Ten31 Timestamp 859,231
This week offered a few stark reminders of the accelerating encroachment of government control over the digital lives of average citizens in both the ostensibly liberal democracies of the West and the more historically restrictive regimes in emerging markets. Over the weekend, Pavel Durov, founder and CEO of the popular messaging app Telegram, was arrested in France and charged with a variety of crimes that appear to hold him responsible for all criminal activity that might have been facilitated through Telegram (no word yet on whether executives at Apple, Microsoft, Ford, Dell, JP Morgan, and other producers of goods and services regularly employed in criminal activity will face similar charges). The charges also indicate the French government views the use of encryption without explicit licensure to be a criminal activity, which could set a problematic precedent for digital privacy worldwide (despite the fact that Telegram chats are not encrypted by default). To close out the week, the Brazilian government blocked access to Twitter – while imposing hefty fines on anyone using a VPN to access the site – on the back of a protracted dispute stemming from the platform’s resistance to “misinformation” regulations required by the local government. While technologies like bitcoin and nostr do not completely address all the root issues at play in these cases, we view these headlines as ongoing evidence of their growing value as less capturable, more decentralized mechanisms for transacting, communicating, and safeguarding the liberties enshrined in the US’s founding documents. We continue to believe that the accelerating pace and severity of these headlines will only serve to highlight these alternative solutions for a wider audience, inevitably increasing demand for products that, in the words of bitcoin pioneer Hal Finney, use the computer to liberate and protect people rather than control them.
Portfolio Company Spotlight
Start9 provides software and hardware to empower users to easily take control of their digital lives by self-hosting their own personal servers independent of third parties. With intuitive mass market software and one-click installations of popular programs like Bitcoin Core, Mempool.space, various lightning implementations, and 30+ other services, Start9 enables a move away from the current computing paradigm of custodial services that limit privacy, data integrity, and personal autonomy. The company’s exciting roadmap aims to do for personal servers what Microsoft and Apple did for personal computing, which we expect to become progressively more valuable over the coming decades as financial and tech counterparties become less reliable and more invasive.
Selected Portfolio News
Mempool.space launched its latest major update for self-hosted users, which natively integrates transaction acceleration capabilities and many other new features:
Zaprite launched a virtual point of sale tool enabling in-person, side by side bitcoin and fiat payments:
Media
Strike Founder and CEO Jack Mallers joined the What Bitcoin Did podcast to discuss bitcoin’s growing importance to the world’s financial system.
Jack also joined Ten31 Managing Partner Matt Odell and Ten31 Advisor Harry Sudock on the final episode of What Bitcoin Did.
Ten31 Co-Founder Grant Gilliam gave a talk at the Baltic Honeybadger conference delving into Ten31’s focus on sats flows and what the concept means for the long-term future of equity investing.
Unchained’s Trey Sellers moderated a panel on bitcoin-collateralized lending at the Bitcoin 2024 conference.
StatMuse published the latest edition of its Muse Letter.
Market Updates
Core PCE, the Federal Reserve’s favored metric for gauging price inflation, came in up 0.2% on the month and 2.6% Y/Y, in line with consensus and likely not disturbing the central bank’s path to long-awaited rate cuts next month.
US GDP growth for Q2 was revised up slightly to 3%, primarily driven by higher growth in consumer spending.
The Q2 earnings call for discount retailer Dollar General painted a less rosy picture for some segments of the country’s consumers, as management slashed guidance on the growing financial constraints of lower income customers (though idiosyncratic competitive headwinds likely played a role as well).
Meanwhile, several components of the latest Dallas Fed services survey worsened notably in August and included some particularly bearish commentary out of a variety of industries.
Bloomberg published a report this week on the more than half trillion dollar decline in office building values in legacy downtown districts across most major metropolitan areas, an ongoing weight on bank balance sheets.
After igniting widespread market panic with tougher messaging on monetary policy earlier this month – only to soften that stance just a few days later – the Bank of Japan suggested it is still prepared to deliver more rate hikes in the relatively near term.
Regulatory Update
Pavel Durov, founder and CEO of the popular messaging app Telegram, was arrested in France over the weekend and charged with a litany of crimes including facilitating various illegal transactions and activities.
The French government’s case appears to hold Durov accountable for criminal activities that may have been coordinated by Telegram users while also criminalizing the use of encryption tools without explicit government permission (even though Telegram is not encrypted by default).
Elsewhere in overseas authoritarianism, Brazil suspended access to Twitter following a lengthy dispute between Elon Musk and the local government regarding the platform’s failure to properly regulate “misinformation.” Local users caught employing a VPN to access the site will be subject to fines of nearly $9,000 per day.
Continuing on the same unfortunate theme, large cryptocurrency exchange Binance acknowledged freezing the accounts of some Palestinian users at the direction of Israel’s government.
A new report this week indicated that nearly half of all corporate funds raised for the upcoming US Presidential election have come from bitcoin and cryptocurrency advocacy groups.
Noteworthy
AllianceBernstein, a US asset manager with over $750 billion in AUM, published a white paper this week arguing that pension funds should significantly reduce passive allocations to long duration government debt, which has traditionally been viewed as the cornerstone of appropriately conservative investment portfolios.
OpenSats announced a variety of new grants this week, including support for several Nostr-focused developers and for the Tor Project.
This week marked the tenth anniversary of the passing of Hal Finney, who was deeply involved in bitcoin from the project’s earliest days. Matt Odell recorded a conversation with Hal’s wife Fran Finney about her charitable work honoring Hal’s memory.
Travel
Austin BitDevs, Sep 19
Portfolio Company Retreat, early October
BitcoinMENA, Dec 9-10