Coinbase Misses Revenue Expectations

The biggest crypto news and ideas of the day

Nov. 10, 2021

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Top Shelf

QUARTER RESULTS: Coinbase posted $1.1 billion in transaction revenue for Q3, down from about $1.9 billion in Q2, the crypto exchange said in its earning report. The total revenue of $1.31 billion missed expectations, and its stock tumbled 13% after the announcement. Meanwhile, Voyager Digital says its brokerage business now has 1 million funded accounts, a 23-fold increase from last year. Finally, ConsenSys' Infura tool for developing on Ethereum now has more than 350,000 users (up from 100,000 last year) with a significant number building on ETH layer 2s.

STABLECOINS: Tether, the largest stablecoin by volume and value, is continuing to expand to alternate layer 1 blockchains with its latest Avalanche integration. The $73 billion, dollar-pegged stablecoin giant also recently went live on Polkadot, Kusama and Solana. Meanwhile, rival stablecoin issuer Circle is looking to establish a larger footprint in Asia with a new hub in Singapore and investment in JPYC, the issuer of a Japanese yen-pegged stablecoin, through its VC wing.

MINING MORE: CoreWeave, the specialized cloud service provider and ETH miner, has raised $50 million from Magnetar Capital to provide high-performance computing infrastructure. Separately, one of the top-five largest BTC mining pools, Foundry Digital, launched a staking business to provide services to institutions related to various proof-of-stake (PoS) blockchain networks, including Solana, Helium and The Graph. Finally, MineOne closed its first $20 million funding round and is now on the market to raise a further $200 million to expand capacity. It was founded last month.

RESTRICTED USE: Huobi Global, one of the largest global crypto exchanges, will close the accounts of all Singapore-based users by March 31, 2022 to comply with local regulations, the exchange said Tuesday. Huobi claims to be expanding its overseas presence to make up for expelling Chinese users, which represent half of its total user base and 30% of its revenue, according to co-founder Du Jun and Global Strategy Director Jeff Mei. But users from the U.S., Canada, Cuba, Iran, Japan, North Korea, Sudan, Syria, Venezuela, Crimea and now the crypto-friendly city-state of Singapore are restricted.

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Overheard on CoinDesk TV ...

Sound Bites

"Deregulation isn't good because it creates uncertainty."

–MakerDAO founder Rune Christensen, discussing the Biden administration's stablecoin report, on CoinDesk TV's "First Mover."

What others are writing...

Off-Chain Signals

How African refugees used bitcoin to build their own grassroots economy (TechCrunch)
A 'whole new class' of consumers is entering the crypto space, says Visa executive (CNBC)
Inside the Earnest Parties at the First Major NFT Conference (TIME)
Lightning Network bot hack perfectly demonstrates it's not Bitcoin (Protos)
Mining for NYCCoin to begin Wednesday with blessing from Mayor-elect Adams (The Block)
NFT Artist Beeple Sells Latest Work for $29 Million at Auction (Decrypt)

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CoinDesk's "Most Influential" recognizes individuals who've had a big impact on the cryptocurrency and blockchain industry in a calendar year. Chosen by readers and editorial staff, the list features 50 people from across the space, including entrepreneurs, traders, coders, regulators, celebrities and the odd surprise. To have your say on who should make this year's list, check out the form here. The results will be announced on Dec. 6, 2021.

Putting the news in perspective

The Takeaway

Towards a Taxonomy of Bitcoin Politics

Hi, David Z. Morris today. In a Twitter thread yesterday, writer and speaker Dave Troy explicitly tied bitcoin to far-right American politics, calling bitcoin advocacy a "sequel to the January 6th attack" on the U.S. Capitol building in Washington, D.C.

Unsurprisingly, Troy got some blowback. At the very least, his criticism is narrow, omitting significant groups of thinkers and activists who see bitcoin, or crypto more broadly, as a potentially significant tool for projects across the political spectrum.

To show just how much Troy's critique leaves out, what follows is a taxonomy of the various groups and tendencies that have actively embraced bitcoin. This tentative breakdown runs roughly from "left" to "right," although the politics of bitcoin sometimes upends the traditional spectrum. My goal here is to provide a largely factual overview of these various constellations of belief rather than critique them – though as you'll see, my magnanimity does have its limits.

Market radicals
Though I'm including them here for thoroughness, the most conventionally "leftist" major group in crypto is a cadre of egalitarian technocrats largely associated with the Ethereum blockchain rather than Bitcoin. They broadly believe that the redesign of money and markets, conducted transparently using blockchains and smart contracts, can help build a more egalitarian and fair society. Their ideas often rhyme with forms of democratic socialism and they sometimes even advocate for weakened property rights as a counterweight to economic rent-seeking.

Anti-authoritarians
Bitcoin is often tarred as inherently right-wing by those focused on America's basically center-right political order, which already provides considerable protection of individual freedom. But many governments, historically and today, are grossly abusive and undemocratic, and in those contexts bitcoin provides an important lever for the resistance of unjust laws. Alex Gladstein of the Human Rights Foundation captures some of this sentiment with his focus on bitcoin's potential to let individuals evade the worst abuses of authoritarians worldwide.

Anti-imperialists
Many bitcoin advocates take the even broader view that the existing global banking regime has been a tool of powerful first-world nations, and that cryptocurrency is a potential counterweight. That's one way to interpret the embrace of bitcoin by El Salvador's President Nayib Bukele, who is well versed in the "shock doctrine" tactics used by entities like the International Monetary Fund. This high-minded financial thuggery by IMF and its ilk has served to impose extractive market neoliberalism on dozens of developing countries since World War II, and depends substantially on the centralized influence of the U.S. dollar (See also anti-war libertarians, below).

Progressives
Many prominent U.S. progressives, like Matt Stoller and Rohan Grey, are either skeptical of bitcoin or simply believe it to be a distraction. This group also includes advocates of radically expansive visions of the role of fiat currency, particularly "modern monetary theory" (MMT), the idea that governments do not actually have to limit their own spending.

But there is at least one recognizably progressive stance in favor of bitcoin: that it is a useful bulwark against identity-based discrimination. As CoinDesk contributor Isaiah Jackson has fiercely argued, the legacy banking system has been and remains deeply racist against Black people in America, making a neutral alternative potentially liberating. And while much "bank the unbanked" rhetoric in crypto is self-serving and hollow, there is substantial real-world evidence that crypto is empowering women in the developing world, which progressives should welcome.

'Alpha Bros'
Easily the largest group of bitcoin holders are those who have little or no deep political stance on it at all. Most in this group, which includes many institutional adopters and those crossing over from Wall Street, are interested strictly in bitcoin's record of gaining value in dollar terms. I would also include many pure technocrats here, such as those interested in blockchain's potential to improve the efficiency of cross-border payments. As researcher David Golumbia has rightly pointed out, though, both of these "apolitical" groups can be drawn towards more right-wing bitcoin rhetoric.

True libertarians
Over the past few years of American politics, many putative libertarians have been seduced by varieties of authoritarianism. But in bitcoin, there are still important figures who take a principled stand for limited government without simply defending the status-quo privileges of the already-rich. Perhaps the most compelling stance of bitcoin libertarians like Shapeshift's Erik Voorhees is a bone-deep opposition to warmaking, which they rightly argue often depends on a government's ability to print money indiscriminately. The idea that bitcoin can stop war may or may not withstand scrutiny, but you can see the appeal.

So-called cyber-libertarians or crypto-anarchists could also be included here. They may not share libertarian politics in the real world but believe that cyberspace should be more or less unregulated. These ideas, famously laid out in John Perry Barlow's "Declaration of the Independence of Cyberspace," were extremely influential on many of those who helped develop bitcoin.

Fiscal conservatives
Even if it doesn't outright replace fiat currency, bitcoin can be thought of as a check on the central banks' worst excesses. This is most often pitched in individual terms, with bitcoin touted as "digital gold" that will protect assets in a high-inflation environment. But at a macro level, the mere existence of bitcoin as such a hedge could have a disciplining effect on central banks, simply because citizens who see their assets taken away by inflation have an alternative for storing value. You might roughly call this position "Bitcoin Mediumism," and it's particularly persuasive in contexts outside of the United States, where weaker or more short-termist governments are more likely to radically meddle with the money supply.

Neo-feudalists
The loudest and most heterodox group of bitcoiners, these are the true target of Dave Troy's Twitter thread. Many of their ideas are intensely individualistic, anti-democratic and effectively in favor of a stark economic and political hierarchy. In some cases this is framed as a matter of grim necessity, as with the often-touted concept of "The Citadel," a vision of the most successful capitalists becoming the kings of privatized city-states as a defense against the imminent crumbling of the neoliberal order.

These ideas also overlap considerably with so-called Bitcoin Maximalism, particularly the desire to eliminate state-backed money, and with it any social redistribution whatsoever. The dominant exposition of this worldview is Saifedean Ammous' "The Bitcoin Standard," a kind of bible for Maximalists (and far more nuanced and readable than you might infer from Maximalist Twitter). Though it's getting dated and shares the blind spots of Troy's thread, David Golumbia's "The Politics of Bitcoin" remains an important critique of the maximalist position.

Neo-feudalism also sometimes flirts with varieties of racism, implicitly or explicitly. Among the more troubling examples is arch-reactionary Peter Thiel's funding of the work of Curtis Yarvin, aka Mencius Moldbug, who has been accused of defending slavery.

White supremacists
At the farthest "right" of the bitcoin spectrum are vile figures including Andrew Anglin, proprietor of the Daily Stormer neo-Nazi website, who have used cryptocurrency to fund their operations. Certain tenets of bitcoin ideology also resonate uncomfortably with white supremacist talking points, particularly those involving fraudulent theories of a Jewish banking conspiracy.

However, it doesn't necessarily follow that, as Troy seems to imply, all skepticism of fiat money-printing is inherently rooted in anti-Semitism. And by and large, racists find bitcoin convenient rather than important: They are more the object than the subject of bitcoin politics. The same technology that lets Nazis raise money after being refused service by Visa also lets Afghan women protect their savings. All bitcoin users and supporters have to reckon with the idea that anyone can use the system – including the most cowardly, stupid people our society produces.

Americans are already comfortable with that idea when it comes to free speech. It remains to be seen whether they're willing to put their money where their mouths are.

–David Z. Morris

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