Author: Dale Warburton

Dale is a former attorney turned passionate Bitcoiner with an interest in investments, macro, geopolitics, innovation, tech, nature, wildlife, MMA and Bitcoin (of course).

Categories
Australia Bitcoin Crypto News

Australia’s Bitcoin Industry Body to Hold Historic Meeting With El Salvador

As the first country to make Bitcoin legal tender, El Salvador has become the Bitcoin nation state poster child, inspiring others to consider following suit. Australian Bitcoin Industry Body (ABIB), for one, is looking to engage with El Salvador on its Bitcoin adoption journey in a meeting to be held this week:

Bitcoin Industry Body – a Voice for Australian Bitcoiners

At its foundation, newly launched ABIB seeks to provide a voice for the burgeoning local Bitcoin industry:

ABIB was established primarily for two reasons:

  1. to provide the local Bitcoin industry with a platform to engage directly with regulators such as AUSTRAC (Australian Transaction Reports and Analysis Centre); and
  2. to provide a proper understanding of Bitcoin in response to misinformed perspectives in the media.

To get a better overall sense of ABIB’s role and purpose, see the video below in which one of its founding directors, Ethan Timor, provides a little more context:

ABIB Meets with El Salvador

On Wednesday, February 9, at 10am (AEDT), ABIB will hold a video conference with representatives from El Salvador, including its Ambassador to Australia, Werner Matías Romero, as well as its Director of Economic Relations, Eduardo Garcia.

In what is expected to be an exciting exchange of ideas, the topics expected to be discussed are Bitcoin adoption, learnings from the legal tender process, feedback from the citizenry, and how ABIB can collaborate with El Salvador going forward.

Crypto News Australia spoke with ABIB’s Ethan Timor in advance of the meeting, who added:

ABIB’s members and sponsors are thrilled to have the opportunity to meet with El Salvador’s representatives to discuss their historic Bitcoin legal tender adoption. One of our stated objectives is to advance Bitcoin adoption within Australia, and having an opportunity to meet with those at the forefront of Bitcoin innovation is invaluable to our mission. We are excited to learn about their experiences and how we can collaborate with them in the future.

Ethan Timor, ABIB director

For ABIB, the meeting with El Salvador is just the beginning. Local Bitcoiners will be also be pleased to hear that it has some lofty ambitions, including:

  • Bitcoin being classified and treated separately to all other cryptocurrencies;
  • Bitcoin being declared a foreign currency, as opposed to personal property;
  • enactment of the HODL Act, empowering government and the RBA (Reserve Bank of Australia) to hold Bitcoin on its balance sheet to protect against fiat debasement; and
  • financial literacy and education, particularly among young Australians.

While the El Salvador meeting is only available to members and sponsors, Australian Bitcoiners can follow developments, as well as other ABIB initiatives, on Twitter.

If you’re a Bitcoiner and keen to get involved, eligible individuals and companies are encouraged to join.

Categories
Crypto News DeFi Hackers

Giant DeFi Bailout as Jump Capital Replenishes Wormhole’s 120,000 Lost ETH

Earlier this week, we saw one of the most devastating DeFi (decentralised finance) hacks on record with an estimated US$326 million stolen from blockchain bridge, Wormhole. In a remarkable turn of events, Chicago-based venture capital fund, Jump Capital, came to the rescue to the tune of 120,000 ETH:

A Hack with a Happy Ending

DeFi exploits and hacks don’t typically end well, as was the case with December’s MonoX Finance saga, in which US$31 million was stolen. However, in the case of Wormhole, things seemed to have turned out okay.

While the team is yet to have provided a detailed report, something expected in these types of situations, Wormhole has indicated that the vulnerability has been fixed:

While the Wormhole network went down for maintenance during the investigation, the team has now confirmed it is back up and running and that all funds have been replenished:

Responses from the community were mixed, to say the least. Some were incredibly appreciative:

Others were less so, pointing to the lack of transparency:

Wormhole initially offered a US$10 million bounty to the hacker, however the current status of the negotiations remains unclear.

DeFi With a Backstop … Contradiction in Terms?

It’s not surprising that the community is somewhat divided on Jump Capital stepping in because … wasn’t the whole purpose of DeFi to disintermediate rent-seeking middlemen and “decentralise” power away from banks and financial institutions? Isn’t DeFi supposed to be a free market, absent of manipulation, bailouts, subsidies, and zombie companies that characterise the modern financial system?

Admittedly if you happened to be a beneficiary of Jump Capital’s bailout, you’d be excited by the prospect of deep-pocketed venture capitalists coming to save the day.

Despite bailouts being inherently incongruent with DeFi principles, the more interesting question, is who would spend 120,000 ETH without some serious skin in the game? Clearly, someone who stands to gain far more by throwing in another US$331 million (120,000 ETH).

Perhaps Jack Dorsey was on to something when he said that Web 3.0 was a venture capitalist’s playground.

Categories
Bitcoin Bitcoin Mining Crypto News

BTC Mining Emissions at ‘Inconsequential’ Levels, According to Coinshares Report

In response to growing environmental, social and governance (ESG) concerns related to Bitcoin mining, leading digital asset management firm CoinShares has produced a report suggesting that the network is responsible for less than 0.05 percent of global carbon emissions, a figure CoinShares described as “inconsequential”.

BTC share of global energy. Source: CoinShares research report

Key Takeaways

According to CoinShares, sensationalist commentators riding the ESG wave continue to pronounce on Bitcoin’s energy use, often with poorly supported arguments.

While Bitcoiners’ retorts typically relate to either the question of energy cleanliness or the necessity of proof-of-work for an open monetary system, CoinShares has instead focused on carbon emissions, using a detailed exploration of quantitative data. This is in contrast to the qualitative, and often anecdotal, evidence offered by critics.

CoinShares echoes the sentiments of Bitcoiners who argue that the “systemic distortion of price signals caused by costless and arbitrary monetary inflation creates malinvestment, economic inefficiencies and waste on a scale that would dwarf Bitcoin’s approximate 0.05 percent share of global energy consumption”.

The argument, then, is straightforward – whether you think Bitcoin has utility or not, its energy use is minuscule when compared to the prevailing financial system.

As a point of reference, total global energy consumption (not production, which is considerably higher) in 2019 has been estimated at 162,194 TWh. At an annual energy draw of 89 TWh, the Bitcoin mining network uses approximately 0.05 percent of the total energy consumed globally. This strikes us as a small cost for a global monetary system, and on the global energy balance sheet, it amounts to a rounding error.

CoinShares research report

Noting the dramatic decline in hash power out of China following its latest ban, the shift in power from East to West is an obvious one, with the US now having an estimated 49 percent of hash power.

Hashrate by country. Source: CoinShares report

The report added that contrary to what many people thought, the miner migration out of China actually increased carbon emissions, since a significant amount of Chinese hash power relied on overbuilt, centrally planned hydroelectric power facilities. CoinShares added that as of December 2021, the estimated relative contribution of various sources of energy were as follows:

  • Coal – 35 percent;
  • Gas – 24 percent;
  • Hydro – 21 percent;
  • Nuclear – 11 percent; and
  • Oil, solar and other renewables like geothermal – 5 percent.

While these figures are a little way off the Bitcoin Mining Council’s estimates of renewal energy comprising 58 percent, CoinShares is of the view that focus should instead be directed toward building renewable power generation.

While it is clear that there currently are emissions created as a result of bitcoin mining, these emissions are not only insignificant on a global scale, but they are in no way necessary in and of themselves. Bitcoin will be 100 percent renewable as soon as our electricity generation is 100 percent renewable. Our focus should be on building out renewable power generation, not on stifling the development of monetary technology.

CoinShares research report

This would appear to align with OG Bitcoiner Andreas Antonopoulos’ view, which is common sense to those properly informed:

Bitcoin is neither good nor bad. It’s simply a demand for energy, and if it’s matched with politics that are environmentally friendly, then bitcoin mining is essentially green. Bitcoin isn’t the villain here.

Andreas Antonopoulos
Categories
Bitcoin Crypto News

$4.2 Trillion Asset Manager ‘Fidelity’ Says Bitcoin is Separate from Crypto

In its report entitled “Bitcoin First”, Fidelity Investments, a Boston-based US$4.3 trillion financial services corporation, argues that Bitcoin is fundamentally different from any other digital asset, and accordingly, must be evaluated separately.

Fidelity: Bitcoin is Different

In its 26-page report, Fidelity argues that Bitcoin is best understood as a monetary good whose primary investment thesis is as a digital store of value in “an increasingly digital world”.

No other digital asset is likely to improve upon bitcoin as a monetary good because bitcoin is the most (relative to other digital assets) secure, decentralised, sound digital money and any “improvement” will necessarily face tradeoffs.

Fidelity report
Comparison of gold, fiat and bitcoin. Source: Fidelity


Importantly, the firm is not suggesting a zero-sum situation where only Bitcoin can be ascribed value:

There is not necessarily mutual exclusivity between the success of the Bitcoin network and all other digital asset networks. Rather, the rest of the digital asset ecosystem can fulfil different needs or solve other problems that bitcoin simply does not.

Fidelity report

Fidelity’s argument, quite simply, is that since other blockchain projects fulfil different purposes, they need to be evaluated from a different perspective.

Investors, according to Fidelity, “should hold two distinctly separate frameworks for considering investment in this digital asset ecosystem. The first framework examines the inclusion of bitcoin as an emerging monetary good, and the second considers the addition of other digital assets that exhibit venture capital-like properties.”

Echoes of Michael Saylor

Fidelity’s suggestion that Bitcoin combines the “scarcity and durability of gold with the ease of use, storage and transportability of fiat” is closely aligned with the view of Bitcoin permabull Michael Saylor, whose company MicroStrategy just yesterday bought another 660 BTC at an average price of US$37,875.

As reported by Crypto News Australia, Saylor recently went on a podcast explaining that Bitcoin is property and that everything else is a security. If you’re keen to explore Saylor’s argument further, go no further than his inspiring talk at Blockchance Europe 2021:

Categories
Crypto News NFTs

ApeDAO on Track to Liquidate 81 Bored Apes and Reimburse Token Holders

ApeDAO, a decentralised autonomous organisation (DAO) founded by pseudonymous non-fungible token collector KyloRen, is the third-largest holder of Bored Ape Yacht Club (BAYC) NFTs.

Community discontent has led to a vote on the question of whether to dissolve the DAO. Available evidence suggests that soon, the DAO will be no more:

The Backstory

According to Montana Wong, co-founder of creator economy-based product studio Sprise, ApeDAO was established with the goal of becoming the largest holder of BAYC NFTs. The DAO itself is governed by a token $APED, which represents voting rights within the DAO and fractionalised ownership of the DAO’s treasury, which at 11,562 ETH translates to approximately US$31.7 million at the time of writing.

Using these figures, the $APED token ought to be trading at around US$16, however in reality it is closer to US$8. Since August, the floor price of BAYC has risen from 20 ETH to 100 ETH, suggesting a fivefold return. However, $APED holders have seen their values decline from US$10 to US$8 over the same period.

The problem, then, is quite simple. The DAO’s governance token has failed to keep pace with the value of the treasury’s holdings. It’s the equivalent of any listed company having net assets worth US$100/share but finds itself persistently trading at US$50/share.

However, unfortunately for ApeDAO, it seems as if discontent has been brewing for some time, given that the community recently shot down a proposal to “professionalise” the DAO:

ApeDAO’s proposal to professionalise. Source: ApeDAO

The Proposal

For the reasons listed above, a proposal has been put forward asking whether the DAO should liquidate all assets. At the time of writing, 64.39 percent of $APED holders were in favour of liquidation, although this was down from 82 percent just yesterday:

Screenshot of the vote. Source: ApeDAO

Assuming the vote is passed as expected, the DAO would need to be liquidated, meaning all of its assets would be sold.

However, since the DAO’s assets are locked up in a multi-sig wallet, requiring four signatures, there is still one major potential roadblock. At present, only one has voted in favour of liquidation. It remains unclear whether the remaining signatories will end up voting in favour of the liquidation and/or release funds by signing the final transaction. As Montana Wong notes:

DAOs are currently all the rage, with one recently being established to buy Blockbuster Video, and another making a failed attempt to buy a copy of the US Constitution.

The lesson in the ApeDAO saga is, however, clear – decentralisation within the context of Web 3.0 appears to be one of degree. In the end, as in this case and in much of the real world, those with power are likely to have the final say, independent of the community’s wishes.

Categories
Bitcoin Crypto News

State Senator Introduces Bill to Make BTC Legal Tender in Arizona

US Republican State Senator Wendy Rogers is looking to follow in the footsteps of President Nayib Bukele of El Salvador by introducing a bill to make bitcoin legal tender in the state of Arizona. The question is: is it possible, and if so, what are the prospects of success?

Sample of the Bitcoin bill. Source: Arizona legislature

Contents of the Bill

The bill, quite simply, seeks to add bitcoin to the list of instruments that currently constitute legal tender in Arizona.

Technically speaking, if accepted as a medium of exchange and unit of account, not only would it enable direct peer-to-peer transactions, but it would also facilitate transactions between citizens and businesses/government. You could even envision a situation where employees could receive their salary in bitcoin, although that is already taking place across the country.

Lord Fusitu’a, a member of Tongan royalty, and who is open about his mission to have Tonga embrace bitcoin as legal tender, took to Twitter to express his support for the bill:

Critically, the bill refers specifically to “Bitcoin”, not “cryptocurrency”, suggesting there are significant and material differences between Bitcoin and everything else.

Although not explicitly outlined, one possible reason for this distinction may be that of the 17,219 tokens/cryptocurrencies, only Bitcoin’s issuance is set in stone and incapable of debasement by any centralised group/foundation. Bitcoin is the 21st century’s solution to loose monetary policy, while other digital assets serve an entirely different purpose.

Prior to the bill coming into force, it would first have to pass the Arizona State Senate and House before Governor Doug Ducey, a Republican, signs it into law.

Potential Roadblocks

One potential roadblock may be a provision in the US Constitution:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts.

US Constitution, Article I, Section 10, Clause 1

At this stage, it’s anyone’s guess as to whether the bill is likely to succeed but the implications, if it does, would be enormous:

While some are excited, others are less so, suggesting there may be a simpler solution than going the legal tender route:

Irrespective, the tide appears to be slowly shifting in favour of greater adoption, and with an estimated 10 percent of US householders owning BTC, it’s likely that bills like this one are just the beginning of a significant trend.

Categories
Crypto News NFTs

OpenSea Update Leaves Some Creators Unable to Mint New NFTs

In 2021, NFT platform OpenSea recorded over US$14 billion in transaction volume, an increase of 646 times over 2020. Unfortunately, its user experience hasn’t come close to its financial performance, as the exchange has experienced one PR disaster after the next.

The latest relates to a limitation on the number of NFTs a creator can mint:

OpenSea, One Drama After the Next

Over the past six months alone, Crypto News Australia has reported on several instances where OpenSea ended up with egg on its face. These include:

More Drama, Like a JPEG Soap Opera

Yesterday, OpenSea announced it had “updated our collection storefront contract limits” to only allow five collections per NFT wallet or user, and a maximum of 50 NFTs in each collection. Recognising that the community might not like it, the platform got on the front foot:

We know this change may impact our community, so please don’t hesitate to share how this affects your creative flow.

OpenSea via Twitter

Within hours, the NFT community was up in arms, with users calling it “unnecessary”, among other less cordial terms:

As some creators noted, for those who had already minted 50 or more in an existing collecting, they were unable to continue and deliver on promises made to prospective investors:

This is probably the worst response to some pretty wonderful competition emerging and others opening up just around the corner. Very sad to see. For me personally, I wouldn’t even care if they [OpenSea] reversed this one hour later. The fact that they would put this out there and let people wake up to it – I’m done with them.

David Horvath, Uglydoll co-founder

OpenSea Backtracks

In virtually no time, OpenSea did a complete 180 on its position, saying:

In a Twitter thread, it explained that the limitation was imposed to reduce plagiarism on the platform, but that it “should have previewed this with you before rolling it out”.

Considering OpenSea’s 2.5 percent fee, you’d imagine that at least part of its US$350 million in revenue in 2021 could go to some good PR management and training.

Categories
Bitcoin Crypto News Markets

60% of BTC Supply Remained Dormant Through Latest Volatile Period

Following the recent drawdown crypto markets, Bitcoin moved strongly into oversold territory, suggesting conviction might have been on the decline. HODLers, however, didn’t get the message, as on-chain analytics shows over 60 percent of supply hasn’t moved in a year.

Illustration of declining ratio between younger to older coins. Source: Glassnode

Long-Term Holders Retain Conviction

Despite Bitcoin’s negative price action reflecting a 50 percent decline from its November high, it’s telling that much of Bitcoin’s holder base has remained unperturbed. This tends to suggest that most Bitcoin holders have strong conviction, enough to see them through periods of extreme price volatility.

One metric illustrating this is age distribution bands, also known as “HODL waves”. Aside from illustrating when various age group bands last moved, it also provides clues regarding broader macro adoption trends.

As illustrated below, over 60 percent of supply has been dormant for more than a year.

BTC HODL waves. Source: Coin Metrics

Minnows Continue to Accumulate

Another optimistic indicator outside of HODLers’ refusal to sell is that addresses holding small amounts of BTC continue to accumulate. As illustrated below, addresses holding between 0.001 and 0.1 BTC have increased from approximately 13.5 million to 16 million since the beginning of 2021:

Number of small holder addresses for BTC and ETH. Source: Coin Metrics

For those feeling particularly uneasy at the recent price action, the indicators above must surely provide some much needed “hopeium”.

Categories
Bitcoin Crypto News

Bitcoin Moves Firmly into Oversold Territory amid Drop Below $33,000

Against a backdrop of negative macro sentiment and a shift towards risk-off assets, the crypto market plunged this week – including Bitcoin, albeit to a lesser degree. It didn’t stop there, however, as Monday evening saw Bitcoin drop further to below US$33,000, a level analysts argue puts it firmly into oversold territory:

Relative Strength Index (RSI) in Brief

The RSI is a momentum indicator used in technical analysis to indicate levels at which an asset is overbought or oversold. It helps traders plot their entry and exit points, and spot general market trends.

In traditional markets, an RSI value of 70 percent or above is considered overbought, whereas oversold is when the value is 30 percent or below. 

Of course, these are just rules of thumb and within the context of Bitcoin need to be considered along with a host of other variables, including on-chain data and fundamentals.

BTC price (above) and RSI (below). Source: Bloomberg

The Upside of a Price Collapse? Bitcoin’s RSI Looks Good

While the initial Bitcoin collapse was driven largely by negative macro winds, the subsequent dip below US$33,000 was mostly attributable to capitulation in the futures market. This was something on-chain analyst Will Clemente foresaw after the initial slump:

The good news of a more than 50 percent correction from Bitcoin’s all-time high is that crypto’s premier asset is now trading at levels that analysts consider “oversold”, as measured by the RSI. Historically, this has represented a good buying opportunity:

As illustrated in the chart below, Bitcoin’s current RSI is close to levels last seen during the pandemic-led meltdown in March 2020.

Bitcoin RSI. Source: Buybitcoinworldwide

Twitter user Bitwatch suggests that the latest RSI levels may indeed be a buy signal:

Be fearful when others are greedy, and greedy when others are fearful.

Warren Buffett, the “Oracle from Omaha”

Based on the most recent Bitcoin Fear and Greed Index, if Warren were a Bitcoiner, we know what he’d be doing.

Bitcoin Fear & Greed Index. Source: @BitcoinFear

At the time of publication, Bitcoin has since recovered and is trading at US$36,346.

Categories
Bitcoin Crypto News Markets Solana

Crypto Markets Tumble Amid Global Investor Sell-Off, Down 44% from All-Time High

Virtually all digital assets are in the red following sharp declines that began last Thursday and continued into the weekend. An estimated US$1.3 billion in leveraged long positions was liquidated amid a correction that saw the crypto market capitalisation (market cap) drop close to 50 percent from its November high.

Blood in the Crypto Streets

Over the course of a few days, billions were wiped out across the board, with few exceptions. Of the top 100 cryptocurrencies by market cap, DeFi tokens were hit hardest:

Top 10 worst performing digital assets over past seven days. Source: CoinMarketCap

The top 10 cryptos by market cap fared somewhat better, although Solana’s 36 percent decline over the week is also partially due to it suffering another, yes another, DDoS (distributed denial-of-service) attack.

Top 10 digital assets by market cap over past seven days. Source: CoinMarketCap

What Happened?

As the US Federal Reserve recently signalled its intent to tighten monetary policy in 2022, market sentiment shifted from risk-on to risk-off.

Risk-on assets are those with higher volatility, to the upside as well as the downside. These include assets like equities and crypto. Generally speaking, value stocks tend to be less risky than tech stocks. And Bitcoin is widely considered less risky than other digital assets.

Risk-off assets, by contrast, are assets with low volatility and therefore perceived as less risky. These are things like government bonds and cash, which don’t tend to fluctuate sharply in value.

With the broader market going risk-off, a Wall Street-induced equity sell-off saw close to US$500 billion in market cap erased over the course of five days. This move was amplified by a cascade of leveraged long liquidations, an all-too-familiar sight in the crypto markets:

As Bitcoin increasingly is viewed as risk-on in the short term, a fascinating positive correlation has emerged between the NASDAQ (a technology-focused index) and Bitcoin.

NASDAQ and BTC correlation. Source: Will Clemente

If you compare the NASDAQ to Bitcoin and then compare Bitcoin to the DeFi tokens, it’s evident that the further you go out on the risk curve, the harder you get hit when market sentiment goes risk-off:

While some may be feeling the Monday blues from the past few days’ crypto carnage, others will look at it similarly to the May 2021 sell-off, which in hindsight represented a great buying opportunity. Of course, hindsight is 20/20.