[header date=”4 January 2019″]Crypto lovers celebrate bitcoin’s 10th birthday by taking their holdings off exchanges, a newfangled privacy coin launches and a bitcoin trolley problem.[/header]
What you need to know—and why
Bitcoin is officially 10 years old. On January 3, 2009, Satoshi Nakamoto mined the genesis block, the first entry permanently recorded on the bitcoin network. For his (or her, or their) efforts, Nakamoto generated 50 bitcoins, but due to a programming quirk, those earliest bitcoins cannot be moved from their wallet.
[takeaway]While it has received extensive media coverage and investment, bitcoin hasn’t fundamentally changed over the last decade. What has changed is the socially construed utility of bitcoin—as a store of value rather than a peer-to-peer digital currency as Nakamoto originally intended. Compare that to the advances between the iPhone (released June 2007) and iPhone X (released in 2017), and one realizes just how little bitcoin has evolved. ➡️[/takeaway]
A new privacy coin is live. Led by Israeli entrepreneur Alexander Zaidelson, Beam is the first cryptocurrency released to the public which uses a Mimblewimble implementation. The protocol—named after the tongue-tying curse from Harry Potter—aims to improve crypto privacy, fungibility, and scalability.
[takeaway]Although Beam wasn’t the first Mimblewimble cryptocurrency to be conceived, the project beat the volunteer-developed, donation-funded Grin cryptocurrency to launch. Grin is currently in its fourth beta version and targeting a Jan. 15 launch. ↗️ [/takeaway]
Ether is climbing. Ether traded for $84 on Dec. 7, but now it’s pushing $150. While much of the holiday hangover has concentrated on bitcoin’s sorrowful state—its price remains below $4,000—ether has quietly crept up the charts. In fact, ether has now reclaimed the No. 2 spot as measured by total market cap, dropping XRP (which is primarily owned by Ripple) to number three.
[takeaway]Ether’s revival has been punctuated by sudden rises and falls, typical of the thinly traded cryptocurrency markets. For what it’s worth, ETH/USDT accounts for seven of the 10 largest ether trading pairs. Considering that USDT is issued and controlled by the company Tether, this represents a concentrated risk to the ether market, and again stokes suspicion of possible market manipulation. ➡️[/takeaway]
A big year for Union Square. Filecoin and Algorand, two projects from companies backed by Union Square Ventures, should launch in 2019, said Fred Wilson, a partner at the venture capital firm. “I think the catalyst for the next bullish phase will come as the result of some of the many promises made in 2017 coming to fruition in 2019,” he wrote in a blog entry.
[takeaway]Filecoin, which is creating a decentralized storage solution—think of it like a peer-to-peer version of Google Drive—raised more than a quarter of a billion dollars through its ICO during Aug-Sept. 2017. With that sort of financial support, it’s high time backers see some results. Meanwhile, even though Algorand is using a novel consensus algorithm which could enable terrific scaling, figuring out an appropriate monetary policy could present a greater challenge. ↗️[/takeaway]
Crypto for the people. Crypto veterans have probably heard that if you don’t control your private keys, then your bitcoin doesn’t really belong to you, a concept driven home by the collapse of Mt. Gox and various exchange hacks. To coincide with bitcoin’s 10th anniversary, Trace Mayer, host of the Bitcoin Knowledge podcast, called on bitcoin owners to “declare and re-declare our monetary sovereignty on a regular basis.” In practice, that means withdrawing your crypto from third-party services and spinning up a full node, so you can submit transactions directly to the network.
[takeaway]The so-called Proof of Keys movement scored support from bitcoin proponents like Balaji Srinivasan, CTO of Coinbase, and Caitlin Long, the former president of Symbiont who was instrumental in passing blockchain-related legislation in Wyoming. However, as stirring as Mayer’s call to action may be, asserting your “monetary sovereignty” is fairly dangerous. Your (bitcoin) life is really in your own hands at that point. If you want to make a political statement, you do so at your own risk. ↘️[/takeaway]
[supplemental headline=”Chart interlude”]
Ether sprang back to life in the second half of December.
[img src=”https://cms.qz.com/wp-content/uploads/2019/01/Ether-December-Revival.png”]
[mailto filter=”Chart” subject=”Here’s a chart idea…”]Got a killer chart idea? Let us know[/mailto] [/supplemental]
Crypto-meets-finance
Bakkt gets backed. The startup exchange raised $182.5 million to pursue “institutional access for digital assets, along with merchant and consumer uses,” Bakkt CEO Kelly Loeffler announced Dec. 31. Supporters include parent company Intercontinental Exchange (owner of the New York Stock Exchange, which also invested in Coinbase), Boston Consulting Group, M12 (formerly Microsoft Ventures), Galaxy Digital, Pantera Capital, Naspers, and Protocol Ventures, among others.
“We’ll share details as the New Year unfolds,” wrote Loeffler, “but as our COO Adam White and I work through Bakkt’s 2019 objectives, we are focused on opportunities to provide new infrastructure, including the industry’s first institutional grade regulated exchange, clearing and warehousing services for physical delivery and storage.”
[takeaway]When ICE created Bakkt last August, it targeted a Nov. 2018 launch for a bitcoin-settled futures contract and bitcoin warehouse. Its debut has been repeatedly postponed as the company works through compliance matters with the Commodity Futures Trading Commission and an exact launch date is still to be determined. Loeffler, whose husband is ICE CEO Jeffrey Sprecher, recently left her role as ICE’s chief marketing and communications officer. ➡️[/takeaway]
[supplemental headline=”Reasonable Doubt”]
CIOs express skepticism about utility of blockchain technology. Juan Perez, chief engineering and information officer at United Parcel Service, told the Wall Street Journal that proof-of-concept tests haven’t shown benefits to implementing blockchain technology. Similarly, Lance Braunstein, chief information officer at E*Trade Corp, said, “blockchain generally got more attention than I think was warranted.” The executives’ skepticism may reflect how companies are broadly using the term “blockchain” to refer to a variety of platforms and services, some of which might be better described as “distributed ledgers” as opposed to “blockchains.” [/supplemental]
Regulatory Watch
The Thai government is exploring blockchain-based voting. Thailand’s National Electronics and Computer Technology Center (Nectec) is working on a project which would use blockchain technology and cameras for verifiable digital voting. “Nectec developed blockchain technology for e-voting that can be applied to national, provincial or community elections, as well as business votes such as the board of directors,” Chalee Vorakulpipat, head of Nectec’s cybersecurity laboratory told the Bangkok Post. Nectec is looking for partners to test its system.
[takeaway]Although electronic voting is sometimes described as the next frontier in governance, it comes with a host of new challenges, including voter fraud and election interference. Last June, Matt Blaze, an expert on electronic voting security and director of the distributed systems lab at the University of Pennsylvania, said “blockchain has no place in civil elections. Period. Anyone who thinks it does is unqualified to be working in election technology or to be making recommendations to policymakers.” ↘️[/takeaway]
[supplemental headline=”Hacks, scams, and capers”]
Irish tram website hacker demands one bitcoin. (Yep, just one.) A hacker breached the website of Luas, a light-rail public transportation system in Dublin, and threatened to publish “all data” in five days unless they receive one bitcoin. It’s not clear whether it’s about the money though.
At present, one bitcoin is worth just $3,800, so the ransom demand seems oddly small and the wallet address shared by the hacker remains empty. However, a message the hacker posted on the Luas website apparently read, in part, “You are hacked… some time ago i wrote that you have serious security holes… you didn’t reply… the next time someone talks to you, press the reply button… you must pay 1 bitcoin in 5 days… otherwise I will publish all data and send emails to your users.”
So, it appears that the hacker may have been upset their security concerns were ignored, and now they’re just trying to embarrass the rail operator. For the moment, Luas seems to have the situation under control. A message posted by the tram operator on its website now reads: “The Luas website is undergoing restoration following a cyber-attack. We wish to advise customers that the Tax Saver and Standard Fare Notice sites have NOT been compromised.” [/supplemental]
Calendar
🗣 January 8 Israel Bitcoin Summit. The Tel Aviv gathering features Nick Szabo (creator of the term “smart contract”), Meni Rosenfeld (chairman of the Israeli Bitcoin Association), and Ittay Eyal (assistant professor at Technion), among others.
🗣 January 19-22 Binance Blockchain Week Singapore 2019. The SAFU hackathon and Binance conference will focus on “sustainable growth.” Speakers include TRON founder Justin Sun and Bloq chairman Matthew Roszak. Registration closes January 9.
🗣 January 31 Wall Street Blockchain Summit. The one-day event in New York will include discussion of market infrastructure, legal and regulatory considerations for blockchain & digital assets, and accounting matters related to crypto assets.
[mailto filter=”Calendar” subject=”This is happening”]Tell us about your upcoming news and events.[/mailto]
Please send news, tips, and Harry Potter spells to privatekey@qz.com. If this email was forwarded to you, click here to sign up for your own subscription, which includes a free two-week trial. Today’s Private Key was written by Matthew De Silva, and edited by Oliver Staley. Happiness is good health and a bad memory.