Banking plus bitcoin plus “bucks” equals boom
10th October 2022 |
You have my apologies for the delay on this latest Crypto Network update. We’ve been working on several upcoming projects in the crypto space – and that has thrown our timeline out somewhat.
We are also bringing you this update from a different time zone. Having jumped across all kinds of time zones in the past month, we’re now on Central European time in Amsterdam (again).
At this rate, my spoken Dutch might possibly extend past the obligatory dankjewel and alstublieft. However, this is unlikely as lots of locals speak excellent English – which makes me lazy in using Dutch properly.
Anyway, the reason that I’m here is that there are two major conferences with a slight overlap. One is called Sibos. It is run by SWIFT – the interbank payments system operator – and focuses on the intersection of financial services and technology. Many of the attendees come from the traditional finance (“TradFi”) world or are looking to business with people and companies from TradFi. It is one of the biggest international banking conferences globally.
The other conference is Bitcoin Amsterdam which (as you might have guessed) is all about bitcoin. By definition, almost everyone comes from the world of decentralised finance (DeFi).
I love being able to go to both. That is because, when we talk about TradFi and bitcoin, we’re looking at a dichotomy. Therefore, it is exciting to be involved with both. In particular, it is possible to see the role that each plays in the ongoing development and progress of the other.
Hence it’s quite exciting to be on the inside of both, understanding the role that each play in our world, but also interestingly the role each plays with the ongoing development and progress of the other.
Over time, it has become clear that elements of TradFi admire and want to adopt at least some of the decentralised aspects of bitcoin. It has also become clear that there are elements of bitcoin’s growing ecosystem that want to be more like world of TradFi.
Neither will admit it, and one trying to be like that other isn’t necessarily a good thing. However, it has become clear to me that, as time moves forward, there will be a happy middle ground between TradFi and DeFi. There will be two extremes – pure TradFi, where ecosystems are centralised and pure DeFi, where everything is decentralised.
If I could be bothered drawing a nice Venn diagram, you’d have TradFi on the left, DeFi on the right and in the middle, something I like to call “MidFi” (middle finance)… okay, it’s a working title.
It’s this idea of “MidFi” that I want to open to you today. I think that in the coming years we’re going to start to see more and more opportunities and growth in this middle ground.
I plan to uncover some of those opportunities this week. We may get to a point where all finance is carried out via DeFi and decentralised systems. However, that point is a very long way away. TradFi is too big, powerful and well established to yield to DeFi any time soon. MidFi could well be where the action is.
In any case, watch this space this week and next, as I’ll be shooting some short videos where possible. I will look to give you a flavour of what these conferences can be like and why I make attending them a regular part of my ongoing research.
As for the rest of the wider crypto world right now, it’s fair to say that things continue to be in a status of suspension. We’re not yet at the beginning of the next big boom cycle, but there’s a good chance that we’ve found our “bottom” of the previous cycle.
Put another way, we’re in that transition phase where things kind of trend sideways, where the media aren’t whipped into a frenzy at any mention of the word crypto, and where things are just subdued and sedate.
The development and the “build” are still going strong. However, it’s just that they don’t grab major headlines like they do in a boom cycle.
Here are some examples of what (quietly) has been going on…
- In June, Binance Labs successfully launched a $500 million investment fund to boost blockchain, Web3 and value-building technologies.
- After buying the assets of troubled crypto lender Voyager Digital (some say for around $1.4 billion), FTX – led by founder and crypto billionaire Sam Bankman-Fried – is said to also be looking to buy the assets of failed crypto platform, Celsius, for around another $1 billion.
- The world’s largest crypto asset manager, Grayscale, has launched the Grayscale Digital Infrastructure Opportunities division to invest in bitcoin mining hardware. It is offering investment opportunities to accredited investors and family offices. The aim is to “capture the upside of the crypto winter”.
- Research from Sifted Intelligence suggests that last year venture capital investments in crypto and blockchain opportunities exceed $30 billion. And that to July 2022 that number had already tallied more than $17.5 billion.
- Crypto assets firm NYDIG just completed a new raise from institutions for investment in bitcoin for a $720 million.
In other words, we’re talking about billions on billions of dollars flowing into crypto and blockchain start-ups, crypto companies, funds, investments and opportunities. It’s coming from retail investors, institutional investors, family offices, hedge funds. The money may be flowing pretty quietly, but it is flowing fast.
This is a very similar pattern to what happened in 2015/16 and 2019/20 as markets were at their cyclical bottoms, preparing for the next major bull run.
This is where I believe we’re at again. It may extend through the remainder of this year and some way into 2023. But the continued flow of money, human capital, and the development and progress in crypto and blockchain opportunities tells me that the next bull run is not all that far away.
And if that’s the case, the best time to be active in this market is now. This is a time when the mainstream is again calling the death of crypto, when the wider financial markets are full of fear and when every fibre in your body suggests that you should just head for the hills.
Crypto is widely hated. The smart money is buying. You should consider doing the same.
Crypto to Know
Below is our “Crypto to Know” list where you’ll find several crypto that we think you should be taking the time to learn and understand.
They each form an important part of the burgeoning crypto ecosystem.
Several of these crypto are doing very different things to others.
What’s key is to learn that every crypto has its own use cases, its own guiding principles, and its own particular potential.
Each crypto is to be judged and assessed on its own merits.
Our aim here is to help you understand these crypto and the wider crypto world.
These aren’t specific recommendations but a guide to help you learn and build your confidence in operating in this space.
We will add more names to this list over time. However, if you’re new to the world of crypto, these are the names where we think you should start your education and learning.
We’ve also added links to each one.
The links are to what we believe, in each case, is the best resource for learning about that crypto.
“Crypto to Know” watchlist
- Bitcoin – it/wiki/Main_Page
- Ethereum – ethereum.org/en/what-is-ethereum
- IOTA – docs.iota.org
- Tezos – tezos.com/learn/getting-started
- Filecoin – docs.filecoin.io
- Cosmos – v1.cosmos.network/intro
- Binance – binance.com/en/about & research.binance.com/en/projects/bnb
- FTX – ftx.com & help.ftx.com/hc/en-us
- Solana – docs.solana.com/introduction
- Secret Network – scrt.network/about/about-secret-network
Until next time…
Sam Volkering
Editor, Sam Volkering’s Crypto Network
