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| The biggest crypto news and ideas of the day Dec. 15, 2021 If you were forwarded this newsletter and would like to receive it, sign up here. Sponsored by Welcome to The Node.
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Today’s must-reads Top Shelf COINMARKETCAP KERFUFFLE: The price of bitcoin, the world’s largest cryptocurrency by market capitalization, was down 99% on crypto tracking site CoinMarketCap. But don’t worry, your bitcoins aren’t suddenly worthless. The extreme drop in prices was due to a glitch on the website, which surfaced during the early hours of Wednesday. The glitch wrongly displayed cryptocurrency trading prices and was solved after nearly an hour. WHAT’S THE DEAL? A bipartisan group of U.S. senators want Treasury Secretary Janet Yellen to specify how the finance ministry will define a “broker” for crypto tax reporting purposes. This comes after a heated debate this summer over a controversial crypto tax provision in the Biden administration’s recently passed infrastructure bill that would seek to tax all spokes on a blockchain. BUY THE BANK: London-based crypto payments company with $40 billion in 2021 volumes, BCB Group, has acquired a 100-year-old German bank, Sutor Bank, as it expands into the European Union. Terms were not disclosed, and German regulator, BaFin, must approve the deal. Meanwhile, traditional bank Bank of America weighs in and says Avalanche’s scaling capability offers a viable alternative to Ethereum in a new research note. INFLATION HEDGE: Turkish citizens, facing high inflation and a plunging lira, have been converting more funds into cryptocurrencies like shiba inu (SHIB) and the stablecoin tether (USDT) than into bitcoin, which is commonly seen as an inflation hedge. Trading volume in the BTC-Turkish lira currency pair on crypto exchange Binance totaled $918 million in November, less than a fifth the level of the SHIB-lira value of $5.26 billion and tether-lira’s $5.58 billion. AAVE WITH IT! A governance proposal floated by the Aave community centered around the platform’s code licensing ended on Tuesday, with 55% voting for the ecosystem to apply for a “business license.” Aave, a decentralized lending protocol thought of as a “blue-chip” DeFi option, will now require permission from projects or developers using its code – somewhat contrary to the open-source ideals of crypto. The vote was part of the project’s decentralized governance over a broader protocol update that brings cross-chain transactions and other code improvements.
PRIVACY FIRST: Popular Ethereum-based privacy mixer Tornado Cash, with over 150,000 ETH in its pools, just got a major upgrade as part of a transition to a highly anticipated version 3. The privacy-focused protocol used for obfuscating the history of ether (ETH) transactions, announced its Nova upgrade that will take Torado to the sidechain xDai, allow for variable deposits and withdrawals and enable “shielded” transactions. Separately, CardCoins, a website that lets users trade prepaid gift cards for bitcoin to remain anonymous, has integrated with the Bitcoin Lightning Network.
A message from Nexo When it comes to buying, borrowing or earning on your crypto, you won’t find and easier, safer way to do it than Nexo. And here’s what’ll happen next: you and your referrals will both get $25 in BTC within 30 days of them passing Advanced Verification and topping up the equivalent of $100 or more of any asset supported on the Nexo platform. There’s no limit on the number of people you can refer, so invite as many friends as you’d like!
Overheard on CoinDesk TV... Sound Bites "There's a lot of education that needs to be done here, both in the media and in Washington."
–Matt Leising, co-founder of media startup DeCential, on CoinDesk TV’s “First Mover.”
What others are writing... Off-Chain Signals IRS posts finalized 1040 form with revised crypto question (The Block) Crypto in Congress: 5 Members Have Invested and So Have Many Staffers (Decrypt) Senator Sherrod Brown writes about the dangers of stablecoins (U.S. Gov.) Instagram accounts created with stolen pics push fraudulent crypto schemes (CNBC) Why hedge funds are warming up to crypto (Yahoo) ‘PayPal for Crypto’ wannabe Ramp raises $52.7M Series A round led by Balderton Capital (Tech Crunch)
How crypto is changing media and entertainment – and forging its own culture. Follow along with our continuing coverage here.
How Brands Can Build in the Metaverse Cathy Hackl, aka “the Godmother of the Metaverse,” on how crypto-oriented virtual worlds can be useful for marketers.
Mobile Bitcoin Gaming Is Powering Up on Lightning Des Dickerson: “We want to gamify the world with bitcoin.”
Putting the news in perspective The Takeaway As part of our Culture Week coverage, members of CoinDesk’s Layer 2 team have been comparing notes about our experiences going to a variety of non-fungible token art events in New York and elsewhere over the past year. One theme has been the prevalence of closed-door events. There are entire NFT gallery shows restricted to people who’ve already shelled out tens of thousands of dollars or more. One member of our team, comically, was yelled at just for walking a bit too close to the front door of an NFT event he wasn’t even aware was happening. The emergent industry seems really, really fixated on keeping out the riff-raff, and making sure you know it.
To many readers, this might sound like how the “real” art world already functions – as an exclusive club only for the wealthy. That’s certainly how art galleries tend to look on TV and in movies. Because many people involved in NFT-land don’t have much background in the art industry, I suspect some of this emphasis on “exclusivity” is based on these secondhand notions.
I’m intimately familiar with the highest heights of the New York fine art industry, through close personal connections and half a decade of haunting galleries in Chelsea and Brooklyn. And I can tell you, closed and exclusive events are NOT how the art world works. And the NFT industry’s imitation of a television caricature of “art galleries” may hurt it in the long run.
Even the very hottest New York galleries – places like, let’s say, David Zwirner – hold public openings that are not only entirely free, but usually even have free booze to entice people in the door. Before the coronavirus pandemic, it was common, even predictable, to see some disheveled-looking chancer stroll into a high-end art opening, take a cursory, performative glance at a few paintings, then surreptitiously fill a backpack with free beers before heading back out into the street. They’re basically never hassled about it.
That accessibility is great in terms of fairness, justice and equity. There are plenty of activists pushing for more accessibility in art, arguing that it’s part of a universal human legacy. They would unquestionably have a fit over the exclusivity and barriers in place in the world of NFTs.
But let’s just throw justice and equity out the window for a moment. Fine art gallerists aren’t in it for their health, or even really to benefit humanity. These are for-profit operations, and ultimately they’re willing to let in any rando off the street not because it’s the right thing to do, but because it helps them make money.
Most immediately, a public event is far more likely to capture an ineffable moment of bustle, liveness and excitement – all of which help motivate people to buy art. The young and/or broke people who have nowhere near $20K to drop on a painting provide a kind of assurance that there is inherent value to a piece. They’re there to tell rich people, who sometimes have little or no taste of their own because they’ve spent their lives making money and not doing much else, that a piece of art is Actually Good.
On the other hand, you fill a room with people worth millions, all of them with a financial stake in what’s going on, and every performance of being impressed or interested by the art itself immediately feels affected and stilted. If no one is walking around looking at the art as art, to demonstrate the pure pleasure of an image or object, it all starts to look like Potemkin Pokemon very fast.
That’s just the short-term upside of inclusivity, though. The real returns come on the back end. Because those young, poor outsiders often include people who will become influential and powerful, when you welcome them early on you’re helping shape their world view and building long-term loyalties. This is particularly true of artists themselves, who are generally just as broke as the stereotypes would suggest, but have real collective power to set the agenda for what’s cool – and in turn, what’s valuable.
One of the best examples here is the work that emerged out of New York in the 1980s, folks like Jean-Michel Basquiat, Keith Haring or (my personal favorite) The RAMM:ELL:ZEE. Basquiat in particular started getting paid very early on, but the scene was completely inseparable from the grassroots scum and villainy that defined New York City in that era. Wall Street traders may have been buying the art, but it was about the B-boys, gay club kids, graffiti writers and crack dealers who populated cultural nexuses like the Mudd Club or Union Square.
Of course, not all NFTs are primarily about art, so there are exceptions. The Bored Ape Yacht Club shindig during the NFT NYC conference, for instance, was restricted to holders. These “profile pic” NFTs frequently lean into their status as an exclusive club for holders. Maybe there’s value in that – a kind of updated online country club.
But other NFTs have been promoted substantially by leveraging the idea that “art,” broadly speaking, has produced great investment returns over time. It’s important to remember that those returns have been the product of a complex and multifaceted apparatus known as the “art industry,” one which has evolved, in its modern form centered on for-profit galleries, over the course of more than a century.
A key insight is that the long-term value of art, financially as well as culturally, is tied up in broader “scenes,” cultural moments that embody something larger than any one piece. These scenes are structured like pyramids, with a small group of wealthy collectors funneling money to a much larger, mostly much less-rich group of artists, curators and other workers. But, and this is crucial, the people at the top of the pyramid are themselves dependent on the much larger group of workers and cultural figures – influencers, in the neutered corporate terminology of our fallen age – to affirm the value of what they buy.
NFT art has the potential to become that sort of scene, but to do so it has to open the doors to anyone who wants a free beer. Until then, the whole thing may be much, much more fragile than the velvet ropes and champagne flutes would imply.
Sponsored Content
Huobi: What Gives Crypto Its Value?
Where does crypto get its value? Where does anything get its value?
It’s really quite simple: If enough people agree that something is valuable, it becomes valuable. That was how ancient currencies like gold or even cowrie shells derived their value, and this applies to the value of artwork. It doesn’t matter why people desire something, only that the desire exists in high enough volumes. This is the point at which economic value is generated.
The given price of an underlying asset will depend on the characteristics of the market and, just like many central bank currencies, each token in the crypto space has different characteristics to prevent depreciation and help retain its value in the market.
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