The Disrupt Weekend

We wanted to highlight the one thing we found notable in the 40 page report, is the bank’s preference for ethereum over bitcoin, which is not really surprising: as Mike Novogratz points out, ‘the three biggest moves in the crypto ecosystem—payments, DeFi, and NFTs—are mostly being built on Ethereum, so it’s going to get priced like a network. The more people that use it, the more stuff that gets built on it, and the higher the price will ultimately go.’

Goldman’s conclusion: ethereum is the platform that solves economic problems here and now, while bitcoin is “a solution looking for a problem.”

The market share of coins used for other purposes beyond currencies like “smart contracts” and “information tokens” will likely continue to rise. Bitcoin owners face accelerated network decay risk from a competing network.

In our view the most valuable crypto assets will be those that help verify the most critical information in the economy. A blockchain platform like Ethereum could potentially become a large market for vendors of trusted information, like Amazon is for consumer goods today.

As cryptocurrency use in DeFi and NFTs becomes more widespread, ether will build its own first-mover advantage in applied crypto technology. Ethereum can also be used to store almost any information securely and privately on a decentralized ledger. And this information can be tokenized and traded. This means that the Ethereum platform has the potential to become a large market for trusted information. We are seeing glimpses of that today with the sale of digital art and collectibles online through the use of NFTs. But this is a tiny peek at its actual practical uses.

Given the importance of real uses in determining store of value, ether has high chance of overtaking bitcoin as the dominant digital store of value. The greater number of transactions in ether versus bitcoin reflects this dominance. [Further], a major argument in favor of bitcoin as a store of value is its limited supply. But demand, not scarcity, drives the success of stores of value. No other store of value has a fixed supply. More important than having a limited supply to preserve value is having a low risk of dramatic and unpredictable increases in new supply. And ether, for which the total supply is not capped, but annual supply growth is, meets this criterion.”

See Also: Goldman’s Crypto Chief Worries About Fraud, but Not Cryptocurrency’s Future

Professional investors “get” DeFi much faster than they get Bitcoin (or Ethereum for that matter). The thing that really crystallizes the excitement around DeFi for traditional investors, however, is real-world examples like Uniswap and Aave.

For instance, traditional investors know Coinbase, which recently went public with a $60 billion valuation, making it the largest publicly traded crypto company in the world. It’s a phenomenal business, with a fast-growing user base and enormous revenue growth. But Uniswap is growing faster. From a starting point of zero a few years ago, Uniswap did $50 billion in turnover last month while generating over $250 million in fees. That’s incredible.

Similarly, Aave is a relatively new lending protocol, a decentralized competitor to BlockFi. The last time I checked, on May 16th, it had more than $8 billion in loans outstanding and was generating more than $1 million in revenue per day.

These are numbers that traditional investors can get their heads around. They are the vernacular of Wall Street: revenue growth, user growth, and so on. You can even apply traditional valuation techniques like price-to-sales multiples, whereas valuing bitcoin is extraordinarily difficult.

The way forward for DeFi is going to be extremely volatile. This is a very early market that faces a huge array of challenges, from regulatory risks to procyclical leverage to security concerns and more. But the long-term outlook is exciting, and the story is compelling, and I believe institutional investors may be entering the market in size sooner than many people think.

See Also: Ultra Sound Conviction

Those looking to donate funds to local aid groups largely can’t because of long standing restrictions, by the U.S., Israel and other countries, on transferring money to bank accounts in the territories.

Banks in Israel and around the world are restricting business relationships with what they consider to be risky clients, along with Israel’s ongoing, severe controls on the movement of people and goods to and from Gaza, undermine Palestine’s economy and hinder development.

They also impact humanitarian and human rights organizations working in the region as well as businesses who have employees in Gaza, and block families from sending remittances to the Strip.

U.S. payment service Venmo, a subsidiary of PayPal, was delaying transactions that contained the words “Palestine” or “Palestinian” along with terms including “emergency fund.” PayPal’s flagship service also does not do business in Gaza or West Bank, although in 2016, TechCrunch reported that it “does work for Israelis living in settlements in the West Bank, which are illegal by international law.”

The use of sanctions as a geopolitical tool can violate human rights and halt entire populations from accessing financial services. Earlier this year, the U.N. called on the U.S. and European Union to ease sanctions on Venezuela as the restrictions – imposed with the goal of removing controversial President Nicolas Maduro from power– were exacerbating a humanitarian crisis. People in sanctioned countries like Venezuela and Iran are increasingly looking to alternatives like cryptocurrencies, that are relatively resistant to government censorship and other restrictions, to be able to conduct day-to-day transactions.”

Bitcoin can help foster a more decentralized energy system than the one we have now. Our electrical grids are mostly built on centralized models, with large-scale generation plants and heavy-duty transmission lines carrying power from generation centers to the users in the regions.

So long as we keep the existing hub-and-spoke model in place, we continue to justify and serve the fossil fuel industries that feed into it.

The inefficiencies of the existing system are now clear. It’s expensive to build, maintain and operate long-distance transportation infrastructure and, in the case of electricity transmission, significant amounts of power are lost between the generating plant and the final destination. The system design also makes it an especially appealing target for hackers.

Bitcoin mining can help communities overcome the one obstacle that disincentivizes them from developing renewable microgrids: the significant cost involved in the initial outlay. Miners can provide revenue guarantees to these operators, allowing them to raise the capital needed to start building their systems. 

Decentralization, in the form of renewable energy created closer to where it’s consumed, is key to a more sustainable future. Bitcoin, as the decentralized value network, can help engineer that.”

Yes Eth2 is coming, we have layer 2 apps in production, and promising scaling solution like Arbitrum and Optimism coming soon. But today, there’s one scaling solution that’s garnered a lot of attention: Polygon.

The scaling solution now has over $11B in value locked and features a growing ecosystem of familiar DeFi protocols like Aave, Sushiswap, Curve, OpenSea and PoolTogether. No, it’s not perfect. It doesn’t inherit all of the security guarantees of Ethereum…yet. But it’s a step forward.

Bottomline for DeFi users: there’s a ton to do on the Polygon network today and the gas costs are virtually zero, so you should give it a try.”

Decentralized governance, a facet of decentralized autonomous organizations (DAOs), is perhaps the most valuable application smart contracts could bring to humanity. DAOs can be thought of as living organisms on the internet, entities that would function autonomously according to distributed consensus mechanisms.

The desire for change in the political landscape is palpable and reflected in the growing voter absenteeism in many nations. Though decentralized parties will initially lack political influence, the craving for empowering technologies and purer forms of democracy will stimulate adoption over time.

The elimination of centralized power authorities would help protect citizens from government overreach and corruption, reduce bureaucracy and improve the speed at which laws and policies are passed.

Last month, a ground-breaking new law was passed in Wyoming, effectively recognizing DAOs as limited liability corporations (LLCs). As regulation catches up to technology, we may see these LLC DAOs progressively introduce decentralization into businesses and organizations.