Ethereum Classic was hit again, Instagram is seeing a proliferation of crypto scams and shipments of Bitmain's latest bitcoin mining machines have been delayed.
You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here.
Ethereum Classic has suffered its second 51% attack in a week after more than 4,000 blocks were reorganized Thursday morning. A chain reorg occurs when a party gains more hashing power than the rest of the network miners, allowing them to rewrite the chain’s history and “double-spend” its crypto. Bitfly and Binance reported the reorganization, announcing all Ethereum Classic payouts, withdrawals and deposits had been suspended due to the attack. The network has suffered major reorg attacks at least twice in the last two years. In late July, hackers moved more than 807,000 ETC from an unspecified crypto exchange to several wallets, according to Bitquery.
Crypto scams are running rampant on Instagram, and attempts at moderation sometimes adversely affect real crypto influencers on the platform. There are more than 1.3 million Instagram posts using #Coinbase, an overwhelming number of which display inauthentic behavior. In July, at least three crypto influencers were temporarily locked out of their platforms as Instagram attempted to stymie scams. Still, Instagram has become a conduit to inform and engage with audiences – particularly in the developing world, where many people rely on mobile phones to access the internet.
An internal power struggle between Bitmain’s founders has delayed production by months. Orders of the mining giant’s latest machines expected in June and July will now arrive in September and October, the company said via one of its official WeChat accounts. The delay is caused by "external interference over the company's management," the official account said. Bitcoin miners are typically sold via pre-orders that are placed two to three months in advance – meaning customers who ordered the machines due this summer could have placed their orders as early as March.
Conflict-ridden Ukraine is embracing cryptocurrency. “Our political situation is somewhat unstable, and Ukrainians are tech savvy, so this combination creates incentives for people fleeing from fiat to crypto,” Gleb Naumenko, a Ukrainian Bitcoin developer who recently got a $100,000 grant from BitMEX, said. With the national currency losing value, people are exploring technological means, he said, but that doesn’t mean the government is trying to squash development. Regulators are working with crypto entrepreneurs to develop a framework to support crypto, which could remain a competitive jurisdiction for crypto startups, Alex Bornyakov, deputy minister for digital transformation, said.
A judge choosing the lead plaintiff in a lawsuit against Block.one has expressed concern over the motivations of some parties. The case, which alleges EOS’ creator committed securities fraud, could stretch on for many years, making it a lucrative prospect for the lead plaintiff's legal team, District Judge Lewis Kaplan said. A class-action lawsuit for five investors showed a distinct lack of diligence and commitment that made them unsuitable to become the lead plaintiff in the Block.one lawsuit. Known as the "Williams Group," Judge Kaplan said the plaintiffs had submitted incomplete, inaccurate and unsubstantiated trading data that failed to show how much money they lost from investing in the EOS initial coin offering (ICO).
Three days ago David Portnoy, founder of Barstool Sports, invited the Winklevoss twins to explain bitcoin to him.
Portnoy, who the New York Times christened “the captain of the day traders,” transitioned from sports media to market commentary during the coronavirus crisis. He’s become the face of the growing crowd of Robinhood and fin-twit investors, who gather around daily livestreams where Portnoy picks stocks and “half screams into a microphone.”
Portnoy is clear he’s not offering investment advice. In fact, it’s unclear what he’s offering. His catchphrase of “stocks only go up” walks the line between parody and a sincere appraisal of irrational markets during this age of monetary expansion and experimentation. Facetious or not, Portnoy has a band of loyal followers with enough weight to move markets.
“What all these new market gamblers seem to have in common is utter contempt for the system – almost any system,” the Wall Street Journal wrote in a profile of Portnoy.
If that statement were true, Portnoy likely would have found himself to bitcoin sooner. As it is, a recent market move towards $12,000 caught his eye – hence his invitation to the Winklevii. “I want to buy all the bitcoins,” he added later.
"Amazing," Messari’s Ryan Selkis tweeted. Many in the crypto industry see this as a bullish opportunity. The real benefit may be in the mirror Portnoy holds up to crypto, exposing irrationalities, just as he does in fintwit.
As Nathaniel Whittemore noted, Portnoy admitted he didn’t know how to buy bitcoin, found wallets confusing and claimed he may have already lost his stake – all potential barriers to entry to less-savvy individuals.
Bitcoin prices surged 5% on Wednesday, outpacing stocks and gold amid calls for more government stimulus. Bitcoin rose to $11,755 and is now approaching $12,000 for the second time in a week, a level that bitcoin hasn’t sustainably traded above for more than a year. Bets are growing that governments and central banks will have to pump trillions of dollars more into the financial system to stimulate the economy out of the worst recession since the 1930s. Gold surged this week to a new record above $2,000 – a 35% gain this year that falls short of bitcoin’s 63% price increase. The Standard & Poor’s 500 Index is now up 3% on the year, with some traditional investors arguing that stocks have become detached from reality. This insight comes from First Mover, which you can subscribe to here.
Publicly traded business intelligence company MicroStrategy said it will invest $250 million of its excess cash in bitcoin, gold and other “alternative assets” over the next 12 months as a hedge against U.S. dollar (USD) inflation. CEO Michael Saylor said the weakening USD is no longer a tenable place to park MicroStrategy’s $500 million cash reserves. Near-zero interest rates, infinite helicopter money and the specter of coming inflation are all forces Saylor said are chipping away at the dollar.
An architectural quirk in the most-used software version of Ethereum, Geth, has led to an uptick in spams, according to Certus One co-founder Hendrik Hofstadt. Transaction spamming is one reason the average Ethereum user fee has increased some 800% since May. Algorithmic trading firms have created bot swarms to watch the Ethereum transaction queue (called the mempool). These bots wait for large trades on DeFi platforms such as Uniswap. After they go through, the bots quickly place orders to take advantage of price movements in what is called “backrunning.”
Anil Lulla, COO of Delphi Digital, thinks crypto is due for a bull run. Converging forces of the larger, inflationary economy is the test case for bitcoin and a trend of investors reallocating capital away from “ghost protocols” (the dying token projects from the last bull cycle) into more promising DeFi applications. “The foundation for the base infrastructure of the decentralized economy is being laid as we speak. The composability between projects allow teams to iterate much faster than traditional software companies and opens up experimentation going forward,” he writes.
Lex Sokolin, CoinDesk columnist and Global Fintech co-head at ConsenSys, thinks the U.S. can learn from China’s experimentation with open-source technologies. “Competition in the next century is going to be far more complex than intellectual property ownership. It is going to be waged over multinational open-source networks, reintegrating finances and economies into a digital global superstructure. We have to develop clearer ways of thinking about this competition, and in this entry we will discuss one such framework,” he writes.
Keith McCullough, CEO of financial media and research firm Hedgeye, sits down to talk about stagflation, Bitcoin and why the “Old Wall” media distracts rather than educates in the latest episode of The Breakdown.
Who won #CryptoTwitter?
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.