Market News
‘The Crypto Story’ – A 40,000 Word Exclusive that Both Bashes and Praises the Sector
Bloomberg Businessweek published a 40,000-word article focused on cryptocurrencies, which was written by Matt Levine, a popular Bloomberg News columnist covering finance and business topics. The article, which looks more like a crypto encyclopedia, reflects the mainstream status of the crypto industry.
It’s not just an opinion piece from Levine, as he was delegated by Bloomberg to cover the crypto market for an exclusive piece. The article is the only story run by Bloomberg Businessweek’s current issue of the magazine, which happens to be only the second time in the magazine’s 93-year-old history that it comes with a single story. Levine was also the main guest of this week’s Bloomberg Crypto Full Show to discuss his article and his take on crypto.
It’s interesting to see how Bloomberg has gradually embraced the crypto space and is now educating the tradefi audience. If you had browsed through Bloomberg back in 2013, you could have read titles like “Bitcoin Is a High-Tech Dinosaur Soon to Be Extinct.” The Bitcoin-skepticism maintained up until 2018 when the feature story of a Businessweek issue told us that “Bitcoin Is Ridiculous. Blockchain Is Dangerous,” with the author mockingly saying that “on the days when Bitcoin crashes, a holiday atmosphere takes over in my corners of the internet.”
Ironically, Bitcoin is the centerpiece of the latest Businessweek edition, and that might be a positive signal suggesting that even the most zealous traditional finance players are getting serious about the still emerging crypto space, with its good and bad.
Even though Matt Levine is “in many ways a crypto skeptic,” as he revealed in his interview with Crypto Full Show hosts, he put the crypto industry in a good light, criticizing what he believes raises concerns, and expressing hope that the blockchain industry will solve problems and is here to stay.
What Can You Learn from Bloomberg’s Crypto Story?
A lot of history and layman's explanation, which is great for crypto novices and those who want to recall how it all started and what it all means. Matt relies on an encyclopedic approach with his story, breaking the crypto lego into pieces for you to understand “where it came from, what it all means, and why it still matters.”
The article explains the main topics like, how Bitcoin started, how it works, what is Ethereum, what is a smart contract, etc. It also discusses how the crypto industry has borrowed many concepts from traditional finance, putting its own twist.
One of the main themes of the essay is related to databases. Basically, our modern life is all about databases, whether it’s about land registries, banking accounts, or stock ownership. In the end, all databases move online, and that means blockchain is poised to play a key role thanks to its decentralization feature.
Matt admitted that he didn’t write about crypto as a ‘deeply embedded crypto expert,’ and he was not a ‘true believer’. He bought his first $100 worth of crypto at the moment of writing the article. Nevertheless, as a finance person, he found that “crypto has a pretty well-developed financial system” that has new things to say about old problems.
Bitcoin and Ethereum Still Dominant
Matt Levine focuses very much on the history of the crypto industry, emphasizing Bitcoin and Ethereum. He doesn’t go further by explaining more recent blockchains and their consensus mechanisms, including Solana, Avalanche, or Algorand. Considering the combined market cap of Bitcoin and Ethereum, the focus on the top two is unsurprising, although some crypto fans criticized the article’s silence on more rapid and scalable blockchains.
Some Twitter users suggested that the Bloomberg article had missed explaining the most recent advancements in blockchain, especially given the rapid growth of decentralized finance (DeFi) protocols.
— Peter (@rujgev) October 26, 2022
For Matt, Bitcoin is interesting because people accepted to consider arbitrary digital units as valuable.
“The wild thing about Bitcoin is not that Satoshi invented a particular way for people to send numbers to one another and call them payments. It’s that people accepted the numbers as payments. […] That social fact, that Bitcoin was accepted by many millions of people as having a lot of value, might be the most impressive thing about Bitcoin, much more than the stuff about hashing,” the article reads.
While many touted Bitcoin’s ability to show no correlation to traditional finance and act as a hedge against inflation, Levine said that it does none of it. He stated:
“In practice, it turns out that the price of Bitcoin is pretty correlated with the stock market, especially tech stocks. Bitcoin hasn’t been a particularly effective inflation hedge: Its price rose during years when US inflation was low, and it’s fallen this year as inflation has increased. The right model of crypto prices might be that they go up during broad speculative bubbles when stock prices go up, and then they go down when those bubbles pop. That’s not a particularly appealing story for investors looking to diversify.”
NFTs Can Get Weird, Stablecoins Can Be Unstable
Levine also touched upon non-fungible tokens (NFTs) and stablecoins. With NFTs, things can get weird as the article suggests the technology is not that strong and it doesn’t address IP issues.
“It’s not all that uncommon for the person selling the NFT series not to own the IP rights. Early in the NFT boom, it was common for people to make NFTs “of” the Mona Lisa or the Brooklyn Bridge,” the article says.
Levine goes further by saying that NFTs may not even represent ownership in a binding sense but they represent a ‘feeling’ of ownership, although “this technical silliness makes NFTs more culturally interesting.”
Speaking about stablecoins, the Bloomberg article categorizes them, stressing that algorithmic stablecoins may become unstable if the algorithm is bad. The author mentioned the crash of TerraUSD as an example.
All in all, Bloomberg’s Crypto Story is an extensive article that discusses everything crypto, mentioning Bitcoin, Ethereum, smart contracts, DeFi, NFTs, decentralized autonomous organizations (DAOs), stablecoins, and metaverse, among others.
