Backstage Pass: The Burger Flippening
Cameron Winklevoss goes to work / New Hampshire bonds with bitcoin / What is Polymarket? / EOS meets World Liberty / Blackrock takes a stake
Welcome to the first actual send of Front Stage Exit. Thanks to everyone who signed up when I announced my plans to change career course last week. This project isn’t really going to get going in earnest until December, but I’m going to do these Friday dispatches, Backstage Pass from here on out, starting this morning.
The numbers are bad right now and the vibes are down, but I’ve been around a long time and remain on Team Zoom-Out-On-The-Chart.
And with that, welcome to the very first edition of the one and only genuinely irreverent roundup of crypto news (please forward this indiscriminately).
Bodies float by
Bitcoin price broke below $90,000 this week for the first time since April. The best optimistic explanation I’ve seen was from Multicoin Capital’s Tushar Jain, who argues that bodies might still be floating to the surface after the leverage wipeouts in October.
Could be right! Simpler story: The party is over, for now.
After the first drop below the $90K mark on Monday, Bitcoin true believer, Cameron Winklevoss, co-founder of the exchange, Gemini, (and Facebook, not an exchange) posted that Bitcoin would never go below $90,000 again. On Tuesday, it went below $90,000 again. And stayed a while.
So then Cameron started posting AI-generated photos of himself working at McDonald’s.
Ha, ha, I made a bad call. I’m rekt. Will flip burgers now.
It takes me back to 2019. Bitcoin had fallen to around $3,000 the year prior. It was a long slog for cryptocurrency to get back onto the world stage. In September, as it started to come back to life, it broke $10,000 and sainted Twitter denizen @hodlonaut predicted it would never again fall below $10K.
Reader: It did.
It did it again and again and again. Every time it would get back over, Hodlonaut would double down, rinse and repeat. People loved him for it. It was self-own as expression of spiritual conviction.
It was just like if, after John the Baptist had his head chopped off, he had gone around doing public appearances where he opened with a big fake head removal. Someone would lop off a puppet head sticking out of the top of one of those huge overcoats, and he would stumble around all confused (the joke being that he didn’t have a head). But then when the crowd got all worked up laughing he would pop his head out the top with a big stupid grin.
Wild applause!
Obviously, he couldn’t pull that, because, well, he had had his head removed. But if there were a way to pull that off, it would have been a great opener. Hodlonaut was able to pull basically the equivalent in recurring gags on the timeline, because he hadn’t had his head removed. His bags were just down. So maybe it wasn’t just like John the Baptist? But directionally.
I hope Cameron doesn’t stop at AI memes. Actually buy a McDonald’s, Cam. Sell Big Macs for 10 satoshi each. Then just watch. One day that stack of sats will be worth more than those sandwiches ever could have been.
Who will be laughing about your bad price call then, Cameron? Who?
Nice bet
There are those in the world who believe that we do things in order to write rules about them.
And then there are those in the world who believe that we should do things, and, in order to make those things we do work well for everyone, eventually we should probably write rules about them, but only once we’ve got a handle on the how and the what and the what for of the new thing we just did.
But the point of things in the world is doing things, not having an excuse to write some new rules. That’s the second view.
These two views are in tension all the time these days, however. The latest evidence comes in the form of roughly 2000 words that Bloomberg dropped on the explodering valuations of Polymarket and Kalshi, the two big prediction markets, the TL;dr of which is basically:
“They are doing gambley things that no one has written rules for!”
Experts concerned.
The supposed biggest question about Polymarket is just: Is it gambling? I mean, yes?
It’s like: Are bananas food? Yes. Are Hostess Cupcakes food? Also, yes. Does that mean you should think about them the same as bananas? No.
This is all just semantics.
Prediction markets are obviously gambling, but so is a dice game and so is buying Nvidia stock. What prediction markets are not is quite the same as a sports book. They work in crucially different ways.
The question about this particular new thing (prediction markets) is how it plays out in the larger world, and rulemakers can’t know that until it — y’know — plays out a bit in the world.
What’s the Dalio?
You probably know Ray Dalio as the chief of Bridgewater Associates, the legendary investment firm, but I think of him as the instigator of the most fun-sounding companywide fun-run that I’ve heard tell of. Dalio said this week that he has about 1% of his considerable wealth in bitcoin.
He likes bitcoin. He likes gold. But he likes gold better than bitcoin right now because bitcoin might be vulnerable to quantum computing. Maybe not this year. Maybe not next year. But one of these days.
Look, quantum computing is one of those topics that you just really don’t want to think about. You think AI is weird? Artificial Intelligence is ABCs and 123s compared to quantum computing.
Here, let me start the explanation: The first thing you have to understand is that there are infinite other universes beyond ours, with millions of new ones constantly spinning into existence each time anything makes any kind of decision.
Do you want me to keep going?
This one gets so heady that there’s a freshman in Madison, Wisconsin — right now! — who just told his roommate that he’s gonna need some more edibles and a vape pen before he’s high enough to talk about quantum computers.
But I mention this because Nic Carter of Castle Island Ventures has recently become convinced that the quantum threat is near enough at hand that Bitcoiners should start kicking around plans for dealing with it.
Normally I’m game to dive down any explainery rabbit hole, but I have a feeling where I’m going to ultimately land on this one will be: “Nic says buy this hardware wallet, I don’t know. Did someone say they had edibles?”
DAT Granite
New Hampshire plans to let people post bitcoin, up to $100 million, in order to get some liquidity without tax implications. Profits on the loans flow back to the state. Etc. Etc.
Let’s be real: Most of the state actions around bitcoin in the last year have been theater. I could be wrong, but I don’t think any of the states actually have acquired any fresh bitcoin yet. It’s all just headline grabbing, sort of like a sigil to hang on their capital buildings to ward off the Eye of the White House.
Wake me up when someone actually makes a loan against this fund. Until then, the news is worth about the same as 300 bank pilot projects by Ripple.
Dear Gov. Ayotte:
Hot tip from me. Free for nothing.
Here’s what people are going to do with the cash you lend them against their bitcoin: accumulate bitcoin.
Here’s how it works. You post bitcoin for a loan. Take the cash, buy more bitcoin. Bitcoin price rises. You sell enough of the bitcoin you bought to pay off your loan. Keep the rest and take back your collateral. Now you have... more bitcoin.
Repeat.
Nothing wrong with that, but just in case you thought they were going to use the money to open auto repair shops or something? Probs no. FWIW.
Commodity Futures’ future
Here are some things I believe to be true.
Congress is not going to pass market structure legislation.
But the SEC will promulgate rules next year that will be just as good.
The SEC’s crypto lawyer will soon be the chief of the CFTC, and he will promulgate rules that precisely complement the SEC’s.
Which will mean that the SEC and the CFTC will actually be hand-in-glove for once, which might sound sketchy, but they should probably just be one agency anyway.
And, with all of that, SEC Chair Paul Atkins will do as much to advance the industry’s interests as Gary Gensler failed to handicap its interests. Atkins will be the inverse Gensler. (”The Inverse Gensler” is also a shot you can order at crypto parties. Ask your bartender.)
Then Democrats will stamp their feet about Binance all through 2028 and voters will stare at them blankly. The Ds will once again prefer to obsess about Trump rather than win. Don’t yuck their yum. This is what they love.
This is the future as I see it.
We’ve had Crypto Mom and Crypto Dad, but it’s going to be Crypto Goofy Uncle that will actually fit blockchain pipes into the analog economy plumbing. Open the valves!
This week, that lawyer I mentioned at step 3 got his hearing before the Senate.
60 Minutes does CZ
The vaunted television news magazine 60 Minutes covered the pardon of CZ and uncovered precisely nothing new at all. Scott Pelley, the reporter, breaks down how World Liberty Finance, the Trump-connected company, got to use its stablecoin, USD1, as the medium for a big deal between the UAE and Binance — all ahead of the pardon for Binance’s founder, CZ.
Pelley can’t seem to wrap his head around the difference between a stablecoin and other cryptocurrencies as he explains how this deal profits the Trumps. Watching it, he was speaking super slowly, like he both wasn’t sure his audience would follow and he wasn’t sure he followed either.
The whole thing has this tone of a mobster from the 1930s traveling through time to the present, then going back and trying to explain cell phones to fellow mobster underbosses.
But the only part they want to hear about is Instagram.
Rise from the deep
The entire market is tanking, and America’s number two crypto exchange, Kraken, announces that it has raised $800 million.
Kraken has always been the slightly more punk rock exchange. When New York said, “You are welcome to operate here, but please fill out those 7 million pages first,” Kraken said: ✌️. While market leader Coinbase said: Here ya go, teacher. Can I get you an apple?
Kraken founder, Jesse Powell, who no one can convince me is not the long-lost son of one of the Nelson brothers, stepped aside in 2022. Arjun Sethi has been running it since then and we’ve all expected the company to go public one of these days, but the market seized up just as it tried to make its move last time.
Is that happening again? Maybe, but maybe enough time has passed that the public markets have realized that even when the tables are empty casinos remain a decent bet, because the house always wins.
World Liberty fixes phishes
Coinbase has announced it is delisting EOS, a not-so-smart-contract blockchain that was designed to crush Ethereum, except for the problem that absolutely everything about its governance architecture was obviously gameable by whales. It was gamed by 🐳 🐳 🐳.
At launch, it took forever for folks to get their EOS coins after the sale ended, and they had to migrate them from Ethereum (weirdly) when the time came, so blockchain miscreants swooped in, pushed out a lot of scary misinformation, tricked some n00bs and stole their coins. Fun stuff.
So the blockchain short bus kids got the first EOS mommies to kiss it and make it better.
Well, it sounds like something similar happened with the Trump family associated project World Liberty Financial. Like EOS, WLF did a big old sale, made everyone sit on their WLFI tokens for a long time, doing zilch. Then finally, finally they set the tokens free in September.
Plenty of time for scammers to work up hijinks.
As the project wrote on X: “Prior to WLFI’s launch, a relatively small subset of user wallets were compromised via phishing attacks or exposed seed phrases.”
If there’s a project that seems roughly as thoughtful as EOS, it’s World Liberty Financial. Stay tuned.
A lot (but less, actually) at stake
BlackRock wants to sell an ether ETF where holders can actually get yield. It’s an ETF for staked ether.
Long story short, to participate in keeping Ethereum secure, holders can put their coins at a very small amount of risk by “staking” them. This works as an economic vote for technical folks keeping the network safe, and you will earn a small yield in ether for doing it.
It’s actual real yield in the crypto world, all in an asset that sometimes rises in value faster than the market.
In short, magic space money becomes more magic space money, but not without someone doing some work somewhere. You say decentralized economic security, I say Boy Math.
The juicy bit is that Blackrock is entering this market as everyone else is trying to get out. In fact, Wednesday was an epic exit from the Ethereum security system. Validators are sending “I quit” emails so fast that Ethereum HR can’t keep up. It takes a month to get out of the biz these days.
And yet, BlackRock wants in. Warren Buffett said “be greedy when others are fearful,” but the world’s largest asset manager looks to be going with patient instead. It did so well of the bitcoin ETF so fast that it doesn’t need a quick hit on its next move.
Ethereum is making all the right moves. One of these days its asset will perk back up and then the world will come to BlackRock humming that classic Biz Markie line, “Oh baby you / got what I neeeeeeeed….”
See you on Black Friday, frens!
Note: A slightly different version of this went out with a few little typos in it. Something weird happened with Substack that I don’t understand. Anyway… I swear this is the version that was meant to go. Growing pains.