Quite a few interesting things that popped up on our radar over the last week, so let’s get to it without further ado.
Three thoughts on the space this week, based on what I saw.
First, crypto as an asset class. Despite crypto’s less than rosy performance since the beginning of the year, interest from “traditional” asset managers doesn’t seem to have disappeared. Crypto exchange Coinbase and fund management behemoth Blackrock have signed an agreement (FT $) that allows Blackrock to offer crypto through its main investment platform. Deals like this take months to close and implement, so I wouldn’t necessarily take it as a bullish sign in the current bear market though. As Benedict Evans notes in his excellent newsletter, the deal also seems inconsistent with Coinbase’s stance that it doesn’t list securities. Regulators might take note.
Second, regulatory pressure intensifies. The US Treasury announced sanctions against Tornado Cash, a so-called mixer, that enables users to obscure details of crypto transactions. According to the Treasury, the service was used by North Korean hacker group Lazarus to launder the proceeds of several high-profile hacks. A few months ago, a similar service called Blender.io was also sanctioned, but an interesting wrinkle in this case is that Tornado Cash is a “decentralised finance” (DeFi) service, meaning that there is no central institution to sanction. Instead, the Treasury put a few dozen wallet addresses on its sanctions list. At least, this shows that regulators understand the space and are figuring out how to enforce existing rules–as they should. Other services can probably expect similar measures soon…
Third, are we seeing the beginning of the end of proof-of-work blockchains? Ethereum, not only the second largest coin by market cap, but more importantly the technological embodiment of the promise of crypto (for example smart contracts), is preparing to switch (FT $) from a proof-of-work model to a proof-of-stake model. The switch (insiders refer to it as a “merge”) is planned for September, after a number of test migrations were successful over the previous months. The proof-of-stake model is faster and significantly less energy-intensive, two pre-requisites to scale up to real world volumes. ETH’s value went up some 20% over the week on this news. A successful switch could well show the way forward for the industry, and potentially spell trouble for Bitcoin, which has no plans to switch away from the proof-of-work model. For all the details on the proposed switch, this explainer has you covered.
5G is supposed to enable a step change in the “Internet of Things” (IoT), but for now it seems the necessary interfaces between all those things are rather insecure.
NSO’s Pegasus spyware keeps turning up on all the wrong phones, this time Thai democracy activists.
Pro tip: sign up at websites with an email alias, so you can figure out where all that spam is coming from or which site has leaked your personal info. Brian Krebs explains how.
App developer Felix Krause’s “quantified self” dashboard is a wonder to behold.