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Bitcoin (BTC) - $19,139.04 |
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Prices as of 10/21/22 @ 6:52 p.m. UTC |
Welcome to Crypto Long & Short! I want to make something abundantly clear: Crypto means absolutely nothing without censorship resistance. Not Bitcoin. Not Ethereum. Not Monero. Not Zcash. Seriously, none of these matter without censorship resistance (also privacy, for the record). And the reason censorship resistance is top of mind is because a crypto regulation article written by Sam Bankman-Fried, the founder and CEO of crypto exchange FTX, was published on the company’s website last week. One of the sections is titled: “Sanctions, allowlists and blocklists.” That section title on its own begets conversation about censorship, so let’s dive in. – George Kaloudis |
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Crypto Means Absolutely Nothing Without Censorship Resistance |
AI Artwork Crypto Censorship (DALL-E/CoinDesk) |
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Censorship resistance is fundamental to any functioning cryptocurrency or blockchain project. It’s been a pillar of crypto from the start, one of the biggest reasons the whole movement got started. What it means is this: As long as a participant in the Bitcoin or whatever network follows the predetermined technical criteria to construct a valid transaction, then nobody – not the cops, not your nosy neighbor – should be able to prevent that. So there’s zero surprise that Sam Bankman-Fried (the crypto billionaire known as SBF) kicked up controversy when the FTX founder and CEO published an article last week on crypto regulation. One of the sections was about implementing blocklists – aka a roster of wallet addresses banned from interacting with a blockchain because they’re suspected of being used for nefarious purposes – and, relatedly, respecting the U.S. Office of Foreign Assets Control’s (OFAC) sanctions lists by maintaining “an on-chain list of the sanctioned addresses … maintained by either OFAC or by a responsible actor.” Here’s the problem. Removing censorship resistance defeats the entire purpose and value proposition of cryptocurrency. Cryptocurrency is supposed to be about banking the unbanked, about granting open access to financial tools, about empowering otherwise unempowered people. There’s nothing valuable in remaking the same financial system – which caused these problems in the first place – with a new, fancy crypto wrapper that openly welcomes censorship just because it is new and fancy. Yet, even as SBF talks about how things should go down the line, censorship resistance is already being undermined. Just look at the news on Ethereum, where, following the Merge, more than half of blocks in one 24-hour period recently were processed in accord with OFAC compliance recommendations. While there’s no shortage of cynics who claim that cryptocurrency is a giant Ponzi scheme, we’ve seen enough anecdotal and empirical evidence to support the idea that Bitcoin is actually valuable and useful. But I believe one of the main reasons Bitcoin is only valuable and useful is because it’s censorship resistant. Read the full article here. |
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Hodlonaut won a lawsuit against self-proclaimed ‘Satoshi’ Craig Wright. - TAKEAWAY: Magnus Granath, known on Twitter as “Hodlonaut,” sued Wright in Norway to preempt a defamation lawsuit Wright planned to bring against Granath in the U.K. On Thursday, Judge Helen Engebrigtsen ruled in favor of Granath, writing that “Granath has sufficient factual grounds to claim that Wright had lied and cheated in his attempt to prove that he is Satoshi Nakamoto.” Judge Engebrigtsen ruled that Granath’s use of words such as “fraud” and “scammer” to describe Wright was fair. Read more here.
JPMorgan appointed former Celsius executive as its head of crypto regulatory policy. - TAKEAWAY: Wishing to expand its digital asset regulatory scope, given the volatile conditions in the markets, JPMorgan appointed Aaron Iovine, who spent eight months earlier this year as head of policy and regulatory affairs for bankrupt crypto lender Celsius Network. According to Iovine’s Linkedin page, he had worked at Celsius from February 2022 to September 2022 before joining the investment banking giant. Read more here.
The IRS clarified how taxpayers account for non-fungible tokens. - TAKEAWAY: On Oct. 17, the tax division of the Treasury Department expanded key US tax language to include an explicit recognition of NFTs. “Digital assets are any digital representations of value that are recorded on a cryptographically secured distributed ledger or any similar technology,” according to the updated draft for the IRS’ 2022 instructions for form 1040 filers. The final tax instructions haven’t yet been released, so the crypto section could still be altered before it’s official. Read more here.
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Podcasts Worth Listening To |
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On The Brink with Castle Island Mining, Transmission & Curtailment with Blake King For another episode of the mining miniseries, Nic sits down with Blake King, power markets engineer at Galaxy Digital, for his second On The Brink appearance. In this episode, Blake reacts to the White House OSTP report on crypto mining and more. Unchained Podcast Do Kwon of Terra: ‘It Was Never Really About Money or Fame or Success’ – Ep. 408 Do Kwon, cofounder of Terraform Labs, discusses the charges against him, gives a message to Terra victims, answers allegations about potential fraud and non-transparent business practices, and much more. CoinDesk’s Money Reimagined ‘The Fairweather Sailors Are Out and the Builders Are In’ The significance of identity and the relationship between privacy and security today. |
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