Why crypto wants $500 million worth of Twitter- POLITICO


With the help of Derek Robertson

The crypto industry no longer wants to be part of the conversation. He wants to own it.

That’s one way to read the latest news on Twitter funding, at least.

When Elon Musk announced the list of sponsors for his Twitter acquisition on Thursday, one of the most intriguing was Binance, the global cryptocurrency exchange that put $ 500 million behind the Musk deal.

Binance frames its investment as a reflection of its support for Elon Musk’s free speech ideology and as an opportunity to build background technology that can help the besieged social network navigate the next generation of the Internet. Equally important, it’s a way to put Binance’s fingerprint on an institution that has long been a megaphone for some of the top crypto evangelists.

“There is a very strong mission,” the founder of the exchange, Changpeng “CZ” Zhao, said in a video. published by Binance on Saturday. “I hope to see more, other crypto players fund more key platforms in society. I think it’s important for the industry to grow.”

Zhao said he wants to help Twitter modernize its Web3 platform, a vague term referring to the next generation of the Internet. In theory, this could mean adding blockchain-based tools that would firmly identify who is behind each individual account, allowing users to preserve their anonymity while ensuring that they are, in fact, a person. It is far from clear whether a Musk-led Twitter would go ahead with those suggestions.

“We’re seeing this as an investment in R&D. It’s not a business interest for us in a traditional way in which we seek to invest” this “amount of money that we hope to get” these “returns,” said Binance spokesman Patrick Hillmann. , in an interview. “We believe this is going to be one of the biggest labs the Web3 industry will have access to to start testing some of these theories that we have, and we thought it was too important to pass up.”

The immediate benefit of maintaining and growing the crypto bully pulpit is more tangible.

Twitter is vital to the cryptographic information ecosystem. It’s where founders falcon tokenized startups, anonymous detectives eliminate possible fraud, and form communities around blockchain-based decentralized networks. It is also where the major players, including Musk, Zhao de Binance or Square CEO and Twitter co-founder Jack Dorsey can flex his political muscles with his followers; Washington policymakers proved this during last year’s debate on the language of the infrastructure bill.

Some of the industry’s top executives, along with some celebrities, have resorted to their Twitter accounts to mobilize their followers in opposition to the language that would force certain cryptographic companies to report their transactions to the IRS. Although pro-crypto forces ultimately failed in that fight, it was widely cited as a catalytic event to drive grassroots engagement in cryptographic policy in the US.

A person close to the company said the investment has both a media and business ideology. Zhao’s “has opinions on a lot of different things; including how people consume their information,” the individual said, arguing that Zhao has cult followers who would view the acquisition as the practical application of digital assets for traditional businesses. the internet. “People really see this guy, in his company, in his Twitter followers, as someone who takes people somewhere.”

Nor is it Zhao’s first foray into the information game. Binance took one $ 200 million stake on Forbes earlier this year. And the company’s venture capital store probably has a lot more money to spend: As reported by Binance raised $ 14.6 billion in fees through its trading platform last year.

That said, there is no guarantee that any of Binance’s goals will align with those of other investors financing Musk’s acquisition, a list that includes venture capitalist Andreessen Horowitz, Fidelity, Qatar’s sovereign wealth fund and Oracle co-founder Larry Ellison, or if Musk himself. will heed the suggestions of the cryptographic exchange.

Elon “was very clear that this is his project and that our investment in this is to come in and have a seat at the table and be able to make suggestions,” Hillmann said. “But in the end, he will be the one to make the decisions.”

The risks of cryptography are a big issue here at DFD this week. Here’s another example: The SEC slammed graphics hardware maker Nvidia on Friday with a $ 5.5 million fine for failing to disclose to investors the extent to which it had begun to depend on sales of equipment used for cryptocurrency mining.

His reasoning was that the volatility of the cryptocurrency market represents an inherent level of risk that would require its disclosure. Nvidia “deprived investors of critical information,” said Kristina Littman, head of the Cybernetics and Crypto Assets Unit of the SEC, in a statement.

But tech companies are taking a lot of risks. Their markets can evaporate. Consumer tastes change. Is crypto really that different?

I emailed John Sedunov, an associate professor at Villanova who studies risk in markets and cryptocurrencies, and asked him about the extent to which cryptocurrency is (or is not) riskier than any other central part of Nvidia’s business model.

Sedunov described how a business built on a fluctuating financial asset is different from a fact about something more concrete and easily predictable.

In other words, it’s not your usual chip market: “As cryptocurrency market values ​​fluctuate, GPU demand is likely to fluctuate as well, which means Nvidia’s GPU sales are likely to fluctuate with it,” Sedunov wrote. “Bitcoin, for example, has had high volatility over time, less recently, but even higher than, say, the USD / EUR exchange rate.”

He compared it to another recent and instructive example of volatility that companies have revealed:

“One that immediately comes to mind is the banking industry, where US banks were quick to reveal how much exposure Russia and Ukraine had when the war began this winter.” – Derek Robertson

NFT culture can be weird. And then you can come really weird how questionably weird: i like this aspect of Will Gottsegen from CoinDesk no world of “Miladys”, an NFT line created by Remilia, an enigmatic right-wing art collective.

The Miladys seek all purposes and purposes like most other NFTs: empty, randomly generated computer avatars thrown over their shoulder, like a school image. But the culture around them is significantly different: “The Miladys are where the polytheistic religion of Vedicism, kaomoji (a particularly DIY flavor of emoticons), rave culture, venture capital, and the downtown Nova podcast ecosystem intersect. York, “writes Gottsegen.

That ecosystem was introduced in a recent Vanity Fair profile which detailed his financial and other connections with tech / far-right billionaire / technology campaigner Peter Thiel. There is also the BuzzFeed report from Thiel-funded film festival, another part of the tycoon’s broader drive to sow a cultural vanguard of the right. (It is not surprising that it naturally overlaps with the cryptographic world, which has always had its strong libertarian inclination).

As is often the case tal edgelord-y cultural phenomena, the defense of the association with unpleasant characters is usually to use an ironic detachment, a jargon laden with theory or some combination of both.

Surprised by quoting an explicit neo-Nazi group, the anonymous creator of the project distanced himself from them, writing: performative, so be it … Cancel the culture is dead, denial does not belong here “.

In 2016 the rising trolls of Web 2.0 forum culture celebrated theirs “meme” Donald Trump in the White House. The credit claim could have been questionable, but it was still a clear example of how small, if not non-existent, the line between irony and sincerity is when it comes to politics. In the nexus of Web3 culture and the “new right” embodied by Thiel, et al., The Milady saga is a window into the next generation of right-wing cultural policy before they become a reality. – Derek Robertson

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Keep in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Konstantin Kakaes ([email protected]); and Heidi Vogt ([email protected]).

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