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
Facebook Social media Stablecoins

Meta (Facebook) Turns to ‘Zuck Bucks’ in Latest Virtual Currency Move

Since offloading its failed Diem stablecoin intellectual property and rebranding to Meta, Facebook is looking to introduce non-blockchain-based virtual tokens and loans as it seeks new revenue sources against a backdrop of fierce competition in the social media landscape.

Virtual Currencies Dubbed ‘Zuck Bucks’

According to a report by the Financial Times, Facebook is exploring the creation of non-blockchain-based virtual currencies which employees internally have dubbed “Zuck Bucks”. Unlike Diem, its doomed blockchain stablecoin project, Meta is said to be leaning towards in-app tokens centrally controlled by the company, much like those used in gaming apps such as the Robux currency in popular gaming platform Roblox.

The company is also considering rewards for users who contribute meaningfully on its platforms – for example, within Facebook groups you may have “social tokens” or “reputation tokens”. Instagram by contrast could have “creator coins”.

Meta Looks to New Revenue Streams

Amid declining profits and users, as well as competition from TikTok, Facebook has of late increasingly turned to other revenue streams for future growth.

In addition to creating a token economy, the US$600 billion social network behemoth is also considering traditional financial services, such as loans for small to medium-sized enterprises. Details, however, remain sparse:

We have no updates to share today. We continuously consider new product innovations for people, businesses, and creators. As a company, we are focused on building for the metaverse and that includes what payments and financial services might look like.

Spokesperson for Meta (unnamed)

Moves to introduce non-fungible tokens (NFTs) are more advanced, as founder and chief executive Mark Zuckerberg recently confirmed plans to integrate NFTs into Instagram in the “near term”.

As news broke of Facebook’s latest attempt to remain in the social media driver’s seat, Twitter was awash with criticism of both Facebook and the controversial founder himself:

At this stage, it’s too soon to tell whether these initiatives will dilute the company’s growth efforts or otherwise accelerate it towards new heights. Time will be the arbiter.

Categories
Bitcoin Crypto News Lightning Lightning Network

$70 Million Raised to Bring Stablecoins to Bitcoin’s Lightning Network

Building on the base established by Bitcoin’s latest protocol update, “Taproot”, Lightning Labs has announced a new protocol, “Taro”, to widen the range of assets supported by Bitcoin’s layer two protocol, the Lightning Network:

‘Bitcoinising the Dollar’

Taro is an open protocol made possible by Taproot that allows developers to issue assets on the Bitcoin blockchain and then move them onto the Lightning Network for speed and scalability, making use of bitcoin liquidity to ensure interoperability between assets.

We see Taro as an important step in bitcoinising the dollar, getting the best of both worlds by: 1) issuing assets like stablecoins on the most decentralised and secure blockchain, bitcoin; and 2) allowing users to transact on the fastest global payments network with the lowest fees, Lightning.

Ryan Gentry, director of business development, Lightning Labs

In practical terms, this means that digital assets such as stablecoins or even NFTs could be issued using a taproot script on-chain and then transferred either on-chain or via the Lightning Network.

By leveraging the Lightning Network’s one million-plus transactions per second capacity, digital assets could, pursuant to Taro, be settled faster and cheaper relative to all other blockchains:

Transactions per second of other blockchains. Source: Saleswallet

The response from Bitcoiners proved to be enormously positive, with Marty Bent commenting: “If it [Taro] passes the peer review test – can bring the usecase of issuing and transferring digital assets that aren’t bitcoin UTXOs to the LNP/BP stack. If Taro is able to do this, it renders all of the competing altcoin narratives obsolete overnight.”

Lightning Growth Continues

As reported by Crypto News Australia, between August and September last year Lightning Network growth more than doubled. In fact, over the past 12 months it has experienced strong growth from both a US dollar (blue line) and bitcoin (orange line) perspective:

Lightning Network Growth. Source: Bitcoin Visuals

As Lightning Labs drives to solve real problems for real people, part of the uptick in network activity has been attributed to the growth of bitcoin as a remittances and payment technology, particularly among developing nations.

As business development director Gentry concludes about the Taro protocol:

Bringing stablecoins to bitcoin via the Lightning Network is good for users who want access to financial services, good for app developers who want new tools, good for routing node operators who want more fees, and good for issuers who want a better experience for their users.

Ryan Gentry, director of business development, Lightning Labs

Price action aside, it’s difficult not to be bullish on Bitcoin with developments such as Taro that appear set to catapult Lightning adoption.

Categories
Crypto News NFTs Sports

Liverpool FC’s NFT Launch Flops as Only 6% Have Sold

Top-two English Premier League team Liverpool Football Club’s much-maligned foray into the world of NFTs has been heralded a spectacular flop, with less than 6 percent of the collection’s 171,072 NFTs sold in the first week:

LFC Heroes Club Launched Despite Pushback

Last week’s release of ‘LFC Heroes Club‘ was intended to be a “fun and innovative way to celebrate being an LFC fan”, featuring 171,072 NFTs starting at US$75, including 24 “Legendary” one-of-one editions.

LFC Heroes Club. Source: Liverpool FC

The LFC collectibles were available for purchase across a three-day sale window from March 30 until April 1, with half the proceeds going to the superclub’s charitable foundation. At the time, fans complained that the release was exploitative and merely an attempt to increase revenues:

The Market Has Spoken

After paying out the promised donations to the LFC Foundation, the club is set to bring in around US$590,000 through the NFT launch, despite sales projections exceeding US$11.2 million.

At the time writing, only 9,721 out of a possible 171,072 NFTs have sold, making LFC Heroes one of the biggest NFT flops in recent memory.

Over the past 12 months, we’ve become accustomed to brands leveraging NFTs to increase revenues and consumer engagement. In the process, countless organisations have faced backlash from fans for their efforts, including SEGA, Salesforce and Uber.

Sadio Mané. Source: Liverpool Football Club

While environmental concerns are often cited, consumer exploitation is the most common cause for complaint, as was the case with the LFC Heroes Club:

It remains unclear why this particular collection of JPEGs failed relative to others that have sold for millions. Either way, the market has spoken.

Categories
Bitcoin Bitcoin Mining Crypto News

BTC Milestone: 90% of Supply Issued and Mining Difficulty Hits All-Time High

This past weekend marked a momentous occasion in Bitcoin’s history as supply issuance crossed the 90 percent mark. As the 19 millionth block was mined, Bitcoin Takeover founder Vlad Costea commented: “There are only 2 million BTC left to mine in the next 118 years!”

How is the 21 Million Bitcoin Cap Defined and Enforced?
Bitcoin supply issuance schedule. Source: Cypherpunk Cogitations

‘Scarcity Intensifying’

In and among celebrations on Twitter, many users took the opportunity to comment on Bitcoin’s remarkably well-designed inflation model. As illustrated above, the bulk of Bitcoin’s 21 million hard cap issuance is front-loaded in the early years.

With the block reward halving every four years, and the next being scheduled in 2024, Bitcoin’s scarcity is becoming increasingly self-evident:

Mining Difficulty Soars

To recap, mining difficulty is a relative measure of how difficult it is to find a new block. This is adjusted on a periodic basis correlated to the hash power being deployed by the network. The greater Bitcoin’s hash power, the more difficult it becomes to find blocks.

Amid the excitement of Bitcoin reaching the historic 90 percent issuance rate, the network also recorded its highest mining difficulty to date, rising 4.31 percent to 28.59 trillion. Notably, mining difficulty is up 100.6 percent from its 2021 low of 13.68 trillion.

BTC mining difficulty all time. Source: BTC.com

A recent illustration was in 2021, when China banned Bitcoin mining (again), resulting in the network difficulty reducing by 16 percent as significant hash power was taken offline.

The long and short of it is that an all-time high for mining difficulty makes it more difficult than ever for Bitcoin miners to “find” blocks, making the network even more robust and secure than before. Remarkably, this is the second time in three weeks it has reached such a milestone.

Categories
Crypto Exchange Crypto Hardware Wallets Crypto News Crypto Wallets Cryptocurrency Law Europe Regulation

EU Parliament Votes in Favour of KYC for Private Crypto Wallets

European Union lawmakers have voted in favour of controversial proposals that require exchanges to collect personal data from individuals who transact more than EUR 1,000 using unhosted wallets.

Bad News for Exchanges

The proposals were passed, albeit narrowly, and purport to effectively prohibit anonymous crypto transactions:

The underlying justification behind the proposals is that they intend to extend anti-money laundering (AML) requirements that apply to conventional payments over EUR 1,000 to the crypto sector. As Coinbase CEO Brian Armstrong noted, however, the burden imposed on exchanges would be extremely onerous:

Most of the pushback from industry is because non-custodial wallets aren’t necessarily customers, with commentators describing the measures as “anti-innovation and anti-privacy”.

Referring to Chainalysis data showing that less than 0.05 percent of crypto volume was related to crime, hardware wallet provider Ledger argued that the proposals were neither necessary nor proportionate. It further noted that they reduced financial freedom, consumer protection and financial inclusion, and put Europe at a competitive disadvantage relative to other jurisdictions.

Image
Proposals’ unintended consequences. Source: Ledger

While some noted that users would simply resort to decentralised exchanges or send EUR 999 at a time, others had a more humorous perspective:

Turning Up the Regulatory Heat

This year has already shown that European lawmakers are increasingly scrutinising the digital asset sector. A few weeks ago, the EU Parliament finally decided not to ban proof-of-work cryptocurrencies (effectively Bitcoin), after going back and forth on the matter.

The next battle is clearly over unhosted wallets and for now it appears as if the regulators are in the driving seat. Importantly, the laws have not been enacted and still need to go through tripartite meetings between the EU Parliament, European Commission, and European Council.

Despite expectations that little will derail the proposals in question, if there is one thing we know about the crypto sector it’s that it will never go down without a fight.

Categories
Australia Bitcoin Bitcoin Mining Crypto News

Bengal Energy is Mining BTC in the Australian Outback Using Gas Wells

Canadian oil and gas miner Bengal Energy has commenced a trial to assess the profitability of mining bitcoin from its stranded gas assets in the Australian Outback.

According to a report in The Australian, Bengal Energy has commenced its program to install approximately 70 Bitcoin mining rigs within a “donga”, a term that left some confused from the outset:

‘Stranded Energy’ Problem

The initial project entailed assembling a series of previously out-of-operation gas wells in South Australia’s Cooper Basin, all of which were purchased from Santos Energy and Bridgeport Energy.

Bengel Energy’s chief operating officer, Kai Eberspacher, commented that the newly acquired wells however posed a significant problem given that they were “stranded” – able to produce power but unable to be distributed as current pipelines are out of reach.

While a pipeline is under construction, efforts have been delayed due to Covid-19 induced supply chain bottlenecks. In Eberspacher’s words:

We were basically looking at six months of having wells ready but without an outlet. We were dealing with stranded assets.

Kai Eberspaecher, chief operating officer, Bengal Energy

Bitcoin Mining Plugs Gap

After having outlaid the initial capital without a return on investment, Bengal Energy turned to portable Bitcoin mining rigs in dongas. A trial donga is being fitted with 66 mining rigs, able to generate approximately 0.005 BTC, or A$315, per day.

Kai Eberspacher, Bengal Energy’s chief operating officer. Source: The Australian

If the trial is successful, the company has indicated that it intends increasing its mining efforts by a factor of 10 to 20.

Energy Companies and Bitcoin – Match Made in Heaven

Despite recent efforts by some to discredit bitcoin mining, we’re seeing growing evidence of energy companies leveraging stranded assets and flared gas to power bitcoin mining operations.

While this has been happening in West Texas for some time, last week US energy giant ExxonMobil joined ConocoPhillips in disclosing that it was mining bitcoin with flared gas and looking to expand.  

A recent report found that bitcoin mining consumed as little as 0.05 percent of global energy with emissions at “inconsequential levels”. It’s also been suggested that up to 58 percent of Bitcoin’s energy composition is renewable, making it one of the greenest industries in the world.

Irrespective, those who believe bitcoin has no value will necessarily also believe that its appropriate energy use is zero:

“Imaginary money”… #NGMI.

Categories
Bitcoin Bitcoin Mining Crypto News

Ripple Co-Founder Launches $5 Million Campaign to Change Bitcoin’s Code

Billionaire and Ripple (XRP) co-founder Chris Larsen has joined forces with Greenpeace in a US$5 million campaign dubbed “Cleanup Bitcoin” to persuade the protocol to shift from proof-of-work (POW) to a “greener” consensus mechanism such as proof-of-stake (POS):

‘Change the Code, Not the Climate’

In partnership with Greenpeace and other organisations, Larsen is funding a series of ads over the next month calling on Bitcoiners to transition away from power-intensive POW mining to a POS system that uses much less energy:

Excerpt from Cleanup Bitcoin manifesto. Source: Cleanupbitcoin.com

Needless to say, the reaction among the community was swift and brutal:

A common criticism emerging from the community was that Larsen’s efforts smacked of duplicity and were instead an opportunistic attempt to leverage the emotive topic of the environment to undermine a Ripple competitor. This appeared to be the sentiment of Bitcoin-friendly US Senator Cynthia Lummis, who described the move as a play for regulatory capture:

Matt Walsh, a partner at Castle Island Ventures, was seemingly in a state of disbelief, given Ripple’s ongoing battle with the Securities and Exchange Commission (SEC):

Walsh’s partner at Castle Island Ventures, Nic Carter, the de facto Bitcoin energy-FUD-buster-in-chief, took a more humorous angle mocking Larsen’s website:

Meme based on Cleanupbitcoin website. Source: Nic Carter

Go Ahead, Fork It

Aside from being misguided about how the protocol works, it was Noelle Acheson, head of Insights at Genesis Trading, who said it best:

Jerry Brito, executive director at Coin Center, challenged the notion that 50 miners could force the code to change and encouraged those who believed otherwise to read The Blocksize War – an episode in history that proved it was the nodes and users who controlled the protocol, not the miners:

The result of the ‘Blocksize War’ was a hard fork of Bitcoin and led to the creation of Bitcoin Cash (BCH) and Bitcoin Satoshi’s Vision (BSV). With BTC’s market capitalisation at over US$900 billion, compared to BCH’s US$6.9 billion and BSV’s US$1.8 billion, the market has clearly spoken.

Having already dealt with a hard fork in the past, Bitcoiners such as Preston Pysh egged Larson on:

Categories
Bitcoin Cardano Dogecoin Ethereum Markets Polkadot Terra

Crypto Market Holds Firm Over $2 Trillion as BTC Reclaims $47,000 USD

Despite the digital asset market first reaching a US$2 trillion market capitalisation in April 2021, significant economic and geopolitical uncertainty has stifled the sector’s forward momentum in 2022.

However, a confluence of factors have turned things around, resulting in the market lifting above US$2 trillion for the first time in over six weeks:

Global crypto market capitalisation. Source: Coinmarketcap.com

After investors’ frustration at what felt like endless sideways price action, the sentiment across crypto Twitter was distinctly upbeat by the positive moves:

Green Candles for All

Digital assets across the board saw material gains, with the crypto economy’s total value holding above US$2 trillion for five consecutive days.

According to Coinglass data, around US$142 million in short liquidations contributed to bitcoin breaching US$47,000 for the first time since January. No doubt, Terra’s decision to buy US$10 billion in BTC is also at least partially responsible for the surge.

At the time of publication, bitcoin is trading at US$47,664, effectively erasing its losses and pushing past break-even for the year.

BTC price action over past seven days. Source: CoinMarketCap.com

Outside of BTC, altcoins similarly enjoyed a strong comeback, with a veritable feast of green candles on display. Analysts have suggested that the positive returns over the past week may be indicative of an impending bull market:

  • BTC – 12.7 percent
  • ETH – 14.5 percent
  • ADA – 30.4 percent
  • SOL – 22.7 percent
  • BNB – 7.8 percent
  • XRP – 4.8 percent
  • LUNA – 11.8 percent
  • AVAX – 6.7 percent
  • POL -15.2 percent
  • DOGE – 19.6 percent

Market Gets Greedy

It’s been said that fear and greed drive financial markets, and nowhere is that more apparent than in crypto.

Last week, the multifactorial Cryptocurrency Fear and Greed index was at 26 out of a possible 100 (a state of “fear”, one level up from “extreme fear”). Within a week, things have turned around and optimism is in the air.

The index is now tracking at 60, suggesting that investors are getting greedy, but nowhere near the extreme levels above 90 last seen in April 2021.

Despite his equating Bitcoin to rat poison, Warren Buffett’s cautionary words are perhaps worth noting, especially when the market is seemingly on the up:

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

Warren Buffett, investor and philanthropist
Categories
Bitcoin Crypto News ETFs Institutions

Canadian Bitcoin ETF Up 23% YTD And Now Holds Over 36,000 BTC

Since becoming the first spot bitcoin exchange traded fund in Canada in February 2021, the Purpose Bitcoin ETF has surpassed CAD$1.7 billion assets under management and, according to Glassnode, holds over 36,000 BTC.

Purpose Bitcoin ETF holdings. Source: Glassnode

One Bitcoin analyst noted the dramatic increase in holdings over the past week in particular:

The Canadian Purpose #Bitcoin ETF has just hit another ATH yesterday of 36.27k $BTC. Last week the ETF ended with an AUM of 34.07k bitcoin. That’s more than 2k bitcoin added this week so far …

Jan Wüstenfeld, Bitcoin analyst for @QE4Everyone

ETFs Not Welcomed by All

A spot-based Bitcoin ETF – that is, one exposed to the price of bitcoin, as opposed to something like a futures contract – is a somewhat divisive topic within the Bitcoin community.

Some regard ETFs as an easily-understood and accessible vehicle for everyday investors to gain exposure to bitcoin. In doing so, it broadens the tent so to speak, and opens up the sector to a whole new range of retail and institutional participants.

An opposing view highlights the risks of manipulation within paper markets linked to physical assets such as gold and silver. Within the context of Bitcoin, this could undermine the protocol’s most fundamental principle, namely a fixed and verifiable supply.

Unfortunately, one needn’t go back too far in history to find evidence of manipulation in financial markets. In 2020, investment bank giant JPMorgan paid US$920 million in fines and restitution for its role in manipulating the paper silver market.

Canada Leads the ETF Way

Whatever one’s view of spot-based Bitcoin ETFs, Canada has undoubtedly been at the forefront of bringing crypto ETFs to market. Not only was it the first country in the world to approve a Bitcoin ETF, it has since successfully launched another four.

By comparison, across the border in the US regulatory authorities are yet to approve a spot-based Bitcoin ETF, citing “manipulation concerns”. As reported by Crypto News Australia, as of November last year there were 34 ETF applications pending approval. Many have since been refused and, at the time of writing, more than a dozen applications remain outstanding.

Tellingly, the Securities and Exchange Commission (SEC) did approve a futures-based Bitcoin ETF in October. This was met with mixed reactions, with the consensus view emerging that it provided little benefit to retail investors relative to the intermediaries involved:

This vehicle means that the arbitrager takes their slice, the ETF provider takes their slice, the lawyer who set up the fund takes their slice, the administrator, the auditor … I mean, everybody is taking a slice out of your pie.

Real Vision founder/CEO Raoul Pal, on the futures-based Bitcoin ETF

While it remains unclear what the holdup is at the SEC, as one on-chain analyst noted, if the Purpose Bitcoin can double in 10 months, imagine what would happen if a spot-based ETF launched in the US:

Categories
Bitcoin Crypto News Russia

Sanctions-Hit Russia Considers Accepting Bitcoin for Oil

According to Russia’s chairman of the Congressional Energy Committee, Pavel Zavalny, the federation is open to accepting bitcoin for its natural resources exports.

Russia Pressured to Find Alternative Solutions

Amid global economic sanctions and a rapidly depreciating national currency, Russia has found itself under significant economic pressure, requiring it to consider creative solutions to keep its economy afloat.

Since Russia exports around 10 percent of the world’s oil and about 40 percent of Europe’s natural gas, the sanctions imposed have dealt a blow to both the federation and global citizens alike. As Russia’s critical revenue source has all but dried up, everyday people are feeling the pain as global energy prices have skyrocketed. In response, Russia has resorted to accepting different currencies for its natural resources.

Russia Retaliates

According to a press conference translation, Zavalny suggested that Russia was open to accepting different currencies for its exports, though the method would depend largely on the preference of the buyer and the importing country’s relationship with Russia:

When it comes to our ‘friendly’ countries, like China or Turkey, which don’t pressure us, then we have been offering them for a while to switch payments to national currencies, like rubles and yuan. With Turkey, it can be lira and rubles. So there can be a variety of currencies, and that’s a standard practice. If they want bitcoin, we will trade in bitcoin.

Pavel Zavalny, chairman, Russian Congressional Energy Committee

The news comes after President Vladimir Putin announced earlier this week that so-called “unfriendly” countries would need to pay for Russian gas in rubles.

Harsh Measures Call For Hard Money

In his press conference, Zavalny echoed these sentiments in relation to “unfriendly countries”, saying: “When we exchange with Western countries … they should pay in hard money. And hard money is gold, or they must pay in currencies which are convenient for us, and that is the national currency – rubles.”

It’s been argued that when the G7 nations confiscated Russia’s US$700 billion in reserves, it marked the beginning of a “new monetary world order“. Whether you agree with that assessment or not, geopolitics quite clearly has had an impact. We may conceivably be witnessing the demise of the petrodollar in real-time and simultaneous emergence of a world where commodities are priced in hard assets.

While it may have been viewed as somewhat fanciful in years gone by, it is not entirely improbable that bitcoin will emerge in the coming decade as a pristine global reserve asset. At least, that’s what Bitcoiners such as Greg Foss think: