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In this next crypto winter, I expect a consolidation of the top exchanges to occur.

What I see most likely occurring in the U.S. is simple, I see the top 8 globally becoming a top 2 or maybe 3 in the U.S.

It’s pretty easy to tell which ones are the chosen:

1. Binance

2. FTX

3. Maybe Coinbase (though I wouldn’t bet on it).

I believe these 2-3 will continue to take marketshare from the 4-8 ranked.

Like any other area of U.S. innovation, typically a duopoly emerges after a little more than a decade. While crypto and Web3 was once nascent, that’s no longer the case. Bitcoin bull markets are mainstream now in 2022. So who stands the most to lose?

I found a good ranking on coinmarketcap.com here. Centralization of crypto trading and its future means significant crypto Tycoons are emerging, like the heads of FTX and Binance, in particular.

I do not see folk like Kraken, Gemini and company competing at least in the U.S. in the long-term. This also stems from real innovation.

Recently, Binance.US dropped its spot bitcoin trading fees. Coinbase’s stock was literally down due to this.

Think about it, Coinbase has crazy high fees! It’s not even competitive.

Binance.US, the U.S. affiliate of the largest crypto exchange in the world by trading volume, said it will allow users to make spot bitcoin trades for the U.S. dollar and stablecoins tether, USD Coin and Binance USD without paying spot trading fees.

This is sort of a big deal.

While Binance doesn’t do regulation that well, it’s too big to fail. I wrote about its founders real net-worth recently and I was shocked. Crypto isn’t decentralizing money, it’s centralizing a whole new breed of Tycoon. I’ll mention however “decentralized” you think Bitcoin, crypto and blockchain are, there’s literally no chance Binance has not had support from the CCP.

Consolidation of crypto trading is too lucrative for China not to have intervened into. Binance likely has ties that you would not ordinarily expect, as of course do many companies in Singapore and people who were born or have significant family in China itself. This is not very shocking, but the lack of transparency in crypto is.

I believe Binance and FTX can significantly outperform Coinbase in the long-term where the majority of trading takes place on one of those two crypto trading platforms. If I had to pick the winners, those would be them.

So how does a crypto winter actually increase the process of consolidation? Last weekend, bitcoin hit a new 2022 low, falling below the $18,000 level for the first time since December 2020. As a result of the continued declines, trading volumes on crypto exchanges have been sliding. Binance U.S.’s move is very smart and strategic.

Coinbase is Getting Desperate

Coinbase historically has relied heavily on trading volumes for revenue but in recent months has been looking to diversify its revenue streams. It is currently testing a subscription service for customers called Coinbase One that would give them access to zero-fee trading for up to $10,000 in transactions a month.

You already have high trading fees bro, now you want us to pay a Subscription? Haha no thanks. Coinbase’s NFT marketplace sought to be the Instagram for NFTs, but their launch was too late, I’m not sure what their product people or C-suite were thinking.

As Bitcoin went mainstream, it slowly becomes a zero sum game for all of these exchanges. Think about it, the zero-fee trading phenomenon, first introduced by Robinhood, began putting a dent in the retail investing world a few years ago, when major stock brokerages shifted to commission-free online trading, including Charles Schwab, Fidelity Investments, E*Trade Financial, Ally Invest, and Interactive Brokers.

It’s not clear how Coinbase can compete with FTX or Binance in the long-term.

There are more than 300 crypto exchanges that specialize in crypto only, without including apps and platforms that mix stock and other assets with crypto trading. There are more than 5000 cryptocurrencies to trade as per the data by CoinMarketCp. Each crypto winter there’s significant demand destruction. Coinbase significantly over-hired in 2020 and 2021 and even the first half of 2022.

Crypto for all its decentralization dogma, is an incentive for the ultra rich to game the system. And it’s really easy to game in the 2020s. You don’t even need gimmicks like ICOs or NFTs, truth be told. It’s all in the volatility of the spikes and downfalls.

Why Zero Commission Trading Creates a Zero Sum Game

I predict by 2030, we will see considerable centralization of crypto trading in just a few eventual winners in a winner-takes-all scenario. My picks currently are Binance and FTX, though there may be a few outside winners still.

Will Block or Crypto.com be able to create a Super-app or someone else? I don’t think it will be Coinbase, due to their high-fees and Silicon Valley mechanics.

Last month, crypto exchange FTX US, revealed plans to roll out zero-commission stock trading (CNBC). Block’s Cash App, SoFi and Public all also offer trading in both stocks and crypto. However I don’t see Robinhood or SoFi being able to pull it off very easily, as good as those apps are.

I see FTX as a surprising winner here in the U.S. market. I wouldn’t have said that even three years ago. What do you think?

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Hey Guys,

Twitch was acquired by Amazon and the entire internet is copying it now. Mind you China was already doing what Twitch does with tipping and subscriptions a long time before as the social commerce leader of app and mobile behavior.

In 2014, Twitch—a web platform that allows users to stream video of themselves playing video games to followers—was purchased by Amazon for $970 million. Microsoft created Mixer but failed to compete with Twitch, inspite of getting even more into the Gaming Metaverse in recent years.

In the latest Bitcoin bull market crypto community became even more important. A lot of this today takes place on Telegram and Discord. It could have been Twitter and WhatsApp, but it wasn’t meant to be. Now Telegram, WhatsApp and Twitter will all soon be monetizing via subscriptions in 2023. Just like Zoom or Twitch does.

Subscription models got more traction as digital media went behind paywalls and platforms like Substack popularized the model and shows that it’s now the new normal especially with podcasts. Spotify’s subscription model is yet another good example who dominate the music-streaming and podcasting and soon the audiobook category.

While Netflix is waning, there’s an entire subscription economy that’s just forming that will stimulate the Creator Economy and its intersection with crypto. If Twitch killed the competition in gaming streaming and how people can tip their favorite Creators, the likes of YouTube are learning on the job. However, for Telegram and WhatsApp it marks a new era for Comms and group apps.

Telegram Will Monetize via Subscriptions

During the pandemic Telegram became even more popular and more central to Web3 startup groups, token groups and crypto trading communities.

The Subscription Economy Goes Mainstream in 2023

Snapchat is also working on this. So in very short order we’ll literally see everyone doing Subscriptions:

• WhatsApp

• Telegram

• Snapchat

• Discord

• Twitter

• Facebook Groups, and so forth.

The subscription model is just the most efficient for monetization in B2B and B2C senses.

The feature, called Snapchat Plus (because everyone's doing it), was first reported on Twitter by app developer and researcher Alessandro Paluzzi on Thursday.

Simultaneously everyone is following in the footsteps of Zoom, Patreon, Twitch, Slack, Substack and others. The list is probably way longer than I’m aware of. It also has repercussions on the crypto community in the next crypto winter which has likely already begun.

This immediately gives the likes of Twitter and Snap more viability. If Snap’s stock keeps coming down like it will, it will be on sale or on a discount in the near future. For Twitter is pretty a pretty hard sell but they do have daily active power users in droves.

For Telegram, Discord and other community based platforms, it’s even more exciting. Even the lowly Medium app did the subscription model and somehow survives to this day.

It’s hard to gauge the real numbers of Telegram or WhatsApp to be honest. The company's FAQ page reports: "Telegram has over 500 million monthly active users and is one of the 10 most downloaded apps in the world." The reason is these apps are choked full of fake accounts and duplicate users like everyone else. Meta has likely been lying for years about its true global users. When companies don’t report real monthly or daily active user numbers it’s a major red flag, like we see with LinkedIn.

Coinbase with its NFT hub must have been hoping it could lure people into paying a sub eventually. Sadly their timing was God awful to create the “Instagram for NFTs”, so they have laid off now a bunch of people.

https://nft.coinbase.com/

Telegram announced that it would launch a paid subscription plan for users later this month. The paid subscription plan would allow users to have a higher limit for chats, media, and file uploads. This is more or less what Slack and Zoom do.

While Netflix has to pivot into Advertising and digital media is pivoting into audio, it’s clear the Subscription Economy is coming and it will be a great reckoning and benchmark for real engagement.

Would you pay for access to some advanced features of Snap, Twitter, WhatsApp or Telegram? Certainly doing it for the right Discord, could be a possibility for some.

Web3 May be Boxed Out of Mainstream Apps and Community Platforms

This is before many Web3 communities and more decentralized apps even have consumer traction. Who will they compete in revenue generation against Web2 apps with huge traction and monetization? It’s not even clear.

As I see it right now, the Gaming Metaverse, Corporate Metaverse and Ad-based App Economy is going to leverage subs to box out Web3 players entirely, and just acquire a good ones. Why would Facebook not acquire Coinbase or even Substack for that matter? What would stop Snap from eventually being acquired by Apple or ByteDance for example?

Many users avoid WhatsApp due to its privacy and data-sharing history. Telegram was a huge beneficiary of this.

You can see the poll I made on LinkedIn about this here. We still might be paying for these subs in Ether and other cryptos, ironically.

I’m out of space. Thanks for reading!

A honest man has Bitcoin in the eyes - anonymous.

Hey Guys,

This is Crypto Bulls Premium.

I’m going to have to learn to be more positive about Bitcoin and its 1% elite community. I’ll get there eventually but for the moment, hear me out.

Jack Dorsey has done good things with Square, with Twitter not so much. He owns a lot of Bitcoin, so he’s really incentivized to make it more accessible to spur his fortunes. Just another honest tycoon out of Silicon Valley who wants Bitcoin to uplift the poor and a very collaborative Block Head.

Now the Pioneer of Web5

Jack Dorsey’s Block – has launched an “extra decentralized web platform” called “Web 5”. The platform’s goal is to decentralize data storage and put users back in control of their identity – by leveraging the Bitcoin blockchain.

If Huawei 5G turned out to be a scam, and Web3 has barely matured in 13 years, how are we jumping to Web5? Okay okay, let’s say that Web4 is the Corporate Metaverse, he might have a point here.

In the thirteen years since launching, Square has grown into a $50 billion-plus financial powerhouse. While Bitcoin hasn’t really done the same as an ecosystem Maverick and a new asset class with sounds fundamentals, at least visionaries can envision, after all Block Heads maybe have been converted by extremely easy wealth acceleration?

Coinbase Cuts 18% of Workforce

It came out today that Coinbase “grew too quickly” and will have to cut about 18% of its staff. Its stock is down 80% so far this year.

It seems Mr. Armstrong also had “Block Head” tendencies. CEO Brian Armstrong pointed to a possible recession, a need to manage costs and growing “too quickly” during a bull market.

“We appear to be entering a recession after a 10+ year economic boom,” Armstrong says. “While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment.”

If you had planned for the worst, would you have over-hired?

Coinbase joins Blockfi and Crypto.com who have started to cut positions this week.

TechCrunch notes in a funny way, while Elon Musk has shitposted his way to crypto sainthood, Jack Dorsey has been spreading the blockchain gospel far more earnestly than most.

What will the Stripe generation of GenZ and Alpha have to contend with in an crypto regulated world? Will each Bitcoin bull market spark the zeal of FOMO schemes, pyramid schemes and the usual fraud we had in the last 8 Bitcoin bull markets? Is this the future of investing?

Jack has a Bitcoin Missionary has its own peculiar logic though the Former Twitter CEO Jack Dorsey called the new platform ‘Web5’, a combination of Web3 and Web 2.0, built on the Bitcoin blockchain. 2+3 oh now I get it!

Coinbase will be letting go of literally 1,000 jobs in the 18% move. The stock is down 6% pre-market. Read the comments on Twitter, the Medium blog is “down” for me.

Jack As Bit-Missionary

If the internet created a religion, it has to be Crypto and the Prophet is Bitcoin.

At a bitcoin-centric conference in Miami this year, Jack Dorsey was his usual lavish self with his praise: “For me Bitcoin changes absolutely everything. What I’m drawn to the most about it is the ethos, is what it represents, are the conditions that created it, which are so rare and so special and so precious. I don’t think there’s anything more important in my lifetime to work on and I don’t think there’s anything more enabling for people around the world.”

The crypto overlords really have talent for laying it on thick.

Hey let’s just enslave Black people with Bitcoin FOMO. Hip-hop mogul Jay-Z and Block CEO Jack Dorsey are teaming up to take Bitcoin and financial education to the rapper’s childhood home. I’m not even joking, this actually happend.

The program  aims to “provide education, empower the community with knowledge” about how to manage their finances with a focus on Bitcoin — which the Bitcoin Academy  website proclaims to be the “future of money.”

Well Bitcoin certainly has a future to make the elite even more powerful, not so sure about free money for the poor?

The Block Head has also told his Square company the importance of laying down at the Bitcoin Idol. Recent initiatives at Square have included a hardware wallet to store bitcoin and the exploration of building a dedicated bitcoin mining system. The Cash App is nearly reaching a super-app status for how Square’s future is bright. The app is ranked #1 in Finance and high on the overall list as well.

Read Coinbase Goodbye Letter

Jack Dorsey is the Head of Block, the one true Block Head. Block (formerly called Square) is an incredible company that operates an FDIC-insured bank, consumer payments platform, offers stock and cryptocurrency trading and has made a number of high-profile acquisitions. It’s actually very linked to the health of small businesses and is now becoming a well-diversified business.

But Jack’s Bitcoin’s ambition seems tainted.

For platforms with a multitude of unsolved and often pressing issues, Dorsey’s seemingly unilateral public focus on the revolutionary power of bitcoin hasn’t always sat well with onlookers. He realistically barely did anything with Twitter in terms of product innovation in the last decade. Now that he’s free from that downer, he can be a total optimist from his high-towers in Silicon Valley’s heartland.

He can plot with other Billionaires the mechanisms of milking Bitcoin for the highest ROI for those that matter. He can pretend to find a16z and VCs selfish in the space. While he does the same thing or even worse in terms of profiteering from being a missionary of the new crypto religion.

While Web 5’s monetary layer will be built on the foundation of Bitcoin, the other technologies underpinning Web 5 are borrowed from myriad areas of cryptography and computer science.

The Extra Decentralized Web - Welcome to Web 5

I cannot make much sense of the website, perhaps you will have better luck: https://developer.tbd.website/projects/web5/

What is marketing and what is the actual product? Does it look like DoS on purpose?

The web democratized the exchange of information, but it's missing a key layer: identity. We struggle to secure personal data with hundreds of accounts and passwords we can’t remember. On the web today, identity and personal data have become the property of third parties.

Web5 brings decentralized identity and data storage to your applications. It lets devs focus on creating delightful user experiences, while returning ownership of data and identity to individuals.

Wow sign me up! This sounds futuristic Jack. I definately want software development folk to help build a world with join ownership that’s open-source, transparent and owned by Tycoons.

Thanks for reading guys!

Hey Guys,

I wanted to just write a short note on Tether.

A lot of Bitcoin’s ownership in price is involved and implicated in the stablecoin Tether. I believe it’s actually at risk in the current macro environment.

Tether said its holdings of U.S. Treasury bills rose 13% to $39.2 billion, while commercial paper fell 17% to $20.1 billion.

Think about, U.S. Treasury Secretary Janet Yellen has urged Congress to approve federal regulation of stablecoins. There’s no reason with inflation and a crypto winter how Tether could not collapse. The fall of Terra was bizarre and shows how dangerous algorithmic stablecoins can be.

Tether, the digital currency, briefly fell below its intended $1 peg earlier in May. This could be a sign of things to come. Tether has seen its circulating supply plunge from a record $84 billion on May 11 to around $73 billion as of Monday. This is not a good sign, it could lead to a domino chain of events where Tether collapses, even as regulators are warning about Stablecoins.

The Crypto Reckoning of 2023 is Coming

This is a major red flag in the confidence around Stablecoins.

The panic over UST has drawn attention to other stablecoins — tether, in particular.

We know that another crypto winter and a global recession are both highly likely, given history and the conditions we have. History is usually the best predictor of future behavior. Bitcoin is not immune to volatility and seems tethered to the massive liquidity trends related for instance, to the decline of the NASDAQ 100 and speculative EV stocks around Tesla.

If we assume that Terra wasn’t a rug pull, it was a poorly designed ‘castle of cards’, could Tether suffer the same fate? , Tether has given back $10 billion to investors looking to divest and redeem their tokens for cash, and it could just be the beginning of a crypto reckoning.

Some believe the pace of withdrawals in May means ‘stablecoin’ company effectively dealing with slow-motion bank run. Tether in this sense functions a bit like the largest crypto bank. According to public blockchain records, $1bn of tether was redeemed – with the cryptocurrency handed back to the company and destroyed as part of the withdrawal process – just after midnight on Saturday. This feels a bit sketchy.

Regulators have raised concerns about stablecoins after the collapse of UST, which at one point was the world’s third-biggest stablecoin. So what’s the worry for Tether?

Some have questioned whether the accounts are as reassuring for depositors as they appear. If the company’s investments in cryptocurrency enterprises fell in value during the market crash, then it may have struggled to match customer deposits. The tokenomics around Stablecoins hasn’t been tested in a recessionary or stagflationary environment.

Like all stablecoins, the tether currency is supposed to always be worth a fixed amount – in this case, one US dollar. It achieves that, the company says, by maintaining a large reserve of stable assets: while retail investors can buy or sell tether on cryptocurrency exchanges, institutional investors can also simply pay money directly to Tether to receive newly minted tokens, and can return the tokens to the company in exchange for cash.

In an environment where Bitcoin swoon dived, what would really happen to Tether? I guess we will find out.

Tether’s latest disclosure is notable as it’s also the first time the company has revealed it is buying government debt from countries outside the U.S. in addition to Treasury bills.

From a high of just over $83 billion in market capitalization on May 11, Tether, the largest stablecoin by market capitalization, dropped to around $73 billion in market cap as of Monday, according to CoinMarketCap.

• USDT is also the most controversial stablecoin, with serious questions raised about its governance and reserves, and especially about its ability to damage the financial system, particularly if it loses its $1 peg.

• Buying government debt from countries outside of the U.S.? That’s not a good sign.

• In the case of a stablecoin, its value could — and in several smaller cases has — fallen to zero. After Terra, Terra is on the hot seat. There’s no guarantee that it won’t fall to zero.

• Tether, the world’s largest stablecoin, has seen its circulating supply plunge and should continue to see this trend continue.

Crypto is a bit like a house of cards because it’s all tethered to Bitcoin (price) via Tether. But more damaging, many cryptocurrency investors, particularly large ones, park huge sums of money in Tether. You can see how a collapse of Tether would bring on a crypto winter of pretty large proportions.

Tether has a history of lying about the nature of its business when it was opening bank accounts around the world. They will be charged for some kind of banking fraud and cat-and-mouse behaviors that are more or less illegal, in my opinion.

Tether claims its dollar-denominated tokens are backed by an equal value of assets held by the company. But the company has never presented a full formal audit of its balance sheet, despite repeatedly promising to do so.

Sadly these are all more red flags for the viability of Web3 and these NFT castles in the clouds.

What do you think? Could Tether Collapse?

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Hey Guys,

I have to say, I find this week-old news pretty crazy. Sometimes on Web3 Digest, I just loose it. This is one of those posts.

For some reason, I don’t drink the Kool-Aid quite like other people.

Sam Bankman-Fried, the CEO of crypto exchange FTX, has taken a 7.6% stake in Robinhood, according to a last Thursday’s filing with the Securities and Exchange Commission. That would be May 12th, 2022.

Samuel Bankman-Fried, also known by his initials SBF, is an American entrepreneur, billionaire and investor. It’s a bit crazy how much crypto has elevated a few to great heights and how much power they will wield in the development of Web3 because of it.

Twitter itself increasingly feels like a consortium of the Billionaire class.

Sam nearly owns as much of Robinhood now as Elon Musk owned of Twitter, before he decided to acquire it. Scary thoughts.

The irony is of course Robinhood’s fate largely depends (TechCrunch) on how well it on-boards GenZ into crypto.

According to the document, Emergent Fidelity Technologies took a stake worth $648 million in Robinhood. Bankman-Fried is the sole director and majority owner, it says. Not cool, Bitcoin bros!

I would not want to be the last human being in a spaceship with this guy.

Sam looks like a particularly twisted crypto version of Reid Hoffman. All kidding aside, thirty-year-old crypto billionaire Sam Bankman-Fried is now playing Peter Thiel like games with the future of humanity.

Robinhood like Coinbase’s stock in Bitcoin’s recent dive, looked like in serious trouble. Robinhood’s net revenue dipped 43% to $299 million in Q1, with crypto trading revenue specifically falling 39% to $54 million (meaning crypto trading accounted for about 18% of Robinhood’s total revenue before the end of March). I’m not sure it was up to Cathie Wood’s standards. $ARKF is below $20 now, pretty shocking really.

Robinhood has been actively growing its crypto arm since the end of Q1 in a bid to attract users and boost trading volume. In the last month or so, the exchange has rolled out custodial crypto wallets to its users, listed four new coins including Solana and Shiba Inu.

So how well has Robinhood onboarded GenZ to its crypto products? Not so great but not terrible either, 22 million customers interact with its crypto products today in May, 2022.

The Coinbase/Binance Rival - FTX

Bankman-Fried currently has no intention to take other actions but at some point if circumstances change, he may review “options for enhancing stockholder value through, among other things, various strategic alternatives or operational or management initiatives,” according to the document. It also says he could acquire additional shares. Ominous guys!

FTX, where Bankman-Fried is CEO, is one of the largest crypto exchanges in the world and offers derivatives products for more sophisticated traders as well as spot trading. FTX has become a rival to Coinbase and Binance, though it doesn’t offer its services in the U.S.

Sam is definately a part of the Stripe Gen, a future of Web3 that looks more like a dystopia filled with Crypto Overlords. Hard to believe Web3 won’t be even more corrupt than Silicon Valley has been at this point. When you notice how aggressive a16z has been to foster NFT platforms at scale, you see how nefariously centralized the ecosystem is becoming.

SBF is so young his profile on Twitter looks more like an NFT avatar. The rogue like Billionaires! Very sketchy.

Sam must like Robinhood’s style. Robinhood is now launching a non-custodial wallet, users will be able to access and manage their own digital assets, including cryptocurrencies and decentralized apps (dApps) including NFTs. Oh boy!

That Block, Coinbase and Robinhood have this much power to bring crypto to the mainstream is just upsetting and really not very decentralized. Jack doesn’t seem to care, I wonder what Sam will do in the future. Whatever is happening, it feels pretty shady.

• With a net worth of US$22.5 billion, the founder of futures exchange FTX is the youngest person on the 2021 Forbes 400 list of wealthiest people in the world. What was he on the 2022 list?

His parents are both Stanford law professors, but he disliked school. What a big surprise? The crypto democratization of finance continues in the hearts of our not so privileged children!

Coinbase, another popular crypto exchange, also offers two types of wallets — custodial and non-custodial — in two different apps, the latter being Coinbase Wallet. Coinbase Wallet is free to use but does pass on individual transaction fees to its users. Guy, it’s a lot of fees! Crypto is not democratizing finance any time soon.

Sam, don’t look at me that way? I know what you and your ilk represent. A new breed of overlord even more sinister than Silicon Valley fat cats and venture capitalists.

I’m not even joking. I’m about ready to throw American capitalism in the trash bin for a “great reset”.

What happens when our Overlords are part of a Nihilistic generation? What do you suppose we are in store?

Sam as a prodigy eventually discovered “effective altruism”, which changed the way he viewed the world. It’s a wholesome philosophy that aims to build a better world by taking action based on research. I guess for his generation, that means Bitcoin.

He’s already donated significant to causes such as animal welfare causes.

I’m just afraid of what Sam’s inner animal-totem really is?

Robinhood got its start allowing retail investors to invest in stocks but saw huge success when it rolled out its crypto trading platform in 2018. Now with Sam’s evil genius, who knows what they might conquer? Uncle Sam might just take over the world like CZ did. I guess the Crypto Princes are here folks.

Sam Bankman-Fried buys 7.6% stake, and there’s a burning light lit in the idols of Web3 where the citizens worship not the American $, but Bitcoin.

God save America.

A tribute to our saviors Elon, Cathie, Jack and Sam. The living Angels of Bitcoin.

Thanks for reading guys!

The Tycoons never pause to get into our wallets. Before the next crypto winter has arrived, they are already preparing for the next Bitcoin bull market. David Marcus has a new project. The relentless greed of Silicon Valley knows no bounds.

David Marcus led Libra, Facebook’s own failed stablecoin project.

Details are vague, but Lightspark has raised an undisclosed funding round co-led by Andreessen Horowitz and Paradigm. It turns out it’s not just Jack Dorsey who is obsessed with the Lightning Network.

David Marcus is a Meta grade entrepreneur, if you can call a PayPal mafia graduate that. He is the former president of PayPal and Vice President of Messaging Products at Facebook where he ran the Facebook Messenger unit from 2014 until 2018. After getting absolutely nowhere with Diem, I mean Libra, I mean Facebook actually, he’s starting a new startup and not surprisingly getting backed by a16z.

Crypto and Web3 Future a16z

a16z is writing about the future.

The Tycoons don’t fall far from the trees of capital, it sounds like. After his departure from Facebook in November, many crypto industry insiders speculated where long-time executive David Marcus would land. This week we found out, and the name of his startup is Lightspark. Such a shiny executive, at the height of his powers ready to embark upon After his departure from Facebook in November, many crypto industry insiders speculated where long-time executive David Marcus would land.

Lightspark is a Lightning Network infrastructure company. Most of Silicon Valley understand Bitcoin and the lightning network is the real deal. The firm did not disclose funding amounts oddly but is sharing that their first round is co-led by a16z Crypto and Paradigm with participation from Thrive Capital, Coatue, Felix Capital, Ribbit Capital, Matrix Partners and Zeev Ventures.

In addition to Marcus himself, the new company also includes other former Meta employees in executive roles. One wonders at its connection to Facebook. Instagram created NFT integrations came just as Bitcoin started to crash in 2022, it was pretty hilarious.

Marcus has revealed few details about Lightspark’s plans, but says that the firm will “explore, build, and expand the capabilities and utility of Bitcoin.” He also says that the company will create a team to “dive deeper into the Lightning Network.” Given this context, it is very possible that the company may create a crypto payments service of some type. Maybe Lightspark will help us pay for stuff in the Metaverse. That would certainly be Meta, just don’t call anything zuck-bucks, like please!

Marcus also commented on the recent crypto market downturn, now 60% below its peak. Marcus called this a good moment “to focus on building and creating value.” Last time I checked PayPal and Meta’s stocks weren’t doing too well. Paypal’s stock is down 68% in the last year, and Facebook’s stock is down 37% YOY, which is a lot.

The timing for the reveal could have been better as Bitcoin and the broader crypto market have sustained massive losses in recent days. Nobody said Mark or David ever had much insight into Web3. Mark didn’t even see TikTok coming, if you can believe that.

Marcus previously founded Zong, a telecom billing network that was later acquired by PayPal (PYPL). Founding stuff is in his DNA, nobody wins every time. Marcus resigned from Diem, Facebook, and associated projects in November 2021 after the product repeatedly failed to launch. It was sad to see that even Facebook couldn’t pretend to do a DAO and a blockchain consortium with the higher ups with Libra. But Facebook needs its own internal Robox-clone one way or another. No problem then that David is 50 and the average user in Roblox is like 10.

Supply-demand ponzi schemes like Bitcoin are limitless when Bitcoin is now owned by the one percent and has escaped all manner of regulatory scrutiny conveniently in the United States. Jack was only too happy to focus on Square, that’s also doing things with the Lightning Network, where he quickly changed the name to Block. So what will this Block and Meta duopoly on the future of payments feel like?

Let There Be Light

The Lightning Network is a project designed to create faster and cheaper transactions on top of the bitcoin network.

a16z knows a thing or two about developing duopolies on new sectors of Web3, like it has successfully accomplished in 2022 with NFT platforms.

So what are we looking at?

David’s latest project, Lightspark, aims at nothing less than reinventing the largest and most antiquated parts of financial services by building on the Lightning Network,” wrote Matrix Partners’ Dana Stalder – an early investor in Marcus’ Zong – in a blog post.

When people are as rich as David Marcus here’s how they view things like inflation and crypto downturns: “Downturns are good moments to focus on building and creating value with mission-aligned people,” said Marcus. Are you a mission aligned person Mr. Marcus? David is an Aries, certainly quite the opposite of a shifty Libra.

Seeing Silicon Valley and Venture Capital pimp Web3 for lust for power and greed, just makes me turn in my vainglory idealism for Satoshi Nakamoto, likely invented by a consortium of such people as David Marcus, Jack Dorsey and these kinds of Silicon Valley group-thinkers always ready to exploit a new trend. Distributed ledger technology has made us pray at the altar of a form of FOMO, that’s frankly like jumping wallet-first into dystopia.

The Meta Mafia Invasion of Web3

I am afraid the high-minded halls of a16z have had a Meta invasion. Several Diem leaders also moved to a16z Crypto last year, which, perhaps not coincidentally, is funding Marcus’ new project. So forgive me if I’m skeptical that a16z has created an NTF duopoly to go with the Lightning Network of this brave new world.

• a16z’s future NFT canon, is highly recommended if you worship at this idol of the future.

Who are my apostles this time Marc? Sonal Chokshi, Chris Dixon, Denis Nazarov, Jesse Walden, Linda Xie. Where do I pray and how much crypto to be part of the pyramid scheme?

Here part of a16z and Meta’s plan is to marry the “ownership” economy into a passionate embrace with Facebook’s Metaverse. Apparently, I only need 100 true fans to get on the inside.

There I am sure, my Life will be Non-fungible and my soul will be for sale in my NFT profile filled avatar of daily begging and raising tips from the elite, their robots, the robots of their kids, etc.… and I would sooner start a TikTok and I have, thank you very much David Marcus.

Lightspark has already started off with a bang of transparency: “We’re excited to dive into Lightning, learn more and work alongside the community. We’ll share more about our work as we make progress.”

Read why a16z invested with Lightspark

Chris Dixon, did you have a secret meeting with Mark Zuckerberg, that I am not aware of? a16z say:

We at a16z started investing in bitcoin in 2013, several years before we had a dedicated crypto fund. We have always been big believers in Bitcoin, its unique history and its foundational role in crypto. 

Oh my faithful overlords! What have you done!

Diem itself was sold to Silvergate Bank in a $200 million deal. But with a16z’s help perhaps even Facebook can learn about how to enter the Web3 portal to the Metaverse. Maybe it will be like a big-bang of Lightsparks and illuminati like venture capitalists ready to “take over the world”. How did you get so good at this Mr. Dixon? Celebrated viral articles on Medium all those years ago…heralding a new wage of decentralization and “ownership”.

A prolonged crypto bear market could mean reduced investor interest and a smaller potential hiring pool. The best startups always come from a downturn. If Meta is funding a16z and even supplying them with talent, what could it all mean?

Thanks for reading guys! Move over Stripe, the Bitcoin Lightning Network might come out of the shadows soon enough.

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This is the first article in a new “Journal” on Web3 Digest title The Stripe Gen. It is as such a special feature article. Web3 Digest continues to evolve thanks to its readers who support it.

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Back in October 2021, Stripe announced that it would be re-entering the cryptocurrency market — ending a four-year hiatus with hype around crypto definitely not abating.

Now on April 22nd, 2022 there’s a new important update, even as Elon Musk has secured the money for a bid, big question - will Elon Must turn Twitter into a Creator Economy utopia?

I’m following the intersection of Web3 and the Creator Economy pretty closely, from writers doing NFTs to gaming evolving platforms for NFTs, it’s all super interesting.

Tipping people in crypto is nothing new, but this is a major development. Online payments firm Stripe says it will start offering merchants the ability to pay their users in cryptocurrency through the stablecoin USDC.

Stripe and Polygon

The reality is Stripe to use Polygon Technology to power payments for creators on Twitter! Polygon is the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development. So there’s deeper collaborations here than meets the eye.

Twitter will be the first company to test this option by paying earnings via crypto to content creators who use its monetization products. People like Jack and Elon are very bullish about the potential of Bitcoin and crypto, even Dogecoin which Elon sometimes Tweets about.

In addition to payments to bank accounts and debit cards, select content creators can now elect to have USDC earnings sent to their wallets. Creators can use Twitter’s Super-Follow to introduce premium content like a subscription.

Twitter Testing Crypto via Stripe for Creators

On the macro side, Stripe is adding crypto payouts to Connect, its programmatic (API-based) payouts platform; and Twitter will be the first platform to let people get payouts in crypto using it.

Starting Friday, Twitter will let a certain number of creators receive their earnings from its paid Ticketed Spaces (audio) and Super Follows features in crypto.

It’s Stripe’s first significant push into crypto since dropping support for bitcoin four years ago. If Twitter is serious onboarding crypto into its Twitter spaces feature, the audio communities could be the Web3 version of Twitter, very very soon.

Creators know that Niche marketing is the most lucrative for them, and Twitter does niche dialogue really exceptionally well. Opening it up to crypto just really makes sense here in the tradition of Jack and Elon.

I never thought I’d say this but Twitter is a first-mover now in this. While the social media giant already uses (Stripe) Connect to pay its creators, Twitter will be the first company to integrate the new crypto payout feature, with expected rollout to other businesses in the next few weeks. Substack pays its creators via Stripe, as well.

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Stripe is a Web3 Payments Platform

Stripe is a huge enabler to be honest of many payments in Web3. For Creators, it’s the most seamless solution and I’m happy personally to pay the 3%. Substack itself takes 10% which is far more reasonable than many other ecosystems (including the worst offenders like Roblox and Facebook). I’ve noticed in 2022, sponsorships are becoming more common on LinkedIn and Substack, we badly need a “Stripe of Sponsorships” for Creators who enable the social graph to connect the right companies with the right creators. Hopefully Google with YouTube have thought about this in more detail.

So what’s going on here? This means Stripe is a Web3 platform. Many of us already knew this.

Payments will occur via the Polygon (MATIC) network, a layer-2 blockchain known for its low fees, fast transaction speed, innovative zero-knowledge technology and integration with Ethereum (ETH). Outside of ByteDance, Stripe is by far the most important to go IPO either in 2022 or 2023.

What does it Mean for Creators?

Twitter already helps Creators monetize in things like Tips, Super Follows and ticketed Spaces events. Connect is available in local currencies already in 70 countries. Twitter’s monetizing service is not, but this gives it the potential to expand at some point. It’s all coming together quite nicely for the future of payment to help build Web3.

Twitter is just a beneficiary. The real story is in Polygon’s integration with Stripe. The real winners are those with serious followings on Twitter. With Elon Musk poised to own the company with backers and take the company private they can mold it into a Web3 winner where “free speech” and freedom of expression is more valued and moderation does not impede in that basic human right.

Stripe is getting very sophisticated. Stripe last month (TechCrunch) released a series of APIs and other tools for developers to start integrating Stripe’s crypto features. Support to use fiat currencies to buy more than varieties of 135 crypto tokens (not a fragmented market at all!), cash-out facilities, NFT trading and compliance features like Know Your Customer (KYC) were among the functions that were rolled out across some 180 countries. That’s massive!

Stripe is Closing the Circle on its Payments Dominance

As companies like Paypal are in a decline, that same cannot be said for Stripe or Block (formerly Square). Coinbase could eventually enter this picture.

Stripe will allow businesses to pay their users via cryptocurrencies, starting with Twitter, in the latest sign of how large financial firms are warming to digital assets. Institutional enter into Bitcoin has solidified its price. The Fed’s nearly unlimited QE during the pandemic greatly facilitated this. It gave huge liquidity reserves and power to shoot on all cylinders to piggy pack their wealth on crypto FOMO.

Stripe is a $95 billion online payments company that will now start offering merchants the ability to make payouts in crypto through the stablecoin USDC, which is issued by crypto firm Circle. Stablecoins are tokens that are pegged to fiat currencies to maintain a stable price. In USDC’s case, as the name suggests, the cryptocurrency is backed by the U.S. dollar. It’s all just pretty incredible if you think about it.

Summarized

So basically according to my understanding, payments processor Stripe will use Ethereum scaling platform Polygon in a move that will enable Stripe’s customers to pay sellers, freelancers, content creators and service providers in crypto.

• Initial payouts will be made using USDC stablecoins native to Polygon’s network and through Polygon-compatible wallets

• This could sync well with an Elon Musk takeover of Twitter to fast-track Web3 integrations and features.

Stripe Hugs Bitcoin

This in mid-2022 is a little surprise to some. It’s Stripe’s first significant push into crypto since dropping support for bitcoin four years ago. The San Francisco-based start-up stopped accepting payments via bitcoin in January 2018. Bitcoin is very different today in the early 2020s and stablecoins and ecosystem currencies like Roblox has created, are being cloned by people like Meta (Facebook).

If you want to support me so I can keep writing, please don’t hesitate to give me tips, a paid subscription or some donation. With a conversion rate of less than two percent, this Newsletter exists mostly by the grace of my goodwill (passion for technology and Web 3 decentralization) & a relative state of poverty as I pivot into the Creator Economy myself.

Sorry I’m not only pumping crypto, I must be neuro-divergent with a bias to critical thinking somehow.

Anyways I hope you enjoyed the topic, that’s all for today.

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