Blockchain technology is claimed to be according to blockchain proponents to be one of the most impactfull discoveries in the recent history. It is promised to have a massive potential to change how we handle online transactions. Despite some skeptics, the majority of experts agree that blockchain has the potential to disrupt the banking and financial industry, and many other ones! To put it simply, blockchain enables decentralized transactions across a P2P network. There are applications where those propertied can be very useful, but there are many cases where blockchain migh not be the best solution even though it is hyped to be solution for very many application (remember to ask Do you need a blockchain? often).
This 16 Blockchain Disruptions (Infographic) by bitfortune.net tries to help you understand how the blockchain technology can and will improve 16 different industries, from music to government.
Infographic by bitfortune.net
1,206 Comments
Tomi Engdahl says:
Emily Nicolle / Bloomberg:
Tether’s accounting firm says Tether holds $20.1B in commercial paper, down 17% QoQ; Tether had $82.4B+ in total assets on March 31 and $82.2B in liabilities
Tether Cuts Commercial Paper, Boosts Treasuries Behind USDT
https://www.bloomberg.com/news/articles/2022-05-19/tether-declares-fall-in-commercial-paper-increase-in-treasuries
Stablecoin issuer said it continues to reduce commercial paper
Holdings breakdown is from before latest market turmoil
Tether, the operator of the world’s most used cryptocurrency, said it had reduced the amount of commercial paper in the reserve backing its $74 billion stablecoin, revealing information about its holdings while dollar-pegged assets face tougher scrutiny from regulators.
Tomi Engdahl says:
Do Kwon, 31, ajoi kryptomarkkinat kaaokseen – Tällainen on romahtaneen kryptovaluutan kehittäjä https://www.is.fi/taloussanomat/art-2000008830485.html
Tomi Engdahl says:
Cagan Koc / Bloomberg:
European Central Bank President Christine Lagarde says crypto “should be regulated” to deter people from speculating on assets that are “based on nothing” — European Central Bank President Christine Lagarde said crypto-currencies are “based on nothing” …
Lagarde Says Crypto Is ‘Worth Nothing’ and Should Be Regulated
https://www.bloomberg.com/news/articles/2022-05-21/lagarde-says-crypto-is-worth-nothing-and-should-be-regulated
Digital euro will be safer store of value, ECB president says
Comments come amid turbulent times for crypto markets
Tomi Engdahl says:
Terrausdin romahtaminen johti siihen, että sijoittajien luottamus muihin vakaina pidettyihin valuuttoihin horjui. Esimerkiksi Tether-vakaavaluutan arvo tippui alle dollariin, vaikka myös sen kuuluisi säilyttää arvonsa yhdessä dollarissa.
Wall Street Journalin mukaan ennen romahtamista eteläkorealaisen Do Kwonin vuonna 2020 kehittämään terrausd:hen oli sijoitettu 18 miljardia dollaria. Terraa ja muita vastaavia kryptovaluuttoja on syytetty Ponzi -pyramidihuijauksiksi.
https://www.is.fi/ulkomaat/art-2000008835471.html
Tomi Engdahl says:
Christopher Beam / Bloomberg:
A look at the tricky blockchain code questions raised by Indexed Finance’s legal fight with an 18-year-old Canadian who exploited the DeFi platform for $16M
The Math Prodigy Whose Hack Upended DeFi Won’t Give Back His Millions
https://www.bloomberg.com/news/features/2022-05-19/crypto-platform-hack-rocks-blockchain-community
An 18-year-old graduate student exploited a weakness in Indexed Finance’s code and opened a legal conundrum that’s still rocking the blockchain community. Then he disappeared.
Tomi Engdahl says:
Sarah Emerson / BuzzFeed News:
After actor and producer Seth Green lost his BAYC NFTs to a phishing scam, his show based on those NFTs is in doubt; OpenSea says it has frozen the NFTs — Actor and producer Seth Green was robbed of several NFTs this month after succumbing to a phishing scam that inadvertently threw …
Someone Stole Seth Green’s Bored Ape, Which Was Supposed To Star In His New Show
https://www.buzzfeednews.com/article/sarahemerson/seth-green-bored-ape-stolen-tv-show?scrolla=5eb6d68b7fedc32c19ef33b4
The actor has been pleading on Twitter with “DarkWing84,” who bought his ape from a scammer, to return it.
Actor and producer Seth Green was robbed of several NFTs this month after succumbing to a phishing scam that inadvertently threw a monkey wrench into the plan for his new animated series. The forthcoming show was developed from characters in Green’s expansive NFT collection, but in light of the recent hack, the project’s blatant crypto optimism has become a tragically ironic reminder of the industry’s shadier side.
On Saturday, Green teased a trailer for White Horse Tavern at the NFT conference VeeCon. A twee comedy, the show seems to be based on the question, “What if your friendly neighborhood bartender was Bored Ape Yacht Club #8398?” In an interview with entrepreneur and crypto hype man Gary Vaynerchuk, Green said he wanted to imagine a universe where “it doesn’t matter what you look like, what only matters is your attitude.”
Unfortunately for Green, what also matters is copyright law. And when the actor’s NFT collection was pilfered by a scammer in early May, he lost the commercial rights to his show’s cartoon protagonist, a scruffy Bored Ape named Fred Simian, whose likeness and usage rights now belong to someone else.
“I bought that ape in July 2021, and have spent the last several months developing and exploiting the IP to make it into the star of this show,” Green told Vaynerchuk. “Then days before — his name is Fred by the way — days before he’s set to make his world debut, he’s literally kidnapped.”
On May 8, an anonymous scammer swiped four of Green’s NFTs in a phishing scheme. Green mourned his “stolen” assets on Twitter, where he announced the losses of a Bored Ape, two Mutant Apes, and a Doodle, which were transferred out of Green’s wallet after he unknowingly interacted with a phishing site.
If the current owner “wanted to cause trouble for Seth Green they probably could, because that person becomes the holder” of the commercial usage rights, said Daniel Dubin, a tax and litigation attorney at Alston & Bird LLP.
NFT copyright law can be “a particularly thorny issue,” Dubin said, and has only begun to be tested in court. A growing number of NFT projects are granting owners the right to commercially adapt their works, which has been a useful strategy for increasing brand visibility but has consequently introduced a host of legal disputes. Bored Ape Yacht Club was among the first to adopt these terms, which led to an explosion of Bored Ape merchandise and derivative NFT collections but also set the stage for bitter copyright lawsuits.
Seemingly aware of the problems his ape’s new owner could cause, Green has spent the last several days tweeting at DarkWing84 in an attempt to reclaim the Bored Ape, appealing to them again on Monday to “work it out between us.”
It’s unclear if DarkWing84 knew the ape was illicitly obtained when they purchased it, and they did not respond to a tweet from BuzzFeed News.
“Ordinarily, bona fide purchasers are legally protected if they buy an item not knowing that it’s a hot item,” Eric Goldman, an intellectual property and technology law professor at Santa Clara University, told BuzzFeed News. But for buyers of stolen NFTs, the blockchain — which records a chain of ownership — could make it tricky for them to plead ignorance. Goldman theorized “there will be a lot of questions about whether they’re buying a stolen NFT and not doing their homework.”
The NFT marketplace OpenSea said it has frozen the tokens, as it has previously done when assets were reported stolen. All four NFTs taken from Green are now marked with “suspicious activity” warnings. “We do not have the power to freeze or delist NFTs that exist on decentralized blockchains; however, we do disable the ability to use OpenSea to buy or sell stolen items,” said Allie Mack, an OpenSea spokesperson. OpenSea is currently facing three lawsuits from NFT owners who lost their Bored Apes to similar phishing attacks.
Tomi Engdahl says:
Hannah Murphy / Financial Times:
Andreessen Horowitz announces a $4.5B crypto fund, including $1.5B for seed investments, its fourth and largest such fund — Silicon Valley venture capital firm launches its largest fund to date focused on digital assets despite market downturn — Andreessen Horowitz has launched …
https://www.ft.com/content/47b05080-67ac-4468-b530-76325d6aba35
Tomi Engdahl says:
Shawn Amick / Bitcoin Magazine:
Stripe partners with OpenNode to let businesses convert fiat payments into bitcoin via OpenNode’s Stripe app; Stripe suspended bitcoin support in 2018 — Stripe, a global payment processor, is working with OpenNode to enable businesses to convert fiat payments into bitcoin.
Stripe To Enable Millions of Merchants To Convert Payments Into Bitcoin via OpenNode
https://bitcoinmagazine.com/business/stripe-and-opennode-to-release-app-for-bitcoin-payments
Stripe, a global payment processor, is working with OpenNode to enable businesses to convert fiat payments into bitcoin.
Stripe, one of the largest payment processors in the world, just announced businesses will be able to convert any amount of payments into bitcoin.
The functionality is available via a new app from Bitcoin Lightning Network infrastructure provider, OpenNode, on Stripe’s new app marketplace.
Stripe simultaneously announced the launch of its app marketplace which allows custom UIs to integrate with Stripes global customer base.
Stripe, one of the leading payment processors in the world, just announced they are working with bitcoin payments infrastructure company OpenNode, to allow businesses to convert fiat payments into bitcoin.
https://twitter.com/OpenNode/status/1529139887617744898?s=20&t=Hz-KPJKjC3xff29pbWn9sQ
Tomi Engdahl says:
Emily Nicolle / Bloomberg:
DeFi Llama: the total value locked across all DeFi protocols has dropped to ~$112B, down from ~$195B at the start of May before UST and LUNA collapse — The collapse of one of decentralized finance’s most ambitious experiments has knocked more than $83 billion off the sector’s total value, as investors fled for safer havens.
https://www.bloomberg.com/news/articles/2022-05-24/terra-collapse-triggers-83-billion-decentralized-finance-slump
Tomi Engdahl says:
”Kryptovaluutat eivät ole minkään arvoisia” – EKP:n pääjohtaja kertoi jyrkän mielipiteensä kryptoista
https://tekniikanmaailma.fi/ekpn-paajohtajan-jyrkka-kanta-kryptovaluutat-eivat-ole-minkaan-arvoisia/?utm_medium=Social&utm_source=Facebook#Echobox=1653316238
Euroopan keskuspankin (EKP) pääjohtaja Christine Lagarde puhui viikonloppuna jyrkin sanoin kryptovaluutoista. Hänen mukaansa virtuaalivaluutat ”eivät perustu mihinkään” ja niiden pitäisi kuulua sääntelyn piirin, kirjoittaa Bloomberg. Näillä keinoin ihmiset saataisiin lopettamaan säästöillään kryptoilla keinottelu. Lagarde kertoi kantansa Hollannin televisiossa.
Pääjohtaja kommentoi tilannetta virtuaalivaluuttojen, kuten bitcoinin ja etherin, arvojen laskettua hurjasti sitten viime vuoden. Valvojat ovat huolissan kryptovaluuttojen vaikutuksesta finanssialaan.
Lagarde kertoi olevansa skeptinen kryptovaluuttojen suhteen ja vertasi niitä EKP:n kaavailemaan digitaaliseen euroon.
”Minun erittäin vaatimaton arvioni on, että kryptovaluutat eivät ole minkään arvoisia, ne eivät perustu mihinkään, niillä ei ole turvana mitään varallisuutta ankkurina”, EKP-pomo sanoi.
Lagarde Says Crypto Is ‘Worth Nothing’ and Should Be Regulated
https://www.bloomberg.com/news/articles/2022-05-21/lagarde-says-crypto-is-worth-nothing-and-should-be-regulated
Digital euro will be safer store of value, ECB president says
Comments come amid turbulent times for crypto markets
Tomi Engdahl says:
The Crypto Crash Continues, Spotlight Focus on Ethereum and Altcoins
https://mishtalk.com/economics/the-crypto-crash-continues-spotlight-focus-on-ethereum-and-altcoins
Ethereum is right on technical support and there is no fundamental or technical reason for that support to hold.
Technically Speaking
Ethereum is testing support at the 1700 level for the fifth time.
In bear markets, repeated tests of support are overwhelmingly likely to break
The next support level is 1250, then 600, then the 300 area
Fundamentally, the major driver of cryptos is not energy, not the hash rate, not payments, not currency.
The fundamental driver for the price of Bitcoin and all of the Altcoins is speculative sentiment.
Major debates along those lines took place on Twitter yesterday.
Hashing is irrelevant over the long haul. Sentiment will determine the price of Bitcoin. If the overall desirability and willingness to hold Bitcoin drops, so will the price. That is a statement of fact.
The hash rate has been meaningless for six months. The desire to hold Bitcoin has gone the other way.
Sentiment Crashing Across the Board
That could be just day to day randomness. But it isn’t.
I excluded stable coins because they are supposed to be stable, but TerraUSD associated with LUNA is now trading around 2 cents, down 98%.
If diversification was supposed to help, it didn’t.
Please note Dogecoin was started as a joke and pumped up spectacularly by Elon Musk.
How Many Cryptocurrencies Are There?
There are over 18,000 cryptocurrencies in existence as of March 2022.
The vast majority of them are headed to zero if indeed they are not already at zero.
Looking Back
Looking back, the early Bitcoin and Ethereum investors are still laughing about this decline as if it is nothing.
One could have bought Bitcoin under $1. Even if one bought at $1,000 they are up about 28 times on their money.
For those who got in this year, the declines are very real.
I have certainly been wrong about how much these have risen. Then again, I underestimate nearly every bubble.
Hellen’s advice is still pertinent. Do Kwon just launched LUNA2!
Seven Percent Free Money on LUNA2!
Staking trapped people in LUNA unable to get there money out for 21 days. LUNA went to zero in a week. They were paid 20% for putting up LUNA. They got back their LUNA plus 20% more LUNA. But 0 + 0 = 0.
What a Hoot!
Where to Now for Cryptos?
The question, as always, is not where we’ve been but where we are headed.
Every time I look at lists like the one I posted, I ask myself the same question: Why are they worth anything at all?
But they will always be worth what someone is willing to pay for them.
Bitcoin advocates believe there is only one true coin, Bitcoin. They label the rest “sh*tcoins”.
But ultimately, the price of all the coins will not be determined by hashrate, alleged scarcity, or the latest favorite hype (alleged ease at moving alleged money).
In El Salvador, Bitcoin is officially legal tender. Hooray! But who uses it for that? Almost no one and I am confident almost no one ever will, globally, as any meaningful percentage of transactions.
Even if 100% of the transactions in El Salvador were in Bitcoin, the price of Bitcoin will not be set in El Salvador.
Rather, the price of Bitcoin will be the price people are willing to pay globally, in the midst of a global liquidity crunch.
Tomi Engdahl says:
CoinBasen bisnesmalli lähentelee huijausta: Houkuttele hyväuskoiset hölmöt sijoittamaan vaihtoehtoisiin kryptovaluuttoihin.
Coinbase Crypto Model: Lure Fools Into Crappy Altcoins For Profit
https://mishtalk.com/economics/coinbase-crypto-model-lure-fools-into-crappy-altcoins-for-profit
Tomi Engdahl says:
Kryptovaluuttojen romahdus jatkuu: Bitcoin -58%, Ethereum -63%, BNB -56%, Ripple -89%, Dogecoin -89%, LiteCoin – 85%, Luna -100%.
Tomi Engdahl says:
Can Cryptocurrencies Actually Be Legal Tender? Should They? Following El Salvador’s adoption of Bitcoin, efforts to legalize crypto are spreading
https://spectrum.ieee.org/should-cryptocurrencies-be-legal-tender?utm_campaign=RebelMouse&socialux=facebook&share_id=7073644&utm_medium=social&utm_content=IEEE+Spectrum&utm_source=facebook
When the blueprint for Bitcoin was unveiled in 2008, the goal was to create a new form of electronic cash that bypassed traditional financial institutions. Since then, the original cryptocurrency and its descendants have primarily become investments rather than practical forms of payment. But now a handful of experiments are trying to bring the technology back to its roots by making it legal tender.
Legal tender refers to forms of money the law says must be accepted in payment of a debt. Most countries only designate their domestic currencies this way, though some adopt foreign currencies either exclusively or alongside their own. Last year, however, El Salvador became the first country to adopt a cryptocurrency as legal tender. The country had already adopted the US dollar as its main currency in 2001, but following new legislation Bitcoin joined it on September 7.
This has sparked similar efforts elsewhere, with the Central African Republic becoming the second country to make Bitcoin legal tender in April. Meanwhile, proposals to do the same at the regional level in the US and elsewhere. But this new push to legitimize cryptocurrencies as a form of payment is raising questions about how well-suited they are to the role.
“A good legal tender is something that is reliable,’” says Thomas Dimpfl, a professor of economics at the University of Hohenheim in Germany. “The biggest risk is that it [Bitcoin] is just so volatile.”
While the value of all currencies vary over time, cryptocurrencies often fluctuate wildly, as demonstrated by the recent crypto crash that has seen the value of Bitcoin more than halve since last November’s highs. This makes using them as a true currency difficult
This exposes both everyday users and businesses to significant exchange rate risks, he adds. It’s also proven a significant problem for El Salvador’s government. As part of its effort to popularize the new currency, it has spent $104m buying Bitcoin, according to Reuters. But following the recent crash, the value of the heavily indebted nation’s holdings is just $67.9m.
Nonetheless, advocates for adopting cryptocurrencies as legal tender believe the dangers can be mitigated and the benefits could be substantial. The Swiss city of Lugano recently announced plans to accept Bitcoin, Tether (a stablecoin pegged to the value of the US dollar) and LVGA (a Swiss Franc-based stablecoin launched by the city in 2020) as “de facto” legal tender.
The city is currently negotiating with service providers, but the final solution will include the ability to instantly convert any cryptocurrency into Swiss Francs. This is partly because the local government is not legally permitted to hold cryptocurrencies on it books
But the case of El Salvador suggests that even with considerable government support, cryptocurrencies may struggle to establish themselves as viable cash replacements. Despite offering all residents $30 of worth of Bitcoin for downloading the government-backed Chivo wallet, a paper published in April by economists at the National Bureau of Economic Research, found that only 20 percent continued to use it once they’d spent the bonus. The leading reason for not using Bitcoin was a lack of understanding, but a lack of trust in the currency and its volatility also ranked highly.
Trust is an important ingredient for an effective currency, says Drimpfl. People trust the dollar because it is backed by the economy of the US—and because they know that the Federal Reserve can intervene if needed to keep prices stable. This is done by manipulating the supply of money through interest rate adjustments or buying government bonds.
Tomi Engdahl says:
Scott Chipolina / Financial Times:
A group of 26 leading computer experts urge US lawmakers to resist crypto lobbying efforts, calling crypto financial instruments “risky, flawed, and unproven”
https://www.ft.com/content/f4b2fa1a-4057-4b10-9f3b-efa57e6bcbac
Tomi Engdahl says:
https://www.uusiteknologia.fi/2022/06/02/valtio-keraa-virtuaalivalutoista-ennatystulot-osa-jaa-silti-ilmoittamatta/
Tomi Engdahl says:
Ecommerce promotions and loyalty in the composable crypto and web3 world
https://www.talon.one/blog/ecommerce-promotions-loyalty-in-the-composable-crypto-and-web3-world
Tomi Engdahl says:
‘Move-to-earn’ Solana app StepN is latest crypto gaming craze
But skeptics question its sustainability and whether it can be called a ‘game’
https://techcrunch.com/2022/05/22/play-move-to-earn-solana-stepn-gamefi/
Tomi Engdahl says:
https://techcrunch.com/2022/05/24/mastercard-exec-is-bullish-on-crypto-sees-mass-adoption-sooner-rather-than-later/
Tomi Engdahl says:
https://www.northcrypto.com/announcement/bitcoin-ethereum-erot
Tomi Engdahl says:
Eli Tan / CoinDesk:
Yuga Labs confirms BAYC’s Discord server hack with 200 ETH worth of NFTs stolen, the third time a bad actor impersonated a Yuga Labs-run account to steal funds — The company behind the Bored Apes NFTs made the disclosure 11 hours after word of the exploit surfaced on Twitter.
Yuga Labs Confirms Discord Server Hack; 200 ETH Worth of NFTs Stolen
https://www.coindesk.com/business/2022/06/04/yuga-labs-confirms-discord-server-hack-200-eth-worth-of-nfts-stolen/
The company behind the Bored Apes NFTs made the disclosure 11 hours after word of the exploit surfaced on Twitter.
The Bored Ape Yacht Club (BAYC) Discord server was hacked on Saturday, with the attacker making off with 200 ETH ($360,000) worth of NFTs, according to Yuga Labs.
The hack took place after the project’s community manager, Boris Vagner, had his Discord account compromised, which the attacker then used to post phishing links in both the official BAYC and its related metaverse project called Otherside’s Discord channels.
News of the hack was first reported by Twitter user NFTherder, who also estimates 145 ETH (around $260,000) was stolen along with the NFTs, tracing the stolen funds back to four separate wallets.
Yuga Labs later confirmed the exploit occurred in a tweet of its own, saying it is still actively investigating the incident. It did so 11 hours after NFTHerder’s tweet.
Tomi Engdahl says:
David Yaffe-Bellany / New York Times:
As OpenSea faces a backlash over stolen and plagiarized NFTs, executives acknowledge the problem and outline steps to improve trust, including hiring more staff
https://www.nytimes.com/2022/06/06/technology/nft-opensea-theft-fraud.html
Tomi Engdahl says:
Siobhan Roberts / New York Times:
Study: Bitcoin transactions show 64 key players mined most of the cryptocurrency in its first two years, contrary to the ethos of decentralized crypto — In myth, the cryptocurrency is egalitarian, decentralized and all but anonymous. The reality is very different, scientists have found.
How ‘Trustless’ Is Bitcoin, Really?
https://www.nytimes.com/2022/06/06/science/bitcoin-nakamoto-blackburn-crypto.html
In myth, the cryptocurrency is egalitarian, decentralized
Tomi Engdahl says:
Mary Ann Azevedo / TechCrunch:
PayPal begins letting users in the US move cryptocurrency from and to external wallets and exchanges, after they complete a new identity verification process — ‘We’re in this for the long term,’ says exec — In response to customer demand, PayPal announced today that its users …
PayPal is finally allowing users to move their cryptocurrency to other wallets
‘We’re in this for the long term,’ says exec
https://techcrunch.com/2022/06/07/paypal-is-finally-allowing-users-to-move-their-cryptocurrency-to-other-wallets/
Tomi Engdahl says:
Jacquelyn Melinek / TechCrunch:
Los Angeles-based Calaxy, whose Web3 marketplace lets creators mint and sell social tokens, raises $26M led by Animoca Brands and the HBAR Foundation — The success of websites like Cameo have shown that people want personalized interactions with celebrities and web3 companies are emerging …
Web3 startup Calaxy raises $26M to give content creators their own social tokens
Jacquelyn Melinek
https://techcrunch.com/2022/06/07/web3-startup-calaxy-raises-26m-to-give-content-creators-their-own-social-tokens/
The success of websites like Cameo have shown that people want personalized interactions with celebrities and web3 companies are emerging to provide creators with a way to do that while valuing themselves, Solo Ceesay, co-founder of Calaxy, said to TechCrunch.
Calaxy, a web3 social marketplace, has raised $26 million in strategic funding co-led by Animoca Brands and HBAR Foundation with support from Polygon.
The name Calaxy is a portmanteau of “creators galaxy.” The startup aims to build new infrastructure that allows content creators, ranging from small influencers to big-time celebrities, to have ownership and equitable exchange of value compared to the current social media landscape, Ceesay said.
The fresh capital will be stored for bearish days ahead, but Ceesay said the funds will eventually be used to expand its platform and products. “We’re an experiential marketplace that does NFTs and a lot of other things, but most notably we’re a social token project,” Ceesay said.
The platform allows each creator to mint their own cryptocurrencies that their fans can buy to interact with their economy or trade value for a social media engagement, Ceesay said. Its utility derives from the traditional Web 2.0 social media applications like Patreon and Cameo, where fans can engage with celebrities through social tokens, Ceesay said.
“People can buy an Ezekiel Elliott coin in order to buy a call with Ezekiel Elliott,” Ceesay said. Every coin attached to celebrities begins pegged at a 1:1 ratio in line with the stablecoin USD Coin (USDC), so “it won’t fluctuate in value because fans don’t want to deal with volatility,” he added. So in this case, $20 is worth 20 Ezekiel Elliott tokens, he noted.
In the future, Ceesay said he expects that the tokens on Calaxy can fluctuate based on market demand and each creator could have dynamically priced assets, but they are currently held at a pegged value to the U.S. dollar.
The social token represents a piece of a creator’s eventual own economy, Ceesay said. “When you think of a dynamically priced token in a finite supply, there’s a market value to that token,” he said. “This is all about capturing your own value; if you’re influencing so many people, there’s no reason you shouldn’t have a publicly verifiable market cap or a value as a person.
“The way creators interact with fans shouldn’t be limited by the scope of the platform they’re on through a centralized entity like TikTok,” Ceesay said.
YouTube, Facebook and Instagram have their big centralized entities that make money off ads and businesses, so they’re not monetizing the creator – they’re monetizing the brand, Ceesay said.
“It’s not fair, so we think creators should be able to control their [success] and take their social token and bring it anywhere to make sense specifically for them,” Ceesay said. “The idea of a social token really opens the playground so creators can monetize and connect with fans directly without an intermediary involved. … We want creators to value themselves.”
Tomi Engdahl says:
Ian Allison / CoinDesk:NEW
Source: Citadel Securities is building a “cryptocurrency trading ecosystem” in partnership with Virtu, Sequoia, Paradigm, and others — The effort also includes Citadel Securities’ recent venture capital (VC) backers, Sequoia and Paradigm, with more trading firms to come, according to a source familiar with the plans.
Citadel Securities Is Building a Crypto Trading Marketplace With Virtu Financial: Sources
https://www.coindesk.com/business/2022/06/07/citadel-is-building-a-crypto-trading-marketplace-with-virtu-financial-sources/
The effort also includes Citadel’s recent VC backers, Sequoia and Paradigm, with more trading firms to come, according to a source familiar with the plans.
Tomi Engdahl says:
Matt Robinson / Bloomberg:
Source: the SEC is investigating whether the marketing of the TerraUSD stablecoin before it crashed in May 2022 violated federal investor-protection regulations
SEC Investigating UST Stablecoin Blowup in Fresh Threat to Terra
https://www.bloomberg.com/news/articles/2022-06-09/sec-investigating-ust-stablecoin-blowup-in-fresh-threat-to-terra#xj4y7vzkg
Probe looks into marketing of token also known as TerraUSD
Last month’s implosion among biggest busts in crypto history
Tomi Engdahl says:
Who knows whether it’s FOMO or actual customer demand for such a thing, but Salesforce announced today that it’s launching a pilot of NFT Cloud, a new platform for buying and selling these crypto assets.
https://techcrunch.com/2022/06/08/salesforce-takes-crypto-plunge-with-new-nft-cloud/?tpcc=tcplusfacebook
Tomi Engdahl says:
Celsius:
DeFi lending platform Celsius pauses “all withdrawals, Swap, and transfers between accounts”, citing extreme market conditions — We are writing with a very important message for our community. — Due to extreme market conditions, today we are announcing that Celsius is pausing …
https://blog.celsius.network/a-memo-to-the-celsius-community-59532a06ecc6
Daniel Roberts / Decrypt:
Celsius’s token CEL fell 70% in one hour after the DeFi lending giant suspended withdrawals, now at about 20 cents amid a broader crypto market slump — On Sunday night, with crypto markets already in freefall, controversial crypto lender Celsius announced it was suddenly pausing all customer withdrawals, swaps, and transfers.
Celsius Tanks 70% in 1 Hour After Company Pauses Withdrawals to ‘Stabilize Liquidity’
https://decrypt.co/102715/celsius-tanks-as-company-pauses-withdrawals-citing-liquidity
The crypto lender paused all customer withdrawals and swaps on Sunday night, citing liquidity issues. CEL quickly went off a cliff.
On Sunday night, with crypto markets already in freefall, controversial crypto lender Celsius announced it was suddenly pausing all customer withdrawals, swaps, and transfers.
“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,” the company wrote in a blog post on Medium. “We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets. Furthermore, customers will continue to accrue rewards during the pause in line with our commitment to our customers.”
Tomi Engdahl says:
Molly White:
A skeptical look at crypto as a foundation for self-sovereign identity and some likely dystopian outcomes, as Buterin, Dorsey, and others explore the idea
Is “acceptably non-dystopian” self-sovereign identity even possible?
https://blog.mollywhite.net/is-acceptably-non-dystopian-self-sovereign-identity-even-possible/
Anonymity and trustlessness are central to the crypto world. People don’t have to attach real-world identities to crypto wallets, and communities at least nominally try to avoid placing trust into institutions like governments or big tech companies. But with the crypto world increasingly trying to move beyond simple payments and NFT trades, they are running up against these limitations.
Decentralized autonomous organizations, or DAOs, are often governed with a “one token, one vote” model that gives power to the wealthy. Though some DAOs may believe this is the ideal governance model, many others have adopted it because there aren’t a ton of promising alternatives. Unlike in offline organizations and societies where centrally-controlled identifiers or even just in-person attendance are fairly successfully used to ensure one individual gets one vote, this has been a very difficult nut to crack in the crypto world, where one individual can trivially create endless new wallet addresses—known as a Sybil attack.1
Loans in the crypto world tend to be overcollateralized, requiring users to put up more value in crypto than what they receive in a loan. Although this works reasonably well for users who have already accumulated capital and want to use that capital in a different format (i.e. borrowing fiat currency against their crypto holdings), it doesn’t work well for the more standard reason people take out loans: because they don’t already have the money they need. Needless to say in an ecosystem whose advocates like to promise will “bank the unbanked” and help the marginalized, this is a bit of a setback.
So, increasingly, we’re seeing conversations around topics like: how can we verify a statement about a person (or crypto wallet) is true without relying on the state or another centralized entity? How can we ensure that a wallet represents a unique individual?
Ethereum co-founder Vitalik Buterin has been talking about “soulbound tokens”.2 Jack Dorsey just launched “Web5”, a buzzwordy project focused on decentralized identity.3 Projects like Proof of Humanity,4 BrightID,5 and WorldCoin6 are all tackling Sybil prevention in their own ways. Web3 companies like Spruce7 and Disco8 have emerged to try to tackle self-sovereign identity (that is, identifiers that are controlled by users rather than by central entities) in the blockchain world and elsewhere.
Tomi Engdahl says:
Bloomberg:
Major cryptocurrencies are crashing: bitcoin drops by 10%+ to below ~$24K, ether drops by 20%+ to below $1.2K, Avalanche drops 20%+, and Solana drops 19%+ — Bitcoin plunged to the lowest in about 18 months in Asia trading Monday as the impact of Friday’s shock US inflation data continued to reverberate through global risk assets.
Bitcoin Tumbles to 18-Month Low as US Inflation Impact Spreads
Ether, other altcoins also suffer amid broad selloff
Crypto remains ‘at the mercy of the Fed,’ Nexo’s Trenchev says
https://www.bloomberg.com/news/articles/2022-06-13/bitcoin-sinks-to-18-month-low-as-us-inflation-impact-spreads#xj4y7vzkg
Matt Turner / Bloomberg:
As crypto tumbles, MicroStrategy, which owns 129K+ bitcoins, drops as much as 23%, while Coinbase, Riot Blockchain, and Marathon Digital each drop 14%+ — Cryptocurrency-related stocks plunged in premarket trading Monday as Bitcoin tumbled to its lowest level in 18 months amid a deepening selloff …
MicroStrategy Leads Selloff in Crypto Stocks as Bitcoin Unravels
https://www.bloomberg.com/news/articles/2022-06-13/microstrategy-leads-selloff-in-crypto-stocks-as-bitcoin-unravels#xj4y7vzkg
MicroStrategy, Marathon, Riot and Coinbase fall at least 14%
Bitcoin sinks as much as 13% after Celsius pauses withdrawals
Tomi Engdahl says:
Matthew Green / A Few Thoughts on Cryptographic Engineering:
A defense of blockchains and crypto as they take on the money-transfer and payments industries, the economics of which computer networking has yet to transform
In defense of crypto(currency)
https://blog.cryptographyengineering.com/2022/06/09/in-defense-of-cryptocurrency/
Last week a group of technologists, including Bruce Schneier, sent a letter to Congress outlining their concerns around cryptocurrency and urging Congress to regulate the space.
Now let me be the first to say that I broadly support this goal. I have no problem with the idea of legislators (intelligently) passing laws to regulate cryptocurrency. Indeed, given the level of insanity and the number of outright scams that are happening in this area, it’s pretty obvious that our current regulatory framework is not up to the task. If the recent letter simply asked for intelligent regulation, I’d gladly sign onto it. Unfortunately that’s not at all what this letter says. Instead, it argues that the entire technology field is worthless and cannot be used for any practical purpose.
Don’t take my word for it. I urge you to stop reading this post right now and take a look for yourself. I’ve helpfully reproduced some of the critical pieces below (emphasis added):
By its very design, blockchain technology, specifically so-called “public blockchains”, are poorly suited for just about every purpose currently touted as a present or potential source of public benefit. From its inception, this technology has been a solution in search of a problem and has now latched onto concepts such as financial inclusion and data transparency to justify its existence, despite far better solutions already in use. After more than thirteen years of development, it has severe limitations and design flaws that preclude almost all applications that deal with public customer data and regulated financial transactions and are not an improvement on existing non-blockchain solutions.
…
The catastrophes and externalities related to blockchain technologies and crypto-asset investments are neither isolated nor are they growing pains of a nascent technology. They are the inevitable outcomes of a technology that is not built for purpose and will remain forever unsuitable as a foundation for large-scale economic activity.
Frankly, this whole letter bums me out. Over the years I’ve spent a decent amount of time on Twitter calling out cryptocurrency shills who spout technical nonsense while promoting outright confidence games. I took for granted that my technical colleagues would be more a little more reasonable, particularly when speaking as technical experts to Congress and regulators. This is not simply someone “being wrong on the Internet.” These are important claims that deserve serious attention, and there are real consequences to being wrong here.
So while I appreciate the authors’ intentions, against my better judgement — and you’d better believe my better judgement is shouting at me for writing these words — I feel compelled to say something in defense of this technology area. “Public blockchain” technology enables many stupid things: today’s cryptocurrency schemes can be venal, corrupt, overpromised. But the core technology is absolutely not useless. In fact, I think there are some pretty exciting things happening in the field, even if most of them are further away from reality than their boosters would admit. Moreover, many of crypto’s technical problems are also amenable to some really exciting technical solutions, many of which are already here or on their way to deployment.
Objection: “Cryptocurrency is terrible for the environment”
It’s probably best not to beat around the bush on this one: the most serious current objection to cryptocurrency (as it’s currently construed) is the massive environmental impact of proof-of-work (PoW) mining. I won’t devote a single second towards minimizing this concern. Many defenders have tried to paint the electricity consumption of Bitcoin and other PoW currencies as “green” or define it as a form of energy storage. This is dishonest nonsense: estimates hold that at east 60% of mining energy consumption still comes from fossil sources.
And that’s a lot of energy.
The totals depend on which smallish nation we’re using as our standard unit of energy consumption: this September 2021 NYT article has Bitcoin (all by itself) consuming nearly as much energy as Finland. Yet whereas Finland produces Nokia cellphones and lovable wooden clogs, Bitcoin just produces… bitcoin. Not to mention a pathetic transaction rate of about 3.5 tx/second across the entire globe, as of this week.
Regardless of where you stand on cryptocurrency as a technology, you should understand that this wasteful resource consumption colors the public’s views of cryptocurrency in a highly negative way, and it is absolutely right for people to have these feelings because we are in a climate crisis and wasting this much goddamn energy on a single consensus protocol is pointless, harmful, and quite possibly evil — particularly when the result of all this energy consumption isn’t even a particularly decentralized network.
However: before you call for some kind of misguided cryptocurrency ban, you should understand that this is a temporary situation and not an intrinsic component of public blockchain technology.
Proof-of-work was chosen early in Bitcoin’s history because Bitcoin was designed to be operated by volunteers with personal computers.
Unfortunately modern proof-of-work mining looks nothing at all like the early Bitcoin network: today’s mining is a capital-intensive industry that competes to build entire datacenters full of specialized ASIC-based mining hardware. This change has undone most of the early decentralization benefits, while pointlessly burning tons of coal and natural gas.
But all is not lost.
Proof-of-work is not the only technology we have on which to build consensus protocols. Today, many forward-looking networks are deploying proof-of-stake (PoS) for their consensus.
Proof-of-stake systems are not perfect: they still lead to some centralization of power, since in this paradigm the rich tend to get richer. However it’s hard to claim that the result will be worse than the semi-centralized mess that proof-of-work mining has turned into.
And proof-of-stake is no longer theory. It’s already been deployed in production within a number of successful projects, including Avalanche, Cardano, Algorand, and Tezos. The Ethereum project is in the process of rolling out a proof-of-stake upgrade they call “Ethereum 2”
Now, admittedly: none of this solves the problem that much cryptocurrency is dirty today.
But the question we should be asking is not whether to be angry about the power consumption of proof-of-work mining. We should be trying to figure out the right path out of this mess. And more concretely, whether there’s a path forward which is more likely to produce a good outcome than what is already happening in the industry — namely, that projects are rapidly deploying cleaner technologies to replace proof-of-work.
Because it’s very unlikely that shade or hypothetical cryptocurrency bans are going to fix the problem any faster, and in fact: government overreaction could make it much, much worse by driving resources away from the cleaner chains that are coming online to solve the problem.
Objection: “Public blockchains can never support banking features like transaction reversal.”
One of the biggest problems in the field of cryptocurrency is that too many technical experts stopped looking at the field around 2015. This means they’ve missed a lot of the more interesting developments that have occurred in the past couple of years.
To give an example of this phenomenon, let’s take one claim that occurs very near the top of my colleagues’ letter:
This claim is not technically accurate. And worse, it indicates that the readers have missed several years’ of business and technological development. Unfortunately, correcting mistakes like this requires diving pretty deep into the technical weeds.
Blockchains work by assembling a data structure called an append-only ledger. Much like a traditional pen-and-paper bank ledger
A common feature of blockchain tech is that the ledger is constructed using a kind of “adversarial collaboration” that runs between many different computers. The upshot of this process is that entries on the ledger are very difficult to tamper with.
In the earliest cryptocurrency systems (like Bitcoin), the ledger is used to record the ownership and transfer of made-up tokens, such as the bitcoin currency. Since there is no trusted party or “bank” that manages the accounts on these systems, Bitcoin’s transaction rules are very simple and work like cash. If I sent money to your account, only you (using a cryptographic private key) should be able to control where it goes next. This is exciting and also a bit scary: there is no “undo” feature in these cash-like tokens.
By contrast, the modern retail-facing credit card and banking industries work very differently. In those industries there exist trusted parties (your bank or credit card’s customer-service representative) who can and do “reverse” fraudulent or mistaken transactions under specific circumstances. (Whether they will do so is a very different question.)
While it’s technically accurate that blockchain ledgers cannot easily be overwritten, it’s critical to understand that ledgers really has nothing really to do with transaction reversibility — any more than the specific writing instrument used by a historical bank (pen vs. pencil) determines whether a bank can reverse transactions. In practice, transaction reversal has nothing to do with the way a ledger is written. Transaction reversal is not about ledger technology, it’s about transaction rules and trust: it requires that there is someone that you trust to make transaction in your accounts without your explicit permission.
In other words, transaction reversibility is not about the ledger, but rather about the transaction rules that a currency uses. A reversible currency requires that someone anoint this trusted party (or trusted parties) and that they use their powers to freeze/burn/transact currency in ways that are at odds with the recorded owners’ intentions. And indeed, this is a capability that many tokens now possess, thanks to the development of sophisticated smart contract systems like Ethereum, that allow parties to design currencies with basically any set of transaction rules they want.
And what’s fascinating is that none of this is hypothetical!
One of the most interesting developments of the past several years is the deployment of several government-regulated “stablecoins” that represent tokenized versions of real fiat currency (e.g., dollars) in a bank account. More or less without exception, these regulated currencies, which are issued by licensed and government-regulated organixations like USDC and BUSD (and are not the same as unregulated algorithmic scam coins like UST) each possess a centralized party/committee that can “freeze”, mint, or “burn” money owned by any user in the system [BUSD code, USDC code]. A centralized manager of the currency can therefore “lock” the account of any illegitimate recipient and compensate the spender directly, or in some cases, the centralized manager can “burn” and mint new currency to send back to the originator.
It is reasonable to point out that, compared to mature banking systems, current stablecoins’ transaction reversal capabilities are quite rudimentary.
Some of these are technical capabilities, but many are largely business questions. In either case, none are “antithetical to the design of public blockchains.” If reversibility is actually important to you as a feature, then you should pay attention to how these new regulated systems develop.
Objection: “Cryptocurrency doesn’t scale [or the fees are too damned high]”
The early Bitcoin protocol was designed to be many things, but fast and efficient was not one. The system’s famously low transaction rate is effectively the result of several tradeoffs in the design of the network’s consensus algorithm: where centralized payment systems like Visa or Mastercard can scale horizontally — by assigning different computers to handle various subsets of user transactions — in Bitcoin (and Ethereum, and most other extant platforms) every single participating node must validate every single transaction made by anyone in the system. This means that simply adding more computing power doesn’t produce a faster network.
The result is pretty dismal. Bitcoin’s transaction rate has historically topped out around 7 tx/sec worldwide (although recent upgrades may improve things slightly.) Ethereum pulls off maybe 20-30 tx/sec by sailing a bit closer to the wind. Meanwhile: networks like Visa handle about 1700 tx/sec on an ordinary day (!), and 10x that rate on major holidays.
This scaling problem makes cryptocurrency unworkable for just about any mainstream payments application. A single popular mobile game like Candy Crush probably conducts enough in-game transactions to challenge the Ethereum network.
And because the transaction rate in these so-called Layer 1 (L1) cryptocurrency networks is so low, competition for scarce network resources translates into high transaction fees. That’s why it recently cost $22 (!) to send a single token transaction on Ethereum, and much more to handle sophisticated transactions like DeFi swaps. These prices are fine if you’re a crypto speculator doing $1,000+ trades. But they rule out anything as mundane as paying people.
This sounds pretty bad. However, an important lesson I’ve learned in my career is this: if people are sufficiently motivated and the only barrier is an engineering problem, then it’s probably wise not to bet against them.
With some exceptions, the cryptocurrency community has acknowledged that existing techniques are unscalable, and they are engineering to try to get around this. The result has gone in two different directions. Both are unproven, and the resolution of these developments will determine exactly how well the field can grow in the future.
More money, more networks. The most obvious way to scale L1 cryptocurrencies is just to build more of them.
This might stave off total chaos, but it probably isn’t sustainable. Even if all these networks work perfectly — and that’s a big assumption — the problem with adding more networks is that your ecosystem fragments. If funds are on the Ethereum chain and you want to use an application that lives on a different network, how do you get your funds over there? The solution today mainly involves “bridges” — semi-centralized parties that will accept your money on one L1 network and provide you with funds on another.
Rollups. The second approach, heavily promoted by the Ethereum Foundation, is to improve the scaling of individual L1 networks like Ethereum by performing transactions on some second-layer, with the most common proposal being a “rollup server.”
Rollup servers are centralized machines that can validate many transactions quickly. One rollup server doesn’t handle every payment or smart contract on the chain. Instead, it operates over one or a small number of applications (say, a few specific smart contracts.) Users submit their transactions either to the chain itself, or directly to the server, which then validates the transactions and posts a short “proof” to the L1 chain asserting that a large collection of transactions has been checked and found to be valid. The idea here is to reduce the amount of computation and storage that the L1 nodes must perform to check these transactions: rather than validating 10,000 individual transactions, the L1 nodes simply verify one short assertion posted by the rollup server.
Rollups sound like a terrific idea, and the Ethereum community has bet heavily on the tech. But it’s worth pointing out that in practice nobody knows how well things will actually bear out when these systems are in widespread deployment.
One problem is that rollups today are largely focused on reducing the computational burden of verifying transactions. This is a big deal, particularly for Ethereum where verifying complex smart contract executions is quite costly. But even with today’s rollups, L1 nodes are still expected to store and transmit the raw transaction data: without keeping these transactions around, the loss of a rollup server could freeze an entire smart contract in place, blocking any further progress. This means scaling bottlenecks still exist — they’ll just be hit when nodes run low on bandwidth and storage, rather than compute.
That’s still a potentially huge improvement and many folks are optimistic: Vitalik Buterin calculates maximum possible scaling improvements on the order of 100x for rollup servers, though he quickly tempers this calculation by noting practical concerns.
In any case, the point of this section is not to claim that scaling is a solved problem. Rather, the point here is that scale improvements are on the minds of a lot of smart engineers, and there are solutions on the way.
Objection: “There is no privacy on blockchains (or there is too much privacy)”
Public blockchains rely on volunteers to operate a network that verifies transactions. The implication of this design is that the transaction data itself must be publicly viewable. While a few naive people still believe that these currencies anonymous, the truth is quite different: these older public chains expose your transactions to anyone who wants to see them. In those systems, your main protection is that transactions use a pseudonym (called an address) in place of your real identity.
Some advocates once felt that pseudonymity was good enough for privacy, but this belief has receded a bit as sophisticated “chain analysis” companies have grown up and made progress towards identifying the real owners of various accounts. The lack of privacy on these systems poses a real challenge for those who would like to build financial infrastructure on public chains.
The good news is that researchers have made a lot of progress on solving privacy problems around cryptocurrency. We now have deployed privacy tech that allows users to conduct transactions on public blockchains without revealing any information that they do not wish to reveal.
So why do I care about any of this?
To put it simply: because payments are important. And because something is badly wrong.
Over the past four decades, computer networking has radically changed the economics of just about every industry that relies heavily on IT. Google made information access so easy that we can barely remember the world before it existed.
And yet if you looked at the money-transfer and payments industry, you’d see no such changes. Credit card merchant fees are similar, or have actually risen in the United States since the 1990s, and that is an absolute tragedy — since these fees are baked into the cost of most retail goods and thus fall heavily on the working poor (who pay them even if they use cash.)
If all you care about is technology, consumer payment tech has improved at a glacial pace. It took nearly two decades to roll out anti-fraud improvements like EMV chipchards and tap-to-pay (NFC) in the US. Shopping online in 1995 meant typing credit card numbers into webforms. In 2022… it mostly means exactly the same thing. As a result, online payment fraud has ballooned to around $200bn in 2020.
Why are these IT-focused industries so consistently immune to the same technological improvements and cost reductions we see everywhere else?
. I can only tell you that what we have right now is not functioning properly: I suspect that legacy industry and regulators have smothered two generations of technological improvement, largely (I suspect) by building a (mostly) closed and permissioned financial system. And this is a big deal: payments are too important to our economy to entrust them to 1970s-era technology and an extractive industry. We don’t even know what novel applications — Googles, Facebooks, Wikipedias, Instagrams — we’re missing out on because the industry simply won’t allow them to exist.
I don’t know if blockchains are the solution to this problem. I see indications that the technology is finally starting to grow up in ways that seem like a harbinger of major positive changes on the horizon. Progress here is slow
And maybe the result won’t even be a success for blockchain solutions: perhaps we’ll simply get more and better offerings from “traditional finance” industry as they start to wake up to the fact that more open systems can compete with their closed offerings.
So while I don’t know if cryptocurrency will be the answer, I’m just hopeful that something will be.
Letter in Support of Responsible Fintech Policy
https://concerned.tech/
Tomi Engdahl says:
Bloomberg:
Some Ethereum miners express reservations about the planned shift to a proof-of-stake model, arguing it makes expensive mining equipment useless
Ethereum Mining Is Going Away, and Miners Are Not Happy
https://www.bloomberg.com/news/articles/2022-06-16/ethereum-mining-tweak-renders-some-crypto-tech-worthless#xj4y7vzkg
The shift from proof-of-work to proof-of-stake will cut power consumption sharply—and leave some expensive technology searching for new uses.
The Ethereum mining community is a diverse bunch, geographically and demographically. There’s a 28-year-old translator in Ukraine, running computing hardware on his balcony to earn cryptocurrency so he can buy clothing and other necessities. In Argentina, a retiree uses her gaming PC to double her monthly pension. A college student in Canada has mined enough to buy a BMW motorcycle and a modified 2006 Dodge Charger SRT—and pay for gas every month.
Tomi Engdahl says:
https://techcrunch.com/2022/06/16/as-crypto-selloff-accelerates-how-much-worse-can-things-get/?tpcc=tcplusfacebook
Tomi Engdahl says:
Is it just us or does mining 10 bitcoin a day not sound like much for a cryptocurrency megacorp?
By Katie Wickens published 10 days ago
https://www.pcgamer.com/is-it-just-us-or-does-mining-10-bitcoin-a-day-not-sound-like-much-for-a-cryptocurrency-megacorp/
Yeah, that still works out as just shy of $300K worth of bitcoin each day but, considering recent crypto crashes, can this really be sustainable?
Update: We previously suggested that the company may be experiencing ‘theoretical’ losses. After which, Hut 8 got in contact with us explaining “Our financial results(opens in new tab) demonstrate that Hut 8 is not experiencing “theoretical losses” either “massive” or otherwise, as we continue to be profitable.”
Tomi Engdahl says:
Kryptokupla puhkesi? Lähes kaikki lupaukset on rikottu
Janne Laakso15.6.202218:01KRYPTOVALUUTATBITCOINLOHKOKETJU
Nousukauden huumassa kryptovaluuttaintoilijat lupailivat paljon, mutta yhtä valtaisaa romahdusta myöhemmin asiat näyttäytyvätkin eri valossa.
https://www.tivi.fi/uutiset/tv/93a2b010-d193-43bc-a7dc-33ad03ce5bd6?ref=newsletter:6bad&utm_source=Tivi_Uutiskirje_ilta&utm_medium=email&utm_campaign=Tivi_Uutiskirje_ilta
Kryptovaluutat ovat jo pidemmän aikaa käyttäytyneet lähinnä maanvyöryn tavoin. Bitcoin on loppusyksyn huippulukemista pudonnut alle kolmannekseen, eikä muilla virtuaalivaluutoilla juuri paremmin ole mennyt. Blogaaja Rukshan Ranatunge on kirjoituksessaan eritellyt, mitkä asiat ovat kryptoissa menneet pieleen.
Cryptocurrencies Have Broken Almost All Of Their Major Promises
Randoms, Web3
https://ruky.me/2022/06/14/cryptocurrencies-have-broken-almost-all-of-their-major-promises/
The crypto market has not been kind to “investors” lately. The market has been near free-fall, and within the first quarter of the year, we’ve seen so many things going south about cryptocurrencies, and it seems almost all the promises that BitCoin and cryptocurrencies promised were a lie. So what are these promises that cryptocurrencies have failed to deliver?
Cryptocurrencies are inflation resistant
The crypto market, in general, has been pushing the ideology that BitCoin and other cryptocurrencies are immune to inflation. And what good time to test this hypothesis when the US inflation is at a 40-year high?
One of the reasons for the cryptocurrency near-nose dive is that US inflation is at an all-time high. People are selling high-risk assets such as cryptocurrencies and stocks in favor of classical assets with little risks attached, such as gold.
The reason that crypto is currently not immune to inflation is that people are still not considering them as currencies but instead considering them as an asset, in fact, a very risky, high volatile assets..
Even though cryptocurrencies have the word ‘currency’ at their end, I don’t think people will consider crypto as a real currency anytime soon. How many of you have purchased anything using cryptocurrency? And instead of holding on to them or day-trading them as you do with stocks?
Stable coins are anything but stable
Since BitCoin and other cryptocurrencies are volatile, people wanted to back these coins with real-world currencies or assets such as the US dollar. Some of these stable coins are backed by US dollar assets, while some are algorithmic stable coins. This means that there are two cryptocurrencies used to maintain value at a steady rate by the supply and demand to the investors and use an algorithm to maintain their value at a constant state.
Even though this algorithmic stable coin value is pegged to a real-world currency, they are not backed by real-world assets.
Stable coins are a great way to make cross-border transactions without involving a third party. And you don’t have to worry about the value appreciating or depreciating after the transaction. As it happens with Bitcoin and other non-stable cryptocurrencies, the amount you paid/sent can be different by the time the recipient receives it.
However, the recent crash of the Terra and Luna network, and how USDT came to a near collapsing a few weeks ago shows that these stable coins are anything but stable. And are like a house of cards waiting to collapse at any given time.
No algorithmic stable coin has been able to succeed up to now and according to some there is no way for a algorithmic stable coin to maintain its value longterm because of the design.
Sometimes all it takes is one leaked document, one shake in the market to create a domino effect on all the cryptocurrencies and for the weaker ones to collapse.
No one can regulate cryptocurrencies
This idea that a central entity can’t regulate cryptocurrencies is pushed around by crypto enthusiasts. However, governments are trying to bring regulations into cryptocurrencies and stable coins.
China has banned mining cryptocurrencies. Congress is looking forward to bringing a bill to regulate stable coins and cryptocurrencies.
SEC wants cryptocurrency exchanges and DAOs to be registered, to protect investors. Before you know it, the crypto market is regulated just like any other asset.
Smart contracts are just as safe as a normal contract
In the term “smart contract”, the word “contract” implies or assures people that they are legally binding contracts. But, they are anything but legally binding.
Bugs and exploits in these smart contacts have yielded millions of dollars worth of crypto assets getting stolen, and there is nothing one can do about it. In 2021 scams, hacks, and rug pulls have stolen roughly 14 billion from users.
Where and how crypto currencies might succeed?
For cryptocurrencies to succeed, they need to gain the trust of the majority outside of the tech/crypto communities. Businesses need to trust cryptocurrencies. There should be a way to easily and quickly transfer assets from one person to another. And everyone has to accept and use cryptocurrencies as true currency instead of an asset like you trade in the stock market.
There should be a way to prevent rug pulls, or a way for the affected to get their lost assets back. Otherwise, people will be resistant to adopting cryptocurrencies and using them.
If there is enough trust, it will be easy to send money from one region to another without any restrictions and regulations.
Web 3 and the decentralized web are other great frontiers for cryptocurrencies. Cryptocurrencies and tokens can be the keys to accessing a decentralized web and web3 applications. And the decentralized web is a great workaround when it comes to censorship and central silos.
These are just a few use cases, but there are so many, specially the underlying blockchain technology has its use cases too.
Tomi Engdahl says:
Wallet That Helped Trigger UST Implosion Linked by Analysis Firm to Terra Developer
https://www.coindesk.com/tech/2022/06/17/wallet-that-helped-trigger-ust-implosion-linked-by-analysis-firm-to-terra-developer/
The popular decentralized stablecoin lost its dollar peg and fell to pennies in May. A South Korean blockchain analysis firm suggests the death spiral was sparked by transactions from a wallet linked to the lead Terra developer – though any motivation or rationale remains a mystery.
Tomi Engdahl says:
Crypto Traders Turn Against Each Other in a Collapsing Market
With profits scarce, attacks on trading positions can pay off
One trader gets liquidated, another gets a liquidation fee
https://www.bloomberg.com/news/articles/2022-06-17/crypto-traders-turn-against-each-other-in-a-collapsing-market?utm_campaign=socialflow-organic&utm_medium=social&utm_content=business&utm_source=facebook&cmpid=socialflow-facebook-business#xj4y7vzkg
Tomi Engdahl says:
Economists and bankers tell CNBC they aren’t worried about the crypto sell-off hurting the broader U.S. economy.
Why the $2 trillion crypto market crash won’t kill the economy
https://www.cnbc.com/2022/06/18/why-the-2-trillion-crypto-market-crash-wont-kill-the-economy.html?utm_term=Autofeed&utm_medium=Social&utm_content=Crypto&utm_source=Facebook#Echobox=1655555850
KEY POINTS
Economists and bankers tell CNBC they aren’t worried about the crypto sell-off hurting the broader U.S. economy.
“People don’t really use crypto as collateral for real-world debts. Without that, this is just a lot of paper losses. So this is low on the list of issues for the economy,” said Joshua Gans, an economist at the University of Toronto.
Carnage in the crypto market won’t let up, as token prices plummet, companies lay off employees in waves, and some of the most popular names in the industry go belly up. The chaos has spooked investors, erasing more than $2 trillion in value in a matter of months — and wiping out the life savings of retail traders who bet big on crypto projects billed as safe investments.
The sudden drop in wealth has stoked fears that the crypto crash might help trigger a broader recession.
The crypto market’s sub $1 trillion market cap (which is less than half that of Apple’s) is tiny compared to the country’s $21 trillion GDP or $43 trillion housing market. But U.S. households own one-third of the global crypto market, according to estimates from Goldman Sachs, and a Pew Research Center survey also found that 16% of U.S. adults said they had invested in, traded, or used a cryptocurrency. So there is some degree of national exposure to the deep-sell off in the crypto market.
Then there’s the whole mystique around the nascent crypto sector. It may be among the smaller asset classes, but the buzzy industry commands a lot of attention in popular culture, with ads on major sporting championships and stadium sponsorships.
That said, economists and bankers tell CNBC they aren’t worried about a knock-on effect from crypto to the broader U.S. economy for one big reason: Crypto is not tied to debt.
Gans says that’s a big part of why the crypto market is still more of a “side show” for the economy.
No debt, no problem
The relationship between cryptocurrencies and debt is key.
For most traditional asset classes, their value is expected to stay moderately stable over some period of time. That is why those owned assets can then be used as collateral to borrow money.
“What you haven’t seen with crypto assets, simply because of their volatility, is that same process by which you’re able to use it to buy other real world assets or more traditional financial assets and borrow off that basis,” explained Gans.
There are exceptions — MicroStrategy took out a $205 million bitcoin-backed loan in March with the crypto-focused bank Silvergate — but for the most part, crypto-backed loans exist within an industry-specific echo chamber.
“There’s certainly been banks and other financial institutions, which have expressed interest in crypto as an asset and as an asset that they might like their customers to also be able to invest in, but in reality, there isn’t that much of that investment going on,”
Tomi Engdahl says:
Is One of the Biggest Crypto Lenders on the Brink of Bankruptcy?
https://www.thestreet.com/investing/cryptocurrency/is-one-of-the-biggest-crypto-lender-insolvent-a-rival-thinks-so
Celsius Network has suspended the withdrawals and other transactions. Nexo, another crypto platform, has just made an offer to buy its assets.
Fuzziness reigns in the crypto planet.
Is crypto lender Celsius Network insolvent?
On the night of Sunday to Monday, the firm announced that it would suspend indefinitely various transactions, including withdrawals of funds, without explaining what had caused such an extreme decision
“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts,” the company said in a memo published in Medium. “We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.”
Tomi Engdahl says:
Tesla’s Bitcoin Bet Turns into a Nightmare
The electric vehicle manufacturer had invested $1.5 billion in Bitcoin in 2021.
https://www.thestreet.com/investing/cryptocurrency/teslas-bitcoin-bet-turns-into-a-nightmare
The list of victims of the Bitcoin and cryptocurrency crash continues to grow every day. Tesla (TSLA) – Get Tesla Inc. Report, the manufacturer of electric vehicles is now part of it.
Elon Musk’s company had invested $1.5 billion in Bitcoin on February 8, 2021. This investment lost a lot of value as cryptocurrency prices plummeted. Bitcoin has fallen and is currently trading at its lowest level since December 2020.
Bitcoin is at $22,499.99, compared to $69,044.77 reached last November. In eight months, Bitcoin has lost 67.5% of its value.
This fall caused important losses to Tesla.
The value of the 43,200 bitcoins that the group has on its balance sheet is now only $968.103 million, according to Bitcoin Treasuries. Tesla has already lost around $530 million.
Besides Tesla, billionaire Michael Saylor’s software company MicroStrategy (MSTR) – Get MicroStrategy Incorporated Report has also seen its Bitcoin investment lose a lot of value.
The company has 129,218 bitcoins on its balance sheet, purchased at a value of $3.97 billion. But that value has melted down to $2.895 billion. Basically MicroStrategy lost over a billion dollars.
Finally, the other big name to have invested in Bitcoin is Block (SQ) – Get Block Inc. Class A Report, Jack Dorsey’s fintech, formerly known as Square. The firm holds 8,027 bitcoins purchased at $220 million. They are now only worth $179.883 million, according to Bitcoin Treasuries.
Block lost nearly $40 million.
Tomi Engdahl says:
Magic Eden now becomes the third NFT marketplace to achieve unicorn status alongside $13 billion OpenSea and $7 billion LooksRare.
https://www.forbes.com/sites/mariagraciasantillanalinares/2022/06/21/billion-dollar-nft-marketplace-magic-eden-raises-130-million-as-the-crypto-winter-deepens/?sh=663357be59f9&utm_medium=social&utm_source=ForbesMainFacebook&utm_campaign=socialflowForbesMainFB
Tomi Engdahl says:
https://cryptopanic.com/news/15549105/Crypto-market-turns-green-as-nearly-70-billion-inflows-in-24-hours?utm_source=notifications&utm_medium=facebook&utm_campaign=Facebook%20Trending
Tomi Engdahl says:
Cloudflare outage hit crypto exchanges FTX, Bitfinex and more
https://techcrunch.com/2022/06/21/cloudflare-outage-crypto-exchanges/?tpcc=tcplusfacebook
Tomi Engdahl says:
The get-rich-quick days of crypto are over. Investors are losing their shirts, but industry players say this is healthy
https://sg.finance.yahoo.com/news/rich-quick-days-crypto-over-130000853.html?guccounter=1&guce_referrer=aHR0cDovL20uZmFjZWJvb2suY29tLw&guce_referrer_sig=AQAAAJtzfMk3en4wJ86HgkE29Y3pJViWRyT-l9cwdt0CFlzo2O_4YhTXolryfCosD1mBC2L7xwXAesTHD7U3mIv4Ok16nDTDMPLp47Rklu6EAtUvLHr26hbhm1W3vHRwZ3qM-MfUl7YazY7xiHgXIpATdUq1p6X3U0TVg0ptARhbl3gP
It seemed like there was nowhere to hide in the crypto market this week.
Forced selling and liquidity troubles have “resulted in one of the worst quarterly price performances of the crypto space,” Lucas Outumuro, head of research at IntoTheBlock, wrote Friday in his newsletter.
“Overall, this week concludes a historic crash for crypto. We have witnessed record-level activity in multiple metrics as mayhem ensues throughout the market,” Outumuro wrote. “While it may still be too early to call the bottom, there are some evident similarities with previous bear markets.”
Tomi Engdahl says:
Elon Musk says SpaceX will accept Dogecoin for some merchandise, though the crypto is down 90% from all-time high
https://www.marketwatch.com/story/elon-musk-says-spacex-will-accept-dogecoin-for-some-merchandise-though-the-crypto-is-down-90-from-all-time-high-11655824820?mod=dist_amp_social&link=sfmw_fb&redirect=amp
Dogecoin has jumped 13% over the past 24 hours on Tuesday to around $0.068, after Elon Musk reiterated his support for the meme coin, even though the crypto has lost more than 90% of its value from its all-time high in May 2021.
Musk, chief executive at both Tesla TSLA, 11.81% and SpaceX, said Tuesday that SpaceX will accept Dogecoin DOGEUSD, 12.26% for some merchandise, after Tesla made a similar move in January
Tomi Engdahl says:
A crypto lending app tried to take over a ‘whale’ account to stop it from collapsing the system
https://www.cnbc.com/2022/06/20/users-of-defi-app-solend-block-attempt-to-take-over-whale-account.html?utm_term=Autofeed&utm_medium=Social&utm_content=Crypto&utm_source=Facebook#Echobox=1655791173
KEY POINTS
Solend, a lending platform built on the Solana blockchain, tried to gain control of a so-called “whale” account which it said was putting the protocol at risk.
It’s an unprecedented move in world of DeFi, which aims to recreate lending and other financial services without the involvement of intermediaries like banks.
Solend’s users have since voted to block the move.
Decentralized finance platforms are going to extreme lengths to limit the fallout from a sell-off in cryptocurrencies.
Solend, a lending platform built on the Solana blockchain, tried to gain control of its largest account, a so-called “whale” investor that it said could significantly influence market movements.
What is Solend?
Solend is a DeFi app that lets users borrow and lend funds without having to go through intermediaries.
Solend said a single whale is sitting on an “extremely large margin position,” potentially putting the protocol and its users at risk. “In the worst case, Solend could end up with bad debt,” the firm said. “This could cause chaos, putting a strain on the Solana network.”
The account concerned had deposited 5.7 million sol tokens into Solend, accounting for more than 95% of deposits. Against that, it was borrowing $108 million in the stablecoins USDC and ether.
On Sunday, Solend passed a proposal granting it emergency powers to take over the whale account, an unprecedented move in the DeFi world.
Solend said the measure would allow it to liquidate the whale’s assets via “over-the-counter” transactions — as opposed to on-exchanges trades — to avoid a possible cascade of liquidations.
DeFi apps under strain
The move led to a backlash on Twitter, with some questioning Solend’s decentralization. One of DeFi’s core tenets is that it’s meant to do away with centralized institutions like banks.
The debacle is a sign of how DeFi — a kind of “Wild West” where users take it on themselves to conduct trades and loans peer-to-peer — has gotten caught up in the crypto meltdown.
MakerDAO, the creator of a dollar-pegged stablecoin called DAI, recently disabled a feature that allowed traders to borrow DAI against staked ether, a derivative token causing mayhem in the crypto market.
StETH is meant to be worth the same as ether, but it’s been trading at a widening discount to the second-biggest cryptocurrency. Moving in and out of stETH isn’t easy, and that’s resulted in liquidity issues at large crypto lenders and hedge funds like Celsius and Three Arrows Capital.
Tomi Engdahl says:
Mack DeGeurin / Gizmodo:
A DARPA report finds blockchains are vulnerable to “unintended centralities”, such as powerful new crypto miners, that could pervasively affect their security — The report points to a handful of, “unintended centralities,” it argues could concentrate blockchain power in the hands of a few select individuals or groups.
Blockchains Vulnerable to Centralized Control, DARPA Report Finds
https://gizmodo.com/blockchains-vulnerable-to-centralized-control-darpa-fi-1849088882?scrolla=5eb6d68b7fedc32c19ef33b4
Researchers at the gonzo Pentagon research agency responsible for introducing the world to stealth bombers, insect-sized surveillance drones, and the internet itself have some reservations about the blockchain technology underpinning Web3.
A newly released report commissioned by the Defense Advanced Research Project (DARPA) titled “Are Blockchains Decentralized?” found key vulnerabilities potentially capable of jeopardizing blockchain tech’s supposed “decentralized” ethos.
The report, conducted in partnership with the research firm Trail of Bits, specifically points to a handful of, “unintended centralities,” that the authors argue can potentially concentrate blockchain power in the hands of a few select individuals or groups. Those unintended centralities range from powerful new cryptocurrency miners and outdated computers vulnerable to attacks, to a select cohort of internet service providers responsible for handling Bitcoin traffic.
The authors notably don’t discover exploits or weaknesses of blockchain’s lauded cryptography (those are actually described as “quite robust”—at least until quantum computing becomes a great reality). Instead, they dig up issues by “subverting the properties of a blockchain’s implementations.”
“We believe the risks inherent in blockchains and cryptocurrencies have been poorly described and are often ignored—or even mocked—by those seeking to cash in on this decade’s gold rush,” the authors said in a statement.
DARPA reportedly engaged Trail of Bits over the course of the past year and asked the firm to examine the fundamental properties in blockchains and potential security risks associated with them. The timing of the report’s release comes amid a historic hemorrhaging of value in Bitcoin and other cryptocurrencies that’s left many in the space rattled.
Nearly two-thirds (60%) of all Bitcoin traffic travelled through just three ISPs over at least the past five years, according to the report. Additionally, around half of all Bitcoin, traffic was reportedly routed through Tor. If so inclined, Trail of Bits CEO Dan Guido said in an interview with NPR, those providers could potentially possess the ability to “rewrite history” by restricting certain transactions and preventing Bitcoin from changing hands altogether.
“Let’s say somebody with great top-down control of the internet in their country starts to interfere with that network,” Guido said. “By slowing down or stopping legitimate blockchain traffic, an attacker could become the ‘majority’ voice in the consensus of what’s written to a blockchain at that moment.”
Then there’s the issue of outdated software. According to the report, around 21% of Bitcoin nodes are running an old version of a Bitcoin core client that’s vulnerable to attacks. Trail of Bits says “overt software changes” can actually modify the state of a blockchain which in turn makes the developers of blockchain software a centralized point of trust in the system uniquely vulnerable to attacks.
“This choice is not simply about the convenience of delegating management to a third party; it is about whether one trusts a centralized third party versus one’s own security hygiene and the developers of one’s non-custodial wallet,” the authors write.
The DARPA-commissioned report’s warnings around unintended crypto centralization partly echoes recent claims voiced by prominent Web3 naysayers. Possibly the biggest name in the “Web3 isn’t what you think it is” crowd is Block CEO and former Twitter king Jack Dorsey. Dorsey has spoken critically of venture capitalists’ involvement in Web3 companies even going as far as to call the supposed new era of the internet, “ultimately a centralized entity with a different label.”
Signal founder Moxie Marlinspike has similarly spoken out against what he sees as weaknesses in Web3 infrastructure that are in effect acting to centralize a supposedly decentralized system.
“Once a distributed ecosystem centralizes around a platform for convenience, it becomes the worst of both worlds: centralized control, but still distributed enough to become mired in time,” Marlinspike wrote in a widely circulated essay earlier this year. “I can build my own NFT marketplace, but it doesn’t offer any additional control if OpenSea mediates the view of all NFTs in the wallets people use (and every other app in the ecosystem).” For his part, Dorsey’s actually already moving on to what he views as a more decentralized “Web5,” era, somehow skipping the Web4 jargon altogether
Still, Web3 believers like Swan co-founder Yan Pritzker aren’t necessarily sold on the criticisms outlined in the recent DARPA-backed report.
“They’re basically doing endgame research,” Pritzker told NPR “Their game is, ‘how do we get better control of the currency,’ and ‘how do we build better systems for our control of the currency’.” Of course, even a theoretical strategy for a government to control cryptocurrency would undermine the promise of blockchain tech that proponents have spent years pushing.
Are Blockchains Decentralized?
Unintended Centralities in Distributed Ledgers
https://assets-global.website-files.com/5fd11235b3950c2c1a3b6df4/62af6c641a672b3329b9a480_Unintended_Centralities_in_Distributed_Ledgers.pdf
Tomi Engdahl says:
Financial Times:
South Korean prosecutors ban “dozens” of current and former Terraform Labs employees from leaving the country amid a probe into UST’s and LUNA’s collapse
https://www.ft.com/content/19c27ae1-ae72-4668-b3a9-162adc27dffc
Tomi Engdahl says:
Idan Abada’s rig looks different from the rows of whirring ASICs that have become synonymous with crypto mining.
The owner of this tiny $875 rig mines bitcoin using free electricity at Starbucks
https://www.cnbc.com/2021/07/28/bitcoin-mini-rig-875-dollars-mine-from-starbucks.html?utm_content=Crypto&utm_medium=Social&utm_source=Facebook#Echobox=1655149690
KEY POINTS
Idan Abada posted a video of himself using free Starbucks electricity to run an $875 mini bitcoin mining rig.
The post has since gone viral on TikTok, with 2.6 million views and counting.
But with today’s bitcoin prices and electricity prices in Los Angeles, he’s actually losing money.
Idan Abada is on a mission to democratize bitcoin mining. As far as he’s concerned, minting new coin isn’t just for the pros.
His message appears to be resonating with the masses.
Abada, who lives in the San Fernando Valley in Los Angeles, posted a video of himself using free Starbucks electricity to run an $875 mini bitcoin mining rig. The post has since gone viral on TikTok, with 2.6 million views and counting.
Instead, Abada’s miner is relatively simple: it consists of a multi-port USB hub, a mounted mini fan, and ten USB-sticks, each containing two Bitmain-manufactured ASIC mining chips.
“It’s one of the easiest miners to set up and run, because all you need is a computer or a laptop,” explained Abada. “It’s powered by USB, and that’s pretty much it. Everyone can become a miner and be a part of the crypto world.”
Research firm Technavio expects the overall market for global crypto mining hardware to grow by $2.8 billion from 2020 to 2024. Abada says his business has grown exponentially in the last four years, as interest in crypto has ballooned.
Abada says Bitcoin Merch sales have hit $428,000 so far this year, up 355% from 2020.
https://bitcoinmerch.com/collections/combo-deals/products/10-x-gekkoscience-newpacs-and-bitcoin-merch%C2%AE-10-port-usb-hub-combo-900-gh-s