Vitalik vs Nouriel Roubini — how to cool down the cryptocurrency wars.
Date: 12 October 2018
The economist Nouriel Roubini testified in front of the US Senate’s Banking Committee a week ago. His views of cryptocurrencies were scathing, to say the least:
“Scammers, swindlers, criminals, charlatans, insider whales and carnival barkers (all conflicted insiders) tapped into clueless retail investors’ FOMO (“fear of missing out”), and took them for a ride, selling them and dumping on them scammy, crappy assets at the peak that then went into a bust and crash — in a matter of months — like you have not seen in any history of financial bubbles.”
He was equally dismissive of blockchain (“over-hyped and least useful technology in human history”) and of Vitalik Buterin. He followed up his Senate comments with a series of fairly wild Twitter comments. One of the less offensive ones was about tokens in general:
“These crypto lunatics know nothing about money, banking finance, monetary policy. They have zero financial literacy. And they pretend to reinvent money. A solution to a problem that doesn’t exist. And a solution that is the return to the Stone Age of barter.”
Peter Van Valkenburgh, representing pro-crypto sentiment at the Senate hearing, responded quite mildly:
“Is it perfect? No. Neither was email when it was invented in 1972. The mere fact that it works without trusted intermediaries is amazing — it’s a computer science breakthrough. It will be as significant for freedom, prosperity and human flourishing as the birth of the internet.”
Following the Senate hearing, and Roubini’s Twitter tirade, Vitalik Buterin stepped into the fray. He started by attacking Roubini’s claim to fame that he was one of the few economists that had predicted the 2008 financial crash. Vitalik made his own prediction: “I officially predict a financial crisis sometime between now and 2021,” suggesting that he had a 25% chance of being correct and could then make similar claims to being a financial guru as Roubini had done.
Besides the spectator value of the interaction, there is a more fundamental issue at play here, according to the BizNews report. There are two completely different worldviews on display:
· An economist looking at the current state of affairs, and seeing only a bubble, highly imperfect technology and poor ability to deal with real problems. The current failure rate is considered to be important and there are alarms about the number of scams in the environment.
· An engineer seeing a problem worth solving (removing third-party authority from financial transactions and contracts) and working on a solution. Failures are simply inputs and scams are irrelevant.
This perspective might serve to cool some tempers and allow everyone to think more clearly about what is actually going on in the cryptocurrency and blockchain world.
Steve Wozniak co-founds blockchain-driven venture capital fund
Date: 15 October 2018
Steve Wozniak, the co-founder of Apple Computer Inc, came out firmly on the side of cryptocurrencies this week.
“Woz” has joined Doug Barrowman and Baroness Michelle Mone OBE in launching EQUI Global, a venture tech innovator, that looks to disrupt the traditional venture capital market. He will be bringing high energy and enthusiasm and willingness to help and mentor new tech stars.
The trio certainly punches holes in the theory of the economist Nouriel Roubini testifying at the US Senate this week that “These crypto lunatics know nothing about money, banking finance, monetary policy. They have zero financial literacy.”
Doug Barrowman qualified as a chartered accountant, worked for 3i pic, a private equity group, in his own private investment vehicle, Aston Ventures, and later the Knox Group of Companies, with funds under management and administration of £1.5 billion. His personal net worth is estimated at close to £1 billion.
Baroness Michelle Mone grew up in the east end of Glasgow, left school at 15 with no qualifications, and started small as a bra designer that led to the formation of the Ultimo Lingerie company. She eventually became a global entrepreneur with interests in interiors, property, tech and jewelry. She was awarded an OBE in 2010 for her outstanding contribution to the business. She is one of the highest-paid business speakers in the world. Her personal net worth is believed to be in the region of £20 million.
Steve Wozniak needs little introduction. He and Steve Jobs started Apple in 1976, with Wozniak being chief designer of the computer. He is still linked to Apple, both as an employee and a shareholder, but has also moved on to various other technical achievements. He has multiple honors and awards for his engineering ability, including several honorary doctorates in Engineering, inauguration in the National Innovators Hall of Fame and the Manufacturing Hall of Fame, recognition from the IEEE (representing 5 major engineering organizations) for “professional achievements and personal endeavors that have advanced the well-being of humankind”. The list goes on. His net worth is believed to be $100 million.
So when these three get together on a new project there is likely to be something to it!
Up to 80% of investment by EQUI will be in technology companies (with Wozniak taking the lead in identifying them and bringing in their owners for mentoring from the EQUI team) and the balance in non-tech assets like real estate, art and vintage cars.
The main drawbacks for traditional venture capital funds are that only institutional investors or high-net-worth individuals can participate, and then their investment is illiquid for a significant period of time. The difference with this Fund is that anyone can participate, and they can buy in and then trade out on external crypto exchanges at any time. Liquidity is created by the EquiToken, built on the Ethereum platform.
Having a traditional investment with a blockchain “back-end” creates opportunities that could change the game for venture capital.
As Steve Wozniak says, “It takes people who have ideas, but not just ideas, not ideas in their head, not ideas that are spoken, not ideas just on paper, they actually do work and create things.”
He will be looking for those people as he identifies tech companies to invest in. And investors will be looking to Wozniak, Borrowman and Mone to do the work to create a new model for investment.
(Meanwhile, Roubini continues to talk on Twitter but has so far not taken up the challenge by the crypto investor A Pompliano: “Pick any asset you want. If Bitcoin doesn’t outperform it in the next 5 years, I’ll donate $10,000 to charity of your choice. If Bitcoin wins, you donate $10,000 to charity of my choice.”Perhaps Roubini is an example of the people who just have ideas and talk about them, without working to create something?)
Can blockchain solve the problem of art fraud?
Date: 14 October
Christie’s Auction House is one of the world’s top outlets for the sale of fine art, antiques, jewelry, watches, wine and more. It was founded in 1766. Its long traditional history has not held it back, however, from introducing blockchain technology to its business model.
Christie’s has a history of technology innovation. They were first with such innovations as online bidding during live auctions, live streaming, e-commerce auctions, mobile bidding registration and others.
Now they have announced the introduction of a system for recording art transactions on the blockchain. The plan is to start with the November 2018 sale: An American Place: The Barney A. Ebsworth Collection. This is a huge sale, predicted to have artwork that will raise more than $300 million. Buyers will have a secure record about their purchases, including description, final price, and verification of the transaction.
There has been talking for some time of the value of blockchain in establishing the authenticity and provenance (record of ownership) of artworks. In 2014, the Fine Arts Expert Institute in Geneva said that it believed that 50% of artworks that it had examined were either forged or not attributed to the correct artist. There is hope that blockchain could slash the instance of stolen or misrepresented art.
The question is how to do this. There have been several companies (eg Blockchain Art Collective) that have postulated a tamper-proof seal to be attached to the artwork that provides unalterable proof that a particular piece corresponds with a particular blockchain entry. While there are some practical difficulties with this type of seal, any change or sign of tampering should be enough to alert others about a potential problem.
Is this yet another genuine use-case for blockchain?