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TOP SHELF
Both the U.S. and China are advancing on their central bank digital currency (CBDC) designs, there’s a new smart contract language for Bitcoin and the Department of Justice (DOJ) seized millions worth of crypto from addresses linked to terrorist organizations.
Digital Dollars The U.S. Federal Reserve is actively investigating distributed ledger technologies for use in digitizing the dollar, CoinDesk regulatory reporter Nikhilesh De said. “To enhance the Federal Reserve’s understanding of digital currencies, the Federal Reserve Bank of Boston is collaborating with researchers at the Massachusetts Institute of Technology in a multiyear effort to build and test a hypothetical digital currency oriented to central bank uses,” Federal Reserve Board Governor Lael Brainard said Thursday. While the monetary authority was long looking into a digital dollar, the coronavirus crisis and China’s ongoing experiments with a CBDC have provided impetus to “remain on the frontier of research and policy development.”
Trial Expansion China is planning a major expansion of testing for its digital yuan. The Ministry of Commerce announced new trial sites for the digital currency/electric payment (DC/EP) including in Hebei province, the Yangtze river delta, Guangdong province and the cities of Beijing, Tianjin, Hong Kong and Macau. When the new trials might start was not disclosed, but the ministry reportedly said that the project design is hoped to be wrapped up by the end of this year.
Dark Markets The U.S. DOJ announced the “largest ever seizure of terrorist organizations’ cryptocurrency accounts” on Thursday, including “millions of dollars” and 300 crypto accounts. In a press release Thursday, the DOJ announced it had investigated and dismantled “three terrorist financing cyber-enabled campaigns” involving al-Qaeda, Hamas and the Islamic State of Iraq and the Levant (ISIS). In al-Queda’s case, the organization maintained a network of Telegram channels and 155 wallets intended to solicit bitcoin to fund terroristic acts.
Ripple Reset? The CEO of Ripple has pushed back against a Financial Times report saying the firm was moving away from using XRP for cross-border payments. CEO Brad Garlinghouse tweeted late Thursday, "Ripple has absolutely no plans to ‘reset’ our strategy" and that banks around the world were already using the XRP token as a cross-border payment solution.” The FT reported earlier that day Ripple was diversifying its approach, quoting Garlinghouse as saying his company aimed to be “Amazon of the cryptocurrency world,” or a platform for everyday consumers not just an interbank settlement layer.
Identity Integration BitMEX will instate mandatory identification protocols for exchange users. Ben Radclyffe, commercial director for BitMEX’s parent company, said the changes are set to remove barriers to entry for some of its target users, improve the security of the platform, and “get ahead of evolving regulation.” Easy registration, high leverage, and bitcoin-only account balances helped BitMEX bootstrap liquidity from all directions and give rise to its reputation as the destination trading platform for unorthodox cryptocurrency traders, CoinDesk’s Zack Voell reports.
The developer team behind Curve DAO were as surprised as anyone when they learned their open-source project went live yesterday.
The anticipated protocol and associated CRV token were deployed on the Ethereum blockchain Thursday at 22:25 UTC, ahead of schedule, when a pseudonymous community member took the liberty of publishing the contracts found on Github.
This premature move cost 19.9 ETH (approximately $8,000), and was an attempt for the developer, who goes by 0xc4ad, to get ahead of trading. “Yo, @CurveFinance ! Saw your DAO is ready to rock and I gots to MAXIMIZE MY ALPHA ! So I went ahead and deployed it for you,” they wrote.
The Curve team initially told users not to deposit funds on the platform, but quickly announced they had accepted the contract as legitimate.
While the pseudonymous developer was christened “chad” for their gusto, accusations of a pre-mine were leveled at early stakers after it was discovered roughly 20,000 CRV tokens were doled out before Curve's official announcement, Decrypt reports.
Developed by one of the most respected DeFi projects, Curve Finance, this exploit has some asking whether crypto is becoming too reckless.
Adam Cochran, a partner with Cinneamhain Ventures, said on Twitter this move has shattered trust in the Curve team. "So we have a team that either makes bad impulse choices to validate a front-runner and reward pre-mining, stores keys incorrectly, wanted a pay day for them and their friends, or let people get a pay day for bad legal advice," he wrote.
The rise and fall of YAM, the memetic BASED and Tendies projects, and now the unilateral deployment of a legitimate monetary experiment are all part of a growing exuberance in crypto not seen since the last bull run.
But it doesn't have to be all doom and gloom. As my colleague Will Foxley Smith wrote yesterday in a story exploring this theme:
“These new projects are about leveraging Ethereum’s tech for unintended uses. They’re about making crypto fun again.
“They’re about making money.”
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MARKET INTEL
Crypto’s Edge? U.S. jobless claims fell to 963,000 last week, according to the latest report, the first weekly figure below 1 million since March. Financial markets saw this as a neutral or negative move, “since it might relieve pressure on authorities to speed up more trillion-dollar stimulus packages,” CoinDesk’s First Mover reports. Crypto, too, seems unconcerned with the larger macro-environment. Lennard Neo, head of research at Stack Funds, wrote Thursday, “Bitcoin could be a ‘risk-on hedging-type asset,’ where it performs relatively well in thriving markets, yet acting as a hedge to global uncertainties, displaying financial attributes that fall in between that of equity and gold.”
Post-Halving Publicly traded bitcoin miner Hut 8 announced a sharp drop in Q2 revenue. Closing the quarter with a C$6.4 million gross loss, the rising value of its bitcoin holdings pushed the firm’s net income into the black. The company mined 795 bitcoin (BTC) last quarter, a 29% decrease from the 1,116 BTC mined during the prior quarter. Hut 8 has 2,954 BTC on its balance sheet as of the end of Q2 2020. The company also noted it raised C$8.3 million in gross proceeds from its public offering, which will be deployed to upgrade its existing mining equipment. Meanwhile rival firm Marathon Patent Group will buy 10,500 new Antminer S-19 rigs for $23 million from Bitmain.
TECH DESK
Simplified Language Minsc, created by Bitcoin developer Nadav Ivgi, is a new programming language that makes it easier for developers to write smart contracts on Bitcoin. The protocol’s go-to language, Bitcoin Script, is unwieldy and overly-complicated, according to CoinDesk contributor Alyssa Hertig. Minsc builds on another alternative Miniscript, unveiled in 2019, to create a simplified and secure programming language.
OP-ED
Staying Clean J.P. Koning, a CoinDesk columnist and writer for a prominent Canadian bank, weighs in on Bitcoin’s proposition as digital gold – and found the precious metal can teach the industry about “staying clean.” “Bitcoin suffers from neither a purity problem nor a counterfeiting problem,” he writes. “But it does have its own unique quirk. [T]rackability means some bitcoin addresses may not be as good as others – they may hold funds that were stolen from an exchange, or used to pay ransom, or have been mixed by an anonymizer. These aren’t the sorts of bitcoin addresses that a sophisticated investor wants to be associated with.”
PODCAST CORNER
Pysh’s Dish The prominent podcaster and bitcoin advocate Preston Pysh joins The Breakdown to discuss Bitcoin’s stock-to-flow model, the inevitability of negative interest rates and the significance of MicroStrategy’s $250 million bet on Bitcoin.
Currency Cold War?