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| What you need to know today in crypto and beyond June 10, 2021 Sponsored By: Welcome to The Node.
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–Daniel Kuhn
Today's must-reads Top Shelf TWO TYPES OF CRYPTO? The Bank for International Settlements’ Basel Committee, the world’s most influential banking regulator, proposed that crypto assets should be split in two categories: assets eligible for treatment under existing frameworks, which would include tokenized assets and stablecoins and those that are not, like bitcoin and similar cryptocurrencies. The latter "pose additional and higher risks" and banks should allocate extra capital as a result.
LAWMAKERS AND BITCOIN: Lawmakers raised some sharp criticism of bitcoin during Wednesday’s U.S. Senate Banking Committee hearing, led most vocally by Sen. Elizabeth Warren. Lawmakers also discussed a potential central bank digital currency (CBDC), which all four witnesses argued would prove useful. MASSIVE FUNDING: Hardware wallet maker Ledger just received $380 million in Series C funding led by digital asset fund 10T Holdings, according to a press release on Thursday. Funding will be used to advance innovation of its hardware products as well as to expand its enterprise capabilities, the company said. PAYING CRIMINALS: JBS Holdings, the world’s largest meat company, which was subject to an attack recently that is compared to the Colonial Pipeline ransomware attack on May 14, paid $11 million to a group, REvil, as an attempt to cushion the impact on its business, The Wall Street Journal reports.
–Helene Braun
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“There’s been ransom and extortion going on on the internet long before bitcoin was popular.”
– CipherTrace’s Dave Jevans on CoinDesk TV’s “First Mover.”
A message from CoinDesk CoinDesk's new reward token soft-launched at Consensus 2021, but $DESK lives on. Attendees can still cash in at the $DESK store, or hodl and accumulate. Join the Telegram group for announcements and airdrops.
What others are writing... Off-Chain Signals Over 1,100 people arrested in China for using cryptocurrencies to launder money from illegal telephone and internet scams (CNBC)The Colonial Pipeline investigation shows cryptocurrencies are not as hard to track as cybercriminals believe (The New York Times) Vitalik Buterin explains Ethereum’s growing use in enterprise. The Ethereum cofounder admitted that high gas fees are pricing out some users and use cases on the blockchain (Forkast News) –H.B.
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Putting the news in perspective The Takeaway Warren Versus the Volcano
In Senate hearings yesterday, Elizabeth Warren (D-Mass.) inveighed against cryptocurrency, saying it had failed in its functional goals while enabling crime and harming the environment. The points about criminal use are tiresome and easily dismissible, especially just days after the FBI leveraged blockchain’s transparency to track ransom payments in the Colonial Pipeline hack. Criminals don’t particularly like to be tracked, which is why bitcoin is proportionally less utilized for crime than dollars (how the FBI then clawed back some of those ransom payments is a separate, more intriguing question).
But the environmental concerns about the Bitcoin system and proof-of-work mining can’t be dismissed quite as easily. Bitcoin really does use a lot of energy, by design. Even if you think that energy use is well worth it, the current reality of global warming means the future of humanity depends on eliminating greenhouse gases from the energy-production process.
That, of course, applies to all energy use, not just Bitcoin, so on that level the critique is disproportionate. But proof-of-work crypto mining actually has a major and perhaps unique advantage in the quest for green energy. This was also on display yesterday as Salvadoran President Nayib Bukele said his country, which has just adopted bitcoin as legal tender, would make it easy for miners to harness green geothermal energy from the country’s volcanos. (Mega-hat tip to Nic Carter, who hosted the discussion that birthed the idea.)
The move isn’t just significant because the energy source is renewable, but because much of that renewable energy is currently underutilized or “stranded.” Unlike nearly every valuable commodity on Earth, electricity is very hard to move over long distances. El Salvador’s geothermal plants are a sterling example. The country has a moribund economy thanks in part to decades of corruption leading up to Bukele’s presidency, and many of its power plants reportedly go underutilized. Bitcoin is a way to utilize this sort of hard-to-use energy, as has already been demonstrated with bitcoin mines powered by China’s underused hydroelectric plants and natural gas flaring in the U.S. and elsewhere.
All of this should be of extreme interest for those who believe in the promise of cryptocurrency, even if they care not a whit for the environment. That’s because, while Warren is likely sincere in her environmental critique, it is simultaneously a potential weapon for those who oppose cryptocurrency for unrelated reasons.
El Salvador’s official adoption of bitcoin is a particularly terrifying landmark for U.S. leaders who, it is increasingly clear, fear the displacement of the dollar as a global currency. That dominance provides a huge subsidy to the U.S. economy, what’s known as America’s “exorbitant privilege.” Its erosion could have grim domestic consequences. U.S. politicians have mostly downplayed that concern for years, arguably to avoid giving it legitimacy, but former U.S. President Donald Trump this week yet again said the quiet part loud when he declared “I don’t like [bitcoin] because it’s another currency competing against the dollar.”
With so much at stake, defenders of dollar hegemony will grasp at any straw available to undermine competitors. That’s why Bukele should convene with the miners organized by Elon Musk and Michael Saylor to establish international and independently monitored standards for "green" bitcoin certification, an agenda I previously outlined here. Real progress towards greening bitcoin would be a good thing for the world – and it would take away a tool of misdirection from those who oppose it entirely out of geopolitical self-interest.
–David Z. Morris
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