A few folks from JLN attended the Voice of Blockchain Conference at Navy Pier this past Friday and Saturday. Here are some observations from two of them:
The Voice of Blockchain event at Navy Pier was big – at least, the room where it was held was enormous, with the microphones on each stage just loud enough to drown out the echo from the microphones on the other stages. There was perhaps an overabundance of stages and topics from which to choose, but there were some interesting speakers as well as startup companies with vendor booths.
Denny Chared of DC Finance provided some outspoken humor at a panel on Funds of Funds vs Family Wealth moderated by Kim Parnell, CEO of Blank. Chared called many of the ideas and whitepapers coming out of the crypto sphere “crazy,” and said some of the people involved are “fanatics” who wanted to get rid of mediators (“referees” who have a role in keeping matters impartial or safe).
“I don’t want Uber [for example] without mediators!” he said. “I don’t want to be murdered!”
He also opined that a number of “bad ICOs” were giving the industry a bad name.
If you want to get investment for these projects, he said, “You need to write serious white papers!”
Another panelist, Dan Gunsberg of Gordian Block, said that although crypto is “a sexy investment…the space needs to grow before large family offices get in.” He added that he was very bullish on gaming and prediction markets.
Both panelists agreed it is somewhat difficult to find investment from large family offices, but that if you become knowledgeable in the space and if you get investors excited about your story, “they’re yours.”
At another panel, JLN’s own Jim Falvey again spoke about the important regulatory issues people in the space need to know, such as the fact that the SEC’s laws do apply to security tokens, and if they trade in a secondary market, that market must register as an exchange or get an exemption as an ATS.
Also, U.S. regulatory uncertainty has led some people to flee to less restrictive places like Switzerland, Malta, and Singapore.
Falvey said we are seeing Self-Regulatory Organizations (SROs) and multiple SROs, including the “Virtual Commodity Association Working Group” endeavor started by the Winklevoss twins, working with four cryptocurrency exchanges.
“SROs like Finra and NFA could end up taking on the bulk of the regulation” in the crypto sphere, Falvey said.
A panel on The Chinese Blockchain Ecosystem brought out, but did not really address, the conundrum of massive Chinese investment in blockchain and crypto projects despite China’s ban on cryptocurrency trading and initial coin offerings starting in late 2017.
China is “very friendly to blockchain” even though regulations are “a little bit strict,” said one panelist. He said a lot of crypto mining is taking place in China, partly because the cost of mining coins in the U.S. is much higher.
Another panelist said that blockchain and the token economy must combine together. He said most token ideas begin in China and are then copied elsewhere around the globe.
Dr. Terry Xing, CTO of Upower, said blockchain is still in its early stage, and we must make sure the bottom layer of technology can support the upper layer. Currently, “the lower layer of the structure can’t support a mass application” of blockchain, he said. He also said people should move away from looking to make fast money and concentrate on projects that will actually benefit users.
The only answer to the investment conundrum seems to be that, at least for the time being, the projects people are investing in are technically not in China, but the money is coming from China.
- The presentation from bitcoin maximalist Jimmy Song was a major disappointment. As opposed to his rousing debate with Joe Lubin of Ethereum on the viability of blockchain beyond bitcoin at the Consensus conference in New York, his Voice of Blockchain speech amounted to little more than warmed-over libertarian hectoring on the virtue of “hard money.” Mark it down as a vivid example of that seemingly peculiar tendency of Americans who luckily manage to make a boatload of money to extrapolate their success into a mistaken belief that they have discovered deeper truths.
- The “Why Chicago” was yet another display of the nagging insecurity that led the city to be labeled as “the second city” in the first place. The fact is that Chicago has already had a profound impact on the development of the cryptocurrency market by virtue of the increasingly out-sized influence of proprietary trading firms and individuals on the OTC markets and the stabilizing effect (i.e. bubble bursting) that the introduction of bitcoin futures at Cboe Global Markets and CME Group have had on the price of bitcoin. The fact is that Chicago has been a world-leading center for financial innovation, particularly over the past 50 years, and it’s likely to remain the case in the future.
- Tone Vays, in conversation with Colleen Sullivan of CMT Digital, had interesting things to say about the ascendance of cryptocurrencies. Bitcoin was validated to him with the Cypriot banking crisis of 2012 because it showed that a government can readily take your assets if you hold them in the conventional banking/investment system. The crisis in Greece a couple of years later was different but he expects that if another Greece happens again then the price of bitcoin will explode as demand soars from neighboring countries.
- There were a couple of panels that examined cryptocurrencies from the point of view of China and they served to highlight how far apart the East and West are when it comes to this new asset class. It’s said that the East is interested in speculation while the West is concerned with investment and while this may be true it only serves to highlight how seriously undefined and underdeveloped the ecosystem is at this point. Interestingly, the majority of audience attendees at these panels was Asian, indicating that one side isn’t really listening to the other yet. Perhaps that’s unavoidable but it’s hardly healthy or indicative of an emerging consensus or synthesis of beliefs. The meaning of this? It truly is way too early to definitively say what the ultimate promise and shape of crypto assets will be.