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Occasional musings on crypto from an early investor, entrepreneur, and two-bit idiot.
TBI's Daily Bit

The Decentralized State


April 11, 2018
Daily Bit

Over the past several months, I've gotten more bullish on blockchain tech's ability to solve meaningful organizational coordination and governance issues through incentives.

Aside from bitcoin for currency speculation and ether for decentralized fundraising speculation, I didn't used to ascribe much value to utility tokens, particularly ones that harped on their "governance" rights as if those were worthy of standalone value.

But this seems to be the direction the industry is moving, at least now that everyone seems to agree application-specific payment tokens will have basically infinite velocities, and thus next to no value.

Maybe it's the short personal stint at ConsenSys (I found this post on "Collaborative Network Economies" fascinating), or the recent reads through Reinventing Organizations or Sovereign Individual, or the recent product releases from 0x, ZeppelinOS, and Aragon that have made me change my tune, but I'm coming around to the intrinsic value of network tokens whose primary value is governance rights over a valuable new network technology.

In particular, there is value in tokens whose main purpose is to decentrally secure valuable libraries of information. You can think of the lower bound in the price of those tokens as you would an insurance product. How much of a governance stake do the users of a given library need to acquire (and hold) to ensure malicious actors don't corrupt an underlying library they use for economically valuable transactions?

If the network value is too low relative to the library being secured, you're f*cked. Too high relative to value secured, and the token holders might be less sophisticated and/or misaligned.

At scale, the value of one of these tokenized libraries should be a good proxy for a) the intrinsic value of that information resource / library, and b) an indication that applications leveraging that library transact or hold many multiples of the underlying's network's total value. 

This isn't to say I'm bullish anyone has actually found the right governance token solution yet, or that all or even most "governance tokens" are valuable, or that even the good ones aren't ridiculously overvalued. 

But some are going to stand the test of time.

0x, ZeppelinOS, and Aragon are three of my favorite to watch right now. And while I'm reflecting on this thesis, I hope you'll tell me why I'm wrong or which other "governance tokens" I should take more seriously. In the meantime, enjoy Messari' first open-source research report on...

Aragon

Expect a new one every day from here on out.
 
-TBI

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I Like Pictures
 
For a country that "hates" crypto and blockchain, China sure does love filing blockchain patents...

Maybe the situation isn't so black and white, as Eric Meltzer explains in this week's Proof-of-Work newsletter

(Image via CoinTelegraph)

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Red Pillz

The volunteer army at Messari is building a free, open-source library that anyone can use as a resource, so you can go down the crypto rabbit hole a bit more efficiently.

Today, we finally share the first!

Download our free three page overview of Aragon, and tell us what you think. The brief and its curated "further reading" resources should help you grok Aragon and it's decentralized court system in less than an hour. If you need proper motivation to read the whole thing, then there new video should do the job to get you properly fired up:

The Fight for Freedom.

If you have feedback on how we can improve the product, and you don't share it, you are 85% likely to be a bad person. 

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TBI's Compression Algorithm

Golem just launched its "Brass Beta" on the Ethereum main-net. The project allows users to earn money in return for their spare computing power, and is one of the primary resource tokens that I think of when I think of bonafide "securitized" digital resources (two of the others being Filecoin for storage, and BAT for attention) - the AirBnb's of the digital realm. The launch comes 18 months after they first raised $8mm in a crowdsale. The project's first test application will be used for 3D computer graphics rendering, allowing any users to distribute CGI processing of any Blender and LuxRender scenes (open-source tools for creating animated films) over the Golem network. The project also announced a bug bounty program. Bitcoin Magazine

South Korea prepares self-regulatory review for crypto exchanges. The Korean Blockchain Association is preparing a self-regulatory review of cryptocurrency exchanges operating in the country as well as launching standards for self-regulation. The association is working with local law firms as well as with the Korean Fair Trade Commission to provide better standards. According to local media, thirty-three exchanges were asked by the association to undergo a review; twenty-three agreed but ten refused. Bitcoin News

Bulge bracket banks can’t stomach crypto volatility. In its latest research notes, Bank of America researchers call bitcoin the "greatest asset price bubble in history” and claims the bubble is already popping. Meanwhile, analysts over at Barclays liken Bitcoin investments to that of an infectious disease. Charming.

Texas’s latest crypto investigative sweep. The Texas State Securities Board released a report on its month-long investigation of 32 different crypto-related investment offerings. The report also reveals that, to date, Texas has opened up no less that 60 crypto investigations. Notably, Texas entered an emergency cease and desist order for Bitconnect earlier this year.  Federal regulators aren’t the only cops on the beat, y’all. Texas


Quick Bits (Don’t read that, I read it for you) 

Choke Points (Exchange news) 
+ Japan’s Financial Services Agency releases domestic cryptocurrency trading statistics for the first time and estimates that at least 3.5 million individuals that are trading with cryptocurrencies-- that is almost 3% of the population.
+  After a four-month halt in user registrations, Bittrex began accepting new users again. Word is also that they have expanded their team to include former Amazon and DOJ employees. 

Startup Signals (ICOs, Cryptos, and Startups) 
+ Y-Combinator backed CoinTracker raised $1.5mm in seed funding from investors like Initialized Capital and FileCoin creator Juan Benet.
+ Ledger Wallet experiences outages over the weekend, rendering some Bitcoin Cash funds inaccessible to its users. Reddit freaks out, Ledger issues statements that the issue is being fixed.
+ Codex, an ethereum based arts and collectibles title registry, will hold a gala at this year’s Ethereal Summit to sell tokensized art.

The Powers That Be (Legal/Reg/Policy)
+ The DOJ seized listing site Backpage last week, accusing the site of laundering half a billion dollars in illegal revenue, some via cryptocurrencies. 
+ Spain’s Tax Agency has asked 60+ financial firms to turn over names and trading data on cryptocurrency buyers in an investigation for potential tax evasion and money laundering.
+ According to the Finance Ministry of Poland, all cryptocurrency transactions, regardless of their net results, are subject to a 1% tax under property transfer rules. Polish citizens are protesting.  

BigCo Noise (Enterprise initiatives)

“Celebrities”
+ Deloitte announces Linda Pawczuk as its new Head of Blockchain Services after Eric Piscini, who previously held the position, leaves to join a new startup. 

Did I miss something big?

Send me the link, your twitter handle and your best imitation compression algorithm write up. If I really whiffed, I’ll include your bit tomorrow (with attribution).


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Shameless Plugs

Hit me up when I'm in your city!

Upcoming Travel:
+ SF (4/8-4/10 - Blockfin at LendIt) 
+ Boston (4/25-4/27 - Pillar VC's Unchained) 
+ SF (5/1-5/3 - private event)
+ NYC (5/10-5/17 - Fluidity, Ethereal, Consensus, Token Summit)
+ Asia (Japan, Korea, Hong Kong early through mid-June)

My company, Messari, is hiring:
+ Front-end developer, blockchain engineers, data engineers
+ Volunteer analysts and summer interns
+ Content curation lead (compression algo tinkerer)

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