Crypto pioneers head to Brooklyn to reshape finance

As ConsenSys spins off new ventures, the crypto world has contributed to ongoing gentrification

By Rob Urban & David M Levitt / BLOOMBERG

The building looks abandoned, but inside the graffiti-covered door, 200 workers tap at laptops with the goal of reshaping the world.

Workers at ConsenSys in Bushwick

The employees of ConsenSys Inc, the blockchain start-up co-created by ethereum guru Joseph Lubin, have taken over the space at 49 Bogart St in the Bushwick neighbourhood of Brooklyn, New York.

Inside its brick walls, they hope to develop new technology to decentralise and democratise a host of things, including the way we record real estate deals, track art ownership and pay people for work.

Outside the walls, they’ve helped transform the neighbourhood in a way that’s reminiscent of precincts in London, San Francisco and Hong Kong.

As ConsenSys spins off new ventures and attracts business partners in Bushwick and adjacent Williamsburg, once part of New York City’s industrial heart, the crypto world has contributed to ongoing gentrification.

Empty warehouses have been revived, condos have gone in and streets are populated with cafes, ramen shops and murals depicting strange creatures.

“There’s an energy here that you don’t find in Manhattan or anywhere else in New York,” said Tyler Clark, co-founder of blockchain developer Cryptonomic, which he started with a former colleague from JPMorgan Chase & Co. “ConsenSys is an inspiration to us.”

Though Manhattan has its own blockchain businesses, they’re more closely associated with established companies such as Microsoft Corp and Intel Corp than rebel Brooklyn would tolerate.

It might be bordering on hyperbole to compare Bushwick and Williamsburg in 2018 to Los Altos in 1976 or Haight-Ashbury in 1966, but as blockchain works toward fulfilling its considerable potential, the post-industrial city blocks where it’s happening have the aura of cultural ferment.

Unless, of course, this blockchain thing amounts to very little. In which case, never mind.

For now, call the area Cryptolandia, a name reputedly coined by the single-named Vishakh, a former VP of technology at JPMorgan and Clark’s partner in Cryptonomic.

Brooklyn planted its crypto-flag during New York’s Blockchain Week. The Ethereal Summit on May 11-12 featured speakers on everything from blockchain in the arts to using cryptocurrencies for charitable giving to the new technologies’ roles in emerging economies.

The Fluidity Summit on May 10 featured Lubin, as well as Wall Street luminaries Nouriel Roubini and Michael Novogratz. It was held at the old Williamsburgh Savings Bank building, designed by the same architect as the New York Stock Exchange.

Gutted Bank
“We intentionally chose a gutted bank in Williamsburg to symbolise the mission of reshaping finance,” said Sam Tabar, a strategist for Airswap, a peer-to-peer cryptocurrency exchange based in the neighbourhood.

“This is the planting of the flag in Brooklyn for blockchain. Legacy finance is headquartered in Manhattan. Future finance is in Brooklyn.”

Across the East River in Manhattan, blockchain developer R3 Consortium might quibble with that assessment.

The company employs about 50 in New York, and works with more than 200 regulators, financial firms and tech companies, including Microsoft and Intel.

R3 designed its own blockchain, called Corda, and this year plans to launch a number of applications, including Tradewind, a gold-exchange company on the Corda blockchain; HQLA X, a securities-lending platform that recently had its first trade; and Fusion LenderComm, an application for syndicated lenders.

“Blockchain for business is Manhattan, not Brooklyn,” said R3 MD Charley Cooper. “ConsenSys really is a thoughtful group, but changing the world is taking a different direction.”

Hope springs crypto in Brooklyn. The borough’s initial appeal was simple: It was cheap, at least by New York City standards, and Lubin and some of the original ConsenSys employees were already living in the area.

“It was a group of people who were locally situated and who appreciated the Brooklyn vibe,” Lubin said in an interview.

“It definitely had a warehouse vibe all around the world for a long time, and I think we resonated with that.”

Already, Cryptolandians are pushing up rents and threatening what made it attractive.

Antonio Reynoso, the New York City councilman representing the area, is pushing to preserve manufacturing jobs, which pay more than a lot of the jobs at restaurants and retailers.

He also wants to keep housing affordable so residents can live and work there, commuting by bike or on foot.

Meanwhile, tour groups have added Bushwick for the street art, helping to raise the area’s profile.

“That graffiti was done by locals who’ve been arrested and gone through hell,” Reynoso said. Then outside “enterprise comes in and gives tours”.

Prices for two-bedroom condos in Bushwick — a category that barely existed until recently — have risen 12% to US$855 (RM3,369) per sq ft from US$762 last year, according to Ariel Tavivian, a Douglas Elliman Real Estate broker.

Lubin led the way three years ago, taking advantage of the plentiful warehouse space. As spinoffs and

An office renovated by real estate developer Moskovits

start-ups multiplied, real estate developers like Toby Moskovits’ Heritage Equity Partners followed. And Cryptolandia was born.

“What this neighbourhood had was a spirit that I felt was going to welcome innovators and tech companies, and a volume of potential spaces that could be converted for innovation-based companies,” Moskovits said.

“Over the last three years, that has come together.” Moskovits developed work spaces near the East River and down the street from ConsenSys.

In the ConsenSys area, Nicholas Tukmanian turned a family-owned property into offices, where eight of its tenants are blockchain- and crypto-oriented businesses. ConsenSys said it has about 40 people there, too.

According to New York City’s Economic Development Corp, in 2015 there were 93 job openings listed for Brooklyn blockchain companies.

Last year, there were 745, a more than eightfold increase. And the growth is just starting, said James Patchett, the group’s president.

“We absolutely believe this is an industry that’s going to explode,” Patchett said in an interview.

“We’ve seen an increase in start-ups that want to be outside of Manhattan.”