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Abu Dhabi, UAESunday 23 September 2018

Brooklyn resurfaces as New York's Cryptolandia

Neighbourhood reborn as it welcomes innovators and tech companies with a volume of potential spaces that can be converted for innovation-based companies

Graffiti and fliers cover the exterior of the building housing the ConsenSys office in the Brooklyn, New York. The Bushwick neighbourhood of Brooklyn has become a draw for start-ups. Holly Pickett/Bloomberg
Graffiti and fliers cover the exterior of the building housing the ConsenSys office in the Brooklyn, New York. The Bushwick neighbourhood of Brooklyn has become a draw for start-ups. Holly Pickett/Bloomberg

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

The employees of ConsenSys, the blockchain startup co-created by Ethereum guru Joseph Lubin, have taken over the space at 49 Bogart Street 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 JP Morgan. “ConsenSys is an inspiration to us.”

Employees work on computers at the ConsenSys Inc. office in the Brooklyn borough of New York, U.S., on Thursday, March 29, 2018. The employees of ConsenSys, the blockchain startup co-created by Ethereum guru Joseph Lubin, have taken over the space at 49 Bogart Street in the Bushwick neighborhood of Brooklyn. Photographer: Holly Pickett/Bloomberg
The ConsenSys office in the Brooklyn borough of New York. Holly Pickett/Bloomberg

Although Manhattan has its own blockchain businesses, they’re more closely associated with established companies such as Microsoft and Intel 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 vice president of technology at JP Morgan and Mr Clark’s partner in Cryptonomic.

Who knows, maybe in future it will represent the new face of innovation in the same way The UAE's Dubai Internet City does today.

DIC is targeting 10 per cent annual growth in the number of new businesses in 2018 and beyond, as it prepares to launch the first phase of a 1.8 million square feet expansion project later this year, its executive director said.

The free zone for technology and media companies expects growth to be driven by start-ups, as DIC pushes ahead with its aim of becoming the "Silicon Valley" of the Middle East and North Africa (Mena), Ammar Al Malik told The National.

“When we started 18 years ago, the objective was to attract global multinationals to establish a presence at DIC and help anchor Dubai as a technology hub,” he said. “In the last few years, the trend has been changing and we are seeing a lot more start-ups take root in the ecosystem."

The vision of the Sheikh Mohammed bin Rashid, the Vice President and Ruler of Dubai, of creating a "Silicon Valley for the Middle East is starting to become a reality”, Mr Al Malik noted.

Brooklyn, meanwhile, this month planted its crypto-flag during New York’s Blockchain Week. The Ethereal Summit, May 11 and 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 feature Mr 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.

“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 managing director 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 Mr 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,” said Mr Lubin. “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 councillor 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.

A man enters the building housing the ConsenSys Inc. office in the Brooklyn borough of New York, U.S., on Thursday, March 29, 2018. The employees of ConsenSys Inc., the blockchain startup co-created by Ethereum guru Joseph Lubin, have taken over the space at 49 Bogart Street in the Bushwick neighborhood of Brooklyn. Photographer: Holly Pickett/Bloomberg
Tthe ConsenSys office.

“That graffiti was done by locals who’ve been arrested and gone through hell,” Mr 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 per cent to $855 per square foot from $762 last year, according to Ariel Tavivian, a Douglas Elliman Real Estate broker.

Mr Lubin led the way three years ago, taking advantage of the plentiful warehouse space. As spin-offs and start-ups multiplied, real estate developers like Toby Moskovits’ Heritage Equity Partners followed. And Cryptolandia was born.

An employee sit at a table in the CARTO office, renovated by real estate developer Toby Moskovits, is seen in the Brooklyn borough of New York, U.S., on Thursday, March 29, 2018. Moskovits developed work spaces near the East River and down the street from ConsenSys Inc., a startup that develops applications and tools for blockchain technology, in the Bushwick neighborhood of Brooklyn. Photographer: Holly Pickett/Bloomberg
Offices renovated by real estate developer Toby Moskovits.

“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,” Ms Moskovits said. “Over the last three years that has come together.”

Ms 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.

Toby Moskovits, principal of Heritage Equity Partners LLC, sits for a photograph at one of her properties in the Bushwick neighborhood of the Brooklyn borough of New York, U.S., on Thursday, March 29, 2018. Moskovits developed work spaces near the East River and down the street from ConsenSys Inc., a startup that develops applications and tools for blockchain technology, in the Bushwick neighborhood of Brooklyn. Photographer: Holly Pickett/Bloomberg
Toby Moskovits, principal of Heritage Equity Partners.

According to New York City’s Economic Development, in 2015 there were 93 job openings listed for Brooklyn blockchain companies. Last year, there were 745, a more than eight fold 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,” Mr Patchett said.

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

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