[Community Post] Long Reads Sunday - Issue #56

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Nathaniel Whittemore - July 21, 2019

This week will go down in history as easily one of the most significant in Bitcoin and cryptocurrency’s history.

It started, really, last week, when Trump elevated the conversation to the national level. It seemed to many, however, that based on what Trump said and further comments from Mnuchin, the contentious force wasn’t Bitcoin but Facebook and its Libra project.

This was confirmed a bit by the first day of hearings with the Senate, which was a bi-partisan roasting of Facebook for having the nerve to try to do this in the context of it’s continued trust issues.

It was confirmed even more, however, by the second day of hearings with Congress. Unlike day one, day two had far more depth, nuance and specificity. What’s more, over and over again the questions of Congress made clear that there is a meaningful and growing understanding of the difference between Libra and permissioned corporate chains and permissionless blockchains like Bitcoin.

Perhaps nothing summed this up quite like the opening statements from VA Congressman Patrick McHenry, who said:

“The world that Satoshi Nakamoto…envisioned, and others are building, is an unstoppable force. We should not attempt to deter this innovation, and governments cannot stop this innovation, and those that have tried already failed.”

There is much more to explore about how the presence of Libra is shifting how Bitcoin is perceived, but for now, enjoy the thread, Happy Long Reads - NLW

Long Reads Sunday #56.

1. One of the most significant weeks in the history of Bitcoin and crypto. From “the unstoppable force” of Satoshi’s world to “shitcoins” on the Congressional record, this was one for the history books. Pull up a pool, heatwavers, it’s long reads time!
2. We’ve know that the Libra hearings would be this week for some time, but they took on a new tenor last week when Trump elevated the industry to a national discussion with his declaration that he was no fan of cryptocurrencies.
3. In the run up to the hearings, many smart folks summed up there feelings about Libra and what to watch for. In this extensive thread, @mayazi laid out the potential issues - from question of the reserve to tax issues to the potential diminishing of tools for local economic stabilization
4. On Monday, we learned that Treasury Secretary Mnuchin would be giving a briefing in advance of the hearings. @StopAndDecrypt grabbed the key highlights, with the banner headline being the label of cryptos as a “national security issue”
5. Still, some pointed out that Mnuchin really seemed to be focusing on the criminal activity aspect of cryptos, not any other larger implications. He even explicitly pointed out that he wasn’t concerned with legitimate investment activity in the area
6. But ultimately, all of this was prelude to the big show. On Tuesday, Facebook’s @DavidMarcus showed up to what would prove to be a very hostile US Senate. @CaitlinLong_ shared the perspective she had given the Senate Banking Committee
7. @dberenzon flagged a number of the important privacy, legal and governance points from the Senate hearing in this thread. Dmitriy also wrote a bang up post on Libra’s governance
8. Meanwhile, we hosted a little live streamed watch party for both days. My day 1 conclusions were that it was *all* about trust - and the lack there of - in Facebook. While other issues were touched upon, most senators wanted to know Why FB?
9. To be honest, I expected Wednesday’s session in Congress to be more of the same - a big ol’ crap-on-Zuck party. So imagine my shock when this remarkable 30 seconds from @PatrickMcHenry kicked off the day.
10. Indeed, whereas the Senate seemed to just want to score anti-Big-tech points, Congress brought an array of measured, thoughtful perspectives. Take, for example @RepSeanDuffy questioning around the political neutrality of Libra
11. There is a huge amount to unpack from the discussion, but of course, I have to flag the moment that everyone was talking about, when @WarrenDavidson asked @Melt_Dem to explain to Congress the difference between Bitcoin and Shitcoins.
12. @Melt_Dem was put on the hot seat to help explain more than just Shitcoins to Congress. In the expert panel following Marcus’ day 2 testimony, she was the lone crypto native to have to explain just how different Libra and permissionless blockchains like Bitcoin are.
13. And somehow, unbelievably, and with some serious kudos to @Melt_Dem, that contrast was made clear! It is impossible to have watched the two days of testimony and not come away thinking that it was a phenomenal week for Bitcoin
14. In my Day 2 recap video, I discussed 7 themes I heard: the distinction between BTC and Libra, questioning “banking the unbanked,” the threat of China, political neutrality, issues of governance, threat to USD, and regulatory clarity.
15. As @AriannaSimpson captures below, the narrative that Libra was a threat because of Facebook’s scale, while Bitcoin remained potentially complementary to the existing system was both clear, shocking, and welcome
16. Let’s take a quick trip through a Rogue’s Gallery of reactions. First up, @prestonjbyrne’s damning argument that the negative implications of Libra are bigger than they appear “This will be no ordinary monopoly; it will be neo-feudalism.”
17. @davidzmorris, formerly of @breakermag and now rocking with @fortunemagazine, writes a piece about the global systemic risks of Libra, from the risk of a bank run to the moral hazard of the theoretically 1:1 reserve system.
18. @antoniogm called BS on one of the lines of questioning/critiques that came up - that no one “elected” the organizations of the Libra Association to be running a global money
19. @NeerajKA, in one of a million good tweets, captured just how difficult it is for Facebook - or really any company in crypto - to comply with regulations given the..erm..lack of clarity.
20. I thought @TR401’s frustration at what seemed to him a revealing that the desire to actually help people with Libra was more lip service than real was particularly poignant.
21. To be honest, despite universal acknowledgment that Marcus did as good a job as anyone could have asked for, there weren’t a lot of folks stepping up to defend Libra. @sytaylor playing the role of the exception.
22. @ryaneshea also argued that, with the right leadership, Libra can be a force for good, and pointed to @beller as a sign of hope. https://twitter.com/ryaneshea/status/1152634322609942528
23. Still, it’s not impossible to me that this was *always* where this project was going to be after this first set of hearings. It’s hard to imagine a world where something of this scale and scope, coming from Facebook, would simply be embraced.
24. The global reaction was similar. At the G7 meetings held in France just after the hearings, the one thing that the nations seemed to be able to agree on was the threat that Libra posed.
25. Another of the week’s most quotable moments came from the G7, when Mnuchin told @JoeSquawk that cash had never been used for illicit activities.
26. Meanwhile, over in China @DoveyWan pointed out that Marcus’ admitting that Libra would compete with Alipay/Wechat triggered an avalanche of attention - more than 220 million views and 17,000 comments
27. Speaking of China, @DoveyWan also flagged a recent ruling that suggests that Bitcoin is, in fact, legally protected property in China. Which is, as they say, sort of a BFD.
28. So, let’s recap so we can highlight a few more non Libra things. First, the hearings made it clear that US regulators are distinguishing between permissionless blockchains like Bitcoin and permissioned corporate projects.
29. Second, it’s clear that we’re moving into a new phase of crypto in the US that is more regulated. It wasn’t just the Libra hearings, but also @Blockstack/@YouNow’s announcement last week or regulated token sales.
30. What’s more, at the end of the week we learned that the CFTC was conducting a probe into BitMEX and US traders using the platform. @lawmaster captured this in the context of changing relationships between exchanges and the US
31. Befitting a ponderous week, the conversation in the crypto community also ratcheted up to 40,000 feet after @RayDalio dropped this opus on the economic paradigm shift happening in front of our eyes
32. Indeed, this high level thinking was everywhere. @MaxKeiser pointed out how Iran may accidentally become a Bitcoin power because of cheap electricity
33. @cburniske pointed out a challenge to crypto’s capacity to reduce inequality based on the face that those at the bottom of the socio-economic pyramid are far more likely to simply not be online
34. @La__Cuen wrote about the practical realities of using cryptos like Bitcoin in Cuba and what it means for Libra’s potential to help the unbanked.
35. @balajis kicked off a fascinating conversation about what crypto means for a new era of digital property rights
36. When I asked folks what was the most interesting thing they had seen outside of Libra was, two DeFi projects came back. The first was the launch of Trend Trading Sets on @Setprotocol
37. The second was the WBTC - wrapped Bitcoin - was added to @Compoundfinance
38. Still, at the end of the day, this week’s story was all about Libra, Bitcoin, and a new phase of US and global regulatory understanding of cryptoassets beginning. What a time to be alive.
39. And there we have it - another crazy week in the books. As always, you can sign up to get LRS via email. For short daily news, watch my Crypto Daily 3@3 livestream at 3 EST or VOD or listen wherever you listen to podcasts