Crypto Hype Cycles and You

Also: Tesla contributes to BTC software, U.K. regulations, titans at the gate.

What you need to know today in crypto and beyond  March 31, 2021 Sponsored By:     If you were forwarded this newsletter and would like to receive it, sign up here.   Send feedback to daniel.kuhn@coindesk.com – we'd love to hear from you! Today's must-reads Top Shelf CARMAKER CONTRIBUTES: Tesla contributed to Bitcoin open-source software. The carmaker disclosed a bug in the open-source Bitcoin payment processor and wallet BTCPay Server, and it also helped the project's team patch the flaw. There are unconfirmed rumors that Tesla is using BTCPay as its preferred bitcoin payment processor. TITANS AT THE GATE: Canada-based digital asset merchant bank Galaxy Digital is preparing for a U.S. listing in H2 2021. The Mike Novogratz-founded firm has been on a growth spurt, having expanded into mining and launching an exchange-traded fund in Canada. Other crypto-incumbents are also reporting growth during a bull market: Recently listed CoinShares Q4 profits more than doubled while Uphold has received FINRA approval to offer securities to retail investors. ISLAND ISSUES: U.K. regulators have released a bevy of guidelines and mandates regarding cryptocurrencies. Yesterday, Her Majesty's Revenue and Customs (HMRC) updated its tax guidance to incorporate income made from proof-of-stake networks. A Treasury minister separately told Reuters the agency is increasingly focused on regulating stablecoins. Finally, the nation's Financial Conduct Authority (FCA) will now require crypto firms to submit financial crime reports under stricter anti-money laundering policies.   – Daniel Kuhn Overheard on CoinDesk TV Sound Bite "There are so many regions in Africa that are thriving with respect to these digital assets."   – Denelle Dixon, CEO of the Stellar Development Foundation, said on CoinDesk TV's "First Mover." A message from Nexo Your digital assets deserve a savings account in their BEST INTEREST. 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What others are writing... Off-Chain Signals The bitcoin terrorists of Idlib are learning new tricks. (Wired UK) Why did the Morning Brew add a BTC markets section? "Its price is noteworthy." Total crypto market cap nearly touches $2 trillion.   – D.K. Sponsored Content   BTCS: Proof of Stake: A stake through Proof of Work's heart? Proof of Work (PoW) isn't dead. It isn't even dying. However, it is moving slower, and that's as good a reason as any for a mining operation to shift to another consensus mechanism. Putting the news in perspective The Takeaway Crypto Hype Cycles and You Yesterday, Messari founder and CEO Ryan Selkis tweeted that he's looking to take on 1,000 new analysts and researchers at his boutique, cryptocurrency intelligence firm. It's the type of goal that has come to define this moment in crypto: equal parts ambition and insanity.   I asked Selkis what he'd do with 1,000 analysts, how he'd coordinate such a team, what resources he's willing to invest in their training and whether my father should be a fit applicant. He referred me to a blog post he had also tweeted out. It begins by quoting from an old newspaper advert:   "'Men Wanted: For hazardous journey. Small wages, bitter cold, long months of complete darkness, constant danger, safe return doubtful. Honour and recognition in case of success.' - Ernest Shackleton, Antarctic explorer."   The ideal candidate knows there isn't much glory in writing longform posts about a maligned, though increasing relevant, industry and is probably willing to go unpaid. Stick it out for long enough, however, and you could build a portfolio, reputation and land a job.   Shortly after, Selkis tweeted, "How are so many people still so bad at resumes in 2021?" It may be fair to say his call to action is off to a rocky start, though I have no doubt Selkis will find success along the way.   A previous Messari cohort accepted 70 out of 200 applicants, Selkis wrote, and brought some of the industry's sharpest minds (Ryan Watkins, Jack Purdy and Mason Nystrom) into the fold.   As others have pointed out, crypto's greatest strength is its intellectual capital. Hedge fund giant and recent coiner Paul Tudor Jones II praised the "enormous contention of really, really smart and sophisticated people who believe" in bitcoin. While Nic Carter has noted that even if a disastrous event befalls BTC – like a glitch in the code, a wave of state bans, a precipitous drop to zero – there will likely be enough developers and writers willing to stick around and rebuild. Bitcoin has similar network effects as other communications and digital systems. While there is clearly cyclical boom and busts – where capital and people rush in, only to leave once the tide turns – bitcoin's price level has steadily progressed over the years.   Following every major crash, bitcoin finds a higher level of support. After surging to almost $1,000 in 2014, BTC never fell below $200. After nearly reaching $20,000 in 2017, BTC found new footing above $3,000. Today, it's an open question where bitcoin might stabilize after this hype cycle pops. I'd argue that a similar phenomenon, harder to measure, governs crypto's social capital.   "Crypto has exited every cycle stronger than it entered. This is true across all key metrics: entrepreneurial and developer activity, academic research, infrastructural maturity, corporate adoption, public awareness, and simplistic price, among others," Paradigm's Fred Ehrsam recently wrote. According to Gartner, the research and advisory firm, "hype cycles" progress from a technology trigger (when a technology – like non-fungible tokens – lands), to peaks of "inflated expectations," through a "trough of disillusionment," up the "slope of enlightenment" and finally arrive at a "plateau of productivity." Messari's 1,000-strong call to action is banking on people's inflated expectations around the industry. College seniors, disaffected bankers (hi, Dad) and those looking for a change are probably having a hard time ignoring BTC's surging price and the genuine fun happening in the NFT space.   When the bubble pops, we'll still be here.    – D.K. A message from CoinDesk What are bitcoin and ether's value propositions for investors? A new report by CoinDesk Research explains how the two most popular cryptocurrencies by market capitalization behave in the market, how their infrastructure differs, and what on-chain metrics say about them.   Download "Bitcoin + Ether: An Investor's Perspective" from the CoinDesk Research Hub. The Chaser... ATTENTION: Scammers have been sending fraudulent emails with links to sites disguised to look like coindesk.com. If you are in doubt about a link, type https://www.coindesk.com directly into your browser; do not copy and paste. Remember, if something seems too good to be true, it probably is. The Node (formerly Blockchain Bites)   A newsletter from CoinDesk   See Previous Editions Copyright © 2021 CoinDesk, All rights reserved.    250 Park Avenue South New York, NY 10003, USA You can manage your preferences here or unsubscribe from all CoinDesk email.