First Mover Asia: Scams on Binance's BNB Chain Highlight Weaknesses in Quality Control; Bitcoin Sags
A Solidus Labs report showed that Binance’s BNB Chain leads in volume of scams.
Good morning. Here’s what’s happening:
Prices: Bitcoin was on the decline following two consecutive days of gains, after a stronger-than-expected report on the U.S. economy's health.
Insights: Binance's 26 validators could create a quality control DAO to address the large number of scams on the BNB Chain.
Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.
Bitcoin slips after GDP report, Aptos recovers from debut debacle
By James Rubin
After two days of gains, bitcoin was sagging again, a familiar posture for a token that has lost more than 70% of its value this year.
Bitcoin (BTC) was down 2.4% over the past 24 hours to trade at roughly $20,300 as investors chewed over a surprisingly strong U.S. GDP report. BTC has occupied a narrow range for much of the past five weeks, although more toward its bottom support of $19,000.
On Thursday, the U.S. Commerce Department reported that GDP rose 2.6% in the third quarter, instead of the projected 2% gain. The increase followed two consecutive quarters of contraction that, according to some rule-of-thumb definitions, would have placed the economy in a recession. Central bankers have been trying to tame inflation without casting the economy into a steep and prolonged recession. The latest GDP suggested their monetary hawkishness has yet to have a full impact.
Ether (ETH) remained near $1,550, down more than 3%, ending two consecutive days of healthy gains that took the second largest crypto to its highest point since mid-September.
Aptos (APT) saw its APT token rally nearly back to where it started trading last week, before a swift crash that brought ample derision. Analysts said that there may not be enough sellers left, with many early private investors and core contributors subject to a four-year lockup schedule on their token allocations.
Dogecoin (DOGE) continued to soar, climbing more than 9% over the past 24 hours as billionaire entrepreneur Elon Musk neared the completion of his $44 billion purchase of social media platform Twitter. Other major altcoins were mixed, although tinted more red than green. ADA and CRO were both down about 2%.
The CoinDesk Market Index (CMI), a broad-based market index that measures the performance of a basket of cryptocurrencies, was down 1.8%.
In traditional markets, the tech-focused Nasdaq fell 1.6% amid a so far disappointing earnings season for major technology brands, including Amazon, which on Thursday reported a weaker-than-expected third-quarter profit. Amazon's discouraging report came a day after Meta Platforms said that its augmented and virtual reality operations missed badly on revenue projections for its third quarter. Meta founder and CEO Mark Zuckerberg has remained defiant even as his company’s stock plummeted nearly 25% in Thursday trading.
The University of Michigan’s monthly Consumer Sentiment Index on Friday will reflect the public’s perceptions about the economy. Earlier this week, the Conference Board reported a decline in its Consumer Confidence Index.
A Gentle Suggestion for Binance to Improve Its Quality Control
By Sam Reynolds
Research from Solidus Labs shows that Binance’s BNB Chain leads in the volume of scams, according to on-chain data – even less than the several-times-bigger Ethereum blockchain.
Certainly, BNB Chain has had some black eyes over the last few years. Remember the unofficial Squid Game token that turned out to be a rug pull? In its dying days, Binance said it considered the project to be a scam and started to blacklist addresses.
In early October it looked like Binance had another mega-hack on its hands, where users were on track to be drained of close to $570 million in crypto.
But centralization saved the day. Binance used its close relationships with the chain’s validators to push out a software update that managed to freeze most of the user’s funds. Only $100 million was lost.
“Luckily that community, the validators, sprung into action really quickly, were able to lock down the chain and actually prevent the lion's share of that new minted BNB from being able to actually leave the ecosystem,” Patrick Hillmann, chief communications officer at Binance, said on CoinDesk TV.
Hillman said that there are benefits to centralization, equating it to a small community “overseeing and keeping the doors locked at night.”
“Because those 26 validators are able to work with one another so quickly, they’re able to prevent that worse-case scenario from happening,” he said.
So, then why doesn’t this small community go one better?
When you try and publish an app to Apple’s App Store or the Google Play Store, the companies do a cursory check of your code to make sure there aren’t viruses, exploits or other dangerous items like privacy violations in the package.
Uber famously tried to sneak in some code to the App Store that Apple considered to be violating user privacy. It got caught.
The system isn’t foolproof, but it does catch a lot. Everyone agrees that these walled gardens make for a better experience (mostly – let’s ignore antitrust issues for now).
Binance’s validators, over which it seems to have tight control, could establish and fund a decentralized autonomous organization (DAO) that does quality control over code that’s about to go live on-chain.
The DAO could fund white-hack hackers to examine the code and, at the least, ensure there’s nothing malicious in it. If anything, along the way they’ll be able to pick up and squash some bugs.
Once the code is vetted, validators can vote to push it out to the network. Of course, this won’t catch everything, but neither does the vetting that Apple and Google conduct over their own mobile app stores. This is much easier to do with 26 validators rather than hundreds or thousands.
Binance is sure not to like its dubious ranking, with BNB Chain leading the way in scams. Having some pre-chain QC might slow things down, but it also might stop the next hundred million exploits from happening.
4:00 p.m. HKT/SGT(8:00 UTC) Germany's Gross Domestic Product (QoQ) (Q3)
8:00 p.m. HHKT/SGT(12:00 UTC) Germany's Harmonized Index of Consumer Prices (YoY) (Oct)
8:30 p.m. HKT/SGT(12:30 UTC) Canada's Gross Domestic Product (MoM) (Aug)
8:30 p.m. HKT/SGT(12:30 UTC) United States Core Personal Consumption Expenditures - Price Index (MoM) (Sept)
In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:
While the metaverse has not yet helped Facebook parent Meta Platforms, which missed Q3 revenue estimates for its Facebook Reality Labs (FRL) division, Deepak Chopra sees great potential for well-being in the virtual world. The popular meditation and self-care author joined "First Mover" along with Seva.Love co-founder and CEO Poonacha Machaiah to discuss their platform in the metaverse. Also, "First Mover" discussed crypto market's reaction to the new U.S. GDP report and how the economy rose in the third quarter faster than expected. Plus, Trading Week continued with "Crypto Is Macro Now" analyst Noelle Acheson.
Hong Kong to Make Retail Crypto Trading Legal, Bloomberg Reports: The city is looking to reestablish its reputation as a global financial hub.
Google Introduces Cloud-Based Blockchain Node Service for Ethereum: The move highlights the growing attention that technology giants are paying to blockchain, crypto and Web3 projects.
Most Crypto Scams on BNB Chain, Solidus Labs Says: The crypto risk monitoring platform says it has flagged nearly 200,000 crypto rug pulls and decentralized finance scams since August 2020.
Bitcoin Miner Core Scientific's Shares Plummet After Bankruptcy Warning: The world's largest bitcoin miner said it will not make payments that are due in the next few days as its reserves dwindle.
US GDP Expands 2.6% in Q3, Faster Than Expected; Bitcoin Steady: Any growth in gross domestic product might be negative for the bitcoin market because the Federal Reserve will have to keep raising interest rates to bring down inflation – typically bad for prices of risky assets.
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.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.