Michael Saylor Interview on The Center Cannot Hold, a show on Bitcoin Magazine podcast.
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In this Bitcoin Magazine Interview with host Alex McShane, MicroStrategy Founder and CEO Michael Saylor discusses initially buying Bitcoin for his firm, number go up mentality vs. Bitcoin maximalism, Bitcoin as digital property, Bitcoin as energy, the human right to property, the predator-prey dynamics of Bitcoin, and his bullish future outlook.
Coming every Saturday,Hodler’s Digestwill help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.
Top Stories This Week
Binance to launch $1B fund to develop BSC ecosystem
Binance, the world’s biggest cryptocurrency exchange, announced an accelerator fund worth a whopping $1 billion this week. The funds will go toward supporting the development of the Binance Smart Chain ecosystem.
Binance outlined that the 10-figure sum will be part of a tiered development model across four specialist areas: Talent Development, the Liquidity Incentive Program, the Builder Program and the Investment & Incubation Program.
The largest benefactor of the fund is said to be the Investment & Incubation Program, which will receive around $500 million, according to Binance. The branch will focus on multichain expansion in areas such as metaverses, gaming, virtual reality and artificial intelligence.
Coinbase follows FTX and Binance in launching NFT marketplace
Coinbase announced on Tuesday that it is launching an NFT marketplace later this year. The platform will initially support tokens from the Ethereum blockchain and will be launched in the U.S. before being expanded globally.
Given that Coinbase tallied around 68 million verified users and 8.8 million monthly active users in Q2, the firm’s new NFT platform could soon mount some serious competition to giants such as OpenSea.
Evidence of this was seen after the announcement, as sign-ups for the waitlist reached almost 1.1 million people within 48 hours. In contrast, data from DappRadar shows that OpenSea has a rolling 30-day average of 261,000 active users.
G7 leaders issue central bank digital currency guidelines
The Group of Seven (G7) forum, composed of the world’s seven largest advanced economic nations, discussed a totally centralized form of digital assets called central bank digital currencies (CBDCs) this week. The meeting resulted in the endorsement of 13 public policy principles regarding their implementation.
The G7 determined that any newly launched CBDCs should “do no harm” to the central bank’s ability to maintain financial stability, suggesting that harm to individual sovereignty by tracking one’s spending habits and programming their money is on the table.
Some of the CBDC-focused policies included mandates that the digital currencies must be energy efficient and fully interoperable on a cross-border basis, along with complementing the current cash-based system.
Crypto lending firm Celsius Network raises $400M
Crypto lending platform Celsius Network raised $400 million in an equity funding round led by Caisse de dépôt et placement du Québec and WestCap. The firm said it will use the fresh capital to double its headcount to around 1,000 employees and expand its offerings and products.
“It’s not $400 million. It’s the credibility that comes with the people who wrote those checks,” Celsius Network co-founder Alex Mashinsky said in an interview with the Financial Times on Tuesday.
Another firm to close a capital raise was crypto risk management company Elliptic, which raised$60 million in Series C funding. The round was led by Evolution Equity Partners and included support from SoftBank Vision Fund 2, AlbionVC, Digital Currency Group, Wells Fargo Strategic Capital and SBI Group, to name a few.
Top engineers working on Facebook’s wallet jump ship to A16z’s crypto fund
Reports surfaced on Monday that two of the top engineers working on Facebook’s spooky digital currency project packed their bags and took a hike to venture firm Andreessen Horowitz (a16z).
The engineers who escaped the clutches of Mark Zuckerberg are named Nassim Eddequiouaq and Riyaz Faizullabhoy. The duo spent two years working on Facebook’s digital wallet dubbed Novi. Faizullabhoy will serve as the chief technology officer of a16z’s crypto division, while Eddequiouaq will take on the role of the chief information security officer.
“Andreessen Horowitz has shown an impressive dedication to advancing the entire crypto ecosystem over the past decade, and we jumped at the chance to join their premier team and provide technical support to their rapidly expanding portfolio,” Faizullabhoy said.
Winners and Losers
At the end of the week, Bitcoin (BTC) is at$60,687, Ether (ETH) at$3,817andXRPat$1.13. The total market cap is at$2.44trillion,accordingto CoinMarketCap.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Stacks(STX)at 38.94%, Perpetual Protocol(PERP)at 30.55% and Telcoin(TEL)at 24.63%.
The top three altcoin losers of the week are Arweave(AR)at -21.68%, Terra(LUNA)at -17.50% and Fantom(FTM)at -15.41%.
For more info on crypto prices, make sure to readCointelegraph’s market analysis.
Most Memorable Quotations
“Bitcoin is a lot less risky at $43,000 than it was at $300. It’s now established, huge amounts of venture-capital money have gone into it, and all the big banks are getting involved.”
Bill Miller, founder of Miller Value Partners
“I think the big difference between Ethereum and Bitcoin is that Bitcoin is a platform where the value of the ecosystem comes from the value of the currency but, in Ethereum, the value of the currency comes from the value of the ecosystem.”
Vitalik Buterin, co-founder of Ethereum
“I can say ‘I have a gold ETF or a Bitcoin ETF,’ but I’m storing that gold in my basement. Is the SEC going to allow that? Probably not. Unless companies can show they can custody it and actually address a lot of the issues Gensler specifically mentioned, it’s not going to work.”
Tad Park, founder and CEO of Volt Equity
“I’m not a student of Bitcoin and where it’s going to go, so I can’t tell you whether it’s going to $80,000 or zero. But I do believe that there is a huge role for a digitized currency, and I believe that’s going to help consumers worldwide — whether it’s a Bitcoin or something else, or more of a governmental official digital currency, a digital dollar, that will play out.”
Larry Fink, chairman of BlackRock
“We haven’t even gotten to the parabolic growth part of Web 3, which is going to create untold wealth.”
Mark Yusko, CEO of Morgan Creek Capital
“The reason I own Bitcoin is because the U.S. government and every government in the western hemisphere is printing money now to the end of time.”
Barry Sternlicht, co-founder of Starwood Capital Group
“Broadly, we’ve gone through a long period of low inflation, and we’ve got central banks experimenting in uncharted territory with very, very loose monetary policy. It’s perfectly reasonable for people to want an alternative to fiat currency.”
Bill Winters, CEO of Standard Chartered
“We’re constantly in a bubble in crypto because there’s still so much to build.”
Franklin Bi, director of portfolio development at Pantera Capital
Prediction of the Week
SEC likely to allow Bitcoin futures ETF to trade next week: Reports
Regulatory approval of a physically-backed Bitcoin exchange-traded fund (ETF) has eluded the crypto industry for years. A roundabout approach to the equation may become reality, however, with several entities seeking approval from the U.S. Securities and Exchange Commission (SEC) for a Bitcoin ETF based on futures rather than a physically-backed alternative.
Two such ETFs, the ProShares Bitcoin Strategy ETF and the Invesco Bitcoin Strategy ETF, could see the green light from the SEC during the week of Oct. 18, according to Friday tweets from Eric Balchunas, a senior ETF analyst at Bloomberg.
“Bitcoin futures ETFs said not to face any opposition at SEC, according to multiple sources confirming this (aside, I’m hearing same thing),” Balchunas tweeted along with an article from Bloomberg. “Pretty much done deal. Expect launches next week.” Balchunas said he personally thinks approval is more than 90% likely. Early in October, Balchunasmentioned 75% oddsfor Bitcoin futures ETF greenlighting in October.
The Commission, however, could also delay its decision. Cointelegraph published a separate article this week covering comments from Todd Rosenbluth, CFRA’s senior director of ETF and mutual fund research, who noted Bitcoin futures ETF approvalmay not arrive until 2022.
Meanwhile,evidence surfaced on Fridayshowing the groundwork being laid for a potential SEC approval of Valkyrie’s Bitcoin futures ETF. Shares of the ETF received registration approval on the Nasdaq by the SEC. Although the SEC could decide to postpone a ruling for this particular ETF until December, the current deadline sits on Oct. 25.
FUD of the Week
Bitmain stops shipment of Antminer crypto mining rigs into China
Top crypto mining equipment provider Bitmain closed its doors in China on Oct. 11. The firm was forced to halt operations following the Chinese government’s latest pushback against crypto and the devilish freedom it represents.
The firm said its move to halt the shipping of crypto mining rigs was part of a response to China’s carbon-neutral policies and environmental targets. However, Bitmain will continue to supply Antminer crypto mining rigs to users across the world, including those in Taiwan and Hong Kong, while the company has also upped its production capacity for its Antbox mobile mining containers.
“From October 11, 2021, Antminer will stop shipping to mainland China. For customers in mainland China who have purchased long-term products, our staff will contact them to provide alternative solutions,” Bitmain said in an announcement.
Bitcoin futures ETF will likely be delayed until 2022, says research firm CFRA
Even though Bloomberg’s Eric Balchunas noted significant possible odds for a Bitcoin futures-based ETF approval during the week of Oct. 18 (as covered above), CFRA’s Todd Rosenbluth expressed a different view earlier this week.
While he admits that a Bitcoin futures product is likely to be the first to be given the green light by the SEC, Rosenbluth asserts that the crypto sector may have to wait until next year due to the clouded regulatory environment.
The researcher also suggested that regulators could be waiting for all of these products to meet their targets so that they can be approved simultaneously to avoid a “first-mover advantage.”
Estonian regulator wants to revoke all crypto exchange licenses
On Wednesday, it was reported that Matis Mäeker, the head of the Estonian Financial Intelligence Unit (FIU), urged the Estonian government to snatch back all crypto exchange licensing in the state.
Mäeker is reportedly seeking to re-establish the regulatory landscape surrounding crypto, pushing it in a new direction. The FIU head asserted that the public is unaware of the risks inherent to the crypto industry, while pointing to the regular tropes of naughty behavior such as money laundering, terrorism financing and hacking.
He also argues that, in its current state, the Estonian crypto industry neither creates jobs for citizens nor contributes “anything significant” to the country’s tax authorities.
“These risks are very, very high. We need to react cardinally and very quickly,” he said.
Best Cointelegraph Features
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Many within and beyond the crypto industry believe that the political standoff around the debt ceiling increase makes digital assets more attractive in the long run.
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United Wholesale Mortgage (UWM) – a leading mortgage provider in the USA – has decided to stop allowing its customers to settle payments in cryptocurrencies, citing “regulatory uncertainty” in the industry as a reason.
Change of Heart
In August, the Michigan-based wholesale lender – United Wholesale Mortgage – announced that clients could pay for home loans in Bitcoin and thus became the first major US mortgage lender to adopt digital assets as a payment method. Later on, it added Ethereum and Dogecoin as options, too.
“We’re proud to be the first mortgage lender to successfully pilot this technology and further demonstrate that we’re innovating for the long term,” Mat Ishbia – President and CEO of UWM – said back then.
According to a CNBC report, though, UWM has suspended its cryptocurrency offering after only two months. Ishbia revealed that during this period, the customer demand was not on the necessary level as there was only one mortgage payment in September and five more in October settled in crypto:
“There was not enough demand at the end of the day to really push the envelope too hard.”
The lack of a regulatory framework on cryptocurrencies is another reason why the firm stopped accepting them as a means of payment.
“Due to the current combination of incremental costs and regulatory uncertainty in the crypto space, we’ve concluded we aren’t going to extend beyond the pilot at this time,” Ishbia stated.
Subsequently, the executive assured that his company will follow the developments in the digital asset space. If crypto “becomes more mainstream,” UWM could once again provide such a payment method as they “know how to do it now,” he concluded.
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Mat Ishbia, Source: uwm.com
Is Crypto Legislation That Urgent?
While many experts urged the US financial watchdogs to implement regulations on the digital asset industry, some opined that the situation should stay the way it is.
Such is Elon Musk’s opinion, for example. Last month, Tesla’s CEO advised the American government not to regulate cryptocurrencies as otherwise, the authorities could hamper their development. He went further, saying that doing nothing would be the best-case scenario:
“I would say, do nothing. I would actually say, just let it fly.”
While the crypto community awaits more regulatory developments from various watchdogs, US officials have provided encouraging news. Fed Chair Jerome Powell and SEC chief Gary Gensler recently reassured that the country has no intentions to ban digital assets, only to regulate them.
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The founder and chief executive officer of Pantera Capital says that investors can expect altcoins to outperform Bitcoin (BTC) in the long term.
In a recent edition of Pantera’s Blockchain Letter, the head of the digital asset management firm outlines Dan Morehead’s key quotes from the SALT 2021 conference in New York. During the conference, Morehead said that even though his company has greatly profited from BTC, he emphasized that most future crypto gains will come from altcoin investments.
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“My perspective is: Bitcoin has been amazing – Pantera Bitcoin Fund is up 67,000% since inception. However, I think the majority of future gains will be from tokens outside of Bitcoin. I know that sounds heretical to some people here, but that’s my professional opinion.”
Morehead compares the rise of Bitcoin and its competitors to that of the tech industry boom during the late 1990s.
“It’s like saying in 1998 that [the] majority of future tech gains would come from outside Microsoft.
At the time, Microsoft was worth $218 billion, Apple $3.5 billion, Amazon was $2.2 billion. Google and Facebook were zero – they didn’t even exist. In the years since Microsoft did great – it went up 10x. However, 80% of the tech gains in these five stocks came from outside Microsoft.
That’s the view I have here – I think BTC is going to go up a ton – like 10x. It’s a great investment…[but] I think the broader portfolio is going to outperform.”
At time of writing, BTC has a market cap of $1.156 trillion while all altcoins combined have a market cap of $1.327 trillion, according to CoinMarketCap.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
The shocking, or not shocking, revelations given by the International Consortium of Investigative Journalists, known as the Pandora Papers, has revealed the truth in what Bitcoiners have been saying for years: The current system is broken.
Over 600 journalists, from 100 countries and an equal number of news outlets, came together for two years to deliver information on the financial secrets of the powerful. As the subtitle reads: “the Pandora Papers reveal the inner workings of a shadow economy that benefits the wealthy and well-connected at the expense of everyone else.”
For those unaware, this is a trove of over 11 million documents detailing the wealth management of current and former heads of state, public officials, sports athletes, celebrities and more. Around $11 trillion dollars was revealed to be hidden in tax havens across the world, nearly 10 times bitcoin’s entire market capitalization, which skeptics would have you believe is the main arena for this type of activity.
To highlight the issue, it’s important to point to a few stories, and a notable — but not unique — one from Lebanon. Riad Salameh, former head of the Lebanese Central Bank, and Marwan Kheireddine, Lebanon’s former minister of state and chairman of Al-Mawarid Bank, appear in the investigation, one for money laundering and the other for evading taxes.
In 2019, Kheireddine blasted his political colleagues for inaction during a severe economic crisis. More than half the population was living under poverty, struggling to find food and encountering closed shops everywhere. According to the Pandora Papers, he said: “There is tax evasion, and the government needs to address that.” Not long after, as the Pandora Papers reveal, he held assets in tax havens on the British Virgin Islands.
However, Al-Mawarid Bank was one of the many banks in the country that restricted USD withdrawals from citizens during the economic panic. Something Wafaa Abou Hamdan, a 57-year-old widow, hasn’t forgotten. According to an ICIJ article, “Because of runaway inflation, her life savings plummeted from the equivalent of $60,000 to less than $5,000. ‘All my life’s efforts went in vain. I have been working continuously for the past three decades,’ she said. ‘We are still struggling on a daily basis to maintain our living’ while ‘the politicians and the bankers’ have ‘all transferred and invested their money abroad.’”
These types of revelations are not new, nor will they end. However, they shine light into the inequality of a system built by the few, for the few. Through an opaque banking system, with economic incentives carefully placed in favor of the elites, and different rules for the upper echelons, once again the world is reminded of the unfairness.
The Bitcoin community has been ringing the high alarm for years. Our current financial order is rife with antisocial behavior, and the issues put forth by the Pandora Papers only continue to confirm the injustice. There are certain allowances for positions of power, while the 99% sits back and chews its rage and frustration.
This doesn’t have to be. The internet created an immense opportunity of resistance for most of the world. We found ourselves at the intersection of instant communication and collaboration, without the need for intermediaries and endless human possibility. The digital age ushered in the age of connectivity.
On top of the internet’s rails, we have created a system of value that is perfectly positioned to push back against the vices of the incumbent system. Bitcoin has built itself to create an alternative, a haven (pun intended), a system for everybody, by everybody with everybody.
Bitcoin is one of the key components toward resisting the revelations of the Pandora Papers. It creates a system of financial transparency, where rules govern and inform and disintermediation is the norm.
While the elites play by a different set of rules, we create a different system. One where collaboration, openness, censorship resistance and equality live at the forefront. No more politicians reaping certain benefits or the 1% squeezing the system. In Bitcoin, we are all the same.
I wanted to write this piece because the Pandora Papers have been largely ignored by the Bitcoin community. While they reveal nothing new, and perhaps not enough “high-level” individuals, it brings existing problems into the open: That billions today are struggling to make ends meet, while the elites dance to the beat of the roaring twenties.
This investigation should serve as a wake-up call. Over and over, we have seen a few purge the system, while the rest are left empty-handed. We no longer must be slaves of inflation, ask for permission to use our money, or live under the tyranny of the real shadowy system.
The role of Bitcoiners is to elucidate the perspectives of the alternative system.
As the internet allowed us to instantly communicate anywhere in the world, Bitcoin is now allowing us to instantly transfer value anywhere in the world. Beyond the reach of those that guard the watchtowers of our current financial system.
Bitcoin and the Pandora Papers are intimately intertwined. While one reveals the inner workings of a covert system geared toward the 1%, the other presents an opportunity for the billions excluded and sidelined.
The internet ushered in the age of connectivity, which let us find out about the Pandora Papers. Bitcoin is building on that connection, giving us an alternative to those fed up with what was inside the box.
This is a guest post by Pedro Solimano. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
A popular cryptocurrency analyst and trader is outlining the path forward for smart contract platforms Solana (SOL) and Ethereum (ETH).
The cryptocurrency analyst pseudonymously known as Smart Contracter tells his 173,800 Twitter followers that SOL is set to surge to a new record high after a period of accumulation.
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“Sol ATH [all-time high] soon anonymous. This re accumulation won’t last forever.”
Solana, the fifth-largest cryptocurrency by market cap, is trading at $158 at time of writing, according to CoinGecko.
Earlier this week, Smart Contracter predicted that Solana could surge by over 100% against the US dollar (SOL/USD) and Bitcoin (SOL/BTC) after ending wave four of its five-wave uptrend.
“[Wave] four low very close to being put in on SOL/BTC in my opinion. The same low on the USD pair already put in and just in some HTF [high timeframe] re-accumulation. The next move higher will be >100% [in my opinion].”
Source: Smart Contracter/Twitter
Smart Contract uses the Elliott Wave theory, a technical analysis approach that predicts future price action by following crowd psychology that tends to manifest in waves. According to the theory, Wave four is the final corrective phase before the asset launches the last wave of its cycle.
In the case of ETH, Smart Contracter says that the leading smart contract platform hasn’t run out of steam yet after taking out its diagonal resistance at $3,500.
“Solid move. I think there’s still some juice in the tank.”
Source: Smart Contracter/Twitter
Ethereum is trading at $3,785 at time of trading, according to CoinGecko.
The crypto analyst is also keeping a close eye on Ethereum in its Bitcoin pair (ETH/BTC). According to Smart Contracter, ETH/BTC is currently gearing up for a move to 0.12 BTC ($7,355), representing an upside potential of nearly 100% from its current value of 0.062 BTC, worth $3,800.
“There [are] people out there that actually think ETH/BTC looks bearish.”
Source: Smart Contracter/Twitter
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Ransomware attacks in the U.S. have been on a rise since late 2020, but it is particularly booming in 2021. This year, hackers have hit numerous U.S. companies in large-scale hacks. One such attack on pipeline operator Colonial Pipeline led to temporary fuel supply shortages on the U.S. East Coast. Hackers also targeted an Iowa-based agricultural company, sparking fears of disruptions to grain harvesting in the Midwest. Schools, insurance companies, and police departments have also suffered from these attacks.
Related Reading | Questions Linger As FBI Recovers Colonial Pipeline Ransomware Crypto Funds
In response to this, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), charged with safeguarding the financial system from illicit use, released a Financial Trend Analysis. FinCEN published the report on Friday, October 15, 2021.
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The report analyzed the considerable growth in ransomware payments in the first six months of 2021 and the relative difference from last year.
Ransomware Attacks In The U.S.
U.S. Treasury Secretary Janet L. Yellen recently noted, “Ransomware and cyber-attacks are victimizing businesses large and small across America and are a direct threat to our economy.” According to the report, FinCEN analysis of Suspicious Activity Reports (SARs) filed during the first half of 2021 indicates that it is an increasing threat to the U.S.
Between January 1 and June 30, 2021, 635 SARs were filed, and 458 transactions were reported. This was 30% more than the total of 487 SARs filed for the entire 2020. The total value of suspected ransomware payments during the first half of 2021 was $590 million, more than the $416 million reported for the whole of 2020.
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Source: FinCEN Financial Trend Analysis
The U.S. Treasury Department said the average amount of reported ransomware transactions per month in 2021 was $102.3 million. FinCEN identified bitcoin (BTC) as the most common payment method in reported transactions. Approximately $5.2 billion in outgoing BTC payments tied to the top 10 variants over the past three years. It noted that USD figures cited in this analysis are based on the value of BTC when the transactions occurred.
BTC trading at over $60.7K | Source: BTCUSD on TradingView.com
If the trends keep up, hackers could make more from ransomware this year than they did in the previous ten years combined.
The U.S. Government’s Response
The U.S. government has been working to clamp down on attacks from hackers. The Biden administration has made the government’s cybersecurity response a top priority following a series of attacks this year that threatened the U.S. energy and food supplies.
Earlier this month, the Justice Department announced the launch of a National Cryptocurrency Enforcement Team to go after the exchanges that expedite crime-related transactions, like ransomware demands.
Related Reading | U.S. Recovers Millions Paid In Bitcoin For Pipeline Ransomware
In September, Wall Street Journal reported that the Biden administration was “preparing an array of actions, including sanctions, to make it harder for hackers to use digital currency.”
Also last month, the Department of the Treasury’s Office of Foreign Assets Control sanctioned crypto exchange SUEX OTC, S.R.O. (SUEX) for facilitating financial transactions for ransomware actors. This action was the department’s first such move against a virtual currency exchange over ransomware activity.
Coinciding with the release of the report, the Treasury Department released virtual currency guidance. The guidance said, “the virtual currency industry, including technology companies, exchangers, administrators, miners, wallet providers, and users, plays an increasingly critical role in preventing sanctioned persons from exploiting virtual currencies to evade sanctions and undermine U.S. foreign policy and national security interests.”
Featured image by Bitcoin News, Chart from TradingView.com
This year, a great crypto cycle has played out with new all-time highs, euphoria and mainstream media paying lip service to the crypto trend du jour. However, the uncomfortable truth for us in the industry is that crypto is no more present in most people’s daily lives than it was in 2017. Four years have passed — what stalled its progress?
2017 marked my first professional foray into the blockchain space when I joined Crypto.com (then known as Monaco) as its first chief marketing officer. The company grew to become one of the largest crypto service providers and fiat-to-crypto gateways in the world.
During that time, the crypto space changed. Payments are much less of a focus and many of the projects aimed at crypto adoption have been sidelined. Decentralized finance (DeFi) and nonfungible tokens (NFTs) have taken the spotlight, but they’re ultimately focused on crypto trading and unable to help the real world in any meaningful way — at least, for now.
Related:Is crypto approaching its ‘Netscape moment’?
The situation reminds me of the mobile industry before the advent of the iPhone and the revolution spearheaded by Steve Jobs. Technology and features were being stacked on top of each other but with no additional impact for the end-user, even though there was plenty of buzz.
A mobile marketing pioneer, I worked with the Mobile Marketing Association for more than ten years in Asia (served as chair during 2009–10) and saw firsthand the development of the industry. One thing that people misunderstand about that revolution is that Apple did not “invent” the smartphone to any meaningful extent.
From zero to hero with just one innovation
If you ask someone on the street what made the iPhone so successful, you’ll get at least half a dozen different answers. It was apps and the App Store, some people say. For others, it was Gorilla glass and the touchscreen. It was 3G (actually, the first iPhone did not even have it), the Wi-Fi connection, the camera, the comfortable size, the sleek design…
Of course, all of these factors contributed. But consider that, in some form, all of those features already existed in other phones. Nokia had the Symbian OS and it featured a quite rich ecosystem of apps. The same thing goes for BlackBerry, which was quite advanced for its time in terms of hardware and software — for example, in 2005, it released BBM, the proto-WhatsApp/iMessages. Palm and plenty of other companies were making “pocket computers” with stylus touchscreens. Nokia excelled with camera phones and predictive text, Motorola dazzled everyone with the Razr’s design, and so on.
The only independent innovation that the iPhone brought was the user experience (UX), and more specifically, the multi-touch capacitive screen. It introduced gestures, on-screen QWERTY keyboards, and the basic smartphone design we know today, but nothing else in the iPhone was, by itself, new. It simply was the ultimate phone — as Steve Jobs said at the time, “An iPod, a phone, and an internet communicator… not three separate devices. This is one device,” — which offered a simple to use, sleek and good-looking device, packed with features. The rest, as they say, is history.
Crypto has yet to have its iPhone moment.
Reframing crypto as the means, not the end
When we talk about crypto adoption, we need to recognize the utilitarian considerations of the average person. The vast majority think about cost and utility well before any idealistic concern. Organic food has its place, but it’s a small niche — most people buy food based on its taste and cost. Electric cars struggle because they offer a significant number of practical disadvantages and because they’re generally much more expensive.
Positioning crypto as an amazing tool for financial freedom and decentralization will ring hollow to most people. By far, the most significant reason why people get into crypto now is price gains, not its utility. Crypto is useful in certain applications, such as cheap global transfer of value. But there are many practical disadvantages to using crypto for payments, which mostly have to do with the integration with existing financial rails. The user experience of using crypto to pay for stuff has been, frankly, atrocious — with complicated fees, confirmation times and difficult units compounding the adoption struggle.
Related:Mass adoption of blockchain tech is possible, and education is the key
There are no perfect analogies but I think that the “multi-touch capacitive screen” of crypto is reframing it as a means, and not the end. The average person does not care about crypto, itself, they care about what it gives them. If you promise them Lambos and moons, they will listen but that only gets you so far.
What if you used crypto to cut out the middleman between you and your money to deliver (nearly) free transfers of money, foreign exchange, interest rates that a normal person can only hope to pay, not receive, and other benefits that would make Black Cardholders jealous?
You can bet the average person would be interested.
This is the strategy we adopted: a redeemable membership fee granting access to a suite of useful financial, travel and lifestyle services, which are easily accessible from both mobile and web apps, and even chat services like WhatsApp or Telegram. We acted in two directions: removing any friction of using our product and making it immensely useful to everyone. Just like the iPhone back in the day.
Of course, there is a long journey ahead. But if more projects in crypto operated outside of the box and focused on utility and not just crypto for speculation’s sake, it just might bring us back onto the path of mainstream adoption we embarked on in 2017.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Sean Rach is the co-founder of hi, a not-for-profit blockchain-based financial platform. Sean was the founding chief marketing officer of Crypto.com, the crypto exchange and card provider. He also served in senior roles at Prudential Corporation Asia, Ogilvy Hong Kong and Mobile Marketing Association. A Business Administration doctoral candidate at the Warwick Business School, Sean has overseen the development of several innovative digital platforms, like Safe Steps (with NatGeo and Red Cross) and Cha-Ching Money Smart Kids (with Cartoon Network), and earlier helped to launch Hallmark.com.
The Commodities Futures Trading Commission (CFTC) is ordering the entities behind the Tether stablecoin (USDT) to pay $41 million in fines.
According to a new press release, the CFTC charged Tether Holdings Limited, Tether Limited, Tether Operations Limited, and Tether International Limited for making “untrue or misleading statements and omissions of material” related to USDT.
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USDT is pegged to the US dollar, and Tether claims it is completely backed by corresponding fiat assets, including the dollar and the euro.
According to the statement, the regulator examined 26 months between 2016 to 2018 and found that Tether only had sufficient reserves to fully back USDT on 27.6% of the examined days.
“In fact Tether reserves were not ‘fully-backed’ the majority of the time. The order further finds that Tether failed to disclose that it included unsecured receivables and non-fiat assets in its reserves, and that Tether falsely represented that it would undergo routine, professional audits to demonstrate that it maintained ‘100% reserves at all times’ even though Tether reserves were not audited.”
The CFTC also says Tether dipped its reserve funds into the operational and customer funds of crypto exchange Bitfinex.
“The order also finds that, instead of holding all USDT token reserves in U.S. dollars as represented, Tether relied upon unregulated entities and certain third-parties to hold funds comprising the reserves; comingled reserve funds with Bitfinex’s operational and customer funds; and held reserves in non-fiat financial products. The order further finds that Tether and Bitfinex’s combined assets included funds held by third-parties, including at least 29 arrangements that were not documented through any agreement or contract, and that Tether transferred Tether reserve funds to Bitfinex, including when Bitfinex needed help responding to a ‘liquidity crisis.’”
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Rapid progress in quantum computing is predicted by some to have crucial ramifications in domains using public-key cryptography, such as the Bitcoin ecosystem.
Bitcoin’s “asymmetric cryptography” is based on the principle of “one-way function,” implying that a public key can be easily derived from its corresponding private key but not vice versa. This is because classical algorithms require an astronomical amount of time to perform such computations and consequently are impractical. However, Peter Shor’s polynomial-time quantum algorithm run on a sufficiently-advanced quantum computer could perform such derivations and thus falsify digital signatures.
Potential Risks Posed By Quantum Computing
For a better understanding of risk levels introduced by advanced quantum computing, we restrict ourselves to simple person-to-person payments. These can be divided into two categories, each affected differently by quantum computing:
Pay to public key (p2pk): Here, the public key is directly obtainable from the wallet address. A quantum computer could potentially be used to derive the private key, thus allowing an adversary to spend funds at the address.
Pay to public key hash (p2pkh): Here, the address is composed of a hash of the public key and hence, is not directly obtainable. It is revealed only at the moment of initiation of a transaction. Hence, as long as funds have never been transferred from a p2pkh address, the public key is not known and the private key cannot be derived even using a quantum computer. However, if funds are ever transferred from a p2pkh address, the public key is revealed. Hence, to limit exposure of the public key, such addresses should never be used more than once.
While avoiding reuse of a p2pkh address can limit vulnerability, there might still arise situations where a quantum-capable adversary can successfully commit fraud. The act of transferring coins even from a “safe” address, reveals the public key. From that moment until the transaction is mined, an adversary has a window of opportunity to steal funds.
Theoretical Methods Of Attacking Bitcoin With Quantum Computing
Transaction hijacking: Here, an attacker computes the private key from a public key of a pending transaction and creates a conflicting transaction spending the same coins, thus stealing the victim’s assets. The adversary offers a higher fee to incentivize inclusion in the blockchain over the victim’s transaction. It must be noted that, before the victim’s transaction is mined, the attacker must not only create, sign and broadcast the conflicting transaction, but also first run Shor’s algorithm to derive the private key. Clearly, timing is crucial for such attacks. Hence, the performance level of quantum computers dictates the success probability of this threat vector.
Selfish mining: In this potential attack vector, the attacker could theoretically use Grover’s algorithm to gain an unfair advantage when mining. This quantum computation routine aids searching unstructured data and can provide a quadratic jump in hash rate. The ability to mine quickly in a sudden quantum speedup could lead to destabilization of prices and control of the chain itself, resulting in possible 51% attacks.
Combined attacks: Combining the above two vectors, an attacker could theoretically build up a secret chain and, when in the lead, selectively publish blocks to reorganize the public chain. The adversary can also choose to simultaneously hijack transactions. Here, spoils of fraud would not only block rewards and transaction fees, but also all funds contained in (non-quantum-resistant) addresses spent in the overwritten transactions.
Methods For Combating Potential Quantum Computing Attack Vectors
Fraud Analytics
Data science tools can be used to mitigate risk in the window of opportunity an adversary has to steal funds.
Data gathered via mempool APIs can be used to run real-time machine learning algorithms to spot anomalies in offered transaction fees and thus, flag attempts at transaction hijacking. Such algorithms can also help to spot sharp jumps in the blockchain hashr ate and accordingly raise alerts on possible “selfish mining.”
Dynamic AI models can compute fraud risk of pending transactions at every instant until confirmation. These models can deduce potential profits of adversaries for every threat vector, thus arriving at the probability of any transaction being fraudulent. Insurance products can be designed to cover fraud risk of pending transactions, pricing of which can be dynamically computed from the fraud probability inferred by models.
Additionally, a “reputation score” can be computed for each node in the blockchain. APIs capturing device details, IP address, etc. can be used to cluster activities (mining and/or transactions) into homogenous clusters, thus having a high chance of originating from the same users. Such patterns can also be used to directly detect quantum computers in the blockchain. ‘’Reputation scores’’ might be of special significance in case of combined attacks as adversaries use a multi-vector approach to siphon funds.
The public transaction log of Bitcoin provides substantial data about user profiles. “Network algorithms” can use this information to link different wallet addresses, thus unmasking coordinated attacks. This can enable us to blacklist linked wallet addresses of quantum-enabled adversaries.
Wallet Interface Design
Intelligent design of user interface can help in alerting customers to the risk of reusing addresses, via strategic placement of warning messages.
Consensus Rules
Principles of effective incentive design can be used to formulate changes in consensus rules, such as applying a markup on transaction fees for p2pk and reused p2pkh wallets. This would prompt users to switch to safer behavior. Additionally, it would result in shortening the confirmation time of such transactions as miners would pick them first, thus narrowing the window of opportunity for the adversary.
Conclusion
The growth of quantum computers, with internal states consisting of many qubits, may raise questions about the underlying cryptographic assurance of Bitcoin. Even users adhering to security best practices might still be impacted in situations where a significant number of bitcoin is stolen from unsafe addresses, thus causing increased price volatility. A broad set of initiatives in post-quantum cryptography are underway to mitigate such scenarios.
It is crucial to note that the emergence of “quantum supremacy” does not necessarily imply weakening of the Bitcoin ecosystem. Better systems of quantum computing will eventually provide opportunities for a slow economic transition to better tooling.
While the phase of asymmetric usage of quantum computers might generate multiple threat vectors, principles of fraud risk management along with user awareness can help design solutions for such a future.
References
Shor, PW. Polynomial-time algorithms for prime factorization and discrete logarithms on a quantum computer, 1999. SIAM Rev. 41, pp. 303–332. Retrieved from https://arxiv.org/abs/quant-ph/9508027
Grover, LK. A fast quantum mechanical algorithm for database search, 1996. In Proc. 28th ACM Symposium on Theory of Computing (STOC ’96), Philadelphia, Pennsylvania, pp. 212–219. New York, NY: ACM. Retrieved from https://arxiv.org/abs/quant-ph/9605043
I. Stewart, D. Ilie, A. Zamyatin, S. Werner, M. Torshizi, and W. J. Knottenbelt. Committing to quantum resistance: a slow defence for bitcoin against a fast quantum computing attack. Royal Society open science, 5(6):180410, 2018. Retrieved from https://royalsocietypublishing.org/doi/pdf/10.1098/rsos.180410
This is a guest post by Debanjan Chatterjee. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
