Blockchain Bites: Coinbase Surveillance, Bitcoin Wargames, CoinMarketCap Drama

The U.S. military conducted a war game involving bitcoin while Chinese police may have potentially frozen accounts linked to illicit transactions.

AccessTimeIconJun 8, 2020 at 4:35 p.m. UTC
Updated Apr 10, 2024 at 3:17 a.m. UTC
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The global COVID-19 crunch appears to be driving interest in cryptocurrencies in developing nations.

Meanwhile, Coinbase has initiated federal-level procurement deals for an analytics tool and Chinese police have frozen potentially thousands of crypto accounts. Here's the story:

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Top shelf

Emerging Markets
Lebanon’s financial crisis has banks looking for alternative monetary policy and citizens scrambling for alternative banking services. Approximately $54,916 worth of bitcoins have traded in the country over the past year on Paxful and LocalBitcoins, a small sum compared to the monthly upwards estimate of $5 million transacted through informal networks. Many see bitcoin and other cryptos as playing an increasingly important role in the nation's financial ecosystem. This is part of a greater trend, driven by a U.S. dollar shortage worldwide, of developing nations turning to bitcoin, stablecoins and other cryptocurrencies. The latest Money Reimagined newsletter examines the dynamics causing people across Latin America, the Middle East and Africa to experiment with novel payment and value preserving technologies.

National Security?

  • Coinbase has initiated procurement deals with the Drug Enforcement Administration (DEA) and the Internal Revenue Service (IRS) for a cryptocurrency investigations tool called “Coinbase Analytics,” after buying blockchain intelligence firm Neutrino last year. 
  • The Saudi Arabian Monetary Authority (SAMA) reportedly used blockchain to distribute an unknown proportion of the 50 billion Saudi riyals, approximately $13.35 billion, in stimulus funding given to banks. (The Block)
  • A state-owned power grid company in Russia claims crypto miners have stolen almost $6.6 million in energy from local providers over the past three years, by building underground mining farms and tampering with electrical systems.
  • Thousands of cryptocurrency users and over-the-counter merchants may have had their accounts frozen last week. A police probe in China’s Guangdong province appears to be targeting transactions that may be linked to telecommunication frauds, Ponzi schemes and casino businesses.

Gamifying Crypto
The U.S. military has created a war game to think through a response to a “Zbellion,” or a cyberattack led by Generation Z who steal money from “the establishment” and funnel it through bitcoin. Meanwhile, AstroCanvas, a game built by two developers at the Cross-Chain Hackathon, is a demonstration meant to increase network participation in proof-of-stake blockchains and reduce the control that massive players like Coinbase exert on a network.

Coinbase said it’s working on technical changes to prevent exchange outages during periods of increased usage. Last week a traffic spike caused severe disruption of services. Separately, the Algorand Foundation launched an accelerator program offering up to $265,000 in support for Asia-focused projects building on its network. (The Block) Finally, CoinMarketCap has rolled out a new way of ranking exchanges that keeps owner Binance at the top of the exchange table. The data aggregator received criticism last month when its new corporate owner received a perfect score in a new ranking metric. 

Crypto Long & Short
CoinDesk Head of Research Noelle Acheson looks at the role technologies play in creating and mending economic inequality in the latest Crypto Long & Short newsletter. “[Technology] has widened the chasm between those that can harness it and those that as yet cannot. It has enthralled populations, who are now captive to its influence. It has sped up flows of capital, while further concentrating its distribution,” she said. With the growing adoption of crypto and blockchain technology, the process looks set to reverse, albeit slowly, through practical application. 

Market intel

Price Consolidation 
Investors remain confident in bitcoin’s long-term prospects despite the cryptocurrency’s struggle to pass $10,000, according to the amount of bitcoin moved out of exchanges. Historically, investors have moved cryptocurrency from their wallets to exchanges to be able to more quickly liquidate holdings during a price crash. Over the last four months, however, exchange balances have declined by nearly 13%, signaling that investors expect the ongoing price consolidation to pave the way for a stronger bull run.

First Mover
Many crypto investors believe trillions of dollars of money injections by global central banks will usher in an era of inflation, helping to send prices for bitcoin, seen as a hedge against inflation, to the moon. This thesis is at ends with Wall Street investors, who are pumping capital into bond markets at a rate that signals consumer-price increases over the next five years will average levels below the Federal Reserve’s 2% inflation target. The First Mover team digs into the dichotomy. 

Post-Halving Fees
Bitcoin’s average transaction fees have fallen by 83% to $1.083, the lowest level since the network’s post-halving high. (Decrypt)

CoinDesk Podcast Network

Let's Talk Bitcoin!
Crypto luminaries Andreas M. Antonopoulos, Jonathan Mohan and Stephanie Murphy join the latest episode of Let’s Talk Bitcoin to discuss prospects of being your own bank. “The powerful idea and meme at the core of Bitcoin self-sovereignty is incredibly empowering but has an unspoken element that requires persistent competence and at least for some makes it more trouble than it’s worth,” CoinDesk's Adam B. Levine writes by way of introduction. 

Who won #CryptoTwitter?

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