It only took seven months …
After seven months and almost 100 emails, I finally got an interview with one of the co-creators of Libra, Christian Catalini, who is now the chief economist at Calibra. He answered a huge range of questions on everything from how Facebook will earn money from Calibra to how Facebook and the Libra Association plan to satisfy the contradictory goals of preventing anti-money-laundering and banking the unbanked. I tried to ask some of the questions that lawmakers asked but did not give Mark Zuckerberg time to answer during the Congressional hearing. I also sought to further understand the issues relating to China’s digital currency and whether Libra really is the best countermeasure to that. Be sure to check it out.
Speaking of China, I also discuss the recent drama at Bitmain with CoinDesk’s Asia editor, Wolfie Zhao, for Unconfirmed. Be sure not to miss his description of how employees reacted when Jihan Wu enacted his coup.
As for other crypto news, it was a quieter week, but that gave me some time to read a long-form article from Wired on a theme that I think will continue to be part of the crypto space for the foreseeable future: how the competition to get ahead in the cryptocurrency race will affect geopolitics.
This Week’s Crypto News…
This long-read Wired article looks into how cryptocurrency mining is booming in post-Soviet countries and why. Hannah Lucinda Smith writes, “There are layers to how Russia might weaponize cryptocurrencies in the era of hybrid warfare. The first is already well underway: using cryptocurrencies to pay for acts of political sabotage, like the hacking of Hillary Clinton’s emails. The next appears to be in progress: the mass stockpiling of cryptocurrencies through intense mining using Russia’s huge gas reserves. If it manages to gather enough, it could secure itself an influential position as blockchain usage continues to grow, perhaps comparable to the place the US holds through the dollar in the traditional banking system. In the meantime, it provides the Kremlin with access to a vast hoard of capital that is difficult to control and trace. But the third layer is most troubling, experts say. At some point in the future, perhaps within the next decade, Russia and other rogue states could create an alternative financial system based on blockchain that allows them to trade freely with one another, channeling money to armed groups and attracting investment to keep their economies afloat despite international sanctions.” As I mentioned it’s a long read, but she goes to these places that most of us have probably never heard of to show the cryptocurrency boom there, and how that is playing into geopolitics.
One of the most absurd security breaches happened last week when Bitcoin futures exchange BitMEX emailed the majority of its users with the email addresses in the “to” field, exposing what Larry Cermak of The Block estimated to be 30,000 email addresses. He tweeted, “There is already a 30k email dump selling on darknet. For any user that was involved in this leak, get ready for constant phishing attempts and emails from competitors. Be careful.”
It was only a matter of time. Ethereum now has a marketing DAO. While other blockchains such as Dash and Decred have built-in funding for functions such as marketing, Ethereum isn’t going that route. It’s going a particularly Ethereum-y way: via a DAO, one forked from MolochDAO. The founders of the MolochDAO include ConsenSys advisor and former CMO Amanda Cassatt, former Ethereum Foundation advisor and blockchain author William Mougayar, MetaCartel DAO’s Alexandre Masmejean, former Shapeshift CMO and current director at Wachsman Emily Coleman and more than 50 others. First up on the DAO’s to-do list is creating an Ethereum brand positioning statement as well as a catchphrase akin to Bitcoin’s “digital gold” handle.
Square reports first-time BTC buyers have roughly doubled since the Cash App redesign in September. And the strong performance in Q3, partially from BTC sales, has prompted Square to push its 2019 revenue guidance upward.
If you’re going to read one article about that far-fetched study saying one individual was responsible for the Bitcoin bubble of 2017, have it be Elaine Ou’s Bloomberg Opinion piece, which gives several more plausible explanations to the authors’ hypotheses. First, she says they attribute one custodial account address, like that of an exchange, to one for an individual. Also, their contention that Tether seems to be issued in response to a lowering Bitcoin price could be explained by Tether being issued in response to user demand. She even has an interesting hypothesis having to do with how traders in China have been using Tether after the Bitcoin trading ban in that country.
But her final paragraph is the most important point, and here, she’s referring to the loan that Tether gave to Bitfinex when one of Bitfinex’s business partners had hundreds of millions of dollars of its funds seized by authorities: “Perhaps the takeaway is that when banks refuse to do business with crypto traders, or when a government bans trading altogether, it doesn’t stop traders from trading. It just forces them to find creative solutions. If it were easy for crypto exchanges to use the traditional banking system, there would be no need for Tether at all.”
This may not exactly be a fun read, but Alex from the Human Rights Foundation got creative in describing just how dystopian a blockchain-based digital yuan could be, calling it, “lipstick for a panoptical pig.”