After an exciting first day in Austin last week, the rest of CoinDesk's Consensus 2022 conference got even bigger, busier, and better! Here are my top three takeaways from two more days of panel sessions, networking, and conversations.
Terra was heartbreaking, but it doesn’t always work out for investors - and lessons were learned
Blockchain and crypto are still a very early revolution in technology and anyone that claims to be smart enough to know exactly how the blockchain is going to play out, is “out of their minds,” said Mike Novogratz, Founder and CEO, Galaxy Digital, on the Lessons Learned While Riding Crypto's Rollercoaster panel.
Investors need to have diversified portfolios, take profit along the way, and have risk management tools in place – for whatever macro framework they are in at any time, he said.
“You’ve got to have some humility in this field as a venture investor, it’s not all going to work out and you also can't have all your eggs in one basket,” Novogratz said. “It's painful to read stories [that say] ‘lost my life savings,’ but often those life savings were made in the previous three months riding everything up.”
Ultimately while the loss of assets in the crash of Terra was hard, some people needed to learn risk management, he concluded.
This was also an issue with one particular kind of stable coin, and it was a failure, but that doesn’t determine blockchain technology overall, said Dan Morehead, CEO, Co-CIO, Pantera Capital, on the same panel
“It's kind of like the internet: Pets.com didn’t work, but that didn't mean the internet wasn’t good, it just meant there was not really a market at the time,” he said. So that's the way I think we should view this, just there's a lot of experiences being tried. Some work really well, and some don’t.”
Time for ‘one size fits all’ regulation is over
Consumer protection laws are around for a reason but not all crypto products are the same, so "the time for blanket regulation has passed, and probably never should have existed to begin with," said Jeff Bandman, COO and General Counsel, 6529 Holdings and 6529 Capital, on the Can Consumer Protection Rules Apply to Crypto panel.
“You can have something that is not a security, that then gets subjected to security laws because of the manner in which it is sold. But I think it's time for people to stop thinking of all crypto as financial products,” Bandman said. “It will probably be much more appropriate [for example] for some NFTs or other digital assets that are not investment products to be looked at from another perspective.”
However, the true definition of consumer protection has to be understood – especially in the wake of the Terra collapse, said Kathy Kraninger, Vice President of Regulatory Affairs, Solidus Labs, Inc., on the same panel.
“I’m not sure that anything would have truly prevented the loss of what happened there, in terms of protection,” she said. “Although there are investigations looking into whether fraud and manipulation were actually involved.”
And that is ultimately what consumer protection is about, to have that fairness of the system and some way to identify those fraudulent projects, that are out there actually seeking to do harm and scams – and that’s not unique to crypto, Kraninger said.
The future of digital objects will shock you
It took years for people to come around to the idea of a viable crypto future, but when it came to NFTs, it took shockingly less time, said Mike Novogratz.
“Convincing people that a CryptoPunk could be 1 in 10,000 and that you couldn't copy and paste and have a lot more of them – [essentially] that you couldn't counterfeit an NFT – took about a month to convince consumers,” Novogratz said. “That's a miracle. We created this concept that you test scarcity on the internet, and now we have a party of belief. That's awesome.”
These are tools and derivatives that are going to get used in ways we’re not even aware of yet, but that foundation is building, and people talk about these concepts as composable, said Novogratz.
“So, I really think unique digital objects are going to shock you,” he said. “Your healthcare records will [likely] be an NFT one day.
All in all, great to be back at a conference in person- and great to hear from some of the most influential voices in crypto on where things are heading, and what to watch out for!
To hear more about the event or talk about communications trends in crypto, email Larissa Padden, Account Director in our NY office.