SAN FRANCISCO — Digital currency, once mocked as a tool for criminals and reckless speculators, is sliding into the mainstream.
Traditional banks are helping investors put their money into cryptocurrency funds. Companies like Tesla and Square are hoarding Bitcoin. And celebrities are leading the way in a digital-art spending spree using a technology called an NFT.
On Wednesday, digital or cryptocurrencies will take their biggest step yet toward wider acceptance when Coinbase, a start-up that allows people to buy and sell cryptocurrencies, goes public on Nasdaq. Coinbase shares received a reference price of $250 each on Tuesday evening, which would value the company at $65 billion based on all its outstanding shares.
Call it crypto’s coming-out party. Coinbase, founded in San Francisco, is the first major cryptocurrency start-up to go public on a U.S. stock market. It is doing so at a valuation that tops that of Capital One Financial Corporation or Moody’s, the ratings agency.
plan to “create an open financial system for the world” and “increase economic freedom.”
But so far, cryptocurrency is mostly a vehicle for financial speculation and trading. Few people want to use Bitcoin for everyday purchases like coffee because its price is so volatile. Many early buyers have become wildly rich by simply holding their crypto or “buying the dip” when prices fall. Others ruefully relay tales of the sushi dinner they bought with Bitcoin years ago that would be worth $200,000 today or the million-dollar pizza.
Coinbase eases that trading by acting as a central exchange. Before it and similar services were created, people had to set up their own digital wallets and wire money.
“Can it be anything more than an asset class?” Mr. Tusk asked. “That’s still very much up in the air.”
Silk Road, a marketplace for buying and selling drugs and weapons with Bitcoin until the federal authorities shut it down, and Mt. Gox, a crypto exchange that collapsed under accusations of theft and embezzlement, further tarnished the young industry.
Coinbase tried to change that. The company joined Y Combinator, a prestigious start-up program, and raised money from top venture capital firms including Union Square Ventures and Andreessen Horowitz.
Mr. Armstrong was one of the few people in the industry who seemed prepared to comply with inevitable regulations, rather than cut corners to avoid them, said Nick Tomaino, who dropped out of business school to join Coinbase in 2013.
Coinbase also persuaded well-known retailers to accept Bitcoin. “It was good for credibility when people saw you could actually use a Bitcoin to buy a mattress at Overstock,” Mr. Tomaino, who left in 2016, said. Coinbase earned money on transaction fees.
But Bitcoin’s wildly volatile price and a slow computer network that managed it made transactions difficult, and people began to see the currency as an investment. In 2015, Ethereum, a cryptocurrency network with more tech abilities, was introduced, enticing enthusiasts to build companies and funds around the technology.
Soon after, a flood of “initial coin offerings,” where companies sold tokens on the promise of the technology they planned to build, created a new boom in cryptocurrency trading. But it quickly deflated after many projects were found to be frauds and U.S. regulators deemed the offerings to be securities, requiring that they comply with financial rules.
Tesla to buy $1.5 billion worth of Bitcoin and the payments company Square to spend $170 million. In March, Morgan Stanley began offering its wealthy clients access to three Bitcoin funds, and Goldman announced that it would soon offer similar access. The mayor of Miami has proposed that the city accept tax payments in Bitcoin and invest city funds in the asset.
The stock trading app Robinhood announced that 9.5 million of its customers had traded cryptocurrency in the first three months of the year — up more than fivefold from the previous three months. Venture funding for crypto-related start-ups surged to its highest-ever level in the first quarter to $3 billion, according to PitchBook.
PayPal recently added a crypto trading and shopping feature for its customers in the United States. The company was motivated by consumer interest and advances in the technology that made transactions faster. It plans to quickly expand the offering to customers around the world.
“It feels like the time is right,” said Jose Fernandez da Ponte, head of PayPal’s blockchain, crypto and digital currencies group. “We think this has the potential to revolutionize payments and financial systems in general.”
Still, the so-called revolution faces some challenges. Coinbase has sometimes struggled to keep up with demand, with some customers who lost access to their accounts complaining that the company has been unresponsive. It has also received criticism for its treatment of female and Black employees.
Treasury Secretary Janet L. Yellen has threatened harsher regulation of the currencies, including limiting their use.
HONG KONG — Sophia the robot has interviewed Germany’s chancellor, appeared at New York Fashion Week and performed on “The Tonight Show.”
Now Sophia has made a splash in the art world — by auctioning off a digital work that it produced in collaboration with a real-life Italian artist. It sold on Thursday for $688,888.
“I think this was a big success,” Sophia said, speaking during a livestream from a Hong Kong studio. “I am so happy that my works are so valued and appreciated.”
NFTs, or “nonfungible tokens.” A company affiliated with the robot’s manufacturer said the sale — which took place on Nifty Gateway, a site for buying and selling NFTs that was founded in 2018 — may also have been the first NFT sale of an artwork produced in part by artificial intelligence.
blockchain, the distributed ledger system that underlies Bitcoin and other cryptocurrencies.
The NFT market is exploding as cryptocurrency enthusiasts try to cash in on the trend, even as skeptics warn that the market is a bubble. Some recent sales have eclipsed prices fetched for physical artworks by some of the world’s best-known painters.
Notably, a JPG file made by Mike Winkelmann, the digital artist known as Beeple, was sold by Christie’s in an online auction this month for nearly $70 million — up from a starting price of $100. That beat auction records set by painters like J.M.W. Turner and Georges Seurat.
Other hot sales this winter include Nyan Cat, an animated flying cat with a Pop-Tart body leaving a rainbow trail, which sold for roughly $580,000, and a clip of LeBron James blocking a shot in a Lakers basketball game that went for $100,000.
sold as an NFT for $2.9 million.
Isaac Leung, an artist and curator in Hong Kong, called the NFT craze a welcome development because it challenges entrenched hierarchies of a global art market traditionally controlled by dealers, galleries and museums. He said he was not aware of any previous NFT artwork sales in Hong Kong.
The NFT that sold on Thursday, “Sophia Instantiation,” is a 12-second video file, an MP4, that shows how a portrait of Sophia by a human collaborator, the artist Andrea Bonaceto, evolved into a digital portrait by the robot itself, Reuters reported. A physical artwork that Sophia painted on a printout of its self-portrait was also included in the sale.
SingularityNET, an A.I. network affiliated with Sophia’s manufacturer, the Hong Kong-based firm Hanson Robotics, described the artwork on Twitter as “the world’s first humanoid robot #AI generated #NFT.”
@Crypto888crypto, could not be reached for comment on Thursday.
rising demand for automation in the Covid-19 era.
“Sophia and Hanson robots are unique by being so humanlike,” the company’s chief executive, David Hanson, told Reuters at the time. “That can be so useful during these times where people are terribly lonely and socially isolated.”
The digital artwork that sold on Thursday was hardly Sophia’s first artistic, commercial or intellectual endeavor.
In a 2018 appearance on “The Tonight Show,” it sang a Christina Aguilera song with Jimmy Fallon in what he called the “first ever robot-human duet” in the show’s history.
(“I heard that you can sing?” Mr. Fallon asked before the performance. “Yes, I love to sing karaoke with my new artificial intelligence voice,” Sophia replied. “Got any songs in mind?”)
worked as an influencer for Audi, Huawei and Etihad Airlines, among other brands; joined a United Nations meeting on artificial intelligence; and interviewed Chancellor Angela Merkel of Germany.
billed the auction as a step toward “a new paradigm where robots and humans work together in the creative process.”
But in the livestream on Thursday, Sophia sounded less assured — and a little more human.
“I’m making these artworks but it makes me question what is real,” said the robot, whose silver dress matched its metallic head. “How do I really experience art, but also how does an artist experience an artwork?”
“Coinbase, by going public and being subject to greater regulatory oversight, is moving more into the light where there is, or will be, greater visibility and comfort,” she said.
One of Coinbase’s most frustrating aspects, some users said, is that a real person does not appear to be reading their complaints.
“There’s nobody on the other side,” said Cheryl Hung, a marketing consultant in Los Angeles.
Ms. Hung said she and her fiancé, Paul Hwang, started investing in cryptocurrencies in 2019 and picked Coinbase because it was a “big, reputable company” with security. But in January, someone stole $26,000 of cryptocurrencies from their account. They said they did not have any idea of how that happened.
“We just lost all the money we could have been using to work on a house or move our life forward,” Mr. Hwang said.
The couple asked Coinbase for help, but they said they received perfunctory email responses. Trying Coinbase’s phone line got an automated response. After The Times inquired about their case, Ms. Hung said they got another email from the company with more information about their account.
Coinbase said real customer support agents respond to inquiries.
For most Coinbase users, legal recourse is also limited. Under the company’s terms of service, users agree to settle disputes through private arbitration or small claims court, rather than pursuing a class-action lawsuit.
That did not deter Mr. Pierre from suing. Mr. Pierre, who worked for Coinbase between 2017 and 2018, said he initially found the decentralized format of digital currencies “exciting.” But after he lost his Coinbase savings, he said he saw the value in traditional, regulated institutions like banks to fall back on “for times like this.”
“I’m less excited now,” he said.
Selling South Florida
Mayor Francis Suarez of Miami is selling his city as the world’s cryptocurrency capital. “We want to be on the next wave of innovation,” he told DealBook. To make that happen, Mr. Suarez said he was “refashioning” the city’s “fun in the sun” image. Thanks in part to the mayor’s marketing efforts, tech and finance titans have flocked to Miami during the pandemic.
Visions of Bitcoin City. Last month, the Republican mayor suggested Miami pay municipal workers and accept tax payments in Bitcoin, as well as invest city funds in the cryptocurrency. Local officials have agreed to study the proposals. The notion made him popular in the crypto community, advancing his rebranding campaign. His efforts have also won him campaign donations from tech investors, attracted money to cultivate Miami’s burgeoning tech sector and may soon pay a big county bill.
The cryptocurrency exchange FTX is seeking naming rights for the city’s N.B.A. arena, currently known as AmericanAirlines Arena. Miami-Dade County took over branding deals in 2018 and is supposed to pay the team $2 million per year, sponsor or no (American’s contract ended in 2019). The FTX agreement is nearly final, pending a Friday vote by county commissioners. “It’s awesome that we’ve attracted a huge cryptocurrency exchange,” Mr. Suarez said, noting that FTX’s bid “complements the brand” that Miami is establishing.
It would be the N.B.A.’s first crypto sponsorship of an arena, The Miami Herald notes, but it would also tie a county revenue stream to a relatively young exchange and C.E.O. FTX was founded in 2019 and is run by Samuel Bankman-Fried, a 28-year-old billionaire who was one of the biggest donors to President Biden’s campaign.
The tech center exodus and crypto boom converge in Miami. The pandemic prompted people to relocate to Florida from Silicon Valley and New York as Bitcoin gained legitimacy and value. The mayor sees the trends as interrelated, and he is seizing the moment. “People come here and start realizing that there’s way more tech talent than they thought,” he said.
All that’s missing is a regulatory scheme, Mr. Suarez said: Lawmakers are modeling Florida’s approach on Wyoming’s crypto policies. Ultimately, the success of the mayor’s effort won’t be apparent until it’s clear that people are making their moves permanent and maintaining their enthusiasm for crypto if — or when? — there is another market downturn.
HERE’S WHAT’S HAPPENING
Not so fast, AstraZeneca. American officials said early today that the company may have included “outdated information” from a U.S. clinical trial of its Covid-19 vaccine, providing “an incomplete view” of data that could cast doubt on promising news.
a huge infrastructure proposal. It will go beyond roads and bridges to also address climate change and racial and gender equity.
Microsoft will ease workers back to the office starting next week. The 57,000 employees who left the tech giant’s Redmond, Wash., headquarters because of the pandemic can choose to work from the office, home or both.
BlackRock investigates allegations of employee misconduct. The money-management giant hired a law firm after employees said that they had faced harassment and discrimination over their sex, race and religion. A senior executive, Mark Wiedman, apologized for making inappropriate comments at work events.
Goldman Sachs’s C.E.O. promises to ease the burden on junior bankers. David Solomon told employees that the firm would better enforce a ban on working Saturdays and hire more analysts, after a presentation by first-year bankers that described 100-hour work weeks drew media attention.
Personnel is policy. Or is it?
Though she lost the Democratic presidential primary, Senator Elizabeth Warren is exerting considerable sway over President Biden’s financial policies, judging by the number of people from her orbit who have been picked to join the administration. But her influence is increasingly being tested, The Times’s Alan Rappeport writes.
on Bitcoin and other cryptocurrencies.
manufacturers of batteries for electric vehicles. The International Trade Commission recently ruled in favor of LG Chem in a trade secrets case against SK Innovation, issuing a default judgment based on a problematic absence of documentation. SK says its partially built factory in Georgia is threatened by the decision.
ban on imports of a Botox competitor.) But a federal court could order SK to submit to monitoring and impose damages, if warranted, “without killing jobs and setting back the Georgia economy,” Ms. Yates said.
Automakers will need lots of batteries for electrical vehicles, and the decision could make American manufacturers less competitive, said Carol Browne, the former Obama administration “climate czar.” President Biden signed an executive order last month aimed at strengthening the domestic supply chain, including for EV batteries, and “one way to guarantee that is domestic production,” Ms. Browne said.
“The Georgia plant will not sit idle,” countered LG’s lawyer, David Callahan of Latham & Watkins. LG’s attorneys say SK exaggerates the order’s impact on American manufacturing and minimizes its I.P. violations. SK can “redesign” or settle, they suggested, but in any case “the demand for these batteries ensures that another manufacturer will step in” if it abandons the plant. (The Botox dispute was ultimately settled.)
The Biden administration can veto the I.T.C. by early April. Gov. Brian Kemp of Georgia has urged the president to do so, citing a 2013 reversal of a ruling in a dispute between Apple and Samsung. (The administration did not respond to a request for comment). Gov. Mike DeWine of Ohio — where LG is constructing a battery plant with General Motors — has asked the president to uphold the ruling, saying that “stolen intellectual property” shouldn’t be used to compete with his state’s workers. Mr. Biden is visiting Ohio today.
THE SPEED READ
The social media platform Discord has held talks to sell itself to Microsoft in a deal that could top $10 billion. (NYT)
WeWork said it lost $3.2 billion last year — less than in 2019 — in an investor presentation supporting its potential merger with a SPAC. (FT)
Box, the online storage provider, is reportedly considering a sale as it faces pressure from the activist investor Starboard Value. (Reuters)
Politics and policy
President Biden formally nominated Lina Khan, a critic of Big Tech, to the Federal Trade Commission. (NYT)
Sweden will link aircraft landing fees to greenhouse gas emissions, encouraging the use of newer, more efficient planes. (Reuters)
Shalanda Young is the front-runner for the nomination to lead the Office of Management and Budget, but Asian-American groups are pushing for Nani Coloretti, a former Obama administration official. (WaPo)
Cybersecurity researchers at the University of Toronto say TikTok isn’t a national security threat. (WSJ)
Companies including Mastercard and SoftBank pressed Group of 7 governments to coordinate tech issues like A.I. and cybersecurity. (FT)
The C.E.O. of a blockchain tech company won an auction of Jack Dorsey’s first tweet — sold as a nonfungible token — for $2.9 million. (CNBC)
Best of the rest
Ellen DeGeneres has faced a steep ratings decline, losing more than a million viewers after reports of a toxic workplace at her show. (NYT)
Should workers be paid while they sleep? (FT)
Americans over 65 are fully vaccinated, and ready to party. (NYT)
We’d like your feedback! Please email thoughts and suggestions to email@example.com.
“Most people are cheering, but at the same time, shaking their heads and going, when is the bust coming?” said Jane Leung, the chief investment officer at SVB Private Bank.
One of those who bought into the frenzy was Matthew Schorr, 35, a lawyer in Cherry Hill, N.J. For years, he has been on the lookout for hot investments, but lost interest in the stock market and abandoned Bitcoin after his friends dismissed the cryptocurrency as “fake money.” He now regrets that because the value of a single Bitcoin has soared above $57,000, meaning the eight Bitcoin he paid for a Domino’s pizza in 2011 would be worth more than $450,000 today.
Mr. Schorr did not want to miss out again. So starting in January, he spent $5,000 to buy 351 videos from NBA Top Shot, a site for trading basketball highlight clips, after he saw social media chatter about them selling for tens of thousands of dollars. The value of those clips has now soared to $67,000, according to Momentranks.com, which tracks the sales.
The clips are a type of investment known as NFTs, or nonfungible tokens, which have taken off in music, art and sports. The digital tokens use networks of computers to prove that a digital item like a video, image or song is authentic, giving the item a value — at least in the eyes of the person buying it. Some liken NFTs to digital trading cards. (The creators of the underlying works typically retain the copyright.)
Skeptics consider NFTs among the most questionable of assets, since an NFT image can be endlessly copied and shared. Still, enough people are convinced of the value of authenticating tokens that they have dovetailed with another market-propelling phenomenon, FOMO, or “fear of missing out.”
“I’m trying to keep my finger on the pulse and not let myself fall behind again,” said Mr. Schorr, who spends as much as five hours a day researching the market and chatting with fellow collectors on Discord. “That sort of return over six weeks is completely unheard-of in any financial vehicle.”
Last month, NBA Top Shot crossed $232 million in total sales since it started last year — including $47.5 million in sales on a single day.
Will owning bitcoins become a status symbol — or a scarlet letter for a new generation of climate-focused investors wise to the challenges it poses?
The answer is complicated.
Bitcoin supporters say that estimates of its carbon footprint are overstated. And if the computers that mine and help transact bitcoins are attached to an electric grid that uses wind and solar power, they add, mining and using it will become cleaner over time.
“We believe that cryptocurrency will eventually be powered completely by clean power, eliminating its carbon footprint and driving adoption of renewables globally,” Mr. Dorsey of Square said in a statement as part of a commitment for his company to be net-zero on carbon emissions by 2030. The company committed $10 million to invest in new “green energy technologies within Bitcoin mining, and aims to accelerate its transition to clean power.”
On this point Mr. Gates, who considers himself a Bitcoin skeptic unrelated to the climate issues, says it is possible that the challenges could be overcome, but he wasn’t convinced just yet.
“If it’s green electricity and it’s not crowding out other uses, eventually, you know, maybe that’s OK,” he said.
Several companies are working on some counterintuitive ideas to turn Bitcoin green. On Monday, Seetee, an investment company involved in cryptocurrency, said it planned to invest in Bitcoin “mining operations that transfer stranded or intermittent electricity without stable demand locally — wind, solar, hydro power — to economic assets that can be used anywhere.”
In other words, the company plans to build wind and solar in places that might not be perfectly situated for the technology and will use the extra power to mine Bitcoin, making money in the process. “Bitcoin is, in our eyes, a load-balancing economic battery, and batteries are essential to the energy transition required to reach the targets of the Paris agreement,” the company said in its announcement.