News: Coinbase key holders leave, Ethereum 2.0 slashing, Libra may not become Diem, regulatory clarity in France

- by David Gerard - 1 Comment
  • I’m doing a Blockchain Debate Podcast on Thursday, on whether Facebook’s Libra/Diem has a future. My opponent is Bryce Weiner. Details will be on the Blockchain Debate Twitter. [Twitter]
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Coinbase: bah, who needs key holders

Brian Armstrong of Coinbase hates politics in the workplace — except politics he likes, obviously — and told anyone who objected that he’d pay them to go away. 5% of staff ended up leaving — including four of the seven people on the key management team, responsible for custody of $30 billion of bitcoins. But hey, he stuck it to those darn SJWs — and isn’t that what really counts? [Twitter]

Philip Martin at Coinbase says that’s wrong and it’s all fine. [Twitter] It’s not clear he convinced anyone. But I’m sure your funds are safe.

This isn’t about Coinbase’s endemic workplace racism problem [New York Times] — this was the Bitcoin libertarians that Armstrong had upset.

Armstrong had pissed off the company’s libertarians with his purchase of Neutrino — because, under their previous name, Hacker Team, they had hacked dissidents and journalists on behalf of dictators — and with Coinbase joining Libra/Diem — because of Facebook’s abuses of data. So the key holders took the generous redundancy offer, and left.

It’s Silicon Valley Smart Dumbass mode, Andreesen Horowitz variety — where the founder of the largest Bitcoin exchange forgot that Bitcoin started as an ideological project.

 

 

Ethereum 2.0: HODLing is now enforced by smart contract

Ethereum 2.0 is the new proof-of-stake version of Ethereum! Instead of mining, you have validator nodes — you stake some ether, you get to validate blocks and get some ETH back. It’s gonna be great, if and when it goes live.

To become a validator node on ETH2, you put up a 32 ETH deposit. If you violate the contract rules, you get “slashed” — which means you’re no longer a validator. And your funds are stuck for two years — because ETH2 doesn’t do transactions at all yet, let alone withdrawals.

One of the ways to get slashed is to run the validator keys in a redundant cluster of nodes, like in any normal IT project where high uptime is important — because the instructions are unclear. [Reddit; Reddit]

“Did you read any HOW TO beforehand? It was stated in everything that I read, that you must not run multiple validators with the same key.”
“No, i did not. I am not talent with English. Digital currency is not popular in my country. So I learn and try most through picture.” [Reddit]

 

 

Carping at Diem

The Libra Association changed its name to the Diem Association, in the hope this would go down better with regulators. German finance minister Olaf Scholz says: LOL no, you’re still not launching in the EU in this condition. [Reuters]

Now, you might think, if you were a multi-billion-dollar company like Facebook, that if you came up with a name for your new crypto coin project, you might check if anyone else was using it already. Here’s London fintech Diem, who are somewhat annoyed. [Sifted; press release]

Diem in the UK are still in the pre-launch phase — and didn’t register the name as a trademark. So they might have an uphill battle against Facebook. [Twitter]

The name Novi, which Facebook picked for its Diem wallet software, is also taken in Ireland — by an IT services company that exists and does a reasonable amount of business. That one might cause Facebook a bit more trouble. [Novi Ireland]

CryptoNews ran a story on the Diem name problem, with a quote from me. [CryptoNews] I was also quoted in Finance Magnates on the name change from Libra to Diem. [Finance Magnates]

But never mind the name. What’s the project like? Well, the testnet only seems to manage 24 transactions per second maximum, 6 TPS typical. This may not be enough for a new world currency for two billion people. This is from news.bitcoin.com looking at the Diem testnet’s blockchain explorer — so not from running a speed test themselves. However, this does indicate that either (a) this is as fast as Diem goes or (b) Diem has yet to bother stress-testing it either. [news.bitcoin.com]

I think we need to be open to the possibility that Libra, or whatever its name is this week, has always been a bad idea, implemented badly, by people who aren’t very good at any of this. I have a book I wrote on this theme.

 

 

Good news for Bitcoin

BUY MORE BITCOIN! BUY IT! BUY MORE! KEEP THE PRICE UP! Because the long-term hodlers are cashing out, and someone needs to supply the actual dollars for them to do that. [Decrypt]

MicroStrategy wants to buy another $400 million of bitcoins, at market peak — and raise other people’s money to do this. At this point, I’m increasingly sure this is Michael Saylor and/or friends dumping their personal stashes, even if it’s via Coinbase Prime. [press release]

In the meantime, Citi has downgraded Microstrategy to “sell” — the recent price pump in MSTR is “overextended,” and insider selling has been “significant and broad based,” suggesting the management team is not as optimistic on bitcoin as Saylor’s “disproportionate focus.” MSTR dropped 13% on the downgrade. [The Fly; AtoZ]

Bitcoin offered this Russian entrepreneur, a stupendously successful captain of industry, the opportunities he needed to start a five-year vacation in France! Alexander Vinnik of BTC-e, the favoured exchange for crooks and money launderers, has just started his first jail term. [AP]

Bitcoin achieves adoption with innovative disruptors in the New Zealand film industry! Jaron McIvor made at least NZ$21 million in cryptos running a pirate download site. [Stuff]

In Mexico, a major distributed business enterprise uses cryptos as a payment system, instead of the obsolete legacy large international banks it used to use! Drug gangs are using Bitcoin for money laundering. [Reuters]

Foxconn, computer manufacturers to the world, may adopt Bitcoin! A $34 million deal for enterprise Bitcoin purchases has been proposed by Bitcoin promoters DoppelPaymer — I’m sorry, ransomware gang DoppelPaymer. [Bleeping Computer]

After years of hype that didn’t check out on the slightest examination — see chapter 3 of Attack of the 50 Foot Blockchain — Bitcoin has finally found a clear and unambiguous payment use case in Venezuela! Evading sanctions. Particularly in trade with Iran, another sanctioned country. Or so claim sources at the Central Bank of Venezuela — who also claimed this worked for deals with Turkey, who are not sanctioned and are part of the EU customs union, so it’s not clear how well that’ll work out. The Venezuelan army is also apparently mining bitcoins. [Runrun]

(I saw a Crypto Lawyer in a chat claim in all seriousness that Venezuela using Bitcoin for sanctions evasion was a genuine use case for Bitcoin, and this therefore proved Bitcoin wasn’t a Ponzi. OK, dude.)

Australian crypto exchange Btcmarkets ensures the decentralised preservation of its customer database! The exchange doxxed all their customers in an email newsletter — by using cc: instead of bcc:. [Reddit; Business Insider]

What the FBI told itself about Bitcoin in Feb 2014 — a guide for law enforcement, obtained under the Freedom of Information Act. [The Black Vault, PDF]

 

 

Regulatory clarity

France recognises an important cryptocurrency payments use case, and seeks to put it on a proper regulatory footing! After recent terrorist attacks, all crypto transactions in France, of any size, will require KYC — two forms of government identification. This will also now include crypto-to-crypto transactions.

Pierre-Guy Bareges, CTO of Digital Service Group, told The Block: “What happened is one of the wannabe digital assets services providers let some people using the services to send money abroad, especially in Turkey and Syria, and then faced investigation from security services. Then the police ran an operation arresting those people and said that bitcoin was used to finance terrorism, and then the finance minister declared we need to control crypto much better.”

A source at the French Finance Ministry has confirmed the changes: “an ordinance will be presented this week, followed by a decree by the end of this month, and all crypto firms will get six months to comply with rules.” [The Block; The Block]

Multiple governments around the world are getting with the programme, and agree to put cryptocurrencies on a firm regulatory footing! Steve Mnuchin, Trump’s Secretary of the Treasury until 20 January, still doesn’t like cryptos, and has been discussing the issue with the G7 finance ministries and central banks. [press release]

 

 

I heard it on the blockchain

“Blockchain could effectively eradicate wire fraud,” says a man apparently blessed never to have heard of Bitcoin and its history of wire fraud. There seem to be people who still think blockchain has a use case in real estate. Not your keys, not your keys. [Crea Cafe]

Good news for enterprise blockchain — JP Morgan uses JPMCoin to perform a completely internal transaction, changing entries in a data store it owns and controls! [Press release]

Locals in Wyoming aren’t so happy with blockchain promoters swooping into town. “By allowing the laws to be shaped and written by those who benefit from them, our legislative hard work accomplished everything the blockchain industry wanted but nothing the state needs. Namely, jobs and revenue.” [Wyofile]

 

 

ICO, ICO

Bittrex is listing company stocks, such as Apple, Amazon and Tesla, as tokens you can trade on their exchange! [CoinDesk]

This is happening on Bittrex Global, a separate exchange that US users theoretically aren’t allowed onto. “Bittrex Global itself lists tokens that represent derivative contracts collateralized by the underlying traditional equities. These tokens are backed by shares of stock powered by DigitalAssets.AG. They cannot be withdrawn from Bittrex Global or redeemed for the underlying shares.” [Bittrex]

This sort of stock tokenisation is otherwise known as running a bucket shop, and was the precise thing that the SEC busted Abra for in July this year — “unregistered security-based swap transactions.” [SEC] Let’s hope Bittrex is immaculately good at keeping US users away from these things.

Hey, remember Status, one of the 2017 ICOs that was so popular it clogged Ethereum? (I mentioned this in chapter 9 of Attack of the 50 Foot Blockchain.) Status is fighting off a Roche LLP class action claiming that they were selling unregistered securities. [Law360, paywalled]

ICO token Oyster Pearl (PRL) was exit-scammed by its founder, “Bruno Block” — who nobody in the project had ever met — who took 3 million tokens via a deliberately-maintained back door in the smart contract code. [Medium, 2018, archive; Medium, 2018, archive] “Block” was Amir Bruno Elmaani, and has just been indicted by the US for using Pearl as a tax evasion scheme. [press release; indictment, PDF]

It has been [0] days since the last DeFi rugpull. Today’s exit scam is Compounder — not Compound — which had a back door in the smart contract program, to let the devs take all the money. Shocked, shocked. [CoinDesk]

 

 

Things happen

The People’s Bank of China is running another DC/EP test, this time for two weeks in Suzhou from December 11-27. This one tests offline functionality in particular. [The Block]

Blockstack asked for a detailed public-relations line edit on the Wikipedia article about themselves. Unfortunately, the marketer they used to make the request was banned for spamming with multiple sockpuppet accounts. [Wikpedia; Wikipedia]

New Money Review has a great podcast interview with Dan Davies about his book Lying For Money (UK, US). Crypto gets discussed at the end — the “trustless” side totally works, but it’s such an incredible pain in the backside that everyone uses trusted entities; “trust is super-cheap … that’s why it’s a good idea to use it whenever you can” — and a mention of Tether, as the bank of Bitcoin. [New Money Review]

When coiners realise they were scammed — WaltonChain buyers reminisce about the good times, when they had hope. [Reddit]

The Block’s email newsletter: financial regulation is just like … the Holocaust. Nice one, guys.

 

 

 



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One Comment on “News: Coinbase key holders leave, Ethereum 2.0 slashing, Libra may not become Diem, regulatory clarity in France”

  1. I’m not saying Dobbs is a deluded fool, this time

    He might or might not be; I couldn’t say. I’m pretty sure he was some kind of fool the time he went out on the screen, with his naked face hanging out, and said “Have a great weekend! The President makes such a thing possible for us all.”

    (That was September of 2019 according to Google. Somehow, it felt more recent, which I have not, for one, found to be my usual experience of Bizarre Sh-t Happening under the Reign of the Chuwero-in-Chief.)

    Reply

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