Author: The Economist
On august 11th 2017 far-right groups from all over America came to Charlottesville, Virginia, to protest against the removal of a Confederate statue. The next day a white supremacist drove his car into a crowd of counter-protesters, killing one of them. In the aftermath PayPal, an online-payment platform whose terms of service forbid raising money to promote hate, suspended extremists’ accounts. So did Apple Pay and Google Wallet. Visa and Discover, two credit-card firms, followed suit, as did Patreon, a crowdfunding site. Far-right groups found themselves in search of other places to raise money. What many of them embraced was cryptocurrency.…
Football clubs around the world are desperate for cash. The pandemic has forced grounds to close, competitions to be cancelled and broadcasting fees to decline. That might explain the appeal of Socios, a crypto firm, which has signed partnership deals with around 60 football teams. The company produces “fan tokens” and sells them to supporters, sharing the proceeds with the clubs. Holding tokens is supposed to bring people closer to their teams by giving them a chance to vote on, for example, the music that is played in the stadium or the name of new training facilities. Paris Saint-Germain fans can buy…
To believers, open, public blockchains provide a second chance at building a digital economy. The fact that the applications built on top of such blockchains all work with each other, and that the information they store is visible to all, harks back to the idealism of the internet’s early architects, before most users embraced the walled gardens offered by the tech giants. The idea that a new kind of “decentralised” digital economy might be possible has been bolstered over the past year as the numerous applications being built on top of various blockchains have boomed in size and functionality. Perhaps the…
“Ridiculous and cool.” That is the architectural brief for a new office tower under construction in the Crypto Valley, a business district of Decentraland, a virtual platform built on the Ethereum blockchain. The edifice—owned by Tokens.com, a blockchain investor—will be a cross between a nightclub in Ibiza and the Bellagio resort in Las Vegas. In a fantasy world unencumbered by something as pedestrian as physics, a rotating company logo will float above the tower as nearby clouds shoot out company-branded thunderbolts. The tower’s purpose—to provide office leases for firms and event space for crypto conferences—is humdrum by comparison. Gamers have traded…
Crypto is the key to paradise, particularly the financial kind. That, at least, is what the fans argue. Greedy intermediaries, such as banks, will be replaced by smart contracts (self-executing rules) that run on blockchains (distributed databases). This will give rise to efficient and innovative financial services, collectively called “decentralised finance” (DeFi). The foundations of this edifice are shaky, however. Today’s blockchains may be masterworks of coding, but they are also fiendishly complex, energy-hungry and, perhaps counterintuitively, centralised. Despite years of work, crypto developers are still trying to fully overcome the trade-offs inherent in the technology. You can think of banks…
The Hong Kong den of FTX, a cryptocurrency exchange, is where high finance meets teenage chaos. It is 7.30pm and staffers in shorts and T-shirts are still arriving for work, slaloming among desks fitted with six screens each. Booze, boxes and general junk, from guitars to badminton shuttles, lie everywhere. A buffet of delivery food tempts the peckish; traders and developers face off on wooden chess boards. Art casting Sam Bankman-Fried, FTX’s founder, as the King of Clubs or Uncle Sam in the trenches adorns the walls. When bitcoin prices are booming, poker tournaments often take place in a cluttered…
The Hong Kong den of FTX, a cryptocurrency exchange, is where high finance meets teenage chaos. It is 7.30pm and staffers in shorts and T-shirts are still arriving for work, slaloming among desks fitted with six screens each. Booze, boxes and general junk, from guitars to badminton shuttles, lie everywhere. A buffet of delivery food tempts the peckish; traders and developers face off on wooden chess boards. Art casting Sam Bankman-Fried, ftx’s founder, as the King of Clubs or Uncle Sam in the trenches adorns the walls. When bitcoin prices are booming, poker tournaments often take place in a cluttered meeting room (tonight…
Although 86% of Americans have heard of cryptocurrencies, only 16% have traded or paid with them according to the Pew Research Centre, a think-tank. One reason for that gap is volatility: bitcoin, the world’s most popular cryptocurrency, rose meteorically before falling by about 25% in the month to mid-December. Stablecoins, a burgeoning class of digital currency, could help crypto to go mainstream. Many use them as a bridge into the broader cryptosphere—the total amount issued grew from $5bn at the start of 2020 to almost $160bn as of December 2021 (see chart). What are these currencies, and what is their promise? Stablecoins are so…