March 18, 2025 | Read Online

"In five years DAS will be TAS: The Asset Summit.."

— David Mercer, LMAX CEO

Digital Asset Summit, Day 1

Even in this internet age of working from home, a few of New York City's "commercial clusters" persist.

An estimated 2,600 precious gem and jewelry businesses remain crammed into the Diamond District on 47th street (2,600! On one block!); there's still a critical mass of fashion-related businesses in the Garment District (including some old-school manufacturing); the Flower District on West 28th Street is still a visual cacophony of wholesale horticulture; and the city still hosts seemingly all the world's investment banks in the two-headed Financial District around Wall Street and Midtown East.

Like-minded businesses have historically clustered together like this to reap the benefits of proximity: networking, idea sharing, reduced transport costs, access to specialized suppliers and pools of labor, brand perception and customer visibility.

There's not as many of these commercial neighborhoods as there used to be — New York's Meatpacking District, for example, lost its last meatpacking business in January. (There were still hundreds of them as recently as the 1980s when walking down Washington Street meant getting slaughterhouse blood on your shoes, not dodging tipsy clubgoers.)

Cities continue to profitably bring people together, of course, but it's now less about customer-facing businesses and more about "innovation clusters" — commercial clusters for knowledge workers, basically.

New York now has clusters of technology innovation in Silicon Alley and DUMBO, for example, as well as a burgeoning engineering hub on Roosevelt Island.

These knowledge businesses are willing to pay NYC rents because even in the age of the internet, geographically concentrated resources (human, financial and intellectual) create feedback loops that amplify creativity and output, as the physicist Geoffrey West detailed in Scale.

As cities grow larger, West wrote, they scale innovation and economic productivity "superlinearly" — an exponential rate of growth driven by the kind of social interactions and network effects that you find in New York's clusters of like-minded businesses.

This week, New York has one more of these like-minded groupings: A pop-up innovation cluster in Midtown West called Blockworks' Digital Asset Summit.

Digital Assets (aka crypto, aka magic internet money, aka "assets") is a work-from-home industry, so it does not naturally reap the all-important benefits of proximity.

But it does have conferences, which can be almost as good.

The financial blogger Byrne Hobart writes that industry conferences can replicate the "agglomeration" benefits of cities on a pop-up basis: "Conferences create a synthetic industry cluster."

They might not do that on the same scale as, say, Silicon Valley, but they do it much faster: "Cities take decades-to-generations to get agglomeration effects going," Hobart writes. "Run a conference and it happens in days."

We've got three days to make it happen for crypto.

Let's see what we can do.

Talk of the day: Meltem Demirors

The coffee is free and plentiful at Blockworks conferences, but if that wouldn't have been enough to jolt you awake this morning, the day's first speaker surely would have.

Meltem Demirors titled her talk "Believe in Something" but she started out telling us what not to believe in — including some of crypto's biggest shibboleths, like proof-of-stake: "Ethereum would be a trillion dollar market cap if it was still proof-of-work."

Nor should we believe in the asset managers that issue ETFs or the centralized companies that issue stablecoins: "These are mercenaries, not missionaries," Demirors warned. "The institutions are here — to take our money."

The institutions are "taking" a lot of it: ETF and stablecoin issuers earned $9.1 billion of fees last year, she noted, a little more than all decentralized protocols combined ($9 billion).

(Note: They're also here to sponsor newsletters, so it's not all bad.)

Demirors was equally tough on the decentralized crypto industry, citing rising bitcoin dominance as a sign of crypto's stagnation (both market and social).

The solution, she thinks, is to double down on the Bitcoin model: "Our biggest victory in crypto is proof-of-work."

Demirors believes that the current AI boom wouldn't have been possible without Bitcoin and proof-of-work: The OG crypto jumpstarted the data center buildout, incentivized lowest-cost electrification, seeded demand for GPUs and pioneered "behind the meter co-location."

(Whether accelerating AI is a good or bad thing is left to the reader.)

Demirors thinks there's much more of this to come: "The future is about crypto embedding itself in the biggest energy buildout in history."

Her bomb-throwing talk was a plea to redirect our crypto investing away from centralized fee-takers and decentralized frivolity and toward the buildout of crypto-enabled energy infrastructure.

The result, she promises, will be "more energy, more compute and a lot more cryptocurrency."

Let's hope so.

Quotable quotes:

"For those of you based in the US, you must be feeling really optimistic." — Binance CEO Richard Teng (who, I'm guessing, must have come straight from the airport)

"They didn't understand the technology." — US Representative Ro Khanna, on why the Biden administration was anti-crypto

"They're not hacking Coinbase." — Ro Khanna on why crypto should be brought on-shore. (Sounds like a challenge!)

"The greatest way to lift people and countries out of poverty is through immutable property rights." — Ark Invest founder Cathie Wood

"Keyrock is going to be the biggest financial institution in the world." — Keyrock CEO Kevin de Patoul

"Soon." — Anatoly Yakovenko on when we'll get the new Solana phone I pre-ordered approximately 100 years ago

"I didn't think we'd be here in five years." — Anatoly on how Solana is different from what he expected five years ago

"Crypto is a first-principles refresh of finance." — Multicoin Capital co-founder Kyle Samani

"I didn't know this was an anti-ETF panel, they didn't put that in the title." — ETF provider Bitwise CIO Matt Hougan, after hearing comments like "I hate ETFs" from his fellow panelists

"Somehow we co-opted governments. I don't know if they know it happened, but it did." — Matt Hougan

"We're in the despair phase where the short-term potential of crypto has been overestimated." — 1000x co-host Jonah van Bourg, on altcoins

"Bitcoin feels like great risk/reward in the low 80s. In the mid 70s you're buying with both hands." — Jonah van Bourg

We try not to be pessimistic, but that's how you survive in this asset class." — 1000x co-host Avi Felman

"As much as we can get." — Executive Director of the President's Council of Advisers on Digital Assets Bo Hines, on how much bitcoin the US government wants

Something I learned today:

"Live podcasts" cannot be played on 2x speed. Or rewound or fast-forwarded. Weird.

Best conference innovation:

Sponsored coffee cups — by Jito, in this case. (Disclosure: long coffee, long Jito.)

Blockworks conference tip of the day:

Don't pack socks. There will be plenty of colorful, free ones on offer in the expo hall.

Panels I'm particularly looking forward to tomorrow:

Bringing the Whole World Onchain with Sergey Nazarov; The Enterprise Demand for Digital Assets with Paul Brody; Building Empirical Valuation Frameworks for Digital Assets with Ryan Connor.

Hit me up if you'll be there: byron@blockworks.co.

— Byron Gilliam

No sleep til Brooklyn

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