Digital Assets Look to Integrate to the Regular Joe’s Economy…How Fun.
The crypto landscape continues to fluctuate from lukewarm to freezing cold (this is where I would normally make a “Winter is Coming” pun.)
As summer comes to a close for most of you out there reading this, the crypto landscape continues to fluctuate from lukewarm to freezing cold (this is where I would normally make a “Winter is Coming” pun). However, to keep you warm we have a collection of stories from the digital asset world in which the theme is the integration of blockchain and blockchain adjacent technologies into the regular everyday economy. Enjoy (or don’t, up to you).
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Some highlights
The SEC and CFTC need YOUR help…to do their jobs.
Have you ever fancied yourself as a financial asset regulator? Dreamed of proudly sashaying through the regulatory halls of power, head held high? Well here is your chance.
At the start of this month, the SEC (everyone’s favorite party pooper) and the Commodity Future Trading Commision (yeah, I don’t know either) put out a request for comment regarding changes to Form PF.
What in the world is Form PF? Well, my clueless friend, it is a confidential filing used by hedge funds to tell the SEC their exposure to certain assets. It came about after the financial meltdown of 2008 – which, as you know, was caused by your favorite financial institutions building their wealth on houses of cards… which happened to be where innocent people were trying to live.
Now, the current iteration of the form makes no mention of digital assets. As such, the two regulators agreed to a joint proposal to add digital asset reporting earlier this year. The questions are pretty straightforward:
Should reporting entities have to identify the specifics of their holdings by name or by type of digital asset?
Should there be different standards for fiat-redeemable stablecoins and central bank digital currencies?
Should tokens that represent equity be another class?
So hurry along, you have until October 11, 2022 to have your brilliant and clairvoyant voice be heard.
Purchasing firearms? Try blockchain (or, just, not purchasing firearms.)
Some “good news” for everyone… buying firearms just got a bit easier (because it was already too tough…). Now as you know, the desire for privacy and the gun ownership culture in America are deeply intertwined, and as such, discussions of any iteration of a national registry draw ire and venom from your favorite gun-toting uncles and aunties (we don’t discriminate here).
Cryptocurrency offers unique value here, as some people seem to believe that any purchase done with cryptocurrency ensures complete anonymity (hint: they are wrong). In fact, when such a purchase is made, a digital paper trail is created as a record of the transaction is logged in the “ledger”, thus privacy cannot be completely assured.
However, the gun market has indeed embraced crypto (well, kind of), mostly because some payment processors refuse to handle firearms transactions or charge a heavy fee for them. For example, The Universal Settlement Coin (TUSC) was made to facilitate transactions of “goods” that are difficult to purchase with conventional currencies (yeah it’s as sketchy as it sounds)... like firearms and maybe the kind of “goods” that raver girl tried to get you to try at that one DJ’s concert.
Crypto.com and UEFA: The star-crossed lovers.
If anyone knows the economics of soccer (or football for the civilized world), you’ll know it has been accused of being hijacked by financial interests and state actors. Well, cryptocurrency exchange, Crypto.com, had agreed to enter the foray of European football.
Crypto.com put together a deal with UEFA (the European governing body for football) that would have seen the exchange take over as sponsor from the Russian-state owned energy company Gazprom (whose sponsorship was canceled soon after the Russian invasion of Ukraine).
Much like your indecisive “situationship” that “wasn’t ready for a relationship”, Crypto.com backed out of the deal just when it seemed like all the T’s were crossed and I’s were dotted. The deal, reportedly, had been greenlighted on principle and was seen to be full steam ahead from both parties. However, regulatory concerns in the United Kingdom, Italy, and France (legal issues with licenses to trade and operate) gave rise to consternations that ended in termination of the proposed deal.
What a shame, I am sure we were all looking forward to seeing Matt Damon mansplain to us why investing in crypto is such a brave act (comparing it to inventing the airplane among other hyperboles), before watching Bayern Munich smash some small team from Austria.
The ETH Merge is coming and we are all lost.
Happy ETH Merge Eve everyone (I’m getting t-shirts made, don’t you worry), depending on when you are reading this fine piece of writing. Even if you barely keep up with digital asset news, you’ll have heard the term “Merge” about 100 times from that annoying crypto frat boy at your local night club (after 6 too many vodka crans, of course).
Well what is it?
Years in the planning, this upgrade to the blockchain is a permanent change/transition of the underlying consensus mechanism that is used to secure the blockchain network.
What's the idea?
The main idea behind this change is to move from ETH’s current proof-of-work validation mechanism to the proof-of-stake mechanism (which I so graciously broke down in the last issue). Now, technically, the proof-of-stake chain (called the Beacon Chain) is actually live already. However, it is yet to be integrated with the main blockchain.
What the merge does is take the current blockchain and merge it (hence, the creative moniker from our Ukrainian founder) with the Beacon Chain… after which ETH will solely be running on proof-of-stake.
Ok, but why should we merge?
The main driving rationale is one of energy efficiency. The current mechanism relies on mining (which I will not personally explain to you - because I just don’t want to - but here you go) in which computer chips are used to solve “puzzles” of the algorithmic/cryptographic variety.
This mechanism is quite effective, but the hardware inputs and their subsequent workloads are extremely energy-heavy, which means more carbon emissions and, in turn, global warming/climate change. For reference, the current ETH network consumes approximately 75 terawatt hours/annum (this is approximately Austria’s annual energy usage).
In contrast, proof-of-stake utilizes validators (again, explained in our previous issue), stake requirements, and pooling as an incentive to be a positive actor on the network. It does not require expensive hardware and inflated electricity bills to run the said mining and thus (in theory) will reduce the carbon footprint that ETH has. It is predicted that switching off ETH’s proof-of-work mechanism will cut down on the network’s energy expenditure by more that 99%.
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