the excesses and envelope-pushing in the frothy market.

“A lot of these ICOs are just bypassing securities laws and just doing fundraising for classic startups,” he said. “There’s a small set that are really creating a brand new group of protocol tokens. It’s in the incentive of the companies to sort of obfuscate the two.”

To many observers, the regulatory arbitrage and the scams are the whole story. But Ravikant has continued to wax eloquent about the long-term promise of blockchain tokens on social media and at conferences, lending gravitas to the chaotic scene.

“Naval brings a certain amount of Silicon Valley credibility to what is otherwise sort of a weird, strange crypto community phenomenon,” says Peter van Valkenburgh, director of research at Coin Center, a Washington crypto think tank and advocacy group.

Placing bets

To be sure, Ravikant hasn’t just been stroking his chin and pontificating; he was an active participant in 2017’s budding token market.

For starters, he became a general partner at MetaStable Capital after three years as a limited partner there. The crypto asset hedge fund backed two of the most ambitious debuts of the year – Basecoin, an attempt to create a stable-value cryptocurrency (which may sound like an oxymoron to some) and the Orchid project, which seeks to restore online privacy by using tokens to compensate exit and relay nodes on a Tor-like network.

Separately, Ravikant himself backed what may have been the first index fund in the cryptocurrency space, managed by BitWise.

Also, reflecting his cypherpunk-tinged worldview (his favorite books include the sci-fi novel “Snow Crash” and the prescient 1997 manifesto “The Sovereign Individual”), he became a board member of the Zcash Foundation, a nonprofit dedicated to supporting not only its namesake anonymized cryptocurrency but online financial privacy in general.

Landing Ravikant for that role “was a big victory for the open blockchain community,” said Van Valkenburgh, who also sits on the foundation’s board. It was important to have a respected business leader alongside the cryptographers and digital-rights advocates, he said, adding:

“The future’s not going to just be built by hippies.”

But of special significance among Ravikant’s 2017 accomplishments is the launch of CoinList, which debuted in May.

It’s a spinoff of AngelList, the online platform Ravikant co-founded back in 2010 to help early-stage startups raise seed funding from accredited investors, defined by the SEC as individuals with a net worth of at least $1 million or earning $200,000. CoinList, similarly, connects ICO teams with such investors, the platform vetting prospective token buyers to make sure they are accredited.

Path for compliance

By limiting the audience to these (presumably) sophisticated investors, CoinList allows companies to market their tokens without having to worry about registering the offerings with the SEC – an expensive, time-consuming and generally burdensome process for fledgling businesses.

Of course, for most of the year, the vast majority of token issuers seemingly did not worry about registering anyway.

“Many tokens have taken the view, rightly or wrongly, that they are not ‘securities,’ and therefore that general solicitation limitations would not apply to them,” said Lewis Cohen, a partner at the law firm of Hogan Lovells.

That may help explain why so far only three major token sales have been completed on CoinList. First was Filecoin, a distributed storage network, which raised $205 million from more than 2,100 investors in September. Then came Blockstack, a decentralized identity and browser startup, which raised $50 million from more than 800 token buyers. (Ravikant was an early investor in both companies.)

A third sale was completed in December for mobile video platform YouNow’s launch of props, a tokenized answer to YouTube.

But perhaps displaying even further that CoinList has merit, about a dozen smaller issuers have used its compliance API without running their ICOs on the site, according to Andy Bromberg, CoinList’s CEO. (Ravikant tends not to get involved in the day-to-day activities of his ventures, preferring to empower his people and step back.)

But with the SEC starting to take enforcement actions, it’s conceivable that CoinList, and platforms like it, will be increasingly important to getting sales done.

“Securities law still apply,” Ravikant said. “That’s why we built CoinList. It helps bring ICO asset and protocol tokens into the same legal compliance that AngelList provides for startups.”

Political capital

Yet even the accredited investor route might not have been available for ICOs in the U.S. were it not for the campaigning Ravikant did on Capitol Hill more than five years ago, before he even heard of bitcoin.

Under a law enacted during the Great Depression, companies raising money were prohibited from “general solicitation,” or public advertising, of unregistered securities. By the early 2010s, this was a problem for Silicon Valley, since it meant that startup demo days were in a legal grey area.

More broadly, in an economy still recovering from the 2008 financial crisis, many in the business community felt that decades-old investor protections were impeding capital formation and due for a digital-age update. Ravikant helped lead the effort to lobby Congress for reform, including a petition signed by 5,000 investors and entrepreneurs around the country.

“I spent six months of my life calling in favors left and right,” he later recalled.

Those efforts paid off when President Barack Obama signed the Jumpstart Our Business Startups Act, or JOBS Act, into law in April 2012. At the time, Ravikant said, he thought the biggest impact would come from Title III, which allowed mom-and-pop investors to put money in companies through crowdfunding sites.

But today, he says it’s Title II, which lifted the ban on general solicitation for accredited investors, that has made the most difference, though in a way that he didn’t imagine back then.

“If Title II didn’t exist, the first ICO would be shut down and that would have been that,” Ravikant told CoinDesk, adding:

“It would have been open and shut, no debate around utility tokens or the Howey test.”

‘No more establishment’

As such, Ravikant’s influence as a startup investor goes well beyond writing checks.

Ryan Shea, a co-founder of Blockstack, rattled off a litany of ways (beyond those already mentioned) Ravikant has mentored his company, from spotting potential pitfalls in its token sale plan to recommending a former SEC official as legal counsel.

“Naval has this constellation of the best people, the right companies, who are actually making a difference,” Shea said. “He is really good at building that whole ecosystem around him.”

But for all his charm and diplomacy, Ravikant also has an iconoclastic streak.

Well before Donald Trump’s November 2016 presidential victory shocked the coastal elites who’d assumed right up until Election Night such a thing could never happen, Ravikant observed on his blog that technological and cultural changes were rapidly altering the political landscape.

“There is no more establishment,” he wrote in January of that year, as Trump and Bernie Sanders were drawing crowds, but still being mocked by the pundits. “Like all things Internet, social media and crowd financing are unstoppable. Every large future election will have outsiders out-organizing, out-raising and out-raging the establishment.”

Odd future

Despite this anti-elitist sentiment, Ravikant sees a growing role for experts in the market whose rise he foresaw and helped make possible.

“I find it harder to evaluate a protocol token or an ICO than I do a classic tech company. There’s a lot more room for error, a lot more places to go wrong. It ends up being less about figuring out the market, less about a team, less about sales force,” he told CoinDesk, adding:

“It ends up being almost all about technology. I wonder how many people in the world are really qualified to assess a high-quality ICO and a low-quality ICO.”

Don’t take that for snobbery, though – Ravikant admits he’s almost as bemused as anyone in this rabbit hole.

“I don’t actually think of myself as qualified to invest in crypto,” Ravikant said at Token Summit II in December. “The deeper you get into this, the more you realize how fundamentally ignorant most of us are.”

For this reason, he said, he expects something like the classic investment syndicate model to eventually take hold in the token market.

That’s also one of the reasons why he put all his personal crypto holdings into MetaStable, after deciding that picking winners and handling custody of keys was too hard (and dangerous: Ravikant initially hesitated to give an interview for this article, because he was concerned his already-high profile in the space made him a target for criminals).

One irony of crypto, he told CoinDesk, is that “anybody who is a small player can be their own bank,” but prominent figures like himself cannot without driving themselves crazy.

Zooming out the lens, though, he sees cryptocurrency as a bulwark for personal freedom around the globe.

“‘Be your own bank’ is always a backup. It’s always there,” he said. “If your government turns oppressive … you can be your own bank.”

This is where Ravikant sounds most animated and inspiring – when he talks about how a platform like Filecoin might help people route around censorship, or how solutions like Blockstack’s might free individuals to port their identities and data across different internet services, breaking the stranglehold of today’s walled gardens.

“I’m not even into the money aspects, I’m not even into the finance aspects, even though that’s what I’ve done career-wise,” he said. “I’m really interested in how this is the next generation of the internet. It’s a fundamentally decentralized Internet.”

And if you have a hard time squaring this lofty, futuristic idealism with his cold realism about politics and investing, Ravikant fused them together almost perfectly in one of his most popular tweets this year:

“Bitcoin is a tool for freeing humanity from oligarchs and tyrants, dressed up as a get-rich-quick scheme.”


Original artwork by Luis Buenaventura II, creator of the CryptoPop website. Click here to view more by the artist, and to check out the official CoinDesk Most Influential T-shirt.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Source: Coin Desk

Joe Lubin

There’s something about the way Joe Lubin relaxes that sums him up as a manager.

Shoes off, revealing a pair of plain black socks, he rests his feet high on top of his desk in the corner of the same room where his staff diligently plugs away at their computers. Staring out a window overlooking Brooklyn, everything about him seems perfectly calm.

But something there, underneath, betrays a hidden ability to strike. While his employees seem to adore him, the competition has learned to tread softly.

If cryptocurrency truly is the new Wild West, Lubin would play the part of the cowboy well, coolly undoing the clasp of his holster as he stares down an opponent.

In the tradition of many a lasso-wielding pioneer before him, Lubin has become a legend of sorts by helping blaze a trail for a new breed of enterprising adventurer looking to unearth exotic exports.

But as a co-founder of ethereum, the third-largest public blockchain by value, Lubin isn’t only trying to stake as much land as he can in the hotly contested space, he also helped create the territory itself. Whether private or public implementations, much of the work at ConsenSys focuses on furthering just one platform – ethereum.

This year, that unique position paid off with almost exponential growth.

Since January, the number of ConsenSys employees has exploded by almost 400 percent, while the decentralized organization itself has grown to include 37 different companies in industries as diverse as prediction markets, energy and accounting.

The expansion itself places ConsenSys among the fastest growing companies in one of the fastest growing industries. But going forward, instead of expansion into new industries, Lubin expects to see growth in a new direction: upward.

He tells CoinDesk:

“We’ve mapped out the space, we’ve mapped out our capabilities, we’ve demonstrated real traction in a lot of our business lines, so we’re just keeping the engines churning because they’re working really well.”

A search for self-reliance

Long before Joe Lubin was the head of one of the most influential startups in blockchain, he worked his way up the ladder in the late 1990s to become the vice president of technology for the private wealth management division of Goldman Sachs.

But the terrorist attacks on the World Trade Center in 2001 caused him to re-evaluate the way “the world’s organizations are structured,” he said. Inspired in part by his reading of Ayn Rand as a younger man, he embarked on a process of learning why centralized control sometimes goes wrong, and when alternatives might be right.

“Decentralized infrastructures, if they’re executed well, can be more fluid, can be more responsive, can distribute power more broadly, equitably,” he said.

Further distraught by the financial collapse of 2008, Lubin next embarked on a global journey. At one time, he even went so far as to place an offer on land in South America, before settling in Jamaica, where he briefly attempted a career managing a musician.

“I played the keyboards mostly,” he says, smiling wryly, and gesturing as if typing on a computer keyboard. But Lubin’s career in the music business was short-lived. Just a year later, the bitcoin white paper was published and at last he saw the building blocks for the new way of organizing systems he’d been looking for.

By the time he received a copy of Vitalik Buterin’s ethereum white paper on January 1, 2014, he was well along the way of being an expert in how the technology worked.

He calls it his “ethereal moment.”

In his first ever article on the ConsenSys site, Lubin wrote:

“Since that day in January, I  –  in conjunction with many gifted thinkers and technologists  – have labored obsessively to help bring ethereum, and elements of the decentralized economic and social ecosystem that we are building on it, into existence.”

When ethereum mined its genesis block on July 20, 2015, Lubin had already founded ConsenSys and was working with a core group of employees to build on the first expansion.

Gold Rush

Just as the California Gold Rush sent a wave of cowboys to uncharted territory, ethereum beckoned its early adopters.

Following the promise of a decentralized ledger similar to bitcoin, but with a computer language enabling entire applications to be decentralized, Lubin drove his first stake into the ground at a small office in Times Square.

Shortly thereafter though, rising real estate prices and the desire to create a culture distinct from Wall Street forced the company to Brooklyn, New York. A far cry from the wagon trains to the Wild West, the move to 49 Bogart Street could be traversed with a short subway ride.

Unlike the sleek skyscrapers that house Lubin’s former employer and other legacy institutions, the entrance to the brick building headquarters is wedged between a hip cafe and an old loading garage left-over from when the area was still part of New York’s influential “Industry City.”

Finding the unmarked entrance and ringing the bell has become a rite of passage of sorts for potential customers of ConsenSys, who might not otherwise venture to that side of the Hudson River.

Initially occupying just a single floor of the building, ConsenSys had grown to 100 employees and 30 companies, or “spokes” by the beginning of 2017. The company has since experienced its own version of manifest destiny, and grown to fill almost every square inch of the building. This year alone it has grown 370 percent to more than 470 employees and now consists of 37 spokes.

“We’re growing fast,” says Lubin.

Over that same 12-month period, the price of ethereum’s native cryptocurrency, ether, has increased in value from under $10 in January to more than $700 today, and the total market valuation has grown to more than $70 billion.

But while ConsenSys’ spiritual heart is in Brooklyn, officially, the startup is headquartered in Switzerland.

Established as a limited liability AG, the decentralized company is structured so that it owns independent entities that are in turn incorporated in jurisdictions around the world.

In addition to formal offices in Dubai, Washington D.C. and Singapore, Lubin counts a series of partially staffed “proto-offices” in Paris, Capetown and Sydney, which he expects will formally incorporate in 2018.

Making money

While the end result of the California Gold rush was an explosion of new cities, what drove the pioneers was the promise of riches. And to help incentivize the growth of this unusual startup infrastructure, Lubin employs a new type of compensation scheme.

Employees, or “members” as his staff refer to themselves, are not only paid a traditional salary, but are frequently tied to the hub via a two-way stock connection.

ConsenSys itself not only has an ownership stake in the spokes, but the spokes also have a stake in the hub. Occasionally, compensation in the form of intellectual property rights is also included.

“All of our projects are part of ConsenSys culture,” says Lubin. “But they have their unique subcultures.”

As an example of how one of these spokes functions in the wild, crypto-enabled prediction market Gnosis set the trend in April for the way many crypto-companies now raise money via an initial coin offering or ICO.

Gnosis, with Lubin as both board member and advisor, held onto 95 percent of the crypto tokens it created, raising $12.5 million from its sale of a five percent stake. Yet, the sale also created value that, at the time, effectively gave the firm $300 million in capital for future use.

While the ConsenSys spoke wasn’t the first to employ this strategy, the success of the ICO brought new visibility to the fundraising technique, and preceded an explosion of interest.

Since the Gnosis ICO in April, the total amount raised by token sales has risen more than 1,000 percent, to $3.7 billion today (not counting fluctuations in price). As activity in this space continues, even mainstream companies have begun issuing their own tokens, not only as a capital raising mechanism, but also to give their users utility on the next blockchain-based generation of platforms.

While ConsenSys is not yet profitable, it’s generating “millions of dollars” in revenue consulting with enterprise and government organizations, as well as providing services such as code audits for a fee. Lubin predicts a number of the companies’ projects will be generating “significant revenue” by the second quarter of 2018, specifically listing the natural resources capital marketplace, Veridium, among the most promising for near-term revenue.

Speaking more broadly, he added:

“We can’t help but move into the black anytime soon.”

Land rush

And here, history also provides a parallel.

The Gold Rush may have started the cowboys on their way, but it was the Land Rush of 1889 that triggered the real growth. At ConsenSys, that has meant allowing its influence to grow beyond its own borders.

In response to increasing industry demand for jobs, ConsenSys launched the ConsenSys Academy in July to help educate the next crop of ethereum employees. That same month, the company kicked off the Blockchain for Social Impact Coalition (BSIC), aimed at solving social and environmental issues.

Since then, BSIC has grown to 30 members, and the academy just graduated its first class of more than 100 students, selected from a pool of around 1,000 candidates.

Most notably though, Lubin solidified his impact beyond the spokes of ConsenSys by helping drive the launch the Enterprise Ethereum Alliance (EEA). The consortium of legacy institutions, blockchain startups and government entities has grown by 525 percent this year to 250 members, including British oil giant BP, bulge-bracket bank JPMorgan Chase and software developer Microsoft.

The largest of several blockchain consortia by total membership, EEA competes against similar groups such as R3 and Hyperledger, though it is the only group established from the beginning with the aim of helping benefit public blockchains, and not their private, permissioned alternatives.

Collectively, Lubin seems to think the overall structure of ConsenSys is nearly complete.

Internally, his hub-and-spoke system is designed to be a decentralized incubator that stretches deep into each of the various verticals that have been identified as ripe for disruption by blockchain.

In the years to come, instead of any significant expansion, Lubin says to expect more of the same, “only bigger and better,” concluding:

“We’re doing what we want to do, we’re doing it how we want to do it.”

Want more? Hear Joe Lubin’s story in his own words:

[embedded content]


Original artwork by Luis Buenaventura II, creator of the CryptoPop website. Click here to view more by the artist, and to check out the official CoinDesk Most Influential T-shirt.

Video by Ali Powell at 40 Thieves Films; Photos by Michael del Castillo

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Source: Coin Desk

Yao Qian

This is an entry in CoinDesk’s Most Influential in Blockchain 2017 series.


“Oh dear God. China is banning bitcoin. Sell! Sell it all, damnit!”

In an industry so often in the midst of erasing its own even recent past, it’s all the more amazing a meme from 2014 still holds true today.

Depicting “South Park” characters on some fictitious trading floor, it retains so much relevance because all the huffing and puffing from China, long the big bad wolf of the crypto markets, never seems to cease.

In the industry’s collective consciousness, China’s influence has only gotten stronger over time. It’s a relationship that’s one of the more nuanced in the technology’s history – informed by fact, but fueled by a kind of fiction with its own, equally relevant, truth.

If the cryptocurrency community has perpetuated one tale, it’s that governments secretly fear bitcoin, that deep down, every central banker will stop at nothing to further their fiat money agenda, one they know is dated and bound to be replaced.

But while other central banks and regulators have blustered and issued warnings, none have perhaps played so thoroughly into this narrative as the People’s Bank of China (PBOC).

As early as 2013, China’s central bank began making moves that some would say display just how nervous it was getting with the cryptocurrency’s incessant rise. At the end of that year, the PBOC banned payment companies from working with bitcoin exchanges altogether.

It was the first – but not the last – blow against the industry, and also against the idea that cryptography, and the trust provided by a global computing network on a blockchain, could replace what humans have historically called money.

Earlier this year, the central bank went even further, becoming the first globally to ban initial coin offerings (ICOs), a form of fundraising in which buyers exchange cryptocurrencies (often bitcoin) for tokens on a newer protocol. Yet, this wasn’t the most devastating move. In parallel, the PBOC also secretly called for the shutdown of exchanges that allow users to swap between crypto and renminbi, effectively shutting off capital inflows into the market.

Yet, for all that antagonism, China retains a leading role in the cryptocurrency story.

It is still the dominant geography for mining, and the government’s attempts to quell the domestic ICO market have seemingly only backfired. Rather, the market has done what cryptocurrency proponents have long argued the “anti-fragile” technology would do – adapt, survive and thrive.

And it’s against this backdrop that a new figure has emerged, a man whose writings and public comments hint that China’s attempts to shift the narrative on cryptocurrency might only just be beginning.

The mastermind

For an industry with an already established east-west divide, it’s perhaps no surprise that little is known about Yao Qian, the director of the PBOC’s Digital Currency Research Institute, nor the program for which he’s now charged.

Rather, Qian appears to have emerged from the ether as a rare government agent in a position of power not just through appointment, but also through his evidently strong grasp of the technology itself. And in an article penned in May of this year, one that served as his introduction to Western audiences, Qian seemed keen to engage.

While other central banks – from Ukraine to Barbados to Brazil – have spent this year talking about the potential benefits a crypto version of fiat currency could provide, Qian’s article is notable in that it’s perhaps the most detailed and candid look at how a central bank might go about its design and management.

Far from meandering, it was advanced in its construction.

In the article, Qian sketches out two different futures – one where the central bank itself is the only party that issues digital currency, and one where the central bank might authorize commercial banks to issue such instruments. And not only that, but he also draws up the framework for a new wallet model as well.

As Qian did not respond to requests for comment, it’s hard to tell if these ideas are still held by him or the PBOC in general, but it’s an impressive and instructive document nonetheless.

In translations provided by PwC, the article also seemingly hinted at the PBOC’s main objectives for adopting one type of cryptocurrency (and possibly shunning the other). Qian wrote:

“To offset the shock to the current banking system imposed by an independent digital currency system (and to protect the investment made by commercial banks in infrastructure), it is possible to incorporate digital currency wallet attributes into the existing commercial bank account system so that electronic currency and digital currency are managed under the same account.”

Here it was again, two truths seemingly intertwined.

The PBOC’s place

But if the document leaves much to interpretation, so do the power dynamics at play among China’s many regulatory bodies.

For example, when “China” issued its ICO ban, it wasn’t the PBOC acting alone.

Rather, seven regulatory agencies participated, including the Central Network Office, the Ministry of Industry and Information Technology, the State Administration for Industry and Commerce and the China Banking Regulatory Commission, all groups that have been less vocal than the PBOC but that nonetheless have different mandates.

Still, there are those who believe the PBOC is in the driver’s seat, given it has jurisdiction over money issuance and governance.

“The national agenda as far as the financial industry goes, it has to be driven by the PBOC,” says Zennon Kapron, author of an early book on bitcoin in China and founder and director of Kapronasia, a Shanghai-based research and consulting firm.

Kapron tells CoinDesk that as far back as 2013-2014, the PBOC had “a good idea” of what bitcoin was, but he believes the cryptocurrency changed some of the dynamics within the agency.

“If you worked at the PBOC five to 10 years ago, it was probably quite tedious. But the moment there are digital currency initiatives, it’s a way to move the country forward,” he says.

And the creation of a research group focused on “digital currency” appears to acknowledge that possibility. For one, the division is said to include more than 100 employees, according to Chun Yin Cheung, a representative of PwC’s China-based blockchain division.

That said, the origins of the group appear to go back further, to statements made in 2016 by PBOC governor Zhou Xiaochuan, who suggested at the time the central bank was considering blockchain among a number of technologies for deploying a digital currency.

The comments painted digital currency as a broader objective, one that the central bank was pursuing before blockchain, though its inclusion was notable at a time when IT giants like Microsoft and IBM were only just venturing into the sector.

Again, here there was a notable dialogue that positioned a central bank digital currency as not just a new technology, but an alternative to bitcoin.

“For a digital currency controlled by the central bank, a combination of technological measures, institutional design as well as laws and regulations will be applied to ensure the security of its operation system. This differs from the bitcoin at the very start,” the governor was quoted as saying.

Game of thrones

Indeed, one of the outstanding questions relates to the power dynamics within China itself, and the lack of clarity about how decisions related to cryptocurrencies are being made.

For instance, there’s an inherent imbalance between the knee-jerk enforcements that have taken place, often in back rooms with little notice, and the more measured approach to digital currency, a conversation that has taken place in public over years.

Exchange representatives told CoinDesk earlier this year, speaking on condition of anonymity, that they weren’t always sure that those doing the enforcement understood the technology, or that there was much of a plan in regard to the meetings other than to suppress unwanted market activity.

But, it’s notable that, like any large organization, the PBOC seems to have discrepancies between its many divisions. On-the-ground enforcement meetings, for example, were held by the regulator’s Beijing and Shanghai offices, and don’t appear to have involved the Digital Currency Research Institute in any capacity.

That said, at least one prominent local lawyer, Roland Sun, legal lead for blockchain consortium effort ChinaLedger, said that anecdotally he had heard Qian was involved in the talks.

Interestingly, his comments paint Qian as someone who stands in contrast to his peers.

“Yao thought it made no sense to harshly regulate the exchanges, which just spurs OTC trading,” Sun told CoinDesk at the time.

Far from being keen on shutting the door to open-source cryptocurrencies, Sun described Qian as “open minded” and “receptive to innovation.”

Graying market

And there’s plenty of evidence to suggest this more realistic market guidance, real or simply perceived, should have been heeded.

Case in point, China’s ICO ban appears to have done little to stop market activity.

“We’re seeing companies get very creative in terms of ICOs,” Kapron says. “Most have started overseas foundations, typically in Singapore. They’re also bringing on foreign advisory teams, though how much they are actually advising is up in the air.”

The idea that China’s crypto-economy, now underground, is not only still active, but thriving, was also put forward by Jack Liu, the former chief strategy officer of Chinese crypto trading platform OKCoin and now a trader for Circle Internet Financial.

In comments, Liu framed 2017 as not a year dominated by regulators at all, but rather one wherein entrepreneurs out-innovated those authorities at every turn.

When ICOs were banned, for instance, China’s startups started creating their own protocols, or forking existing ones, thereby giving free cryptocurrency to users of the old currency.

“The ban is you can’t put RMB into [cryptocurrency]. With airdrops, you didn’t raise any money, you just dropped it onto the people or gave it to employees for free,” he explains.

And while public market data suggests there’s been a massive drop-off in cryptocurrency trading, Liu said this is simply an accounting error, one that’s due to the fact that APIs can’t measure the high volumes of OTC trading.

“RMB trading is down because that’s been made inconvenient,” he says. “But, people have this impression that China went away. In terms of total capital deployed, I’m sure it is the same ratio it was a year ago.”

But whereas Liu sees a thriving free market, others believe the PBOC made the right call to intervene in a market where consumers were at risk.

Michael Yeung, founder of International Blockchain Company and the former employee of a research effort backed by the Chinese province of Jiangsu, believes that the market had turned “very shady” and “very gray in color” even before the central bank actions.

“People were getting scammed left and right by digital tokens that didn’t exist. There were people who were younger than me, their family had money, they lost 90 percent of their net worth. People were investing in every ICO, not in ether or bitcoin, they lost their fortune,” he says.

In this way, Yeung says he believes the curbs on exchanges had more to do with the furor around ICOs, which he said attracted unsavory multi-level marketing elements.

“Some of these ‘coins,’ there was no blockchain, there was no software,” he recalls.

Matter of time?

But given that all this market activity persists, it remains to be seen if the PBOC and other Chinese regulators will take further action, and if that action will include essentially legitimizing cryptocurrency through a government-approved alternative.

Those with close ties to the country tend to be optimistic about the future of cryptocurrency there.

PwC’s Cheung, who has worked with Qian, believes his recent silence in the media is effectively a signal that a central bank digital currency could be on its way.

“I forecast China will surprise the world again and be the game changer in the crypto world. I personally believe, in 2018, China will be the first major country to launch a central bank digital currency,” he says.

Yet, others aren’t so sure.

“There was a lot of hype around [the idea],” says Kapron. “The feedback we’ve been getting anecdotally is the enthusiasm for a Chinese digital currency has waned slightly, so it might not be going as quickly as people thought or expected.”

According to him, that’s because – like many people say about crypto for payments in the U.S. – the current system works quite well. Plus, when it comes to maintaining control over monetary and fiscal policy with a cryptocurrency, there are substantial challenges, he added.

Yet even Liu, who doesn’t necessarily see central bank involvement as the right expression of a form of money designed to cut out such institutions, is bullish on the idea.

“I do think [the PBoC] will launch a coin earlier than other central banks,” he says. “In some sense, it will be better for the crypto ecosystem. It’s not that they will launch a coin and no one will want [other coins].”

But if nothing else, with China’s pursuits into cryptocurrency really just getting started, the country and its regulators are likely to keep surprising traders and causing bouts of panic.

Although, at some point, the market might decide they’re just crying wolf.


Original artwork by Luis Buenaventura II, creator of the CryptoPop website. Click here to view more by the artist, and to check out the official CoinDesk Most Influential T-shirt.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Source: Coin Desk

Pieter Wuille

This is an entry in CoinDesk’s Most Influential in Blockchain 2017 series.


Pieter Wuille is quick to bite his tongue.

In one of the developer’s first-ever long-form interviews, it’s clear he has plenty of thoughts to share. He gets fired up when chatting about bitcoin’s coming innovations and the cryptocurrency’s original white paper.

“There’s so much we’ve learned since then,” he says, addressing those he feels treat the nine-page document, published in 2008, as a “bible” of sorts.

Over the span of just a few minutes, he lists several holes in the paper – so-called “fraud proofs” have been shown unlikely, or at least very difficult, to work, while it failed to predict key innovations, such as scripts and payment channels.

He’s probably one of the few knowledgeable enough to pick apart bitcoin’s guiding document. And yet, as he starts to speculate on how Satoshi Nakamoto’s paper might look if drafted today, he stops mid-sentence.

“I really shouldn’t speculate,” Wuille says.

And when asked what he would do if Nakamoto appeared before him – after a pause – Wuille says, “I would say, ‘Thank you.'”

In these moments of hesitation, these flashes of deliberation, the shy developer decides it’s better to keep his focus on the facts than let his opinions be used in the political barrage that bitcoin’s raging scaling debate has become.

These moments, they define Pieter Wuille, alongside his six years of servitude, working tirelessly on Bitcoin Core, the currency’s most popular software implementation (as well as the term often used to denote the loose group of volunteers that make changes to this code).

Following Wladimir van der Laan, bitcoin’s lead maintainer, Wuille has made the second-most contributions to the software, but it’s safe to say he’s been behind some of the more significant changes. One particular upgrade, Segregated Witness (SegWit), came to define this year’s scaling debate.

The groundbreaking (and highly controversial) change, enacted in August, shook the bitcoin community this year, where tensions were high and social media was a firestorm of finger-pointing and slander.

You’d think the creator of the code change would get involved and defend its creation, but actually Wuille seemed too cool and collected to stoop to such levels.

According to developer Nicholas Dorier:

“Pieter is trying to put aside all politics and always look only at the technical aspects of things.”

The puzzle

This is likely why you can sense a cringe when he’s asked how much bitcoin he owns, and why he says he couldn’t think of any truly defining stories over his years of working on bitcoin. His personal website is bare, with just a spinning email icon whose pixelated graphics look straight out of the 1990s.

Wuille seems to cherish his privacy.

It makes sense, many bitcoin enthusiasts came to the cryptocurrency that way, but becoming one of the most well-respected developers, that was something that only someone as poised and focused as Wuille could pull off.

But his story begins with another computer scientist and notable cypherpunk, the late Hal Finney, the recipient of bitcoin’s first-ever transaction.

In 2011, Finney – who unlike other jaded cypherpunks at the time was keeping an open mind to bitcoin – submitted a contest (with a 20 bitcoin prize) to a popular bitcoin talk forum. A cryptographic puzzle, it was designed to test developer understanding of the nascent currency.

And Wuille quickly got to work.

This was the first time Wuille, who had a PhD in computer science and a job at Google behind him, looked over the bitcoin codebase. Like many other programmers, Wuille’s interest was piqued on a technical level – initially the code looked like a mishmash, but he marvelled that bitcoin actually worked (after so many failed decentralized money plays).

And in turn, he put together a solution – his first shot at bitcoin development, a moment that would change his life, and the trajectory of bitcoin, forever. Yet, that wasn’t his shining moment.

“I don’t remember who won, but it wasn’t me,” Wuille says.

Still, whereas some might shrug their shoulders and move on, Wuille remained hooked on bitcoin.

He told CoinDesk:

“At the time, when I discovered bitcoin, I didn’t expect it would become my job or that I would spend every moment of my free time on it.”

And he’s used a nearly unbreakable focus to tune out the trash talk and continue lumbering along toward the future where cryptocurrency changes the world.

For him, SegWit was just one small step.

Zen Masters write code

But to get SegWit added to bitcoin was more of an uphill climb.

Introduced in 2015, the code was initially applauded by the community as big step for cryptocurrency, mainly in that it fixed a bug that prevented forward-looking projects from expanding the technology’s capabilities. As a result of the change, ideas such as the Lightning Network and Schnorr signatures are possible to implement.

At the time, Wuille pitched the idea as a compromise that would appease both sides of bitcoin’s scaling debate – one which wanted slow and steady scaling that wouldn’t increase the size of the blockchain, and the other of which wanted more hasty on-chain scaling.

Still, SegWit turned out to be an unexpectedly controversial change.

To oversimplify, developers have generally sided with the “slow and steady” approach to code changes, whereas bitcoin companies and miners tended to want bigger and faster scaling, pointing to long transaction times and increasing transaction fees as deterrents that would keep new users from using the “digital currency.”

As the debate between those two groups heated up, Wuille hardly chimed in on the debate raging around him. Mirroring a Zen Master who’s undergone years of intense study to reach enlightenment, Wuille kept his head down.

And using the mantra “cypherpunks write code,” Wuille endeared himself to the bitcoin community, which has respect for those that code up solutions to problems rather than attempt to achieve change by political or social means.

Bystanders to bitcoin’s fiery debates have argued he’s too “busy writing code” to get involved in all the drama.

Some go as far as to argue he knows bitcoin better than anyone. Dorier, for instance, says Wuille has a “near-complete understanding” of all of bitcoin’s source code. And Bitcoin Core contributor Eric Lombrozo says Wuille “obsesses” over his coding work, albeit in a “peaceful” way.

Heavy heart

Yet, on the phone, Wuille admits he hasn’t been able to tune the debate out entirely.

“It’s been heavy,” Wuille told CoinDesk, sighing. “I’ve been in the middle of it for longer than it’s been public.”

The debate first entered the limelight in early 2015, when former Bitcoin Core maintainer Gavin Andresen published a series of blog posts advocating for an increase to the 1 MB block size parameter, a technical direction that many other developers shunned.

True to his reserved personality, though, Wuille wouldn’t name any names or dive too deep into the details when asked for clarification.

He continues, sounding a little like a forlorn sage, “The whole block size debate started out among developers before certain people brought it to the public. But that was a long time ago.”

And despite having opinions on the matter, in public he stayed composed – wading into the debate only to make short technical corrections.

In one fiery thread, for example, rather than point fingers or namecall, Wuille responded to one technical comment matter of factly: “This is wrong. The signatures are always needed when a node first processes a block, whether that is now or later.”

The teacher

Although, some developers wish he had expressed more of an opinion. Take Lombrozo, one of the group’s more public members, who says he often ponders whether it would be better for Wuille and other shy coders to step up.

“I’d much rather people listened to people like Pieter,” he says.

Social media channels are filled with misinformation and falsehoods, he argues, and developers like Wuille, who deeply understand how bitcoin works, could help to fill the gaps. That said, Lombrozo’s not pushing too hard.

“It’s just not his personality,” he says. “He and developers like Van Der Laan shun the spotlight and the media in some ways. It’s outside their comfort zone.”

In this way, Purse.io founder and CEO Andrew Lee agrees. Even though he’s personally tried to back alternative software efforts, he admires Wuille, calling him more “self-actualized” than the average person, meaning he knows what makes him happy in life – coding – and sticks with that.

Lee told CoinDesk:

“I think it’s awesome that he has stayed out of it. Pieter knows where he wants to have an effect.”

And that seems to be on other developers. Wuille has a history of passing on tips to newer coders, teaching the ways of the open-source bitcoin world.

Lombrozo notes that when he first attempted to get into bitcoin development, Wuille took him under his wing, teaching him about the tools and processes. (Lombrozo and Wuille would later buddy up to work on SegWit together).

And Lee says similar things, pointing to Purse’s Bcoin, a bitcoin code implementation in Javascript, which was one of the first projects to add SegWit support.

“[Integrating SegWit] wouldn’t have been possible without Pieter. He’s super helpful to everyone in the space,” Lee says.

Short-term soothsayer

Beyond all that, Dorier says Wuille has a sixth sense for bitcoin improvements.

“What’s very impressive is that he’s capable of knowing what’s going to happen in the next year and focusing on the work for the shorter-term,” he says.

And if Dorier’s right, signature aggregation, a change championed by Wuille that mashes signature data together allowing more transaction data to fit into each block, could be one of the next bitcoin improvements.

Wuille revealed to CoinDesk that he’s writing a more concrete bitcoin improvement proposal (BIP) for the code change.

And Dorier, who calls the upgrade “the next big step,” guesses the change could be added to bitcoin in the next couple years. But why’s Wuille doing all this? What makes the Zen Master spend all his time grinding away at bitcoin? As other developers and crypto-enthusiasts, he idealizes a future world with a fully functioning bitcoin.

“It might end up changing the world,” Wuille says, adding:

“I think it can show how technology can remove the need for certain third parties and systemic risk that exists in the world.”

But until then, and according to Wuille we’re far from that, he’ll keep tinkering away.

Because he believes, for all the animosity, the scaling debate hit a high point in 2017 because an ecosystem has blossomed around bitcoin, even though at a technical level it’s not quite mature yet.

And that’s the one thing many people fail to understand, he argues.

“Bitcoin’s not ready for mainstream adoption. There are many unsolved problems,” he says, pointing to privacy and scalability, among others.

And he still worries that it could all go down in ruin if there problems aren’t solved.

“We need to get the incentives right so we don’t just replace one banking system with another,” he says.

But through it all, bitcoin’s Zen Master leaves us with patient optimism like any good guru would:

“We’ll get there in time.”


Original artwork by Luis Buenaventura II, creator of the CryptoPop website. Click here to view more by the artist, and to check out the official CoinDesk Most Influential T-shirt.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Source: Coin Desk

Erik Voorhees

This is an entry in CoinDesk’s Most Influential in Blockchain 2017 series.


“You’ve invited a philosopher, and the curse that comes with that, is you have to hear a bit of philosophy.”

And as promised, that’s just what Patrick Byrne, CEO of e-commerce giant Overstock.com, proceeds to provide. It may be the depths of January, but Byrne is bringing his own form of heat to the roomful of bitcoin insiders assembled for the annual “Satoshi Roundtable” retreat in Cancun, Mexico.

Nearly two years into a debate over how best to alter bitcoin’s software (and still months away from anything resembling a path forward), much of the event’s itinerary centers on the issue, or as much as it can before devolving into either acrimony or aimlessness.

Fresh off a leave of absence from his company, though, Byrne adds a burst of life to the proceedings. Taking center stage for a speech, he rifles through a brisk dialogue that equates bitcoin with the American Revolution and pokes fun at major banks.

“They have not internalized how much they have to change. You’ve shown up with a Ferrari and they’re insisting on putting a lawnmower in it,” Byrne quips.

This rapid pace of play soon takes a pause, however, when Byrne points to a man with his hand raised in an effort to ask a question. Byrne soon balks at the name. “Voorhees, the Erik Voorhees?” he asks.

On affirmation, what starts out as surprise quickly turns to reverence, as Byrne nods, bends at the middle and begins a short series of bows. “I’m not worthy,” he says a few times in a sing-song tone.

Looking back on the incident some months later, Voorhees is still taken aback by the gesture. Speaking from the offices of his startup ShapeShift, nearly a year removed, he admits he’d never met Byrne before that moment, and that he hasn’t exactly had much contact with him since.

“It was nice, I didn’t know if he knew who I was,” Voorhees remarks.

Still, there’s an obvious shared camaraderie, one Voorhees traces back to not just their interest in cryptocurrencies, but the way in which they’ve approached advocating for the technology, often in protracted fights with U.S. regulators who don’t see eye to eye with their philosophy.

And in Voorhees, Byrne finds rare company, as the entrepreneur’s own battles against the government stretch back years, to a time when he was just a man defending bitcoin on message boards. But if Voorhees was an oddity then, he’s perhaps more remarkable now in that he’s remained, always a touch out of step with the mainstream.

Whether it’s taking left-of-center positions on bitcoin’s technical roadmap, how industry business should be structured to maximize growth or the nature of cryptocurrency as money, Voorhees remains the shapeshifting fox his company’s logo enshrines.

Then and now

One of the earliest evangelists for cryptocurrency (his online posts on the matter date back to 2011 and 2012), Voorhees is now one of its most distinguished entrepreneurs.

An early employee at its first major startup, New York-based BitInstant, he later founded and sold a gambling platform called SatoshiDice that was so popular it congested the bitcoin blockchain before scaling was even a widely acknowledged concern. Still, SatoshiDice was not without its critics, including the U.S. government, who fined Voorhees for the unauthorized exchange of cryptocurrency for startup equity.

If that sounds familiar, that may be because the model is en vogue these days, with so-called initial coin offerings (ICOs) performing similar sales on an almost daily basis. Since 2013, sales of custom cryptocurrencies have resulted in nearly $4 billion in project funding.

“I wish tokens were a thing back then. I went through all that risk and all that crap,” he says, reclining back in his corner office chair.

If that’s the case, though, ShapeShift’s new office complex also doubles as a statement on how far he’s come, and also how he’s always been a bit early to the future.

Complete with reclaimed wood tables, catered lunch for employees and ample room for expansion, the office is a living I-told-you-so to the naysayers who mocked Voorhees for being one of the few to embrace the idea cryptocurrencies beyond bitcoin had any value.

Yet, the growth of his company, which hired more than 50 people in 2017, at the time when many early bitcoin startups are struggling or pivoting, is credence to his foresight.

What started as a website that offered the ability for users to swap cryptocurrency without a counterparty now has five total offerings – its eponymous ShapeShift service; PRISM (a synthetic asset portfolio built on ethereum); KeepKey (a hardware storage offering); CoinCap.io (a data provider); and Arbiter (a stealth initiative).

Anarchist blues

But for Voorhees, the success has come with trade-offs. Namely, he hasn’t been able to be quite as visible – and outspoken – as he once was.

“When you run a company, you can’t also be super political. You have a target on your back; I have to censor myself all the time,” he says.

For one, he’d like to be more outspoken about the relationship between money and the government, the subject for which he first rose to renown in the industry.

Before he was an entrepreneur (struggling or successful), he was a blogger, authoring long thought pieces on the nature of politics and money, and how cryptocurrencies, by effectively moving the tools for money creation back into the hands of the people, were destined to upset this balance.

And for all there is to manage at ShapeShift, Voorhees still tries to keep in touch with his Libertarian roots. Case and point, the weekend before the interview, Voorhees was supposed to visit Ross Ulbricht, the founder of online dark market Silk Road, now serving life behind bars for his creation.

Though he’s never met Ulbricht, Voorhees likens his planned two-hour drive, delayed due to an abrupt hand surgery, to a kind of pilgrimage, one that acknowledges Ulbricht’s influence in building what was essentially the first large-scale business of any kind run exclusively on blockchain payments.

“He’s in jail forever at least until we bust him out. So, I want to go talk to him and let him know that he’s not forgotten about,” Voorhees says.

But if all this makes you think Voorhees has a bit of a fetish for oppression, he pushes back against the claim. A fairly new father, he says he’s eager to avoid a similar fate.

“I don’t want to end up in a cell,” he adds.

It’s the first of many statements in which Voorhees seems to see himself as someone bound to his beliefs, at once optimistic they’ll be vindicated, but also prepared to accept the outcome of their adherence.

Mean and nasty

On windswept streets, this predilection is on display again as Voorhees begins tearing into the meat of the subject we’ve been dancing around, his role in the industry in 2017, one that was primarily (publicly at least) defined by his support for failed bitcoin scaling proposals.

Like many other entrepreneurs, he signed a statement of support for the Segwit2x software upgrade that would have changed bitcoin’s code to increase its block size parameter. The backlash was shift, and without broad support, many CEOs pulled out over customer complaints and general in-fighting.

On the subject of how he emerged from that still respected – if voting on our ‘Most Influential’ poll is any indication – it’s clear he’s a bit bitter about the insinuation at all, calling it “totally absurd.”

“What was most tragic about the year was that all these people who were on the same side and they agree on 99 percent of things became not just opponents in a debate, but like vitriolic hating enemies of each other,” he argues.

Looking back, he’s sympathetic to his peers, like early investor Roger Ver, who have largely borne the brunt of fierce internet trolling. To Voorhees, it’s an example of how “mean and nasty” the debate got over what he believes was a well-intentioned, and ultimately necessary, change.

Voorhees, like Ver, maintains his position that bitcoin’s 1 MB block size needs to be raised for the software to succeed, and he remains taken aback by suggestions that the events served as a referendum that found developers staking a different path forward.

Asked to retort common criticisms of the Segwit2x proposal, Voorhees is quick to tear down arguments that have seemingly become accepted mantra.

“Are you saying bitcoin was not supposed to be used as a peer-to-peer cash system? It’s the sub-title of the white paper,” he says sarcastically.

Still, he does seem to refuse what appears to be the mainstream consensus, that bitcoin is now an asset more akin to a digital gold. To Voorhees, bitcoin can’t just be an asset class, or even a store of value, because it’s primary utility isn’t to be held, but to be spent.

“I’ve never confused price and utility. The only reason that the price should rise is if more people are finding it useful,” he says. “Holding is a derivative use case, it only applies long term if there’s something else the thing is useful for. In this case it was value transfer.”

Sly fox

From there, the issue is forced further, to the point where it’s perhaps too onerous to state the number of conditionals I use to prod at his preconceptions. But to this barrage, Voorhees holds the line, and over the course of the dialogue, his positions become a bit more defined.

He believes bitcoin cannot succeed as simply a store of value (and that better scaling is needed), that the rising tide of competing cryptocurrencies isn’t likely to be beaten back (by any bitcoin advance) and that, this aside, bitcoin remains worth fighting for as it’s the best chance for the cryptocurrency concept to be truly realized.

It’s perhaps this last goal that seems to most motivate Voorhees and his continued visibility in bitcoin, despite ShapeShift’s embrace of a more practical model that focuses on many protocols.

Indeed, if Voorhees proves nothing else in conversation, it’s that he’s perhaps uniquely able to see both idealism and practicality as two separate ideas to be embraced.

Time after time, he defends the idea that “magic internet money” can’t be silly or arbitrary, no matter how many there are, going so far as to fight against the idea that cryptocurrencies only have value when measured against a fiat currency.

“If it wasn’t, why would anyone be interested in it? Other than some cryptographers,” he says.

But he remains devoted to bitcoin because he wants to see the world cryptocurrency unleashes sooner than later.

“The issue is that of all the work and effort going to build bitcoin today, if it gets surpassed or destroyed, it delays the entire project,” he says.

The hanging wire

This intellectual game of fox and the hound now over, we retreat back to ShapeShift’s offices, both perhaps unsure of what to make of the conversation.

Somewhere at a coffee shop, we decide on a title for the discussion – “The philosophy of change as it relates to bitcoin and cryptocurrency” –and soon after call it a draw. Though, there’s a sense of disorientation that remains.

Looking at a twin pair of fox paintings on the wall, my perceptions blurs. Made of a million black and blue brushstrokes, I remember there’s no such thing as color at all. The images I’m seeing aren’t even right side up, they seem to say.

Voorhees stops to fix the picture.

A little to the right, a little to the left.

“It might just be the wire,” he says at last.

Do I see what he sees? I linger on the way out, stepping back, changing perspective, looking at the pictures from different angles. Stepping into the elevator, I resolve that if they’re off, I can’t tell.

But it’s a testament to Voorhees that I feel like they should be.

Want more? Hear Erik Voorhees discuss his philosophy toward digital assets.

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Original artwork by Luis Buenaventura II, creator of the CryptoPop website. Click here to view more by the artist, and to check out the official CoinDesk Most Influential T-shirt.

Video by Ali Powell at 40 Thieves Films 

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Source: Coin Desk