CoinDesk Reports

In this episode, Anna Baydakova and Danny Nelson discuss North Korea reportedly stealing your crypto to create nuclear weapons, Tesla rattling markets at an opportune time and Nigeria trying to ban crypto. 

Starting Feb. 12, in the Chinese calendar, we are in the year of the ox, or bull; at least for now, things are looking quite bullish for crypto. Usually, Chinese users would massively sell bitcoin ahead of the New Year but the current rally is being mostly driven by institutions, not retail buyers in Asia. So it looks like the “To the Moon” show must go on!

A United Nations expert panel said North Korea used the money it extorted by cyber attacks to fund nuclear weapons development. The panel said that according to its investigations, North Korean regime-linked hackers worked all through 2020 and made the money now funding weapons of mass destruction and ballistic missile programs. According to Chainalysis, the hackers used DeFi infrastructure, over-the-counter brokers and mixers to sell their crypto. So will we end up with a bit of North Korean hacker crypto one day? 

Tesla hyped the bitcoin market right around the time some bad news came out of China. In February, Tesla’s annual report to the Securities and Exchange Commission included the news the company put an aggregate of $1.5 billion into bitcoin. Just before that filing several Chinese government agencies publicly questioned Tesla cars’ quality and safety. Coincidence?

Nigeria is trying to curb crypto adoption, but that is not so easy. In early February, the country’s central bank sent a letter to financial institutions ordering them to shut down all bank accounts associated with cryptocurrency trading platforms. Result: Binance halted deposits in Nigeria. As a result, Nigerians turned to peer-to-peer trading platforms. Is this actually good for crypto adoption? We’ll see.

Stories mentioned in this episode:

• CoinDesk: Why a Chinese New Year Sell-Off May Not Happen This Year 
• AP: UN experts: North Korea using cyber attacks to update nukes
• CoinDesk: UN Says North Korea Funded Nuclear Weapons With Crypto Hacks in 2020
• Chainalisys: Lazarus Group Pulled Off 2020’s Biggest Exchange Hack and Appears to be Exploring New Money Laundering Options
• CoinDesk: China Was Questioning Tesla About Quality Problems. Then Bitcoin Happened
• Bloomberg: Tesla Summoned by China Regulators Over Quality, Safety Issues
• CoinDesk: Nigerian Central Bank Says Its Ban on Crypto Accounts Is Nothing New 
• CoinDesk: Bitcoin ‘Can’t Be Stopped’: Nigerians Look to P2P Exchanges After Crypto Ban

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This week’s Money Reimagined dives into the increasingly urgently needed Ethereum 2.0 upgrade. What is it and why does it matter?

We talk with Danny Ryan, a researcher at the Ethereum Foundation. He has become a key player in the complicated “herding the cats” task of “herding the cats” of getting thousands of different stakeholders in this vibrant decentralized community aligned enough to undertake the massive 2.0 transition with sufficient cohesion.

With Danny’s help we break the whole thing down in a way that’s accessible to people beyond the developer community: Proof-of-stake consensus, sharding, Layer 2, and how decision-making and development happens in this free-wheeling open-source environment. 

We put it all in the context of a giant boom for the Ethereum ecosystem, as money pours into red-hot decentralized finance (DeFi), as a mania for non-fungible tokens (NFTs) plays out, and as ether hits new all-time highs as large institutions gain exposure via new CME futures. All this is bringing into stark relief the urgent need to advance the system’s scalability as congestion on the network is driving up transactions costs, or “gas fees” to unsustainable levels. 

It’s a timely episode, in other words. Have a listen. 

Image Credit: Sander Weeteling/Unsplash

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In this episode, Christine Kim and Will Foxley discuss with Ethereum Foundation researcher Danny Ryan the roll-out of the Ethereum 2.0 development roadmap, starting with the launch of phase 0 and the Beacon Chain. 

“Not a surprise but a relief.”

That’s how Ryan characterized how he felt about the successful activation of the Eth 2.0 network in early December. 

“We were confident going in but it’s been excellent to see it go so well,” Ryan said. “Compared to some of our testnet launches, they got better and better. But the mainnet launch was more successful than any of those.”

As of Jan. 27, the parallel Ethereum network dubbed “Ethereum 2.0” has accumulated over $3.6 billion in staked ether. There are over 72,000 active participants called “validators” securing network operations, with another 16,000 awaiting activation in a queue for entry into Eth 2.0. 

The absence of unexpected bugs, hacks and attacks has certainly been the source of much celebration for Ethereum developers. Ben Edgington, product owner for Eth 2.0 software client Teku, wrote in a weekly newsletter on Dec. 12, “It’s been a wonderfully dull [11] days since genesis: [A]pparently it all just works.”

It’s not all perfect, however. 

Ryan explained that there are a few fixes, tweaks and improvements he’d like to see made on Eth 2.0 over the next few months. First and foremost is “an iterative upgrade in the middle of this year which would clean up a couple of things in state management, more technical-side things and also add a nice feature which enables light clients as a first class citizen for the Beacon Chain.” (More information on Eth 2.0’s first planned upgrade here.)

Ryan mentioned he is optimistic the distribution of software clients being used by validators to connect to the network would diversify.

“It looks like 50% of nodes on the network are Prysm,” Ryan said. Nodes are computers that store and share blockchain data. “It’s not quite where we want it to be. I’ll say time and time again there are four fantastic clients out there. I don’t run Prysm in my own setup and I’m stable and happy.”

Find out more about what other developments and milestones Ryan expects the Eth 2.0 network to accomplish this year by listening to the full podcast episode. 

For weekly analysis and commentary about Ethereum 2.0, be sure to sign up for CoinDesk’s Valid Points newsletter. 

Links mentioned in the podcast: 

Danny Ryan’s blog post - 

https://blog.ethereum.org/2021/01/20/the-state-of-eth2-january-2021/ 

Etherscan’s breakdown of Eth 2.0 deposits - 

https://bi.etherscan.io/public/dashboards/KH9jbP687szqlAnHiNEfNictrwNhvdOEQl0PwB6m?org_slug=default 

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In this episode, Anna Baydakova, Tanzeel Akhtar and Danny Nelson discuss possible crypto restrictions in India, fresh darknet market research from Chainalysis and the newest chapter in Virgil Griffith’s North Korea saga. 

Will India ban crypto? The move by the government, rumoured for months, may be not as bad as expected. For now, it’s only about illegal activities involving crypto and using it to pay for things, as Minister of State for Finance Anurag Singh Thakur told the nation last week. 

India had cracked down on cryptocurrencies: In April 2018, the Reserve Bank of India barred India’s banks from serving crypto exchanges and related businesses. The ban was successfully challenged in India’s Supreme Court and lifted last March. Whether you can really ban crypto in any form is another question, though.

As for illegal use cases, Chainalysis new report on darknet markets and crypto says Russia, the U.S., Ukraine and China are the countries that pump the most money into the illegal goods marketplaces. Per the previous Chainalysis’ report on global crypto adoption, Ukraine and Russia also lead the global retail adoption of crypto. 

Does it mean most of the crypto adoption in these countries are “dark”? One thing is clear: Both these countries are user bases of Hydra, the world’s most successful drug marketplaces, pocketing about 75% of the entire darknet markets’ revenue, Chainalysis said.  

In the meantime, the court case of Ethereum dev Virgil Griffith is moving along – and it doesn’t look good. During the latest hearing, on Jan. 27, the judge rejected Griffith’s motion to dismiss charges he violated U.S. sanctions law in North Korea. Griffith’s lawyers’ argument that his speaking at a conference in North Korea is not equal to providing “services” to the sanctioned country apparently did not convince Judge Kevin Castel. Free speech or helping bad guys do bad things? A jury will decide in Griffith’s case. 

Stories mentioned in this episode:

• CoinDesk: Why India’s Proposed Crypto Ban Has Investors Nervous, May Feed Anti-Bitcoin Narrative 
• CoinDesk: India Minister Suggests Modi Government Not Planning Outright Crypto Ban
• CoinDesk: Russia and US Dominate Global Dark Market Traffic: Report 
• Chainalysis: Geographic Distinctions in Darknet Market Activity: U.S. and Western Europe Have the Most Vendors, Eastern Europe and China Lead in Money Laundering
• CoinDesk: Ukraine Leads Global Crypto Adoption, Chainalysis Says in New Report
• CoinDesk: Judge Denies Virgil Griffith’s Motion to Dismiss Charges 

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Preston Byrne is a partner in Anderson Kill's Technology, Media and Distributed Systems Group, and a CoinDesk columnist. 

He joins CoinDesk Features Editor Ben Schiller to discuss his recent op-ed about GameStop, Robinhood and the rise of online mobs. 

See the article here:

‘The Squeezening’: How the GameStop Backlash Will Curtail Freedom

Schiller spoke to Byrne about:

• The rise of online mobs from GameStop to Capitol Hill and how the internet is impacting real life in an increasingly tangible way
• What policymakers can do to prevent mobs doing damage to decent companies
• Why it’s likely the WallStreetBets Reddit contained some pump-and-dumpers
• How the regulatory reaction to the WallStreetBets could impact cryptocurrencies 
• How the backlash from “elites” impacted by GameStop could harm free speech
• Why Preston Byrne supports marmots (which are like squirrels or groundhogs) 

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In the aftermath of WallStreetBets, Demetri Kofinas joins the hosts of Money Reimagined as they dissect the events that led to this moment and what it means for our future.

There’s a reason the Gamestop/WallStreetBets drama of the past two weeks got so much attention. It’s because it speaks forcefully to the inequities and systemic problems in both our financial markets and the internet economy and how they’ve shaped our politics and social tensions. 

So, in true Money Reimagined form, we wanted to have a super high-level discussion about what all this means for the future of money and society. And for that we called on someone who is a master at drawing big-picture narratives around such issues: Demetri Kofinas, the host of the popular Hidden Forces podcast.

Demetri Kofinas is an insatiably curious media entrepreneur and financial expert. His mission is to make the connections that help you see the bigger picture, empowering you to make smarter investing decisions.

He also hosts the Hidden Forces podcast, where he gives his listeners an edge by using his critical thinking approach to challenge the consensus narratives structuring our world .

You can follow him on Twitter at @kofinas, check out his podcast at hiddenforces.io, and sign-up for more in depth content and analysis at Patreon.com/hiddenforces.

Find Michael Casey on Twitter or Clubhouse (@mikejcasey)

Find Sheila Warren on Twitter or Clubhouse (@sheilaw)

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In this episode, Christine Kim and Will Foxley discuss with CoinDesk Director of Engineering Spencer Beggs how the idea of staking on Ethereum 2.0 came about and the early decisions that had to be made to get the project started.  

“I feel I have become paranoid doing this project.”

At the start of the new year, CoinDesk Director of Engineering Spencer Beggs began working on setting up an Ethereum 2.0 validator node. The process, he explained, was particularly interesting from “the security perspective.” 

“You really do think about security. Where are you storing your keys and your mnemonics? … You start thinking in a really paranoid manner,” said Beggs.

Ethereum 2.0 is a new parallel Ethereum blockchain that launched in December. Designed to ultimately replace Ethereum’s base layer technology and radically improve network scalability, the only actors on Eth 2.0 able to engage meaningfully with the new blockchain are so-called validators.

As unveiled in November, CoinDesk has embarked on a project to run validator operations in-house and glean direct, real-time data about Eth 2.0. The goal is to deepen CoinDesk’s editorial coverage of the network at its most untested and potentially vulnerable phases of development. 

At the same time, this project has also offered important lessons about the trade-offs and decisions the users who are considering joining the Eth 2.0 network will make. 

Outside of learning about security, CoinDesk tech reporter Will Foxley recounts wrestling with the decision of whether to use a staking-as-a-service provider or run a validator node independently during the early weeks of the Valid Points project. 

“We started looking around at staking-as-a-service providers, and there are a lot out there. There’s gotta be over 15 at this point, not including [cryptocurrency] exchanges that operate staking services like Coinbase or Kraken. We were looking at who can do this for us quickly so we can get up and start running … and who can provide data for us,” said Foxley. 

For the full breakdown of how CoinDesk is going about staking on Ethereum 2.0, the important decisions that were made along the way and the lessons learned, listen to the inaugural episode of “Mapping Out Eth 2.0.” 

Foxley and Kim also have a weekly newsletter tied to the Valid Points project where they dive deeper into Ethereum 2.0-related topics and the health of CoinDesk’s validator node. To get these updates straight to your inbox, sign-up for free here. 

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In this episode, Anna Baydakova, Tanzeel Akhtar and Danny Nelson discuss what the GameStop stock market chaos can teach crypto, why the Bank of International Settlements is pitching central bank digital currencies (CBDC) instead of crypto, and the privacy concerns around China’s digital yuan.

The big story for the week involves the Reddit-based trading community called WallStreetBets that has been causing equities to behave like cryptocurrencies – very volatile. WallStreetBets have wreaked chaos in traditional markets after pumping GameStop stock up by nearly 900% in five days to around $380. Hedge fund Melvin Capital Management suffered heavy losses by betting against video game retailer GameStop. 

Does crypto fix this?

The digital yuan was front-and-center in yesterday’s CBDC survey by the BIS, better known as the bank for central banks. Researchers there said 20% of the global population will likely be using general purpose digital fiat in the next three years. What they didn’t say was the identity of the country with 18% of the global population…. China!

In the meantime, security researchers started paying attention to potential risks of the digital yuan for the users outside of China. The Center for New American Security issued a report on how the Chinese Communist Party might get access to the financial data of people worldwide including, potentially, Americans who will be using the Chinese system in the future. 

Would you use something like that, and do you care about privacy of your transactions?

Stories mentioned in this episode:

• CoinDesk: GameStop Investing Craze ‘Proof of Concept’ for Bitcoin Success, Says Scaramucci

• CoinDesk: GameStop-Style Revolts Spread, Drawing Attention of White House, Nasdaq; TD Ameritrade Restricts Trading 

• Reddit: An Open Letter to Melvin Capital, CNBC, Boomers, and WSB

• CoinDesk: BIS Chief Blasts Bitcoin’s Viability, Prompting Blowback From Advocates 

• BIS Plans Platform for Testing Central Bank Digital Currencies in Cross-Border Payments https://www.coindesk.com/bis-plans-platform-for-testing-central-bank-digital-currencies-in-cross-border-payments

• CoinDesk: Geopolitics at Stake in US Response to China’s Digital Yuan: Report

• Center for New American Security: China’s Digital Currency. Adding Financial Data to Digital Authoritarianism

• CoinDesk: WEF Davos: Bank of England Governor Insists Digital Payments (but Not Crypto) Are Sticking Around 

• CoinDesk: WEF Davos: Silver Lake Co-Founder Tells Davos Cash Is Used Far More in Crime Than Bitcoin 

• Colombia, Estonia Upload the Bitcoin White Paper to Their Governmental Websites https://www.coindesk.com/colombia-estonia-bitcoin-whitepaper 

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For this episode, we travel, metaphorically, to a town in the Swiss Alps that’s for the first time in 50 years experiencing some peace and quiet in January. 

This week was the World Economic Forum’s “Davos Agenda,” a conference filled with the usual roster of high-powered speakers but conducted entirely virtually, over Zoom, instead of in Davos. So, as Sheila took time out from helping run that agenda, we invited her colleague Adrian Monck, a long-time WEF managing director, to reflect on the forum’s past and future and how something as anti-establishment as cryptocurrency and blockchain is being integrated into its work. 

It might come as a shock to the rebellious strain that’s prominent in the crypto community, but its world and that of the WEF have some important similarities. Both must grapple with the core problem of governance in a decentralized environment, with the difficulty of solving problems that serve the interests of the whole when there’s no single party in charge. Both of them grapple with the problem of consensus.

As Adrian explains, the WEF tries to resolve this by using its unparalleled convening power. It brings together disparate decision-makers from governments, businesses and civil society so they can find common ground on how to address the world’s many urgent needs. 

At times, that convening exercise has involved inviting radical newcomers, such as the internet tech community, into the tent. In this wide-ranging discussion, which partly delves into Sheila’s groundbreaking work introducing blockchain ideas to the WEF, we dive into the current challenge for this evolving process: how to bring the crypto disruptors inside.

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In this episode, Anna Baydakova, Tanzeel Akhtar and Nik De discuss what to expect from U.S. President Joe Biden’s administration regarding crypto, how QuadrigaCX users are doing and trying to predict the future for Ripple. 

President Joe Biden has named Gary Gensler as his pick for chairman of the U.S. Securities and Exchange Commission and Janet Yellen as the future head of the U.S. Treasury. Gensler, the former chairman of the Commodity Futures Trading Commission is known for his series of lectures at MIT about blockchain tech. Yellen said recently she believes crypto is funding illicit activities, sending the bitcoin price down. What’s next? Nik De provides a short guide to what to watch.

Ernst and Young (EY), the bankruptcy trustee for the defunct Canadian exchange QuadrigaCX, is still trying to figure out how to value the firm’s cryptocurrency assets before disbursement to creditors. Timing is crucial here: The amount of money creditors will get depends on the day of evaluation chosen because the price of bitcoin changed a lot between February and April 2019, when QuadrigaCX’s court story was developing. 

Last but not least, Ripple has been grappling with a bunch of troubles since the SEC filed a lawsuit against the company in December. The commission believes Ripple has been selling unregistered securities, namely the XRP tokens. The court case is still in progress, but soon after the lawsuit was filed, a number of exchanges and brokers suspended XRP trading including Coinbase, Kraken, OKCoin, Bitstamp, eToro, Crypto.com, Genesis and others. Now, a new SEC head is expected. Good news for Ripple? Probably not too much.

Stories mentioned in this episode:

• Gary Gensler Named as Joe Biden’s SEC Chair Pick (TA)

https://www.coindesk.com/gary-gensler-confirmed-as-joe-bidens-sec-chair-pick 

• Janet Yellen Says Cryptocurrencies Are a ‘Concern’ in Terrorist Financing https://www.coindesk.com/janet-yellen-says-cryptocurrencies-are-a-concern-in-terrorist-financing

• Criminal Activity in Crypto Transactions Fell Sharply in 2020, Says Chainalysis

https://www.coindesk.com/criminal-activity-in-crypto-transactions-fell-sharply-in-2020-says-chainalysis

• Trustee of Collapsed Exchange Moves to Resolve Crypto vs. Fiat Creditor Claims Tussle https://www.coindesk.com/trustee-of-collapsed-exchange-to-ask-court-to-resolve-crypto-vs-fiat-creditor-claims-tussle

• Kraken to Halt XRP Trading for US Residents https://www.coindesk.com/kraken-to-halt-xrp-trading-for-u-s-residents

• Japan’s FSA Says XRP Not a Security: Report https://www.coindesk.com/japans-fsa-says-xrp-not-a-security-report 

• Asia’s Retail FOMO Could Be Behind XRP’s Rally Despite SEC’s Lawsuit https://www.coindesk.com/xrp-asia-retail-fomo-rally

• Ripple CEO Walks Back Threat to Leave US https://www.coindesk.com/ripple-leaving-usa 

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