BitDigest May 12 · Issue #656

• Cryptocurrencies are unchanged following the Halving
• ECB is preparing but does not see a concrete use case for a central bank digital currency
• Paul Tudor Jones says bitcoin is birthing a new store of value

Crypto Fear and Greed Index

The Crypto F&G Index is basically on par to its posting last week with the sentiment index slipping 1 point to 39 following the Halving.

Trump to Announce Digital Dollar

I want to make a prediction that President Trump will instruct the Treasury Department to issue a digital dollar in the coming months.

We all know the President likes his headlines and he can use this announcement to both criticize Congressional leaders and propose a solution to overcome the delays Americans have encountered receiving their COVID-19 assistance payments. I also think the President has watched the actions taken by the Chinese government in releasing their DCEP (digital currency electronic payment) and he will not want to miss the opportunity to respond with a decision that if taken now could help solidify the US dollar as the global reserve currency for many years to come. Finally,  there is a possibility that the President will not be re-elected and being able to say the digital dollar was his decision is something that could go down as one of his great achievements and strengthen his legacy.

The Halving is Over for Now

Yesterday afternoon a little before 3PM I opened up Blockchain.com’s Block Explorer and started waiting. At 2:51 PM, F2Pool mined block 629997. Only three blocks remaining.

Every several seconds, I hit refresh on my browser. Nothing new. I waited and got up get a drink. I hit refresh. Still nothing. After 10 minutes I sat back down and started hitting refresh more often.  15 minutes passed, then 20, still nothing. Finally at 3:12 PM Poolin mined block height 629998. Only 2 blocks remaining.

Block 629999 was mined 11 minutes later. The Halving was about to occur.

I sat at my desk glued to my screen and within seconds 630000 was mined. The Halving was here. I jumped up to celebrate this momentous occasion and realized no one in my house cared. The Halving was over and like the 2nd Halving in July 2016 nothing really happened. Kind of like New Years Eve – an over hyped event came and went, and unlike New Years I didn’t even get a glass of champagne.

Thinking about it, bitcoin’s code really makes this a non-event. We celebrate among the interested, but besides the block reward automatically dropping from 12.5 BTC to 6.25 BTC nothing really happens. There is no formal procession. No one needs to reset the blockchain or even fork it. It just happens following the code with programed reliability. But unlike, the monetary policies of fiat currencies, when I went to bed last night I was not concerned that today another announcement would be made and more or less bitcoin would be printed. Bitcoin’s code is law and unchangeable. So the Halving is over and we now get to watch and see how the market reacts.

If you are curious, the next bitcoin Halving will occur at block height 840000 which is forecasted to occur in 1,384 days on February 26, 2024. You can track the countdown here.

Consensus Distributed Takeaways

• Consensus Distributed, Coindesk’s annual Spring conference started yesterday, but unlike prior years where thousands of people packed the New York Hilton and Marriott Marquis, this year conference attendees get to watch the speakers on Zoom. Here are my takeaways from the morning sessions:
• Former Treasury Secretary Larry Summers warned that fiat currencies may already have too much privacy and said the issuance of a central bank digital currencies would provide needed traceability not secrecy.
• Representative Tom Emmer (R-MN) admitted the current crisis has renewed interest in digital currencies in Congress. Emmer highlighted the need for the Blockchain Regulatory Certainty Act (single licensing standard across nation) and the Virtual Currency Tax Fairness Act (excludes $200 taxable gain in personal currency transactions).Ethereum co-founder Vitalek Buterin announced Ethereum 2.0 would be coming shortly and discussed a new method of charitable giving using quadratic funding in which beneficiary organization would not selected by the individual giving the largest dollar amount but rather using a model driven by the largest number of smaller donations.
• The Office of the Comptroller of the Currency’s Brian Brooks agreed with Representative Emmer and said crypto companies needed to be licensed on a national level rather than state by state.
• Former CFTC Commissioner Christopher Giancarlo quoted French author Victor Hugo to speak about digital currencies in saying that “nothing is more powerful than an idea who time has come.” He repeatedly said society is operating using an antiquated system of accounts.
• The Libra Association’s Dante Disparte called for central bank digital currencies to be data agnostic with “low switching costs” to enable developers to innovate and build marketplaces around transaction processing and digital currency wallets.
• ShapeShift CEO Eric Vorhees called for fiat to go away and allow “real market digital money” to take over. He suggested that the habit of intervention and encroachment by the government will not change. Vorhees added that printing money is “stealing purchasing power from the people…printing money does not print wealth it just rearranges how wealth works in society.
• Primitive Ventures Dovey Wan explained that while the Chinese crypto investor is retail focused, Chinese miners are long term hodlers due to their great sunk costs and view the market as a long term call option.
• Castle Island Ventures’ Nic Carter said every business is in the content business today and the strength is having a trusted vocal brand. He added that crypto is not just an asset class but also a political expression over how society should be configured.
• The Bank of International Settlements’ Rafaela Auer spoke about crypto’s Security Trilemma suggesting there needs to be a trade off with scarcity, liquidity in trading markets and decentralization.
• Economist Carlotta Perez said that blockchain is a revolutionary technology but it is not a technical revolution in itself. She questioned the ability to have a decentralized society and said we need to have leadership in place, but suggested that the government today needs to be modernized with a multi-level structure placing power at the local seat. In supporting the government involvement, she argued that their leadership in innovation, i.e. building the internet and other technical developments, must not be overlooked.
• Martin Wainstein from Yale University’s Open Innovation Lab suggested that blockchain can be used to help manage and track climate change to tackle the invisible enemy like the COVID-19 pandemic. 

The Headlines

Mersch Says ECB is Preparing for CBDC

www.ecb.europa.eu

European Central Bank (ECB) Executive Board Member Yves Mersch sees no concrete business case for a central bank digital currency (CBDC), but said that the ECB will continue to study its digital innovation so “if and when the time comes…[they] will be ready.”

Vietnam Beginning to Study Impact of Digital Assets

www.en.vietnamplus.vn

Vietnam’s Ministry of Finance is establishing a crypto research group to study and propose policies to effectively manage virtual assets.

Paul Tudor Jones Sees Bitcoin Developing as a Store of Value

www.cnbc.com

Paul Tudor Jones appeared on CNBC calling bitcoin the “birthing of a store of value” by saying “every day that goes by that bitcoin survives, the trust in it will go up.”

Market Data

Last Pre-Halving Block Contains New Message

www.blockchair.com

Similar to the Genesis Block in which a coinbase parameter was included that famously references a London Times article headline: “Chancellor on brink of second bailout for banks,” block height 629999 included a new message from the New York Times: “With $2.3T Injection, Fed’s Plan Far Exceeds 2008 Rescue.”

Bitcoin Hashrate Holding

www.bitinfocharts.com

Although reports have stated that up to 30% of all bitcoin miners may cease operations following the Halving, so far bitcoin’s hashrate is relatively unchanged and holding at 130.1 Ehash/s.

Exchange, Custody and Product News

Coinbase Receive Application for First Regulated STO

www.acnnewswire.com

Proof of Capacity based BitcoinHD (BHD) has applied to be listed on Coinbase making it the first SEC approved security token offering (STO) on the Coinbase platform.

Crypto.com Extends Cold Wallet Insurance Coverage to $360 Million

www.blog.crypto.com

Crypto.com has secured a new $100 million direct insurance policy with Lloyd’s of London bringing their total cold storage insurance using Ledger’s Vault to $360 million.

ErisX Adds Ether Futures Contracts

www.businesswire.com

Digital asset trading exchange ErisX has introduced physically settled ether (ETH) futures contracts.

Binance Invests in Indonesia and Open US OTC Trading Portal

www.binance.com

Binance announced an investment in Tokocrypto, the leading regulated exchange in Indonesia. Binance.US has launched an OTC trading portal allowing investors who are looking to trade more than $10,000 the ability to place and confirm orders. Note: Binance.US is still not approved to operate in NY state.