The biggest crypto news and ideas of the day |
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Ethereum Already Shows Signs of Increased Centralization After the Merge: Crypto exchange Coinbase and decentralized staking protocol Lido added over 40% of the network's new blocks in the hours following Ethereum’s shift to proof-of-stake on Thursday. These early signs of consolidation have raised concerns about censorship and profit-seeking on the second-largest blockchain, now that validators not miners process transactions. It’s not all doom and gloom: Ethereum’s co-founder Vitalik Buterin said the Merge lowered the world’s energy consumption by 0.2%, potentially making it one of biggest decarbonization events ever. However, mining gear was immediately directed towards other proof-of-work chains, meaning crypto energy consumption may be unchanged. ETH traded slightly down after Ethereum completed its historic shift, though a larger sell-off began overnight. ETH is down 9.1%, while bitcoin is down only about 2% on the day. Ethereum PoW Network Sees Complaints on Day 1 Amid Data Goof-Up: Ethereum PoW, the version of the Ethereum blockchain that continues to use a proof-of-work (PoW) consensus mechanism, ran into teething problems on its first day. Users said they weren't able to access the blockchain's servers and attempts to set up a crypto wallet failed. SEC’s Gensler Signals Extra Scrutiny for Proof-of-Stake Cryptocurrencies: U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler said after a congressional hearing on Thursday that staked cryptocurrencies may be subject to federal securities regulations, repeating a pro-oversight stance in the wake of Ethereum’s transition to just such a method. It is not unusual for the federal securities agency to make bold, if not fully defined, claims about the crypto industry. In fact, recent SEC guidance is disrupting several banks' crypto projects due to the prohibitive cost and confusion of new digital asset custody rules. Meanwhile, the head of the U.S. Commodity Futures Trading Commission told a Senate hearing he has already directed his agency to begin preparing to be the major, fully funded regulator for much of the crypto market, as anticipated in Senate legislation. Crypto Lending Company Celsius Files for Permission to Sell Its Stablecoin Holdings: The bankrupt lending firm Celsius is seeking authorization to sell its stablecoin holdings to generate liquidity to help fund its operations. Celsius currently owns 11 forms of stablecoins totalling approximately $23 million, according to disclosures. FTX Is in the Lead to Buy Crypto Lender Voyager Digital’s Assets Out of Bankruptcy: Exchange giant FTX is in the lead to buy the assets of Voyager Digital, the cryptocurrency lender whose collapse shocked crypto markets earlier this year, but higher offers could still come in in the days ahead. Sam Bankman-Fried's FTX exchange and Wave Financial, a digital-asset investment firm, are still competing for the bid at the final stage of an auction for Voyager's assets. El Salvador's Debt Rating Cut to CC by Fitch: El Salvador, which made bitcoin (BTC) legal tender a year ago, saw its credit rating cut to CC from CCC by Fitch Ratings, which said the country is likely to default on a bond maturity payment that's due at the start of 2023. El Salvador’s bitcoin plans included buying bitcoin, accepting bitcoin for taxes and selling a “bitcoin bond” to raise funds for a “bitcoin city” tax haven, though the bond was never offered. – Xinyi Luo |
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Putting the news into perspective |
Craig Wright’s Abnormal Psychology This week saw the latest in Craig Wright’s international tour of courthouses, presumably on Calvin Ayre’s expense account. He took the stand in Norway as part of his larger attempt to pursue a U.K. libel suit against a Norwegian schoolteacher named Magnus Granath, aka Hodlonaut. It was another invaluable chance to see Wright’s beautiful mind in action as he continued his campaign to prove, against all verifiable evidence, that he is pseudonymous Bitcoin creator Satoshi Nakamoto. Hodlonaut initially called out Wright as a fraud in 2019, after Wright’s attempts to claim the Satoshi identity were repeatedly shown to involve apparent deception. Wright had been called out by forensic blockchain experts and others for seemingly backdated documents and the misrepresentation of “private” cryptographic keys. When confronted about misrepresentations, Wright has a tendency to get entertainingly baroque. For instance, he has claimed that backdated documents were planted on his computer in a hack by Blockstream. Another creative explanation involved the theft of private keys to the Satoshi coins through a confusing welter of home invasions, clandestine router swaps and security camera outages. Wright’s most fascinating contortions, though, rely on his psychological self-diagnosis. Wright has repeatedly explained inconsistencies in his Satoshi claims by depicting himself as a careening wreck, beset by autism and binge drinking and deeply conflicted about confirming his Satoshi identity. This week brought us a sterling entry in this genre. Wright’s lawyers have said they will try to establish his identity as Satoshi without relying on his control of the private keys that would definitively prove it. By way of explanation, Wright claimed this week that he “stomped on” the hard drive containing the keys. (This seems to supplant his earlier claim that the keys were stolen in an elaborate home invasion.) Wright explained his destruction of the keys, which would have amounted to destroying his own access to billions of dollars’ worth of bitcoin, by saying it was “the only way” to avoid being forced to prove his identity cryptographically. |
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(Trevor Jones/CoinDesk) A reluctant Satoshi? All this in part advances Wright’s repeated claims that he never wanted to be “outed” as Satoshi, which he has also used to explain past failed proofs. In the case of the bungled “Sartre proof” in 2016, for instance, Wright now claims he intentionally got it wrong to throw people off the trail. This isn’t even internally consistent – if you are tortured by the pressure to prove something, why would you destroy the only evidence that would conclusively prove it? But the entire “reluctant Satoshi” pose is even more obviously false than that. Wright was helping promote his own identity as Satoshi circa 2015-2016, rather than being unwillingly outed by “leaks.” The clearest evidence of Wright’s involvement in the claims comes from journalist Andrew O’Hagan, who was approached by a lawyer named Jimmy Nguyen with Wright’s story before the claims appeared in Wired or Gizmodo. Nguyen told O’Hagan he was representing Wright through an entity then known as nCrypt, and is now president of the BSV Blockchain Association, an arm of the Wright/Ayre network. Regardless, demonstrating control of the Satoshi keys would also be bad, Wright said this week, because he “didn’t want to encourage the arguments that you need keys.” That’s the hinge between Wright’s purportedly tortured psyche and his even-more-tortured claims about how blockchains work. A misunderstood genius who misunderstands his own invention Since at least early 2020, Wright has been advancing the patently false idea that a court order is sufficient to unlock blockchain tokens without using the owner’s private keys. I can’t even begin to explain his logic here, because there is none – it’s just something he says again and again, loudly and angrily. Some have speculated that these claims relate to an attempt to gain real control of the Satoshi coins. Wright has made other, even more bizarre claims about blockchains with far less motivation, such as recently writing on his blog that “if you are ever told that any blockchain network can have more than ten nodes controlling the network, know that you are being deceived … There is no way to create a blockchain system that is maintained by thousands of nodes.” This sort of hokum is hard to explain. Why would someone claiming to be Satoshi rattle off clearly incorrect claims about a system he supposedly invented? Read the rest of the essay here. – David Z. Morris |
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Overheard on CoinDesk TV... |
"A lot of miners will be bankrupt." – Ethereum miner Chandler Guo, discussing the launch of his proof-of-work fork following Ethereum's Merge, on CoinDesk TV's "First Mover." |
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White House Releases ‘Comprehensive Framework’ for Crypto Regulation and Development (Decrypt) New PoW Ethereum Fork Plunges 75% Amid Flurry of Problems (The Defiant) Justice Department Forms National Network of Prosecutors Focused on Crypto Crime (WSJ) The Rise of Crypto Gambling on Twitch (Bloomberg)
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