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January 22, 2021 The top stories in bitcoin, crypto and more – all in one place, delivered daily. Sponsored By: By Daniel Kuhn If you were forwarded this newsletter and would like to receive it, sign up here.
Top shelf After dropping 13% yesterday, bitcoin is once again on the ascent. Meanwhile, Janet Yellen has offered a more nuanced view of crypto and small Ethereum mining pools are organizing a campaign against a potential network upgrade.
Miners revolt! Trust progress? Banking deposits Crypto sweep Big in Japan
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Quick bites BITCOIN ETF: Five reasons it should be approved. (Bloomberg opinion) HUMAN TRADERS: A quant fund (not crypto-specific) is giving people a chance. (Bloomberg) FOR THE FAITHFUL: Joe Weisenthal thinks bitcoin is a religion. Who’s the Pope? (Bloomberg) BLUE SKIES? Jack Dorsey’s open-source social media platform released a 6o-page overview of the decentralized ecosystem. (Blog) CUT TO THE CORE: A notable Bitcoin Core dev reflects on his time building and argues Bitcoin needs to decentralize. (Blog)
Introducing State of Crypto, a CoinDesk Newsletter About Policy As the U.S. presidency changes hands, CoinDesk's global macro and policy reporter Nikhilesh De launches his State of Crypto weekly newsletter to break down how the new administration could shape the cryptocurrency industry.
State of Crypto covers how policy and regulation impact the crypto world – and the other way around.
Subscribe to receive State of Crypto every Tuesday.
Market intel Efficient markets? Two events batted around to explain bitcoin’s 13% price drop on Thursday are a bit more complicated than they appear on the surface. Yesterday, bitcoin saw its biggest intraday drop since March 12, 2020, when bitcoin tumbled 39%. Looking for cause, some suggested the markets threw a temper tantrum in response to a rumor that a double-spend appeared in the wild, on the Bitcoin blockchain. That story was picked up by the mainstream press. Others, that traders were spooked by comments made by Treasury Secretary nominee Janet Yellen, who raised concerns about crypto’s use in the criminal underground. That story was picked up by the mainstream press, too. CoinDesk tech reporter Colin Harper set the record straight: The transaction that looked like a double-spend – the very phenomenon Bitcoin was created to address – was a normal occurrence. The trouble bubbled up after BitMEX researchers found an orphan block containing a 0.00062063 BTC transaction that was also included in a valid block mined to the blockchain. But it really was no big deal. In what’s called a block reorganization, Bitcoin programmatically dealt with the issue. While the bitcoin was technically “double-spent,” Harper notes, “no new coins were added to Bitcoin’s supply.”
Meanwhile, following a U.S. Senate hearing where Yellen spoke briefly about money laundering and terrorist funding issues that plague bitcoin on Wednesday, the former Federal Reserve Chair disclosed a nuanced opinion of crypto in a letter to the Senate Finance Committee a day later. To wit: “I think we need to look closely at how to encourage their use for legitimate activities while curtailing their use for malign and illegal activities,” she wrote. “If confirmed, I intend to work closely with the Federal Reserve Board and the other federal banking and securities regulators on how to implement an effective regulatory framework for these and other fintech innovations.”
She is likely to be confirmed today, CoinDesk regulatory reporter Nikhilesh De said.
While neither the rumored double-spend nor Yellen’s concerns are nonevents, they were both based on limited or faulty information that was picked up, (including in yesterday’s Blockchain Bites).
That said, neither news items should be blamed for the market spat, nor should the new information in the public register be seen as leading to today’s price appreciation. As Nic Carter as written, the efficient market hypothesis, the idea that states that asset prices reflect all available information, is complicated. For now, like during the panic in March, it’s best to keep in mind that “time in the market beats timing the market.”
At stake Bitcoin's support Yesterday was a show of solidarity in the Bitcoin community, after nChain Chief Scientist Craig Wright pushed for cultural touchstones, Bitcoin.org and Bitcoincore.org, to pull the first cryptocurrency white paper off their sites. Wright, who has long claimed to be Bitcoin’s pseudo-anonymous creator, Satoshi Nakamoto, has filed for patents over Bitcoin’s earliest documentation and intellectual property. The notably rambunctious developer, law student and academic is also the creator of Bitcoin SV (for Satoshi’s Vision), a fork of Bitcoin Cash and competitor coin.
Bitcoin.org rebutted Wright’s legal challenge and kept the document up, though Bitcoincore.org – the main repository for the Bitcoin code base – took it down.
No matter, as CoinDesk Managing Editor Zack Seward reported, some of crypto’s most prominent voices have decided to host a mirror copy. These include Square, Coin Center, Facebook subsidiary Novi and CoinDesk, among dozens more companies, nonprofits and individuals. It has also been uploaded to the “uncensorable” Arweave platform as well as internet alternative the InterPlanetary File System (IFPS), Seward notes.
According to Bitcoin.org, the Bitcoin white paper was published under an open MIT license by Nakamoto, making it a public domain document. “There is no doubt” people have the legal right to host the white paper, the nonprofit said.
Wright has long been a thorn in the Bitcoin community’s side, launching several lawsuits against prominent personalities who questioned his claims of being the authentic Nakamoto. Hodlnaut, the pseudonymous account behind the lightning torch experiment and who was sued for defamation, was vaulted into the spotlight in 2019 with a wave of bitcoin enthusiasts adopting his cartoon cat avatar for their Twitter profile photos. While the event shows Bitcoin is still capable of rallying together, the real issue at play is much bigger than Wright’s copyright claims. Dozens of businesses have patent key technologies off of, or that support, this open-source system. In some sense, some would argue, a copyright is simply anathema to Bitcoin’s core ideal of permissiveness.
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