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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Last week was my periodic reminder that I don’t control crypto news. Nor any other news, for that matter. If I did, believe me, I would lead a much different life.
If I controlled crypto news I would most certainly have delayed the previous newsletter by just a few hours. That way I could have included the shocker of a story that Binance CEO Changpeng “CZ” Zhao had decided to face US regulators’ music.
I expect to have more on that next week. In the meantime, as we’ve reached the end of the month, this is the media roundup issue. I somehow managed to find four podcasts that were not about the SBF verdict.
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You’ve probably heard the term securitization tossed around financial circles. It’s a technique in which someone takes a contract (or something else that represents ownership of an asset, such as bonds or physical property) and splits it into tiny pieces that can be sold independently. This approach lets investors grab a piece of exposure to that asset’s price movements without having to own the whole thing outright.
Securitization is nothing new. Lenders, for example, commonly securitize home loans so they can pass them off to investors in the open market. (This process doesn’t always end as poorly as it did in 2008. That was … different.) What is new is that blockchain technology makes it easier to securitize off-chain assets into collections of on-chain tokens. Hence the crypto term real world assets, or RWAs.
Podcast guest Lucas Vogelsang is founder of Centrifuge, a crypto credit platform which manages RWAs. In this episode he speaks with host Camila Russo about bridging off-chain assets to blockchains; reducing paperwork; improving liquidity of assets by running 24x7, automated systems; and how that last point makes it easier to securitize smaller-valued assets. Vogelsang also covers how to bridge on- and off-chain legal structures in the event of a default, and how to get up-to-date pricing data for these off-chain assets.
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I originally pulled this up because I was interested in the topic promised in the title. Hosts Mike Ippolito and Myles O’Neil certainly deliver, exploring the economics and timing of token drops. That includes a few similarities to pharmaceuticals advertising. Seriously.
(There’s a slight detour in the middle to compare Solana and Ethereum. Stick around for the remainder of the token talk.)
As a bonus, Ippolito drops two hard truths near the end of the episode. First:
I do worry a little bit. Obviously, I’m rooting for stuff to go on-chain, but one thing I think is very important for us to just look and be very clear-eyed about is that just putting something on-chain does not make it risk-proof. We should be very open-eyed about that. […] It’s just good old risk management.
At the end of the day, this is the Sam Kazemian interview we did. It’s managing assets and liabilities. You can mess that up on-chain, too. So I would say, maybe just as a cautionary word, let’s not assume that just because it’s on-chain doesn’t mean it’s absolved of any risk. It’s not.
And shortly thereafter:
I do tend to think that security, brand, stability, safety are the winning adjectives for financial applications.
If you listen all the way through, you’ll note that this segment’s title is a quote from Ippolito and O’Neil riffing on the nascent crypto comeback.
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Speaking of that crypto comeback …
Finance writer Morgan Housel has released his latest book, Same As Ever. Lest you dismiss this interview as a thinly-veiled book plug, I’d encourage you to give it a listen.
I mean, yes, it’s pretty clear that he’s trying to get the word out on the book. I don’t knock the hustle. But this episode is about so much more than crypto. What Housel says applies to finance in general, especially in terms of bull markets and asset bubbles:
- How bubbles are as inevitable as war.
- How lack of institutional memory is a key element of a bull market.
- Distorted incentives and envy as drivers of bull markets (and how social media feeds into envy).
- Comparing the time scales of good and bad events.
As he explains, it’s all about “how people respond to greed, fear, risk, and uncertainty.”
(Perhaps I’m biased because I have a deep interest in asset bubbles, and because my views overlap with much of what Housel says here. As it turns out, we even point to the same Chris Rock routine when talking about incentives…)
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Long-time readers know that I’m interested in use cases for emerging tech. So when someone releases a podcast that calls out crypto use cases, I’m going to pay attention.
This episode is the fourth in a series of Bitcoin conversations co-hosted by ARK and Bitcoin Park. There are nine people speaking, which makes it tough to keep track of who’s saying what, but that doesn’t diminish the discussion’s value.
The guests offer their views on payments processing, stablecoins, and Bitcoin as a gaming rewards mechanism (which doubles as a way of on-boarding people into crypto). They also mention the challenges of building on Bitcoin, and how that balances with the benefits of Bitcoin being focused on doing one thing well.
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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