It’s almost time to turn the calendar to 2022, if you can believe it. This is the 25th edition of Innovation Beat, and while we’ve covered everything from cybersecurity to hypersonic missiles to even the smart bra, there’s one big tech topic that was still on the to-do list — until today. And that’s crypto.
It’s getting too hot and controversial to ignore. Bitcoin is the most famous example of crypto, but the blockchain technology that runs the digital currency without a central authority is being used to create lots of other currencies, apps, and schemes. The latest hype is around a new class of applications, dubbed “web3,” that could be owned and controlled by the millions of people who use them (via digital tokens tracked on a blockchain, a type of distributed ledger) instead of a few tech-bro billionaires.
Though, some tech billionaires are fighting back. Tesla and SpaceX chief Elon Musk this week said web3 was “more marketing than reality,” while former Twitter CEO Jack Dorsey tweeted that the effort was “ultimately a centralized entity with a different label.”
Boston is not the center of crypto tech — that is probably New York or San Francisco — but it’s also not a crypto desert. Funding for Massachusetts crypto startups has surpassed $633 million this year, more than 10 times the 2020 total and exceeding the previous record of $241 million in 2018, according to PitchBook data.
The largest local player, Circle Internet Financial, runs the world’s second-largest stablecoin and will become one of just a handful of publicly traded crypto companies when and if it completes its SPAC merger. Circle announced the deal to combine with blank-check company Concord Acquisition Corp. back in July, with the aim of closing by year-end. Tick, tick (no response to a request for comment on the deal this week).
Elsewhere there are a lot of other interesting stories.
Coin Metrics is focused on measuring and analyzing the emerging crypto economy. The four-year-old firm’s report on the rise of non-fungible tokens, or NFTs, is a must-read to understand the meteoric rise of the digital collectibles market. CEO and cofounder Tim Rice tells me the local combination of academic smarts, old-school financial institutions and funds, plus venture capital and incubators, is why “there are a plethora of crypto startups emanating from Boston.”
MIT professor Silvio Micali has ideas about addressing some of the biggest hurdles to using blockchains for more applications. His startup, Algorand, is developing its own blockchain network that aims to handle thousands of transactions per second without using gobs of energy. If it works, it could become a low-cost platform enabling all kinds of web3 apps. Just one example: the Drone Racing League is working with Algorand on apps for ticketing, collectibles, and NFTs.
Still, it’s early days and skeptics like UK software programmer Stephen Diehl like to point out that there are not a lot of real businesses running on blockchains yet. “Crypto is an environmentally destructive, anti-democratic and socially corrosive get rich quick scheme that corrupts everything and everyone it touches,” the web3 critic tweeted this week.
A whole lot of startups are working to prove him wrong.