“The Curb [Exchange] makes a market for men’s hopes. The New York Stock Exchange only has room for men’s successes.”

— Edwin Hill (1920)

Digital Asset Summit, Day 2

Before the Revolutionary War, colonial securities were traded informally — often peer-to-peer between wealthy individuals, and sometimes by auctioneer, with stock and bonds offered for sale alongside commodities like wheat and tobacco.

After the war, there was a lot more business to be done (because the new US government had a lot of bonds to sell) and that required more liquid markets — so activity migrated toward semi-professional brokers that met (still informally) in the streets of Lower Manhattan. 

In 1792, the most prominent of those brokers responded to a financial panic by gathering under a buttonwood tree on Wall Street to agree on some rules and regulations for both issuing and trading securities.

This marked the beginning of organized securities markets in the US: Under the agreement, only approved brokers (the 24 signatories of the Buttonwood Agreement) were allowed to trade a short list of securities that met the new listing requirements (just government bonds and a few bank stocks).

Trading in these select few securities occurred in coffee houses (the Merchants Coffee House at first and then the purpose-built Tontine Coffee House across the street) before moving into a more formal space in 1817 when the New York Stock & Exchange Board (later the NYSE) was created.

Unregistered, more speculative securities continued to be traded in coffee houses and on the streets of Lower Manhattan.

As interest in these unregistered securities increased, trade became concentrated on the west side of Broad Street, a block south of the NYSE.

Anyone could walk up and try to buy or sell anything (often dodging the horse-drawn traffic while they did).

There were lots of scams, of course, but lots of substance, too: Miners financed the 1840s gold rush in part by selling equity to traders on Broad Street and an industrial boom in the 1890s led to an even bigger boom of trading (still outdoors).

Sometimes, there was more trade occurring outside in the street than there was inside at the stock exchange — so much so that the outdoor market became known as the “New York Curb Exchange.” 

The Curb Exchange was active six days a week (from the prescribed hours of 10 am to 3 pm) and there was enough popular interest in the goings-on there that the prices agreed were published in the daily newspapers.

By 1905, the market had grown so large and loud that it became a public nuisance.

The crowds soon became a nuisance for investors, too: Broad Street was so crowded with brokers, market makers and speculators that it was impossible to go from the north part of the street (where copper stocks were traded) to the south side (where gold stocks were traded) in any reasonable amount of time.

In 1918, an estimated 167 million shares were traded on the Curb Exchange, which must have required a lot of shouting.

The shouting was surprisingly productive.

Here is what journalist Edwin Hill said of the Curb Exchange in 1920: “That bunch of gymnasts of incomparable lung power is the incubation of American finance, the hatchery for many, if not most, of our stock companies.”

The historian Ann Daly later concurred: “The best stocks, including Coca Cola, General Motors, Shell, Standard Oil, Goldwyn Pictures and Phillip Morris, started on the Curb and quickly moved inside to the NYSE.”

Many, many more did not make it inside, of course, but that has never stopped investors from trying — in any age.

“Curb annals are crowded with amazing tales of $0.10 shares bounding up to $10 values,” Edwin Hill wrote at the time.

He cited one legend of the Curb who “started by borrowing $300 [and] made three-quarters of a million in 10 years.”

(And you thought only memecoins could go up 2,500x.)

In 1921, the Curb’s traders decided it was time to go indoors, moving into a new building on Trinity Place that would later become known as the American Stock Exchange (AMEX).

They did so reluctantly, because, while leaving the street meant a reprieve from the rain, snow and scorching sun, it also invited government regulation.

“The Curb Market used public space to lend credence to its claim that it was not a formal securities market, and therefore could not be regulated,” Ann Daly explains.

(Crypto people will get that — crypto’s claim to remaining unregulated is that trading on decentralized exchanges occurs peer-to-peer, just as it was on the Curb Exchange.)

The good thing about regulation is that it protects investors from scams, frauds and misinformation.

The bad thing about regulation is that it protects investors from turning $300 into $750,000.

The New York Stock & Exchange started out with just government bonds and a few bank stocks to trade, none of which was ever going to make investors 2,500x.

Investors need a lot more shots on goal for that kind of return and that’s what the unregulated Curb Exchange provided.

It’s not so different today: There are ever fewer stocks available to investors on regulated exchanges, too few of them have lottery ticket-like upside, and too few people have access to them.

This week, we’re meeting indoors (at the Jacob Javits center) to see if there’s something we can do about that.

The world needs more investment opportunities made available to more people and crypto might be able to provide it.

The promise of permissionless capital markets is that a company located anywhere in the world, at any point in its lifecycle, can raise capital from anyone in the world. 

Uniquely, that tokenized equity can then be used to incentivize supply or bootstrap demand.

And anyone can trade that equity from anywhere, at any time.

We’re off to a slow start, however — the universe of investable crypto tokens is pretty much restricted to money (bitcoin) and a bunch of different ways to trade crypto tokens.

But that’s how NYSE started, too — just government bonds and a few banks.

It was the outdoor Curb Exchange that produced the real investing gems (hidden among a lot of dross, of course).

With luck, crypto might turn out to be just the right combination of in- and outdoor trading that produces both the dreams of the Curb and the successes of NYSE.

One theme from today: Crypto capital markets

Several of today’s DAS speakers touched on the topic of crypto as a new kind of permissionless capital market.

Santiago Santos assured us that “this industry is far more than a casino.” 

But I don’t think he’d blame anyone for not taking his word for it — it’s still an article of faith that crypto will produce investable assets that are not just more ways to trade crypto.

Stani Kulechov described blockchains as a new kind of “fundraising rails” and also explained why that’s important: It allows founders to “fundraise from a community [that] really cares about what you’re doing.”

I’m enough of a capitalist to think it’s fine if an investing community only cares about how much money you’re making.

But we already have a lot of that, so I’m interested to see what kind of protocols/companies this “caring” thing might produce.

Mike Cahill told the main stage audience that “the global financial market doesn’t exist,” which sounds provocative at first glance but obvious on a second: Most of the world’s population cannot access the US stock market.

That’s partly because “the system wasn’t built for access,” as Cahill noted. “It was built for control” — and that control goes back as far as the Buttonwood Agreement that restricted access to government bonds and regulated stocks to just 24 brokers.

Crypto is a global capital market that does exist and that anyone can access.

We still have to find some utility, as Brad Garlinghouse noted, but it might not be too much further off: Sergey Nazarov said today that TradFi will soon be using DeFi to distribute its products.

It won’t be easy for fundamentally minded investors like us to make sense of.

“The complexity is like no other,” Raghav Chopra noted. “But that also puts the ‘fun’ in fundamentals.”

The Curb Exchange was a lot of fun too, by all accounts.

Let’s hope the global crypto exchange proves equally fun and equally productive.

Overheard at DAS:

“It’s like taxis before Uber.” — Pyth Network co-founder Mike Cahill, on the financial system

“Crypto is a world of double-edged swords.” — SKALE Labs co-founder Jack O'Holleran 

“Tribalism is the enemy of progress. This is not a zero-sum game.” — Ripple CEO Brad Garlinghouse

“Become more barbelled.” — Main stage investment advice from Mohammed El-Erian

“The single most important change in crypto since Satoshi’s white paper.” — 1RT CEO Dan Tapiero, on the Trump administration’s embrace of crypto

“It’s probably smart to be bearish on 99% of altcoins, but you’re looking for the outliers.” — Framework Ventures co-founder Vance Spencer 

“It’s so blank slate that no one knows how to use it.” — Apollo Global Management partner Christine Moy, on crypto’s UI being free of tech debt

“I’m just exhausted thinking about it.” — Dan Tapiero on all the work there is for crypto investors to do

Best news of the conference

Lots of Blockworks Research data has been liberated from its paywall.

Best conference flex

The guy sitting three rows in front of me who opened his Phantom wallet with a $30,202 balance displayed in a very large font.

Main stage awkward moment of the day

Santiago Santos telling Blockworks co-founder Jason Yanowitz that crypto companies spend too much money on conferences. (Fact check: They don’t.)

Day 2 takeaway

Vegetable lo mein, scallion pancakes, side of edamame.

What I’m particularly looking forward to tomorrow

Dan Smith’s “Blockchain Revenue Does Not Exist” and Pete Rizzo’s conversation with Michael Saylor: “A View From the Hedge Funds with Cosmo Jiang.”

— Byron Gilliam

No sleep til Brooklyn

Permissionless IV is where you stress-test your vision. This conference is for the engineers, founders and devs building the next cycle’s backbone. If you’re scaling infra, rewriting DeFi, or experimenting with new primitives, apply to be a speaker.

Hackathon devs? Your ticket is covered.

1. First SOL futures ETFs are slated for launch

2. DAS Day 2: Another SEC move and more exec predictions

3. Fed holds interest rates, indicates 50bps cut by end of year

4. President Donald Trump to address Digital Asset Summit

5. [Sponsored] The Investor’s Guide to Bitcoin-Backed Lending

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Listen to Forward Guidance on Spotify, Apple Podcasts or YouTube.