El Salvador Mines Its First Volcano Bitcoin ~ CEOM Coin

The biggest crypto news and ideas of the day

Oct. 1, 2021

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Today's must-reads

Top Shelf

THE VOLCANODE: El Salvador has mined its first bitcoin using volcanic energy. The country has 20 "potentially active" volcanoes according to VolcanoDiscovery.com, which account for almost 22% of its energy supply.

PLAY TO EARN: Rapid growth for blockchain-enabled play-to-earn game Axie Infinity came to a screeching halt in September, with revenue sliding by almost 40% from August, the first month-over-month decline for the company since January. The monster-battling game that uses non-fungible tokens (NFTs) to reward players made 64,933.71 ether (ETH), worth $220 million, in September, down from a record $342 million in August, data center Axie World shows.

SOCGEN'S OXYGEN: In a proposal on Thursday on MakerDAO's governance forums, French multinational banking giant Société Générale (SocGen) submitted an application for the DeFi lending platform to accept on-chain bond tokens issued by the bank as collateral for a stablecoin DAI loan. The loan would be for up to $20 million in DAI – likely the largest step towards institutional adoption of DeFi to date.

'OUTRIGHT FRAUD': The International Monetary Fund (IMF) said more regulation is needed as the burgeoning cryptocurrency industry poses a number of challenges and risks to financial stability. The industry suffers from a lack of robust operational, governance and risk practices – leaving consumers at risk, according to a blog post on the organization's website.

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Overheard on CoinDesk TV...

Sound Bites

"I do believe that they are trying to gain control over the cryptocurrency industry and direct it and that really isn't conducive to growth and entrepreneurial activity and opportunity."

–Rep. Tom Emmer (R-Minn.), on regulatory efforts, on CoinDesk TV's "First Mover."

What others are writing...

Off-Chain Signals

Biden Administration Seeks to Regulate Stablecoin Issuers as Banks (WSJ)
Coinbase's "Special Investigations Team," which recently produced a blog about terrorist financing, found Ripple (XRP) is one of the most-loved cryptocurrencies for Saudi jihadists, just behind Bitcoin (Protos)
Coinbase's Recent $2B Bond Offering Shows Voracious Appetite of Investors (Blockworks)
Another story about partying with "crypto bros." Cool! (The Cut)
Financial Times checks in on Singapore, which is relatively receptive to crypto and stands to benefit from China's ban
Great interview with Andreessen Horowitz's Katie Haun, who thinks the China ban is "an opportunity" in the states (CNBC)

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Putting the news in perspective

The Takeaway

Is Mozilla Trying to Sabotage Distributed Identity?
Coin Center, the cryptocurrency lobbying group that vaulted into the spotlight during the recent U.S. Senate fight over crypto tax reporting, this week called out the Mozilla Foundation as part of an attempt to "waylay" the development of a distributed identity (DID) data and implementation standard. The foundation, which develops the Mozilla browser and is usually a half-decent supporter of internet privacy and security, filed an objection in early September to the working draft of a new DID standard being developed by the collaborative W3C foundation.

Coin Center, in an open letter this week, characterized those objections in part as "transparently irrelevant," and more broadly warned that "a promising effort to standardize Decentralized Identifiers (DIDs) at the W3C is being waylaid by the objections of centralized digital identity providers." The new standard would potentially disrupt centralized digital identity providers such as Google and Facebook.

The concept of distributed identity is fairly simple, though a bit tough to explain. At its heart is the idea that identity should be contextual online much the same way it is in real life – that you can offer different pieces of information to prove who you are in different situations. Under such a system, a wide array of issuers would be able to create identity attestations, but service providers could choose which to accept. It would create something like a free market for identity verification, without interfering with the use of "strong" forms of identity like government ID.

Among other benefits, this is a much more secure and private model than the Facebook or Google logins which currently dominate identity verification on the web. That's in part because service providers could limit the data they see or collect based on their security risk level or specific qualification requirements.

The Mozilla Foundation's objections to the proposed standard, though, focused not at all on the core goals of privacy, openness and security. Instead, as Coin Center's Peter Van Valkenburgh writes, "The Mozilla objection … dedicates the vast majority of its critique to the putative environmental costs of proof-of-work mining. This is transparently irrelevant to the W3C DID standardization process."

Objections to proof-of-work (PoW) systems on environmental grounds are widespread, but the tone of the Mozilla objection is practically inquisitorial: "We (W3C) can no longer take a wait-and-see or neutral position on technologies with egregious energy use," it reads. "We must instead firmly oppose such proof-of-work technologies including to the best of our ability blocking them from being incorporated or enabled (even optionally) by any specifications we develop." Burn the witch, in other words.

Environmental critiques of Bitcoin are, at the very least, still open for debate. It is strange, then, that Mozilla is taking them so much at face value as to say that PoW should be "opposed," full stop. It is especially strange since the current DID draft standard does not even mention PoW mining, according to Coin Center, and can accommodate many data architectures.

That leads directly to the other horn of Mozilla's objection: that because it encompasses many different approaches to data, the current DID standard "encourages divergence rather than convergence." Coin Center argues that this objection is logically incoherent with Mozilla's crusade against PoW: "How can the standard both be too permissive of various methods (blockchain and non-blockchain) while simultaneously too deterministic in locking the community into a particular method that, it is alleged, would have deleterious environmental consequences?"

Mozilla's objection to the diversity built into the DID standard also seems questionable in its own right. "The whole point of DID is interoperability across different methods and therefore trust systems," said Gregory Rocco, co-founder of Spruce Systems, creators of the SpruceID toolkit for decentralized identity. "Why do pockets of user-owned identity need to fight each other when they can just collaborate using DIDs?" In other words, the "divergence" Mozilla objects to is kind of the point.

Coin Center characterizes Mozilla's statement as "scare tactics and hyperbole," and it is certainly a strange and off-putting position from an organization that is usually quite intellectually honest. It will be interesting to see if Mozilla sticks to its guns here, or if insights emerge about deeper motives for its objections.

–David Z. Morris

Financial advisors are taking a cautious approach to bitcoin as client interest in the space increases and new products offer retail investors easier access to this new asset class. As trusted guides, advisors cannot risk falling behind, even if the jury is still out on bitcoin's role in a client's portfolio.

At Bitcoin for Advisors 2021 on Oct. 6, Michael Kitces and Tyrone Ross share insights from the front lines. Apply today.