Exploring the transformation of value in the digital age By Michael J. Casey, Chief Content Officer Was this newsletter forwarded to you? Sign up here. |
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This was a very big week in Cryptoland. “The Merge” – Ethereum’s transition from a proof-of-work consensus mechanism to the more energy-efficient proof-of-stake model is a game changer for the industry. See the Relevant Reads section for a sample of CoinDesk’s extensive coverage of the most important upgrade in crypto history. Today’s column is tangentially connected to the Merge. It takes an alternative look at the Treasury’s sanctioning of Tornado Cash, which some fear could drive compliance-wary staking pools to censor Ethereum transactions on-chain. My main point here, though, is that the U.S. government forcing blockchains to make transaction data public has dangerous geopolitical implications in the tech race against China. The rest of the newsletter is pure Merge. This week’s edition of the “Money Reimagined” podcast hails from NEARCon, the Near protocol’s annual developer gathering in Lisbon. There, my co-host Sheila Warren and I recorded the first of two episodes on blockchain applications for climate change, interviewing Frederic Fournier, the CEO of Open Forest Protocol, and Marc Johnson, environmental solutions architect at Protocol Labs. A key topic in our conversation: whether the Merge will alter the mainstream public’s unfavorable view of the crypto industry’s energy consumption. Have a listen after reading the newsletter. |
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Launched in September 2017, KuCoin is a global cryptocurrency exchange with its operational headquarters in Seychelles. As a user-oriented platform with focus on inclusiveness and community action reach, it offers over 700 digital assets, and currently provides spot trading, margin trading, P2P fiat trading, futures trading, staking, and lending to its 20 million users in 207 countries and regions. In 2022, KuCoin raised over $150 million in investments through a pre-Series B round, bringing total investments to $170 million with Round A combined, at a total valuation of $10 billion. KuCoin is currently one of the top 5 crypto exchanges according to CoinMarketCap. Forbes also named KuCoin one of the Best Crypto Exchanges in 2021. In 2022, The Ascent named KuCoin the Best Crypto App for enthusiasts. |
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Tornado Cash Ban Will Aid China’s AI Goals
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(Rachel Sun/CoinDesk) If the U.S. government fears China’s progress in artificial intelligence, why is it giving Beijing a treasure trove of highly valuable crypto data with which to train its machine-learning models? That’s the rhetorical question that developer Anish Mohammed left with me when we caught up at the NEARCon gathering in Lisbon this week. It gave me a new, rather alarming perspective on the anti-privacy, self-censoring crackdown that’s playing out in crypto circles following the U.S. government’s sanctioning of Ethereum-based transaction mixer Tornado Cash. I and many others were making the positive case long before the Tornado Cash action that the U.S. and its allies would gain a geopolitical advantage if they allowed the expansion of decentralized, privacy-protecting, open-access crypto protocols. The idea is that Western society can unleash a “killer app”: the enshrining of individual rights into code, enticing the world’s digitally-mobile citizens to vote with their pocketbooks in favor of Western monetary systems that encourage open-access and privacy over authoritarian control and surveillance. The model would win, we said, because dictatorships and single-party states cannot match it without losing control over their money and thereby sowing the seeds of their own downfall. Until my conversation with Mohammed, the chief scientist at privacy-protecting Panther Protocol, the failure to embrace that open approach to crypto policy was a major source of my frustration with the United States’ draconian regulation of crypto projects, where users are compelled to identify themselves, comply with “accredited investor” requirements and meet excessive reporting demands from government authorities. All of that activity, I’ve argued, defeats crypto’s decentralization principles and diminishes its potentially vast value to society. But, sadly, I now have a more ominous take on the problem. It seems we’re not only relinquishing the opportunity to use the “carrot” of privacy to out-compete China, we’re also handing it a “stick” with which to subjugate us and accelerate its march toward AI dominance. Read the full story here... |
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Off the Charts: Ethereum’s New Supply Model
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(Sage Young/CoinDesk) One key metric to watch with the Merge is how a new measure that burns ether rewards impacts the supply of tokens. This should slow Ethereum’s inflation rate, which should in turn provide support to the price of ether. At first glance, based on this chart from Ultrasound.money, a data website set up to track the progress of the Merge, looks as if the function was already working one day later. After an initial drop in the total number of ether outstanding, supply is seen to be growing at a slower pace. |
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The Conversation: Like Clockwork
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No one could be fully sure this week’s big update to the Ethereum blockchain would go smoothly. Merging the full seven-year transaction history of the proof-of-work era into the parallel Beacon Chain’s proof-of-stake system was always going to be challenging. Yet, as Gnosis co-founder Martin Köppelmann pointed out in a tweet, by one measure the transition has gone remarkably well. A few hours into the Merge, blocks were being produced with much more consistent and predictable timing than under proof-of-work. |
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Ethereum co-founder Vitalik Buterin pointed out in a tweet that this consistency is resulting in fewer blocks with transactions at full capacity. That might mean that even if a reduction in Ethereum’s notoriously high gas fees must still await additional scalability upgrades, such as the planned introduction of sharding, transaction costs could also become more predictable on Ethereum. |
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Relevant Reads: The Merge Edition |
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