Pro Crypto, Anti-Bad Actors: Crypto Is Definitely Here to Stay

Challenging Skepticism in the Evolving Landscape of FinTech, Cryptocurrency, and Blockchain

Disclosure: Article Update - 1/17/2024

Please note that the article has been updated to include a video of JP Morgan CEO Jamie Dimon discussing Bitcoin and cryptocurrencies at DAVOS. The video is placed at the end of the article for added insights.

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Listen to the audio version.

I wrote this article initially for a prominent tech media outlet, submitting it to the editor in the last week of 2023. Three weeks have passed since my submission, and upon their response, the editorial team imposed a word limit that would encompass only one-third of my original content. Determined to preserve the entirety of my work, I've made minor revisions, updated the title, added a few more paragraphs, and opted to publish it exclusively on my Substack. Enjoy! 😀

In the realm of cryptocurrency advocacy, I proudly champion a pro-crypto, anti-bad actors stance, a core tenet of my beliefs. This position underscores my steadfast commitment to nurturing the positive potential of cryptocurrencies while actively opposing any involvement in illicit activities within the space. I am dedicated to highlighting the enduring strength of crypto and its profound impact on the financial landscape. It's essential to clarify that opposing bad actors does not equate to dismissing the entire crypto industry. On the contrary, I genuinely believe in the innate value and long-term potential of cryptocurrencies. While it's true that not all cryptos are cut from the same cloth, much like the diverse landscape of publicly traded companies on Wall Street. In the realm of traditional centralized companies, the ethical foundation and moral values of the management team heavily influence the entity. Similarly, in the decentralized sphere, although the product itself is decentralized, the ethos and principles upheld by the centralized management team play a crucial role. Despite these variations, I see cryptocurrency as a driving force in reshaping and strengthening the future of finance.

As 2024 unfolds, I reflect on the impactful measures taken by the SEC in concluding 2023, particularly in their enforcement actions against key figures such as Sam Bankman-Fried of FTX Exchange and the trading firm Alameda Research. The regulatory scrutiny extends to addressing concerns surrounding Changpeng Zhao of Binance, the world's largest cryptocurrency exchange. Delving into John Reed Stark's publications, namely 'The Fallacies of Crypto-Whataboutism' and 'Why Goldman Sachs Is Wrong About Blockchain (A Blockchain Due Diligence Primer),' I've actively engaged in discussions with attorney John Reed Stark. While we've shared our thoughts on various occasions on X Spaces (formerly Twitter Spaces), where we find common ground on most matters, a notable divergence exists in Attorney Stark's anti-crypto stance, contrasting with my pro-crypto perspective. My involvement in the crypto space dates back to late 2015-16.

Part 1: "A Future With Crypto? No Thanks."

Attorney Stark expresses concerns about potential money laundering and criminal activities linked to crypto-trading platforms. He contends that the scale of criminal activities in the crypto space surpasses that of traditional finance.

Counterargument:

It's essential to acknowledge that the majority of crypto users are law-abiding individuals and businesses, and the technology's neutral nature is shaped by its users. The decentralized design ensures transparency, traceability, and security. Traditional finance has faced its share of criminal activities, and blockchain advancements can strengthen security measures.

Security Token Offering (STO): A Form of Tokenized Equities

In my recent Substack article, titled “Decrypting Misconceptions: A Deep Dive into SPBDs, SEC Guidance, and Coinbase's Strategic Playbook,” I touched on INX SECURITIES as a DIGITAL ASSET BROKER-DEALER (CRD#: 162182/SEC#: 8-69058). To further delve into STOs, it's essential to highlight their historical significance. Blockchain Capital (BCAP) pioneered the first Security Token Offering (STO) on April 10, 2017, achieving a remarkable $10 million raise within a single day. The regulatory landscape underwent a transformation in 2018 when the US Securities Exchange Commission (SEC) launched investigations into crypto organizations and tokens. This led companies to file the SEC's Form D, formalizing the process for launching STOs. Notable milestones include Arca Labs trading its SEC-registered digital security token, the ArCoin, in July 2020, and INX's SEC-registered security token offering securing $85 million in September 2020. As detailed in the article, security tokens represent a compliant evolution from initial coin offerings (ICOs), emphasizing investor protection through adherence to legal standards, transparency, and regulatory measures within the crypto space.

Blackrock’s CEO Larry Fink's perspective on tokenization

Just last week, on Thursday, January 11, marked a revolutionary breakthrough since the birth of Bitcoin, which is 15 years ago this month: the SEC approves the first spot bitcoin ETFs. BlackRock’s CEO Larry Fink has been making appearances in mainstream media, leading a PR campaign as if he were Satoshi Nakamoto himself, assuming the role of CEO of Bitcoin, and elaborating on the positive aspects of cryptocurrencies in shaping the future of finance. In one of his interviews, his perspective on tokenization, he envisions a transformative step forward: "The next step going forward is the tokenization of financial assets – every stock, every bond. We would have instantaneous settlement… Everything would be immediate, and we believe this is a technological transformation in financial assets." Fink sees tokenization as a revolutionary force, aligning with the potential security enhancements offered by blockchain technology. Expressing his belief in cryptocurrency as an asset class, not a currency, Fink stated, "I’m a believer in cryptocurrency as an asset class, not a currency."

Part 2: "A Blockchain Due Diligence Primer"

Attorney Stark argues that blockchain lacks utility and equates it to a mere spreadsheet.

Counterargument:

It's crucial to understand that blockchain is NOT just a spreadsheet; it is a decentralized and distributed general ledger that guarantees transparency, security, and data immutability. Its applications extend beyond finance to supply chain management, healthcare, and more. Smart contracts, a feature of blockchain, automate and enforce contract terms, reducing the need for intermediaries. Additionally, the advent of tokenized securities on blockchain platforms is revolutionizing traditional financial systems, providing efficient and transparent means for asset representation and transfer. For example, in supply chain management, blockchain enhances traceability and reduces fraud. The criticism overlooks the transformative potential of blockchain in streamlining processes and enhancing trust.

In the video clip below, BlackRock’s CEO Larry Fink articulates that blockchain transcends being merely a spreadsheet; it is a transformative distributed general ledger. This shift in technology is poised to redefine itself historically and reshape the course of history.

Part 3: "Don’t Follow the Horde"

Attorney Stark cautions against following the herd in blockchain investments, citing a lack of objectivity and excessive bias in information spread by promoters.

Counterargument:

It's important not to dismiss blockchain entirely based on potential bias, as the technology holds genuine transformative potential. Objective and impartial sources do exist, and investors should conduct due diligence. The rising interest in blockchain reflects its growing acceptance as a valuable technological innovation. Rather than rejecting it outright, a balanced approach involves critically evaluating specific use cases and applications.

One notable real-world application of blockchain is in supply chain management. The decentralized and transparent nature of blockchain ensures an immutable record of transactions and data across the supply chain. For instance, a company can use blockchain to trace the origin of products, verify the authenticity of goods, and monitor the entire production and distribution process. This not only enhances transparency but also reduces fraud, counterfeiting, and errors in the supply chain.

In practice, a food company leveraging blockchain can enable consumers to scan a QR code on a product's packaging to access a complete history of its journey from the farm to the store shelf. Each step in the supply chain, from harvesting to transportation and storage, is securely recorded on the blockchain. This not only instills confidence in consumers regarding the product's authenticity and quality but also provides businesses with a powerful tool to enhance efficiency and accountability in their supply chain operations.

By critically evaluating such real-world applications, investors can gain insights into the tangible benefits of blockchain beyond speculative considerations. This approach fosters a deeper understanding of how blockchain technology is reshaping industries and driving positive change in various sectors.

Addressing Excessive Bias in Information Spread by Promoters: Anti-Bad Actors Perspective

I agree with Attorney Stark's concerns about the biased information spread by promoters, particularly on X (formerly Twitter). This issue is exacerbated by self-indulgent and ethically questionable attorneys, unscrupulous journalists from major media outlets, and individuals from various walks of life who proclaim to be "experts" and tweet daily to pump their narratives, especially when they have a stake in such cryptocurrencies. In my perspective, Bitcoin doesn't function primarily as a store of value – a role I attribute to Gold. Instead, it operates as a speculative asset investment, comparable to a commodity, exhibiting volatility similar to Foreign Exchange (forex).

While acknowledging the issue, it doesn't negate the fundamental value of underlying decentralization technologies. I advocate for an approach that prioritizes education over emphasizing the underlying technology. Implementing regulations to counter manipulative promotion, applicable not only to Bitcoin but also across various crypto narratives, especially when driven by financial interests, can foster a more informed perspective. This approach positions the decentralized technologies, including blockchain and selective cryptocurrencies such as Bitcoin, as a feasible asset diversification option. This is particularly appealing to those comfortable with high-risk and volatile investments.

Part 4: "If You Don’t Get It, Don’t Get It"

Attorney Stark criticizes the dismissal of skepticism regarding blockchain and crypto by enthusiasts, portraying it as a form of groupthink.

Counterargument:

How about, 'If you don't get it, learn it?' Recognizing the complexity of blockchain, it's crucial to distinguish skepticism from outright dismissal. While enthusiasts' passion is evident, ongoing dialogue is essential. Educational efforts should emphasize clear explanations and real-world examples, addressing concerns instead of dismissing them. Skepticism, when channeled constructively, fosters healthy discussions. For instance, in healthcare, private blockchain ensures secure patient data sharing. Medical histories, stored on a private blockchain, allow efficient and secure data access, transforming skepticism into constructive dialogue and nurturing an environment where blockchain evolves based on valuable feedback.

Part 5: "What If It All Vanished Tomorrow"

Attorney Stark challenges the value of blockchain by asking if anyone would notice or care if it disappeared.

Counterargument:

The question oversimplifies the intricate role of blockchain in various sectors. If blockchain vanished, the impact would be profound, especially in industries relying on its benefits—transparent and secure data management, the emergence of tokenized securities, decentralized finance (DeFi), and enhanced supply chain efficiency. The emergence of tokenized securities alone is critical and revolutionizing traditional practices, given the approval of Bitcoin spot ETFs, proving it can further underline its potential for positive disruption. The question disregards these transformative developments and underestimates the far-reaching impact of blockchain technology.

How Crypto, AI, and Decentralized Finance Revolutionize Industries

Blockchain's influence extends beyond mere financial gains, encompassing a transformative synergy with artificial intelligence (AI) and decentralized finance (DeFi). Its true worth is found in the promotion of transparency, fraud reduction, and enhanced efficiency across various sectors. Take, for instance, the role of blockchain in building trust within digital transactions—a crucial factor as our society embraces digital transformation. While the immediate impact may not always be apparent, the long-term benefits of blockchain are substantial, reshaping industries and paving the way for a future marked by innovation and trust.

AI's Integral Role in Revolutionizing Crypto Platforms

In the dynamic landscape of cryptocurrency, a technological revolution is unfolding as AI and blockchain synergize to redefine financial ecosystems. Cryptocurrencies, underpinned by blockchain's secure and decentralized architecture, are witnessing an infusion of advanced artificial intelligence. This amalgamation is not merely a security enhancement but a leap toward a more accessible and inclusive financial future. AI-driven risk analysis and market insights are becoming integral to crypto platforms, mitigating fraud and elevating transaction efficiency. Beyond the buzz, the crypto realm is showcasing a profound potential to foster financial inclusion, bridging gaps for the unbanked and revolutionizing traditional banking norms.

Part 6: "Avoid the Conflation Rabbit Hole" and "Well, if Goldman is using blockchain…"

Attorney Stark critiques the prevailing confusion about blockchain's nature, asserting that public blockchains necessitate crypto tokens. Furthermore, Stark contends that Goldman Sachs' utilization of blockchain doesn't necessarily render it an optimal investment. He implicates financial intermediaries of inadvertently aligning with crypto promoters' interests.

Counterargument:

Blockchain: Goldman Sachs and the New Age of Financial Infrastructure

The distinction between public and private blockchains is valid, but dismissing the importance of crypto tokens oversimplifies their role. Public blockchains leverage tokens for incentives, fostering a decentralized network. However, private blockchains also hold significant value in enhancing internal processes within organizations. Blockchain's versatility allows tailored solutions, and the absence of public tokens doesn't diminish its applicability in various contexts.

In the corridors of financial giants like Goldman Sachs, the whispers of blockchain are evolving into decisive actions. As Goldman Sachs delves into blockchain projects, it signifies more than just an exploration; it signals a strategic recognition of the transformative power inherent in distributed ledger technology. Private blockchains, embraced by the institution, promise controlled environments, paving the way for enhanced security, operational efficiency, and tailored use cases. Asset tokenization emerges as a cornerstone, offering fractional ownership opportunities and redefining how traditional assets are transacted. Not only Goldman Sachs but also financial behemoths like BlackRock, Fidelity, Franklin Templeton, and VanEck have now taken the plunge into the blockchain realm. This strategic move places them at the forefront of financial innovation, streamlining settlement processes, minimizing fraud, and amplifying transparency. These traditional giants are positioning themselves to harness the transformative power of blockchain in reshaping the landscape of modern finance.

The critique about conflation overlooks the evolving nature of financial infrastructure. Institutions like Goldman Sachs embracing blockchain technology indicates a nuanced understanding of its benefits, even in private settings. The financial evolution extends beyond conflation concerns, acknowledging the tailored solutions and efficiencies blockchain introduces.

Part 7: "Indeed, the perils of blockchain-groupthink sophistry"

Attorney Stark warns against blockchain groupthink and highlights instances of financial losses by prominent investors.

Counterargument:

While caution is warranted, associating all blockchain projects with groupthink oversimplifies the diverse and evolving landscape of the industry. Learning from past mistakes is essential, but it should not stifle innovation. Blockchain's potential extends beyond the pitfalls mentioned, and the lessons learned contribute to refining future initiatives. Blockchain's success hinges on a nuanced understanding of its applications, regulatory considerations, and continuous improvement.

Goldman Sachs' entry into blockchain goes beyond mere headlines, now reinforced by numerous other major traditional financial institutions and somewhat endorsed by the SEC's approval of all 11 Bitcoin spot ETF applications last week. It represents a strategic move towards the future of financial infrastructure. In the intricate dance between financial institutions and blockchain, Goldman Sachs emerges as a key player embracing innovation. The use of private blockchains serves as a canvas for experimentation, providing controlled environments where security and efficiency are paramount. The vision extends to asset tokenization, where as clearly detailed by Larry Fink of BlackRock, Goldman Sachs explores new realms of fractional ownership and streamlined transactions. This isn't a fleeting trend; it symbolizes a shift towards a financial landscape where collaboration, innovation, and transparency converge in a new era led by blockchain technologies.

Part 8: Analyzing Both of Attorney Stark's Publications...

Attorney Stark delves into the specifics of cryptocurrency and blockchain technologies in his own publications, asserting his belief that crypto and blockchain lack revolutionary qualities and advocating for their complete abandonment and non-usage. Additionally, he emphasizes the susceptibility of cryptocurrencies to ransomware and cyber attacks, referring to them as the perfect match for criminals.

Counterargument:

Recognizing differences in opinion is essential for promoting constructive dialogue. While Attorney Stark maintains an anti-crypto stance, it's crucial to acknowledge the industry's collective efforts to address challenges, enhance security, and promote responsible use. As discussed earlier, a balanced perspective considers both the potential benefits and challenges inherent in the crypto space and its underlying decentralized technologies, such as blockchain.

In contrast, it's essential to contextualize the crypto space within the broader landscape of cybersecurity. While Attorney Stark highlights the vulnerabilities of cryptocurrencies, it's important to note that ransomware and cyber attacks are prevalent across various industries in the traditional world as well. Currently, there might be limited data explicitly linking cryptocurrencies to be the leading sector in such attacks globally. However, in the evolving digital age, particularly driven by Gen Z, as we continue to grow with digitalization at the forefront of every sector, there will undoubtedly be a continued rise in ransomware and cyber threats. But, as technologies advance, including AI and AGI, becoming more sophisticated, the need for enhanced security measures to counteract these threats extends beyond the crypto space to all digitized sectors worldwide.

Conclusion: Deciphering the Future of Finance

Over the span of two years, from 2022 to 2023, the crypto landscape witnessed a surge in notable bankruptcies, including entities like Genesis Global Capital, FTX, BlockFi, Celsius Network, Voyager Digital, Three Arrows Capital, Gemini Trust, Core Scientific, Babel Finance, LUNA, and the ongoing case of Binance. As we look ahead to 2024, the trend of bankruptcies doesn't seem to be slowing down, especially for companies involved in questionable practices. My projections suggest the possibility of regulatory interventions, ranging from stringent measures to complete shutdowns and censure of centralized management teams. This scrutiny extends to well-known entities like Tether and USDC (stable coins), Ethereum with its groundbreaking introduction of smart contracts (although certain areas of practice may be susceptible to fraud), and other crypto entities such as Ripple XRP, Solana, Grayscale, as well as exchanges like Coinbase and Justin Sun's crypto empire, among others.

As we delve into the narrative of crypto and blockchain, the evolution of finance becomes the focal point. Despite existing skepticism, the symbiotic relationship between AI and decentralized technologies such as blockchain, while still in its early stages, signifies a 'technological transformation for financial assets,' as BlackRock's CEO Larry Fink mentioned in his recent Bloomberg interview.

Finance reveals a realm of possibilities, breaking down barriers and promoting inclusivity. Goldman Sachs, along with other notable traditional financial institutions, has adopted blockchain usage, signaling a pivotal moment for financial institutions. This ushers in an era of innovation that redefines how assets are transacted and financial infrastructure operates. The SEC, while not approving Bitcoin as an underlying asset class, did approve Bitcoin spot ETFs – all 11 initial applications, marking a breakthrough in the crypto and blockchain space.

While the intricacies of blockchain and crypto may fuel skepticism, a nuanced understanding emerges amidst the clamor. This understanding acknowledges the potential for financial evolution and the recalibration of traditional norms within the ever-evolving landscape of finance. Regulations act as guardrails, crucial for recognizing that the road itself is neither inherently good nor bad. The underlying technology has significant potential and is making great progress, revolutionizing countless sectors. Ultimately, the ethicality of individual drivers will determine the journey's outcome for these 'HYBRID' companies going forward.

Being an active builder within the crypto decentralized technologies space since late 2015-16, while I strongly speak out against bad actors, I believe in the enduring potential of crypto to transform the financial landscape. Embracing the principles of transparency, innovation, and collaboration, crypto is not just a fleeting trend but a formidable force that is UNDOUBTEDLY HERE TO STAY. Together, as stewards of this transformative technology, we shape a future where crypto thrives, free from the influence of bad actors, and becomes an integral part of a more inclusive and transparent financial system.

Jenny Q Ta is a serial entrepreneur with three successful ventures under her belt, and serves as a general partner at WEAL28H.com (formerly web3vcfunds.com). She is also a sought-after contributor at various publications, including TechCrunch, Rolling Stone, Entrepreneur, Nasdaq, Benzinga, and more. Connect with her on X, formerly known as Twitter, Instagram, or LinkedIn. Neither Jenny Q. Ta nor WEAL28H (formerly Web3VCFunds) or any other entities owned by the author, is affiliated, personally known, paid for, sponsored by, or connected with any of the names and entities listed in this publication. Furthermore, the author does NOT own any shares or tokens, directly or indirectly, in any of the mentioned entities, asset classes or securities. The opinions in this article are those of the author.