Podcast Summary
Significant crypto developments and market updates: The CFTC vs Binance legal battle continued, Zevm introduced two new iterations, Gary Gensler testified before Congress, Infura launched an NFT API SDK, Bitcoin and Ethereum had flat weeks, and the total crypto market cap remained above $1 trillion.
This past week in crypto saw several significant developments, including the ongoing CFTC versus Binance battle, the continuation of Zevm's rise with two new iterations, and Gary Gensler's upcoming testimony before Congress regarding his actions towards the crypto community. Additionally, Infura introduced an NFT API SDK to make building NFT applications easier for developers. Bitcoin and Ethereum had relatively flat weeks, with Bitcoin starting at around 28,000 and ending at 28,420, and Ethereum starting at $1,825 and ending at $1,795. The total crypto market cap remained above $1 trillion. Despite the economic downturn, there were hopes that new buyers entered the market during the last banking crisis.
Bitcoin's price surge: Temporary or permanent trend?: Some experts view Bitcoin's price increase as a temporary spike due to the Fed's balance sheet expansion, while others see it as a more permanent trend. The consensus is that the macroeconomic environment will continue to impact Bitcoin's price movements, with the US national debt adding to the complexities.
The recent surge in Bitcoin's price could be attributed to various factors, with some experts believing it's a temporary spike due to the Federal Reserve's balance sheet expansion, while others argue it's a more permanent trend. Jim Bianco, who was interviewed on the podcast, falls into the former camp. He believes the recent increase in Bitcoin's price is not systemic and is more contained to the banking sector, rather than leaking out to the general public. However, he also acknowledges that the Fed's actions have erased significant progress made in the last year in terms of rising interest rates. Despite differing opinions, the consensus seems to be that the macroeconomic environment will continue to play a significant role in Bitcoin's price movements. Additionally, it's important to note that the US national debt has grown rapidly in recent years, reaching a milestone of $24 trillion in just 27 months, adding to the complexities of the economic landscape.
Central banks create credit and inflate currencies: Central banks contribute to economic prosperity but come with risks, while Bitcoin lacks the ability to create social credit and may not offer the same level of community credit creation as banks.
The rapid growth of central bank balance sheets, as seen in the chart, is a feature of our credit-based money system, not a bug. Central banks are designed to inflate currencies and create credit, which has contributed to economic prosperity over the last century. However, this comes with risks, such as increased debt and credit risk. On the other hand, a hard money system like Bitcoin lacks the ability to create social credit and may not be able to provide the same level of community credit creation that banks do. Ultimately, both systems have their advantages and disadvantages, and it may be possible to have both in a society. The Fed balance sheet and the supply of cryptocurrencies are moving in opposite directions, and individuals may choose to hold both for different reasons. While some may prefer the deflationary properties and store of value of cryptocurrencies, others may still need fiat currency for things like home loans. It's important to note that this is a complex issue with many nuances, and further research and understanding is necessary.
Impact of Monetary Policy on Crypto: The banking crisis could lead to lower interest rates and boost growth stocks and crypto in the long run, with the upcoming Ethereum staking withdrawal expected to be bullish for ether's price.
The current banking crisis could be bullish for crypto in the long run, despite the short-term volatility. The banking crisis, caused by aggressive monetary policy, is more likely to lead to disinflation than hyperinflation, allowing the Fed and other central banks to lower interest rates and boost growth stocks and crypto. Balaji's bold bet on Bitcoin reaching $1 million is seen as a directional signal rather than a literal prediction. The upcoming Ethereum staking withdrawal unlock is expected to be bullish for the price of ether, as stakers are unlikely to sell their holdings. Arbitrum's recent token launch and airdrop have raised concerns about airdrop farming, but the extent of this issue remains unclear. Decentralized exchanges have seen increased volume compared to centralized exchanges following the collapse of FTX. Overall, the discussion highlights the potential impact of monetary policy on financial markets and the ongoing shift towards decentralized finance.
Lost Ethereum Worth $1.15 Billion Due to User Errors and Buggy Contracts: Approx. $1.15B Ethereum lost due to user mistakes and buggy contracts, CFTC sues Binance, but reliable exchanges prioritize security and customer support.
Decentralized exchanges (DEXs) are experiencing significant growth, but there are risks involved, such as lost funds due to user errors and buggy contracts. Connor, a researcher, has identified approximately $1.15 billion worth of Ethereum (ETH), or about 0.5% of the circulating supply, that is lost forever due to various reasons like typo errors, user mistakes, and buggy contracts. One notable incident was the Parity wallet bug that caused $1 billion worth of ETH to be locked forever. Meanwhile, regulatory news includes the Commodity Futures Trading Commission (CFTC) suing Binance for alleged regulatory violations. Despite these challenges, it's important to remember that crypto exchanges like Kraken prioritize customer support and security, making them a reliable choice for crypto enthusiasts. Additionally, tools like Earnify can help users claim unclaimed airdrops and manage their wallets effectively.
CFTC Sues Binance for Operating Unregistered Crypto Derivatives Platform and Money Laundering: The CFTC has filed a lawsuit against Binance, its executives, and affiliated companies for operating an unregistered crypto derivatives platform, failing to implement KYC/AML processes, and facilitating money laundering activities.
The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Binance, Binance Holdings Limited, Binance Holdings I.E. Limited, and Binance Services Holdings Limited, along with its CEO Changpeng Zhao (CZ), accusing them of operating a centralized digital asset trading platform in violation of the Commodity Exchange Act and other CFTC regulations. The CFTC alleges that Binance knowingly disregarded applicable provisions of the Commodities Exchange Act while engaging in regulatory arbitrage. The complaint includes charges of offering unregistered crypto derivatives inside the United States, failure to implement KYC/AML processes, and poor anti-evasion programs. The CFTC seeks disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations. The more damning allegations include Binance's awareness and facilitation of money laundering activities on its platform. Binance has responded by stating that they have been cooperating with the CFTC for over two years and disagree with the characterization of the issues alleged in the complaint. The crypto industry is not surprised by these allegations, as money laundering has been a long-standing issue in the crypto space. The CFTC's actions against Binance come as US regulators also target other crypto exchanges, such as Coinbase.
CFTC's Lawsuit Against Binance: Impact on Cryptocurrency Regulation: The CFTC's lawsuit against Binance and its classification of Bitcoin, Ether, and Litecoin as commodities could influence the SEC's stance and potentially lead to more decentralized practices and skepticism towards cryptocurrencies from the White House, but a gold-like ban on digital assets is unlikely to last.
The cryptocurrency industry, specifically Binance, is facing increased scrutiny and regulation from authorities such as the Commodity Futures Trading Commission (CFTC). The CFTC's lawsuit against Binance Holdings marked a significant development, as it clearly stated that Bitcoin, Ether, and Litecoin are commodities. This could potentially impact the SEC's stance on these digital assets. The fine and potential settlement between Binance and the CFTC may lead to more jurisdictionally friendly practices for Binance and a push towards decentralized protocols where no one has the ability to perform AML KYC checks or ban users. The report from the White House also expressed skepticism towards cryptocurrencies, advocating for the use of the central bank digital currency and the existing financial system. There has been a heated debate regarding the future of cryptocurrencies in the US, with some speculating about the possibility of an outright ban on owning digital assets. However, the historical precedent of Executive Order 6102, which banned private ownership of gold, suggests that a similar ban on cryptocurrencies is unlikely to last for an extended period.
Potential for making cryptocurrency ownership illegal: History shows extreme circumstances can lead to making crypto ownership illegal, but the probability is currently low, stay informed and be prepared.
While the events of the 1930s and the idea of making cryptocurrency ownership illegal may seem far-fetched today, history has shown us that extreme circumstances can lead societies to take drastic measures. The discussion highlights the potential for a choking off of fiat to crypto exchange as the first step towards making cryptocurrency ownership illegal. However, it's important to note that the probability of this happening is currently low, but it could increase if central banks and governments feel threatened by the decentralized nature of cryptocurrencies. The Internet and the availability of information have made it harder for such extreme circumstances to arise, but it's not impossible. The debate around crypto hoarding versus maintaining the social good also echoes the sentiments of the 1930s, with some seeing it as a necessary precaution and others as a cause for instability. Ultimately, it's crucial to stay informed and be prepared for potential changes in the regulatory landscape.
Law Firm Alleges Regulators Preventing Crypto Integration: A law firm accuses regulators of using tools to hinder crypto integration into the financial system, with SEC Chair set to testify before Congress. Industry supporters urge accountability and consider shifting political allegiances based on crypto stance.
The cryptocurrency industry is facing pushback from regulatory bodies, leading to legal action and calls for accountability from Congress. A law firm, Cooper and Kirk, has sent a letter to US Congress, alleging that regulators are using regulatory tools to prevent crypto integration into the financial system. This comes as Gary Gensler, the Chair of the Securities and Exchange Commission (SEC), is set to testify before Congress regarding his approach towards crypto. The industry's defenders, both within and outside of crypto, are urging Congress to hold federal banking regulators accountable and are considering shifting their political allegiances based on each party's stance on crypto. This growing partisanship over crypto could potentially impact the 2024 election.
Crypto as a Political Issue: Freedom vs. Regulation: The crypto industry is a political issue with advocates viewing it as a fundamental right to own digital property and a cornerstone of modern democracy, while critics express skepticism or hostility. Policymakers must find a balance that protects consumers, fosters innovation, and upholds constitutional values.
The crypto industry is becoming a significant political issue, with some individuals and politicians viewing it as a fundamental right to own digital property and a cornerstone of a modern, classically liberal democracy. The industry's advocates argue that it embodies human values and freedom of speech in the digital age, and they believe that both parties should rally around this idea. However, there is a growing divide between those who support crypto and those who view it with skepticism or outright hostility. Some politicians, like Tom Emmer, are making crypto a part of their platform, while others, such as Elizabeth Warren, are criticized for misunderstanding and misrepresenting the industry. The debate over crypto regulation is a complex one, with both sides making valid points. Ultimately, it is up to policymakers to find a balance that protects consumers, fosters innovation, and upholds constitutional values.
Regulation's Role in Crypto Protocols' Maturity: Regulatory clarity and consistency are vital for crypto's growth in the US, with some countries leading the way in supportive regulations, while others risk driving innovation offshore.
While centralized entities like banks require regulation for trust and clarity, decentralized protocols, especially those aiming for permissionlessness, can benefit from regulation as well. Regulation provides a clear path forward for crypto protocols to mature. However, the current regulatory landscape varies greatly, with some countries, like Hong Kong, embracing crypto and providing supportive regulations, while others, like the US, are seen as choking off the industry. This inconsistency risks driving crypto entrepreneurs and builders offshore. Regulatory clarity and consistency are crucial for the US to remain a leader in the crypto space. Meanwhile, in crypto news, two more zkEVMs have launched on Ethereum, MakerDAO has a new path for Dai, and SBF is in trouble once again. Additionally, Uniswap, a decentralized exchange and NFT aggregator, and Phantom, a multi-chain wallet, are sponsoring this show and offering innovative solutions for users in the crypto space.
Discussion on Polygon's acquisition of ZK Hermes and the emergence of zkEVM: Polygon's acquisition of ZK Hermes led to the development of zkEVM, which is now live on mainnet. zkEVMs are rapidly emerging and considered Ethereum's 'broadband moment.' Understanding risks like data availability, upgradability, validator failure, sequencer failure, and state validation is crucial.
During ECC 2021, the speaker, Mariano Conte, was present when Mihaylo received a call about Polygon's acquisition of ZK Hermes, a project led by Geordie Ballina. This acquisition marked the beginning of the development of zkEVM, which is now live on mainnet. The speaker also mentioned that zk EVMs are rapidly emerging and Ethereum's "broadband moment." They discussed the importance of understanding the risks associated with these new roll-ups and provided an example of a pie chart representing the risks in terms of data availability, upgradability, validator failure, sequencer failure, and state validation. The closest roll-up to having all risks in the gray (secure) category is at 60%. Additionally, Euler, the exploiter, returned a significant portion of the exploited funds, totaling over 57,000 ETH and 20,000,000 DAI, amounting to 84% of the stolen funds.
Hacker returns $110 million in crypto heist, raising questions: A hacker stole $150 million in crypto but returned most, while MakerDAO plans to increase decentralization and Ticketmaster enters NFT market for ticket sales and artist tools
The crypto world continues to evolve with new developments and complexities. In the discussion, we learned about a hacker who exploited a system for $150 million but returned most of the funds, raising questions about their motives. It could have been due to law enforcement pressure or feelings of guilt. In other news, MakerDAO, a decentralized finance platform, announced a new era with plans to increase decentralization and potentially reduce reliance on real-world assets. Meanwhile, Ticketmaster entered the NFT space, offering token-gated ticket sales and artist tools to limit ticket resale prices. These events highlight the ongoing growth and potential of the crypto industry, despite its complexities and potential misuses. It's important to stay informed and understand the nuances of these developments.
Ticketmaster's New Registration System Uses NFTs and Crypto Wallets: Ticketmaster integrates NFTs and crypto wallets for registration, Microsoft buys more Bitcoin, Nasdaq offers crypto custody services, and the crypto industry continues to grow and evolve.
Ticketmaster is implementing a new registration system called Verified Fan, which uses NFTs and crypto wallets to verify ticket buyers and eliminate scalpers. This marks a significant step for onboarding more people into the NFT and crypto world. Ticketmaster, a massive entity, is now part of the Ethereum ecosystem, allowing users to connect their wallets like MetaMask and Coinbase during the purchasing process. Although skepticism towards Ticketmaster's intentions is valid, this move could potentially lead to a reformed ticketing system. Microsoft, another significant player, has recently bought more Bitcoin, further highlighting the growing importance of cryptocurrencies. The Nasdaq is also entering the crypto space by offering custody services for Bitcoin and Ethereum, signaling potential future developments. Despite occasional hiccups, such as Avalanche's outage, the crypto and blockchain industry continues to evolve and expand.
AI safety debate: Pause or continue large-scale experiments?: The debate on pausing large-scale AI experiments due to potential risks versus continuing for their utility is ongoing. Notable figures have signed a petition, but some argue that it may not be enough to stop development.
AI expert Eliezer Yudkowsky warns about the impending superintelligence of AI and the potential danger it poses to humanity. The Future of Life Institute, a nonprofit organization, has launched a petition calling for a pause in large-scale AI experiments, including ChatGPT 4, due to the risks involved. The letter has been signed by notable figures such as Elon Musk, Steve Wozniak, and Max Tegmark. However, some argue that signing the letter may not be enough to stop the development of AI. The debate continues, and the Bangless podcast plans to bring on guests with opposing views. ChatGPT, with its usefulness and ability to process vast amounts of data, poses a challenge in stopping its development due to its utility. The AI community is actively discussing the issue, and the podcast aims to deep dive into the counterpoint. As investors in Dune Analytics, we have experienced the convenience of AI in data analysis, but the Moloch trap presents a challenge in stopping its development. The debate on AI safety is ongoing, and it's essential to consider the potential risks and benefits.
Ethereum addresses replacing email logins: MetaMask integrates with Ethereum's 'sign in with Ethereum' protocol, enabling users to access websites using their Ethereum addresses instead of email and passwords. This feature is now available on Bankless and could become more common, potentially eliminating email addresses for online content access.
MetaMask is now integrating more natively with Ethereum's "sign in with Ethereum" protocol, allowing users to sign in to websites using their Ethereum addresses instead of traditional email and password logins. This includes the Bankless website, which has recently added this feature. This integration is expected to become more common and could potentially eliminate the need for email addresses for accessing certain online content. Additionally, Kraken Exchange has announced a partnership with Williams Racing to allow users to potentially display their NFTs on the back of a Formula 1 race car. Furthermore, Conduit, a crypto native infrastructure program, has released a feature allowing users to launch a rollup with just a few clicks and has raised $7,000,000 from Paradigm. These developments demonstrate the growing importance and integration of Ethereum and cryptocurrencies in various industries and online platforms.
Bankless Podcast Hires Global Video Editors, Discusses Portfolio Changes and Ethereum's Bullish Outlook: Bankless Podcast seeks global video editors, discusses potential portfolio changes, remains bullish on Ethereum, and highlights importance of educational resources and Arbitrum as a sponsor.
The team behind the Bankless podcast is seeking global podcast video editors to help them produce and edit content due to their high volume of production. They are particularly interested in those with experience in audio and video editing software, and those living in EST or European time zones. The podcast, which has already amassed 30-40 million downloads, aims to reach billions. Other job opportunities include roles at RISE, Uniswap, and Metamask. During the podcast, they discuss potential changes to their portfolio after a conversation with Balaji, but no changes were made. The team remains bullish on Ethereum relative to Bitcoin and continues to hold long positions in both assets. Additionally, they highlighted the importance of educational resources like Metamask Learn for onboarding newcomers into the crypto world. Arbitrum was introduced as a sponsor, offering secure and fast Ethereum scalability for builders and users.
Long-term value of Ethereum and Bitcoin, investment recommendation: For short-term investors, a 50-50 split between Ethereum and Bitcoin is recommended. For longer-term investors, a greater percentage of Ethereum is advised due to its unique staking feature providing a fixed income option. The long-term fundamentals of Ethereum are promising, and the Bitcoin narrative will continue to bolster its value.
Ethereum (ETH) and Bitcoin (BTC) are both valuable assets in the long run, with Ethereum potentially benefiting more from the Bitcoin narrative due to its role in the monetary premium story. For a 70-year-old investor with a 5-10 year time horizon, a 50-50 split between ETH and BTC is recommended. For longer time horizons, a greater percentage of ETH is advised due to its unique staking feature providing a fixed income option. The first ZK EVM to mainnet was technically zkSync, but the gap between it and Polygon is becoming insignificant with the rapid release of new zkEVMs. The speaker, who owns both ETH and BTC, believes that the banking crisis will further bolster the Bitcoin narrative, but the long-term Ethereum fundamentals are also promising.
Bankless focused on layer 2 solutions during 2021 bull market: Bankless's commitment to layer 2 solutions during the 2021 bull market led to disproportionate benefits for its listeners through OP and Arbitrum airdrops and accurate warnings on cross-layer 1 bridge risks.
During the 2021 bull market, Bankless, a crypto-focused media platform, made a deliberate choice to focus on layer 2 solutions and avoid covering certain layer 1 projects like Solana, Avalanche, and Terra, despite external pressure. This decision led to criticism and a label as "eth maxis," but Bankless's listeners disproportionately benefited from OP and Arbitrum airdrops due to this focus. Bankless also emphasized cross-layer 1 bridge risks, which turned out to be valid as these projects experienced significant price declines. While some may argue that Bankless was out of touch during this time, the team remained committed to producing content based on their beliefs rather than external pressures. This choice has paid off, as Bankless continues to bring authentic, biased-but-long-term-oriented content to its audience. It's important to note that Bankless is not perfect and does not claim to be unbiased journalists, but rather, crypto investors sharing their experiences and learnings. Cash being a risk asset, as discussed in a tweet by David Friedberg, is another significant paradigm shift in the crypto industry, highlighting the importance of understanding and managing risks in the space.
Volatility vs Risk in Investing: Volatility is price fluctuation, risk is potential loss. Bitcoin's high volatility doesn't always mean high risk, while cash and Treasuries have inflation risk.
Volatility and risk are not the same thing in the context of investing. While volatility refers to the degree of fluctuation in the price of an asset, risk signifies the potential loss of an investment. Bitcoin and other cryptocurrencies, despite their high volatility, may not necessarily be high-risk investments, especially for those with a long-term perspective and a strong emotional resilience towards market swings. Cash and US Treasuries, on the other hand, can also carry significant risk due to inflation and potential losses in purchasing power. It's essential to distinguish between these concepts when assessing investment risks and making informed decisions.
Bullish on Crypto's Independence from Stock Market: Speakers at the Bankless conference are optimistic about crypto's growing separation from the stock market, with signs of decoupling and a strong community reflected in memes and jokes on the Bankless Twitter account. The conference, focusing on DeFi, NFTs, and crypto regulations, is expected to attract thousands and offer discounts for Bankless citizens.
The speakers at the upcoming Bankless conference are bullish on the growing independence of crypto from the stock market. This was highlighted during the Jim Bianco episode, where it was noted that the economy's health is now being reflected in the stock market, while crypto is showing signs of decoupling. Additionally, the speakers are excited about the memes and jokes coming from the Bankless Twitter account, which they believe is a sign of a strong community and product-market fit. The conference itself, which focuses on DeFi, NFTs, and crypto regulatory issues, is expected to attract thousands of crypto enthusiasts and offer discounts for Bankless citizens. The speakers also shared some humorous memes, such as one featuring Janet Yellen at a casino and another depicting the US government trying to "choke out" crypto. Despite the risks involved in crypto investing, the speakers expressed their enthusiasm for the Bankless journey.
