Teddy Fusaro: Why Crypto Crosses ‘The Chasm’ in a Post-Coronavirus World

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It is often said that Julius Caesar brought the Roman Republic to an end when he died on January 10, 49 BC. Crossed the Rubicon with the 13th Legion of the Roman Republican Army and began the civil war that would make him a dictator.

This post is part of CoinDesk’s 2020 Year in Review – a collection of posts, essays, and interviews about the year in Crypto and beyond. Teddy Fusaro is Chief Operating Officer at Bitwise Asset Management, a crypto asset management company. Previously he worked at IndexIQ, Direxion Investments and Goldman Sachs.

But Caesar accurately believed that the republic at that time had become just a name whose spirit and essence had been eroded by decades of attachment to the status quo, corruption, and internal conflict.

As in 49 BC 2020 is considered to be the year marking the present era of the past. the demarcation line between before and after. It will be remembered as the year everything changed.

The COVID-19 pandemic that made millions of people sick and dead, suddenly brought the world economy to a standstill, hit all planes on the ground, put millions of people out of work, and froze people in their homes for months, is known as the “Rubicon Moment” to be remembered That changed the world indelibly.

But as with Caesar’s claim that the Roman Republic had changed even before he crossed the river, the truth about the change in 2020 is also much more nuanced.

“Caesar” by Adolphe Yvon, 1875 (Creative Commons)

A world that is ripe for change

The geopolitical tensions between the US and China have been increasing for decades.

The relationship we have with one another as individuals and the methods we use to communicate, work, and interact have changed since the advent of social media in the early 2000s.

Confidence in government and traditional institutions, including the way we consume news and media and by whom, has been dwindling for years.

The “overton window” of acceptable political positions on government deficits, spending, taxes and monetary policy has opened en masse since the arrival of “quantitative easing” 12 years ago, allowing previously radical ideas to flow into the mainstream.

The world has accelerated rapidly over the past 20 years towards digital, mobile and virtual modes of speech, spending, living, love and war. The 2020 COVID-19 pandemic accelerated the transitions, filling a vacuum that only took a spark to ignite the flame that would become an indefinite change, and forcing the world over the Rubicon. A more resilient Western world would already have embraced the technological changes the pandemic is now imposing on society and would have been more able to cope with the public health, economic and financial consequences.

Russian communist revolutionary Vladimir Lenin said: “There are decades when nothing happens and weeks when decades happen.” 2020 was a year of decades in many ways.

Just as this year has pushed forward the newer ways we work, meet, live, communicate and even vote, it has also pushed the ways we spend, save, invest and plan for the future.

Meet the moment

In this context, it is not surprising that bitcoin and cryptocurrencies also crossed their own divide in 2020.

Commentators often miss the connection, but as other norms and institutions evolve into their future digital, mobile and virtual form, so are norms related to banking, financial services and investing. The interrelationships between decentralized systems like Bitcoin and Ethereum and this dynamic are too often misunderstood or underestimated.

In the pantheon of business literature that describes American Silicon Valley, Geoffrey Moore’s “Crossing the Chasm” is perhaps the most cited work on how new technologies are gaining acceptance.

According to Moore, every disruptive technology has to go through five phases of introduction: starting with the tinkering of “innovators” who first try out new technologies, through the “early adopters” to the “early majority” and “late majority” – the two largest groups – and finally to the “stragglers”.

Source: Teddy Fusaro

It is remarkable how regularly and routinely this roadmap has played out in technology after technology. The most critical phase of Moore’s framework for these trips is what he calls the “abyss”. The gap yawns between the “early adopters” and the “early majority” because there is a difference in the step function between the requirements of these two cohorts. This is where new technologies often die.

Bitcoin and crypto may not have been ready to leap across the chasm yet, but the long year of 2020 that drifted the world across the Rubicon pushed cryptocurrency onto the rift’s inception.

As investors and policymakers grapple with the changing dynamics of developed nations’ monetary responses to the crisis and the rapid pace of technological change, giant financial firms like PayPal have also made crypto available to every consumer. Crypto startup exchange, custody and trading platform Coinbase now has more user accounts than financial giants Charles Schwab, TD Ameritrade, E * Trade and Interactive Brokers combined. The Chicago Mercantile Exchange’s bitcoin futures derivatives contract has become the largest and most active bitcoin trading market in the world, previously dominated by unregulated and non-domiciled platform operators.

We have since seen innumerable other references to step function developments. JPMorgan has embedded crypto as an asset class on Wall Street. Fidelity started hiring and growing its suite of crypto products. Square announced large technical development grants to allow engineers to work on Bitcoin as the Bitcoin offering boosted financial performance. The central banks announced that they would build their own digital currencies. The foundations invested over $ 750 million in risk managers.

Although they are often misunderstood at the regulatory level, significant breakthroughs have been made despite the short-sighted interpretation of many industry participants.

The Office of the Currency Verifier (OCC) concluded that government-chartered banks may provide cryptocurrency custody services, and noted that the provision of cryptocurrency is a modern form of traditional banking. The Financial Crimes Enforcement Network (FinCEN), an office of the US Treasury Department, proposed new rules for “non-hosted wallets,” which philosophically violate certain basic Bitcoin principles, but do not go as far as many feared. The Securities and Exchange Commission announced that their strategic innovation and financial technology hub (or FinHub) would become a standalone office and brought or brought several high profile cases to the room.

The drumbeat of clarification and confidence-building enforcement actions from the SEC and the U.S. Department of Justice has continued to marginalize the bad actors and criminals, creating a safe space for innovators and developers to follow the rules. The US financial system is the envy of the world in large part because of the integrity of its markets, the sanctity of its laws, and the sophistication of its regulators. While changes in this area move more slowly than innovation itself, the importance of any additional clarity, regardless of opinions on the rules themselves, cannot be overstated.

Despite some loud industry voices shouting badly, 2020 regulatory activity laid the foundation for the future success of crypto and related companies in the US

A reason to be optimistic

The global cross-currents of 2020 were both turbulent and severe. The world is shaken to the core. The first global pandemic in a century has mixed with a flurry of necessary technological adoption, causing us all to adapt in different ways. These broad issues have brought the power, resilience, trust, and immutability of decentralized public blockchains like Bitcoin and Ethereum to the fore. These public blockchains have emerged in stark contrast to our hollow social, political, and economic anchors, which have turned out to be fragile and weak due to the changes brought about by public health and economic crises.

The ideas inherent in Bitcoin and other open source blockchain networks offer an alternative and hopeful vision for Western liberal and classic American values ​​to mature into a fully digital future. Bitcoin is based on the enduring ideals of freedom of speech, freedom from censorship, self-sufficiency, opportunity, resilience and the right to privacy. It is with great optimism that we should see this acceleration in crypto maturation, partly due to the global transformation of 2020.

2020 was the year we look back and believe we have crossed the Rubicon. But the truth is that COVID-19 has been overdue for a turning point in a world. The fundamental transformations had long since manifested conditions for such transitions, a system pervaded by years of bureaucracy, struggles, cronyism, and resistance to change, similar to the Roman Republic on which Caesar 49 BC was based. BC Marched.

While 2020 ends as always, the future remains vague. But it is clear that the analog world is behind us. The future is digital, mobile, distributed, trust-minimized and unchangeable. In 2020 the world crossed the Rubicon and cryptocurrencies crossed the gap.