Welcome to the first edition of Crypto for the Commoner! This is a bite-sized newsletter that provides readers with a layman’s analysis and reflection on key events and updates in and around the crypto space.
“Cryptocurrency is everything you don’t understand about money, combined with everything you don’t understand about computers.” - John Oliver
You do not need a background in traditional finance, computer science or engineering to understand cryptocurrency and blockchain technology. A little patience and some curiosity can easily morph into a full blown obsession once you start to go down the rabbit-hole of what this new technology can and will unlock for the world.
Considering this entire industry was more or less ‘invented’ upon the release of Satoshi’s bitcoin white-paper in 2008, I strongly feel that pretty much anyone can become well versed in crypto’s full history in a fairly short amount of time. In my humble opinion, as well as countless other people who are way smarter & richer than I, there is no industry or movement on earth right now that is more exciting or promising than crypto.
My goal is to simply organize my thoughts and analysis as we navigate through the evolution of decentralization in real time and into the future. I will also highlight references from many of the people and resources I have found along the way.
Block-bites | Snack on these updates:
Elon Musk & Tesla: Electric Cars, Paper Hands
Tesla released their Q2 earnings report last week which showcased their sale of roughly 75% of the company’s bitcoin holdings, adding $936 million of cash to their balance sheet. It is important to note that the purpose of this sale was not a dig on bitcoin as an asset or store of value, rather a move by the company to ensure that their balance sheet did not otherwise reflect the previous quarter as being cash-flow negative. Tesla still owns roughly a quarter billion dollars worth of BTC. [Blockworks]
This timely sale of BTC very likely contributed to the cascade of contagion and forced selling across the crypto industry, led by Do Kown’s Terra Luna imploding and eventually Celsius, 3AC, BlockFi, Voyager and the likes.
The Ethereum Merge… Surge, Verge, Purge and Splurge!
The highly anticipated Ethereum merge is slated to take place in September, the process in which the network will transition from Proof-of-Work to Proof-of-Stake. The switch from PoW to PoS is intended to eliminate the need for energy-intensive mining and instead secures the network using staked ETH. This process change will allow Ethereum to reduce energy consumption by ~99%, providing better scalability, security and sustainability of the network.
Good news for investors - despise swapping out proof-of-work, the entire history of Ethereum since genesis remains intact and unaltered after the transition to proof-of-stake. Any funds held in your wallet before The Merge will still be accessible after The Merge. No action is required to upgrade on your part. [ethereum.org]
Despite how many bitcoin ‘maximalists’ feel about abandoning PoW, if executed smoothly, the ETH merge should likely draw a lot of excitement and positive attention to the crypto space as a whole - especially as we navigate and hopefully soon exit the depths of ‘crypto winter’.
Sick of the Contagion: Crypto heavyweight Sam Bankman-Fried has been busy fighting for the industry during the bear market.
The FTX co-founder said he isn't bothered by losing some money if his bailouts keep the crypto infrastructure humming. FTX and Bankman-Fried’s Alameda Research have offered costly rescues to crypto lender BlockFi and crypto broker Voyager Digital amid a broad market downturn, and Bankman-Fried said he's open to helping more.[Coindesk]
Despite how you view SBF’s intentions as he picks up the pieces of a battered crypto market, I think the crypto community and outlets need to do a better job of celebrating heroics and advocates of the space, and less promotion of the meltdowns at failed bucket shops like Terra Luna, Celsius, 3AC, etc. Similar to media coverage of unfortunately all too familiar events of gun violence, which usually always chooses to focus on the villain over the heroes or victims of the story. A dark, yet intriguing take on this matter by CakeDeFi CEO, Dr. Julien Hosp:
Overlooked are the positives that were made clear over recent months, such as how extremely well DeFi actually worked, while the centralized and over-degen-levered parties were all the notable casualties of the liquidations and meltdowns. There is an incredible amount of brilliant people and top-tier talent that exists, and continues to pour into, the crypto space. If WAGMI (We’re All Gonna Make It, for those who want to add another acronym to the book) then we should all pay tribute to and be more encouraging of the true leaders and innovators who ultimately seek to benefit every single participant. With all of the challenges and headwinds the industry is subject to while still in it’s infancy, crypto needs active and vocal leaders such as Ryan Selkis, Messari CEO, who aren’t afraid to lead from the front and call it like it is.
To put it lightly, I simply do not care any more about these contagion and liquidation events and see them more as direct bottom indicators (not financial advice). Yes these events are inevitably going to serve as a black eye to the industry temporarily, but bitcoin has ben declared dead so many times that is has now been turned into an analytics tool:
[https://www.bitcoinisdead.org]
Direct proof of the anti-fragility of not only bitcoin, but the resilience of the industry and innovation powering it.
Thank you for reading! Please feel free to share, subscribe and comment below with any feedback.
Best,
Tommy