Bitcoin Headlines: Queen of the Blockchain

Bitcoin Headlines is a weekly analysis of Bitcoin media coverage and the impact it has had.

If there is any doubt that Bitcoin’s virtual currency applications are inferior to distributed ledger use cases, Bloomberg Markets’ October issue shows that this is a theory that is rapidly collapsing.

“Blockchain is everything,” reads the cover of the monthly journal, which is currently on sale, a reference to the distributed ledger underlying bitcoin and to the growing belief among financial executives that the technology will dramatically alter business models.

Personifying the revolution are the magazine’s cover stars, Blythe Masters, 46, CEO of Bitcoin startup Digital Asset Holdings, and a 27-year-old JPMorgan Chase & Co. veteran and early advocate of credit default swaps.

The interview, Masters’ first as Digital Asset Holdings CEO, offered new insights into how big banks can use bitcoin technology and was also featured in other major newspapers this week.

The father of blockchain

There is no doubt that as one of Wall Street’s most high-profile financial veterans, Masters is well prepared for blockchain projects. Rumor has it that she is raising venture capital at a valuation of up to $100 million. Given her penchant for attracting media attention, this goal may be achieved soon.

There is still a lot that remains to be learned about Digital Asset Holdings, and the 3,000-word article provides all sorts of evidence of what Masters has been able to bring to the industry so far.

In short, the article covers a lot of background about Wall Street’s interest in Bitcoin, and also touches on Masters’ professional background and the origin of Bitcoin. However, there is little new information about Masters’ career and new company.

However, Digital Asset Holdings did disclose a new piece of information, that is, its business will focus on three markets, namely U.S. Treasury bond repurchases, group loans and private company holdings, although these areas have already been involved by companies including online retailer Overstock and smart contract platform Symbiont.

The authors Edward Robinson and Matthew Leising did not spend much time discussing the mechanism of Digital Asset Holdings and its market strategy. Instead, they spent more time on the description of blockchain technology.

“In recent months, the word blockchain has spread like a virus to trading floors, executive suites of banks and brokerages on both sides of the Atlantic. It would be incredible to go to a financial conference today and not hear blockchain discussed on the presentation boards, in reception or even in the toilets.”

The article’s most important finding centers on the fact that while banks are touting their interest in private blockchains, Masters himself believes there will be significant value in connecting these databases to the open bitcoin public ledger.

Robinson and Leising also hinted that Digital Asset Holdings is, in fact, working on products that connect users to the existing bitcoin system while also implementing its private decentralized ledger project.

Separately, Bloomberg commentator Matt Levine wrote an editorial that fiercely criticized the artificially fueled debate about distributed database systems. He couldn't help but ask:

“Do you really care how computers determine and record the agreement of market participants about who sold what to whom?”

Regardless, Masters still demonstrated how she can easily make news with just a single interview, with her comments and opinions being widely covered by outlets including MarketWatch and American Banker.

Large banks show more

On the topic of big banks, both UBS and Barclays released new information this week about their ongoing experiments with digital currencies and blockchain technology.

The biggest winner of the two is Barclays, which will work with an unnamed bitcoin company (later revealed by the Wall Street Journal to be wallet provider Safello) to help charities accept bitcoin as part of a project to be announced later this year.

The blog Ars Technica published an article that was originally reported by The Sunday Times, causing a chaotic uproar.

Ars Technica said that Barclays will eventually accept Bitcoin in its bank accounts, although it later clarified this hyperbole. This big step is surprising because many large banks are still unsure about their ability to work with blockchain technology and are currently in an experimental environment.

However, with Barclays making headlines as the first bank to accept or support Bitcoin, some major financial institutions are taking some time to understand the technology.

The fact that Barclays received headlines from publications including Quartz and The Daily Mail perhaps reinforced this misconception.

As the news spread around the world, Barclays’ support for blockchain technology even reached Russian-language news publications.

Free publicity for BitPay

Even more bizarre was a piece of news on TechCrunch this week, when host Alex Wilhelm called blockchain technology “a thing you hear about and claim to understand, but don’t really understand.”

The style of the article was originally intended to make some insincere sarcasm, but it became more of a reflection on the interview. Its writing style of analyzing industry dialogues at great length may have deviated from the original intention.

While it covers some pertinent current issues (such as how the bitcoin network is addressing scalability issues with its core software), the bulk of the six-minute interview focuses on bitcoin’s adoption as a payment method for users and the impact of media interest on bitcoin’s price, two trends that have become less relevant in terms of industry conversation.

The bulk of the article is narrated by guest speaker Sonny Singh, chief compliance officer at BitPay, a business bitcoin payments startup that has raised $32.5 million in public funding but has recently shown signs of business slowing down, abruptly terminating a large public service agreement and laying off staff.

Singh also distanced himself and his company from the current popular news reports, noting that from his position he “will never say the word blockchain.”

“Payments managers at big companies simply don’t understand what it means,” he said.

While it’s perhaps not surprising that merchants remain very interested in using the technology as a low-cost digital currency, it’s telling that Singh said his company is still seeing continued interest from merchants.

In response to Singh’s comments that “merchants are now calling on BitPay” to accept Bitcoin, Wilhelm quipped, “You’ve gone from a toddler to a belle of the ball.”

This may be true, but it is contradicted by data collected in Coindesk's second quarter Bitcoin report this year, which shows that the growth rate of business user adoption of Bitcoin is declining.

Also not mentioned are the ongoing reports that the company is being abandoned by talented developers and is in a quagmire, and that it is offering commercial business services for free but is unable to monetize Bitcoin.