Blythe's big win

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December 10, 2017
 Blockchains Require Patience

That goes whether you're HODLing cryptocurrency, or pitching enterprise DLT to the world's largest financial market infrastructure providers.

Read more in the THE TAKEAWAY below.

TOP TRENDS ON COINDESK


Lunar trajectory, or lunacy?

Bitcoin powered through $10,000 ... then $11,000 ... then $12,000 ... then $13,000 ... then $14,000 ... then $15,000 and beyond. 

To be sure, there's a wide discrepancy in prices on the various exchanges, which to varying degrees have struggled to handle the increased volume.

And it's hard to tell how much of this run-up is "real" and how much is due to margin lending, momentum investing, or wash trading. According to technical analysis by CoinDesk's Omkar Godbole, a correction is not out of the question, either. 

Still, for those who stuck with bitcoin when the bien pensants were declaring it dead and buried, this rally feels good, man.

The claws come out

CryptoKitties, an app running on top of ethereum that allows users to buy, sell and "breed" unique digital pets, exploded in popularity – creating transaction bottlenecks on the second-largest blockchain.

First it was funny, then it caused the delay of an ICO and prompted serious discussions about scalability. Eventually frustration turned to acrimony and calls to increase the gas limit (the maximum amount of computations that can be performed in a block).

Could this become ethereum's version of the bitcoin block size fracas?  

Your show of shows

At Token Summit II in San Francisco, initial coin offering pros basked in the glow of $4 billion in cumulative sales while grappling with issues such as scaling limitations, market exuberance and valuing a new asset class.  
 
See all CoinDesk stories

 
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QUOTE OF THE WEEK

"Fuck cats. When will they solve this problem? I have been waiting for 20 hours now."

– An ethereum user, fuming about the congestion caused by CryptoKitties.

THE TAKEAWAY 

Last week I described how bitcoin, as a deflationary currency, encourages delayed gratification. Now there's evidence that bitcoin's straightlaced twin, enterprise blockchain technology, requires such an attitude as well.

Overshadowed by the bitcoin price action, the enterprise use case  – and one of its most prominent evangelists – scored a major advance this week. But it was a hard-won victory.

After two years of exploration, the Australian Securities Exchange (ASX) decided to replace its decades-old post-trade settlement system with a distributed ledger from Digital Asset, the startup founded by former JPMorgan Chase executive Blythe Masters.

That's right, replace. This is not another pilot or a proof of concept or a sandbox, it's real production.

Masters called the agreement "precedent-setting," and it'll be interesting to see what else her company does with its $115 million war chest after this prolonged and successful courtship.

But the achievement is all the more impressive considering that the ASX was publicly skeptical about the technology throughout the testing process.

So skeptical that the exchange had a contingency plan in place, in case it decided Digital Asset's technology wasn't suitable.

It probably didn't help that just months after the partnership with DA was announced, the ASX CEO who had championed blockchain resigned (even though the exchange quickly reaffirmed its commitment to exploring the tech's possibilities.)

And it almost certainly didn't help when, about a year into the process, stakeholders started to express disillusionment about blockchain in the Australian financial press.

Despite all these hurdles, Masters' team won over the ASX.

"We believe that using DLT ... will enable our customers to develop new services and reduce their costs, and it will put Australia at the forefront of innovation in financial markets," Dominic Stevens, managing director and CEO of the ASX, said in announcing the final decision.

Believe. That's a strong word, one you hear often in bitcoin, but very little in enterprise blockchain.

And perhaps rightly so. Financial market infrastructure is, to use the parlance of regulators, "systemically important" – too big and too interconnected with the rest of the economy to bet on a buzzword. The careful, deliberate approach ASX took with DA before closing the deal this week was appropriate. If anything, it's remarkable it took only two years to get this far.

But that in turn means others watching and participating in the space are going to have to exercise patience as well. This is not the kind of technology where you can "move fast and break things," as Facebook famously encourages its employees to do.

Bitcoin's resurgence this year has embarrassed the know-it-alls who wrote it off two years ago, confidently declaring that the blockchain, not the currency, would take off. But DA's big win shows it was also premature to declare commercial blockchains over, as many bitcoiners were understandably tempted to do this year.
– Marc Hochstein
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Beyond CoinDesk...

OTHERS ARE TALKING ABOUT

The MSM narrative about bitcoin is shifting from "is this a bubble about to burst?" to "OMG, what if this thing actually succeeds?"

James Mackintosh writes in the Wall Street Journal: "There is another danger, perhaps even more serious from the point of view of the central banks and regulators: bitcoin might not crash. If the speculative fervor in the cryptocurrency is merely the precursor to it being widely used as an alternative to the dollar, it will threaten the central banks' monopoly on money. ... No central banker could allow that to happen, both because she would be out of a job and because it would be economically disastrous... [if] the world switches away from fiat currencies, they would be unable to create new money to alleviate a crisis."
 
The Financial Times' Miles Johnson sees bitcoin as a manifestation of the same forces that put Trump in the White House and led the U.K. out of the EU. "Like populist politics, belief in cryptocurrencies and 'trustless networks' have chimed with a collapse in confidence in traditional forms of authority and a disdain for experts."

The New York Times profiles Coinbase, which the Grey Lady describes as "the heart of the bitcoin frenzy."

Last but not least, here's a smart response to anti-bitcoin environmental FUD from Elaine Ou at Bloomberg.

UPCOMING EVENTS (see more in our full listing)

WHAT WE'VE BEEN UP TO

CoinDesk editor-in-chief Pete Rizzo was traveling out West this week, shooting videos for our forthcoming Most Influential People in Blockchain 2017 series. Stay tuned for those clips, along with illuminating profiles of all the MIPB honorees and our Year in Review opinion pieces, starting later this month and running through the first week of January. 

Missed Consensus: Invest? We're already planning for Consensus 2018. Get your tickets here.

Got suggestions on how to make this newsletter better? Want to write an opinion piece for CoinDesk? Stoked as our managing editor is that you can now buy Slayer albums with monero? Email marc@coindesk.com, or tweet @MarcHochstein. And follow us @CoinDesk. 

Until next week...
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