Welcome to the Block & Mortar newsletter! Every week, I bring you the top stories and my analysis on where business meets web3: blockchain, cryptocurrencies, NFTs, and metaverse. Brought to you by Q McCallum.
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Welcome to the last Block & Mortar of 2023! I call this one “Looking forward and looking back.” Not so much because it’s a year-end newsletter, but because that aptly describes this week’s segments.
The first two segments are about where web3 is headed. They cover matters that are top of mind for me, such as regulatory arbitrage, policy, and tech investments.
As for the other two segments, well … It’s web3. “Looking back” usually means “reviewing what’s gone wrong.”
(Don’t worry. I still manage to end this newsletter on a high note. Sort of. Maybe.)
Taking the long view
Chain Reaction: Crypto VC space may be on the cusp of recovery (w/ David Pakman)
(Runtime: 30mn)
David Pakman works in web3, which is a new field, but he’s hardly a newcomer to emerging tech. Case in point: he co-founded Apple Music back in 1991.
That industry tenure is likely why he takes a long view in his role as head of venture investments at CoinFund. Instead of chasing the fast money, he sees his investments on a six- to ten-year time horizon.
In this conversation with Chain Reaction host Jacquelyn Melinek, Pakman talks about why compelling use cases are more important for web3 than pure user numbers. He points out that established players are catching on to web3’s potential, and shares where in the world he is meeting crypto founders. As a bonus, Pakman offers an idea on how web3 can address some problems in generative AI.
Where policy is the priority
The Defiant: How Paradigm Is Shifting The Crypto Policy Landscape | Policy Lab’s Brendan Malone
(Runtime: 1hr)
I’ve noted before that every emerging technology eventually morphs from a pure-tech play into a regulatory matter. The Shiny New Thing, as it weaves its way into Everyday Life, inevitably bumps into Established Norms And Laws. That’s why forward-thinking tech shops keep an eye on policy matters.
(Crypto stands out because it encountered policy hurdles early. In part because it presented itself as an alternative to an established, highly-regulated system. But I digress.)
Crypto investment firm Paradigm went as far as to create a dedicated policy team. Co-head Brendan Malone came to Paradigm’s Policy Lab after seven years’ experience as a Federal Reserve economist. Similar to David Pakman, from the previous segment, Malone takes a long view of web3’s regulatory challenges.
He posits that the US already has a kind of central bank digital currency (CBDC) because of how people hold Central Bank reserves, as FedWire balances, in digital form. Following that, Malone shares his thoughts on how Paradigm approaches its policy work, what it means to fund academic research, and the impact of US laws on crypto founders. And maybe, just maybe, “community” is the killer use case for crypto.
There’s always more to the story
(Runtime: 1hr15)
My favorite true-crime podcast The Underworld hosted author Zeke Faux to discuss Number Go Up, his book on FTX and SBF. (I could’ve sworn I’d mentioned Faux before? I can’t find it now. Maybe I mixed him up with the umpteen folks who’ve published books on crypto-scam shenanigans…)
You might think that you already know the whole FTX story – “guy launches crypto exchange, crypto exchange collapses, guy gets his day in court” – but there are always more details and more connections to surface. Faux’s tales of how his book came together point out FTX’s ties to other, even shadier parts of the crypto ecosystem. Such as the so-called “pig butchering” practice, which is several shades nastier than it sounds.
The conversation with Faux is equal parts funny and sad. Hmmm. Well, no. I’d say it’s definitely more sad than funny. And the funny parts are not exactly “ha ha” but really “wtaf.” You get my drift.
When you don’t have to dance around the hard truths
How the Winklevoss twins’ crypto program failed
(runtime: 15mn)
(Warning: this video includes flashing lights.)
Comedy gets license to speak plainly when polite society has to dance around a topic. That goes double for news-themed comedy like SNL’s Weekend Update, The Daily Show, and YouTube channel Good Work. Behind every laugh there’s a strong sense of “yeh, damn … that actually happened.”
Last week Good Work published a video on crypto platform Gemeni. This was both “a venture of Cameron and Tyler Winklevoss” and “a crypto company that had unfortunate ties to the Terra/Luna meltdown.” You see, Gemeni had sent customers’ money to Genesis, which it passed to FTX’s sibling operation Alameda Research, which had given money to Three Arrows Capital (3AC), which had heavily invested in Luna, which long-time readers will know blew up in spectacular fashion in time for the third Block & Mortar newsletter.
(And this, folks, is why good risk managers look several levels deep in search of exposures.)
Check out this video if you’d like a few laughs to go along with the hard truths of the Gemeni story.
The wrap-up
This was an issue of Block & Mortar.
Who’s behind Block & Mortar? I'm Q McCallum. I've spent the past two decades in the emerging-tech space. And I'm very interested in web3 use cases.
Credit where it's due. Big thanks to Shane Glynn for reviewing early drafts. Any mistakes that remain are mine.
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