Ep. 68 Doubling Down On Shitcoins
On this episode of the Unhashed Podcast: Craig Wright’s bonded courier never showed up to deliver the missing multi-sig keys to his alleged fortune. Did he go the way of Jeff Epstein at the hands of Blockstream or was Craig just lying? It turns out that crypto was less volatile than both the S&P500 and Gold in 2019. But will it keep this stability up or go on another run like 2017? And...Brian Armstrong is doubling down on shitcoins, but does he really believe in the decentralize everything mission or is he just shilling his own bag?
Weekly News Wrap Up:
In what is sure to be SHOCKING news to all of our listeners, the bonded courier which was to deliver the missing multi-sig keys to Craig Wright failed to materialize. It turns out that he has been delayed and the florida court has now given Craig until February
The notion that 2019 was quiet for cryptocurrencies is marked by the fact that volatility was hushed across the board. Over the course of the year, bitcoin’s standard deviation from its 30-day average price was 9 percent according to SFOX, lower than the previous year and much lower still than 2017’s bull market. Most other top cryptocurrencies shared this low volatility with the exception of ETC, whose monthly average was 35 percent. Even with dampened volatility, bitcoin still outpaced all other major cryptocurrencies in price gains for 2019. Its 93 percent returns superseded gold (18 percent) and the S&P 500 (29 percent). On top of beating these two traditional assets on returns in 2019, SFOX also found that bitcoin’s price movements are largely uncorrelated with both gold and the S&P 500, something that should make it attractive for risk diversification, the firm believes.
Bitcoin’s price is up in the new year. But did you know that the bitcoin mining hash rate and difficulty are climbing too? On January 5, 2020, Bitcoin’s hash rate struck a new all-time high of 117 exahashes per second (EH/s) (that is, miners are producing roughly 117,000,000,000,000,000,000 hashes every second in hopes of finding the next block for the network). Mining difficulty has risen in tandem, setting a new all time high of 13.79 T on the second day of the new year. 2020 is the year of Bitcoin’s third halving — an algorithmic event that cuts Bitcoin’s block reward (currently 12.5 BTC) in half. So, are miners racing to unearth as many bitcoin as possible before their yields are cut in half? Maybe but probably not. There’s a less obvious, more nuanced explanation for the rise in hash rate: Established mining farms are now in a position to ramp up their operations.
Coinbase’s Brian Armstrong has issued his next decade’s prediction for the crypto industry and spoiler alert: he is doubling down on shitcoins. The CEO of America’s largest exchange began by saying “In short, I think over the next decade we’ll see a blockchain, that is both more scalable and includes privacy features, reach about 1B users by the end of the decade (up from about 50M at the start of the decade). Adoption will happen both in emerging markets, where the financial systems are most broken, and from a crop of new crypto first startups producing products people want. By the end of the decade, most tech startups will have a crypto component, just like most tech startups use the internet and machine learning today. Governments and institutions will move into the cryptocurrency space in a big way as well.” He elaborated on the corporate point further - “I believe that by the end of the 2020’s almost every tech startup will have some sort of cryptocurrency component. What defines a crypto startup? Three things. First, it will raise money using crypto (from a much larger pool of global capital, unbundling advice from money in the VC industry). Second, it will utilize cryptocurrency to achieve product market fit by issuing tokens to early adopters of the product (turning them into evangelists), similar to early employees getting equity in the company. Third, they will bring together global communities and marketplaces at a pace we have never seen before in traditional startups (which have to painfully expand country by country, integrating each country’s payment methods and regulations one at a time). There are myriad regulatory questions this open up, but the advantages are so strong, I think the market will find a way. These crypto startups will have the challenge that all startups have: making something people want. The next 100M people who get exposure to cryptocurrency will not come from them caring about cryptocurrency, but because they are trying to play some game, use a decentralized social network, or earn a living, and using cryptocurrency is the best/only way to use that particular application.”Other highlights include his claiming that “There are a number of high quality teams working on next generation protocols today (Dfinity, Cosmos, Polkadot, Ethereum 2, Algorand, etc) and there are great teams working on layer two scaling solutions for existing chains. My prediction is that we will see consolidation of chains (in developer mindshare, user base, and market cap) in the decade to come. The chains that make the most progress on scalability, privacy, developer tools, and other features will see the most gains. We may even see M&A amongst these teams, a reverse-fork if you will, where one chain is deprecated and each token becomes exchangeable at a fixed rate to the acquiring token. There will be as many tokens as there are companies/open source projects/DAOs/charities in the world (so millions) but only a handful of chains will power the underlying infrastructure for these. The winning chains will likely follow a power law distribution on outcomes, just like any other industry.”
Recently, Wasabi Wallet users have reported multiple instances in which antivirus programs identify both Wasabi and the newly integrated Bitcoin Core as “system infections.” More specifically, the computer security algorithms for Avira, Bitdefender, Kaspersky and F-Secure (and many other antivirus softwares) confuse full Bitcoin nodes with unwanted cryptocurrency mining programs that run in computer backgrounds and steal processing power (a type of malicious attack whose popularity peaked during the 2017 bull market). In response to this phenomenon, Wasabi Wallet developers have started a social media campaign — distinguished by the hashtags #BitcoinIsSafe and #WasabiIsSafe — as a way of encouraging community members to write to the providers of their antivirus software and demand that Bitcoin and Wasabi be labeled as “false positives.” On the Wasabi Wallet website, Bitcoiners who want to join the reporting movement can obtain an email template, a list of online forms and email addresses for sending the false-positive-label requests and some tutorials that are meant to offer a graphical step-by-step guide throughout the process. While Wasabi is clearly incentivized to free its own product from system infection designations, the campaign is also pushing to ensure that Bitcoin Core spreads as widely as possible.
Although Satoshi Nakamoto’s white paper suggests that privacy was a design goal of the Bitcoin protocol, blockchain analysis can often break users’ privacy. This is a problem. Bitcoin users might not necessarily want the world to know where they spend their money, what they earn or how much they own, while businesses may not want to leak transaction details to competitors — to name some examples.But there are solutions to regain privacy, like CoinJoin. Some of the most popular mixing solutions available today use this trick, including Wasabi Wallet (which leverages ZeroLink) and Samourai Wallet (which leverages Whirlpool). In both cases, users chop their coins into equal amounts to mix them with each other. Using equal amounts is considered a crucial step for the mix to be effective. However, a new mixing protocol called CashFusion, in development for the Bitcoin Cash network, challenges this assumption. The developers behind the protocol claim that CashFusion offers privacy through CoinJoins without the requirement to only mix equal amounts. If true, this might drastically change how we think about privacy in Bitcoin as well.
Price Analysis:
Number go up
One Final Note:
Make sure you are storing your crypto on something secure like a Ledger and backing it up on something sturdy like a Billfodl. If you buy these items through the links above, we do take a cut of the profits but it also helps support the show - a win/win for all involved.
And also...thanks for stopping by and listening. If you want to help us grow, there are several ways you can help out.
You can donate bitcoin to us at the address on the donate page on our website unhashedpodcast.com, you can also sponsor our show by getting in touch with us at mailbag@unhashedpodcast.com, or there are a few other things you can do that will cost you nothing but a little time - you can rate our show on itunes or wherever you are listening to this, you can tell a friend about us, or most easily, you can retweet our tweets announcing each episode and follow us @unhashedpodcast or join our telegram channel at t.me/unhashedpodcast.
Again thanks for listening and helping us grow. See you on the other side.