Ethereal SF & Why Ethereum Price is Stuck

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The Big News: Ethereal SF & Why Ethereum Price is Stuck

Last Friday I had the opportunity to attend and speak at Ethereal SF,  and these were a few of my takeaways: 1) Consensys: What is it? 2) Big Ambitious Ideas and 3) Decentralized Exchanges.

About Consensys

For those unaware, Consensys was founded by Joseph Lubin (most people just call him Joe). He was one of the founders of Ethereum, and it is speculated that he is the largest holder of Ether today. At first glance, it might seem obvious that one of the founders would be the largest holder, but as far as I understand, he put a significant amount of his wealth towards buying up Ether when it was still in its infancy. He put his career, reputation, and wealth on the line, long before anyone knew how big it would become.

Consensys has recently exploded in terms of employees. They have offices in New York, San Francisco, London, and Dubai. They have grown from 100 to over 300 in the last 9 months. It is composed of several different teams all working on projects relating to the Ethereum ecosystem. They refer to this as the "hub and spoke" model. Their business model includes ICOs for projects, and enterprise and government consulting services. Up to this point, the majority of the business is being funded out of Joe’s pocket, and it appears that a big part of the business model is to build out Ethereum ecosystem such that the price increases and Joe can continue to foot the bill. I have a lot of respect for what Joe is trying to accomplish and the amount of personal stake he is putting towards the community.

Now, the price of Ethereum hasn’t really moved for a solid month as it’s hovered around $300. This is entirely speculation, but you wonder if the reason the price isn’t increasing because Joe has to sell a significant amount of Ethereum to pay the bills of Consensys. It sounds absurd, but Consensys has grown extremely fast especially in the last 3 months. Plus Coinbase announced they’re continuing to add a record number of users. There is still plenty of new ethereum buyers, but this is being counterbalanced by big players selling. It’s just a thought and interested to get your feedback.

Big Ambitious Ideas

Anyways, back to the conference. I had all kinds of amazing conversations with people working on audacious projects. I came across a rewards company that is wanting to help their existing clients convert their loyalty and rewards programs to cryptocurrencies, which I think is a no-brainer use case and something that we'll definitely have in the future.

I was also reminded that the big ideas in this space are also accompanied by a lot of money and perhaps questionable practices? I overheard a conversation between two founders in the Speaker's room. They were talking about one of their recent ICOs not doing too hot (only because the entire ICO market is in a slump) and I overheard the other founder say his company would buy the other’s tokens so as to provide support and instil confidence in that particular coin and project. After all... this is the Wild West!

There was also a lot of grand ideas about technologies and use cases that are way too far in the future. This included an artificially intelligent robot named Sophia and a presentation about putting our brain on the blockchain. Overall, it was interesting to be around people that are thinking about such big problems and how we might address them with technology.

Decentralized Exchanges

A big conversation piece was the new decentralized exchanges being launched (see OmiseGo, 0x, Kyber, EtherDelta, Radar Relay, Counterparty, and more). With the ICO market showing signs of weakness, lots of people are pointing the finger at centralized exchanges for not listing coins, and requiring ICOs to pay at least  $100,000 to the exchange in order to get listed. Everyone is excited for decentralized exchanges so new ICO tokens can be listed at will, which will provide more liquidity and less selling pressure. Now I agree this would be great, but we need to remember centralized exchanges will be the conduit for institutional money, so I wouldn’t be too quick to hate on them at this point.

Looking Forward

Overall, the conference made me even more bullish than I already am. I realized there’s a ton of development being done on the overall ecosystem, and it’s only making it easier for people to get introduced to the space. The number one thing everyone is waiting on is the emergence of institutional money. People are solving the problems of custodianship, and when they do, everyone expects the prices to skyrocket.

For those interested, I will be in Utah this week to speak at BYU and an IP Law Firm about all things blockchain and crypto. Next week, I’m speaking in New York for a Microsoft event. I’m happy to share slides if anyone is interested. Past presentations can be found on our website.

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Interesting Articles

  • rebranded this week to Their most recent pivot enables companies to pay people to take surveys and pay them in bitcoin. Think Qualtrics + Crypto = I’ve made $30 over the last couple months. Link

  • One of my favorite thought leaders in the space, Chris Burniske, wrote a book called Cryptoassets. He outlines why he wrote it and signals bullishness for cryptocurrencies over private blockchains. Link

  • Bank of America sees a $1.6 trillion market for a Bitcoin ETF. Link

  • What will cryptoassets look like in 20 years? It’s easy to get stuck thinking about the next 6 months since the space moves so fast, but we should step back and look further down the road. Link

  • U.S. based exchange, CME, announced they will be listing Bitcoin futures. This announcement shot the price up past $7000 for the first time and is a big deal as institutional investors have been waiting for futures and derivatives so they can better hedge their risk. Link

  • There are now more than 120 crypto hedge funds with a total of $2.3 billion under management. Link This may sound high, but I bet the number doubles in 6 months.

  • Podcast: Adventures in Finance interview with Trace Mayer. Great explanation why you should be primarily bullish bitcoin over any other cryptoasset.

  • YouTube: I think this guy is pretty over the top on his gold calls, but his bitcoin calls have been eerily accurate. He’s calling for a $2000 pull back in November.


Chart of the Week

We’ve seen bitcoin really take off again as it approached $7000. I thought the following chart was interesting as they compared the chart of gold (white) to the chart of bitcoin (black). You will notice the 3 level denoted on the black chart was when bitcoin was around $5750.