Bitcoin and altcoins in the South By Southwest: Is it the year 2018? How to make a blockchain of cryptocurrencies?

When they hear about digital currency, they think ofcurrencies. Cryptocurrencies have skyrocketed in popularity over the past few years. They have given rise to an entireecosystem of financial speculation, get rich quick schemes, and in some cases fraud.

I was in South By Southwest when I attended my first time. It seems like it’s a fertile ground for the NFT community, because of the convention’s claims that it’s the key to art and technology. Is this the year? It didn’t seem to me that there was a lot of mention of altcoins. And the few who did bring it up seemed embarrassed to do so.

At this point, you get two responses: eye- rolling and dismissal, or excited fervor at the potential for quick money, when you say blockchain. It does not need to be either or. The system that powers Bitcoin could yank power from central banks, build trust into supply chains, and manage ownership in the metaverse, but it could also shrivel into nothing amid chaos and hype, a technology looking for a use case.

Sam Bankman-Fried: A New Story about Coincurrence, Ponzi Schemes, and The Coin Crimes of a Collapsed Crypto Exchange

Editor’s Note: Casey Michel is a writer and investigative journalist covering kleptocracy and dark money networks across the globe. He is the author of “American Kleptocracy: How the US Created the World’s Greatest Money Laundering Scheme in History,” and is at work on a book investigating foreign lobbying in Washington, DC. The opinions he has in this article are his own. Read more opinion at CNN.

The crypto world was also rattled last year by the shocking death spiral of digital currency exchange FTX and the subsequent indictment of its founder Sam Bankman-Fried on eight criminal charges including fraud and conspiracy.

The details of Bankman-Fried’s alleged fraud will likely take months, and potentially even longer, to disentangle. He spent years defrauding investors of huge sums of money and then used that money to set up tens of millions of dollars in illegal campaign contributions.

In some ways, these kinds of cases, many of which resemble traditional Ponzi schemes, are as old as American capitalism itself. They almost always combine a lack of regulation and oversight with promises of easy wealth schemes, made with some kind of proprietary technology, which seems to generate returns out of thin air.

A crash of the stock market in the late 1920s was followed by a series of bank runs, which led to the Great Depression. And in 2008, faulty loans repackaged as unique financial products sparked the Great Recession, with regulators asleep at the wheel along the way — all of which not only crashed the economy, but led to a foreclosure crisis, whose reverberations are still being felt.

And then scandals like FTX hit. Sam Bankman-Fried, one of the co-workers of the founder of the collapsed exchange, was arrested and charged with criminal fraud after billions of customer funds were missing.

In that sense, Bankman-Fried may be no different than his predecessors. Given the continued lack of regulation and oversight in the crypto industry, Bankman-Fried is not only a new version of an old story, but hopefully the start of long-overdue change in the industry, with the kinds of regulations and transparency needed to prevent other scammers, fraudsters and criminals from simply stepping in to replace Bankman-Fried.

CNN Business had a version of the story. Before the Bell newsletter. Not a subscriber? You can do that right here. You can listen to an audio version of the newsletter if you click the same link.

On the first trading day of 2022, the S&P 500 and Dow hit record-highs. Later that week, minutes from the Federal Reserve highlighted increasing concern over rising inflation and indicated that officials were considering rate hikes. Since then, trillions of dollars have been erased from markets across the globe as equities and bonds were whipsawed by hawkish Fed policy, geopolitical chaos, Covid shutdowns and more.

Inflation was the top market story last year, as prices around the globe soared, causing central banks to hike interest rates more than 300 times.

By the end of the year, Fed officials increased the rate that banks charge each other for overnight borrowing to a range of 4.25%-4.5%, the highest since 2007.

These rate increases were intended to cool the economy and tamp down price rises, but now analysts and economists fear that things have become too chilly and a recession is imminent. How bad will it be?

Bitcoin has a sheen of chaos: How Donald Trump lost $200 billion in wealth can add another record to the world’s richest man’s list

Over the past three years China has kept a large swath of the country shut down as a result of the zero- cood policy.

Russia invaded Ukraine in the middle of February, setting off a long-lived war that would drive up global food and fuel prices. Now, an energy crisis is gripping Europe.

European Commission President Ursula von der Leyen and International Energy Agency Chief Fatih Birol warned Europe about a potential natural gas shortage. The region consumes nearly 7% of its annual consumption.

Russian gas to the EU over the course of a few years could eventually be stopped entirely. It might slash oil production in response to a Western price cap.

And no wonder. Everything that touches the world of cryptocurrency has a sheen of chaos. The value of bitcoin leapt from $5,600 in 2020 to $48,000 in 2021 before crashing down to $13,600 in 2022; whether it’s soaring or spiraling changes month to month, though its value is unquestionably higher than many expected just a few years ago.

According to a new report, the founder, CEO, world’s richest man, SNL host and currently the first person ever to lose $200 billion in wealth can add another record to his list.

The Rise and Fall of the Electric Vehicle Boom: The Case for Electric Power and Musk’s Wealth, Teslas, and the State of the Economy

Last year, the number of electric vehicles made by established automakers doubled, leading to decreasing demand for Teslas. The company missed its growth targets and scaled back production in China. The fourth-quarter deliveries missed Wall Street’s estimates.

Musk’s $44 billion purchase of Twitter hasn’t helped Tesla’s stock or Musk’s personal wealth, either. The largest shareholder in Musk has sold $23 billion worth of shares in his company since he began courting the micro-blogging site.

It’s not all doom and gloom out there. We’re not in a recession yet, after all. A colleague, cautiously optimistic Matt Egan recently laid out why we may achieve soft-landing in 2023.

Hiring is surprisingly resilient. The unemployment rate plummeted from over 15% in the spring of 2020 to less than 4% in November, as the economy added 263,000 jobs.

Although the cost of living is high, the rate of inflation appears to have peaked. Consumer prices soared by 7.1% year-over-year in November, marking the fifth-straight month of improvement and a significant cooling from 9.1% in June. It was the lowest annual inflation rate in nearly a year.

After spiking above $5 a gallon for the first time ever in June, gas prices have plummeted. The national average for regular gasoline recently dropped to $3.10 a gallon, an 18-month low, though it has crept higher in recent days to about $3.22 a gallon.

A Review of Two Coin Systems Founded by David Chaum to Defend and Resolve the Digital Currency Theorem (RPOW)

The original blockchain is the decentralized ledger behind the digital currency bitcoin. The ledger consists of linked batches of transactions known as blocks, with an identical copy stored on each of the roughly 60,000 computers that make up the Bitcoin network. To prove that person is the owner of the coin, each change in the ledger is signed with a digital signature. No one can spend coins twice because once a transaction is recorded in the ledger, every node in the network will know about it.

DigiCash was founded by David Chaum to create a digital-currency system that enabled users to make untraceable, anonymous transactions. It was too early for that. The company went bankrupt in 1998 as the internet became a thing of the past.

E-gold was a digital currency backed by real gold. The company was plagued by legal troubles, and its founder Douglas Jackson eventually pled guilty to operating an illegal money-transfer service and conspiracy to commit money laundering.

Two cryptographers propose separate but similar coin systems with limited supply and a limited amount of digital money being issued to the people who devoted computing resources.

RPOW was a prototype of a system for issuing tokens that could be traded with others in exchange for computing intensive work. It was created by Hal Finney who was a second user of the digital currency.

Source: https://www.wired.com/story/guide-blockchain/

Against the Tidal Wave of Initial Coin Offerings in Blockchain-Based Investment Systems: A Case Study of DogeCoin and Namecoin

Immutable ledgers have benefits in business too. Major banks are testing private blockchains to boost trading efficiency while maintaining trust, corporations are tracking internal compliance, and retailers are cleaning up supply chains. But with a few notable exceptions, these use cases remain limited trials or experiments rather than real shifts to using blockchain for business.

Ethereum and other blockchain-based projects have raised funds through a controversial practice called an “initial coin offering,” or ICO: The creators of new digital currencies sell a certain amount of the currency, usually before they’ve finished the software and technology that underpins it. The idea is that investors can get in early while giving developers the funds to finish the tech. The offerings have traditionally been outside of the regulatory framework meant to protect investors. Since the first tidal wave of ICOs in 2017, the SEC has said that virtually all violated securities law. The practice of raising money through VCs and airdrop coins is a more common way to raise money for newer companies.

Many have. At first, blockchain enthusiasts sought to simply improve on Bitcoin. Litecoin, another virtual currency based on the Bitcoin software, seeks to offer faster transactions. One of the first projects to repurpose the blockchain for more than currency was Namecoin, a system for registering “.bit” domain names that dodges government censorship.

In order to resolve the problem, Namecoin has created a solution by storing the.bit domain registration information in a system that makes it impossible for anyone without an encryption key to change it. To seize a.bit site, the government has to locate the person responsible and get them to give up the key. Other coins, also known as altcoins, were less serious in nature—notably the popular meme-based DogeCoin.

If the software is written right, there is no need to trust anyone in these transactions. That turns out to be a big problem. A hacker stole about $50 million worth of a custom currency designed to be used in a democratized investment system. A person made off with virtual cash because of a coding error. Lesson: Humans can be removed from transactions with or without a ledger.

Source: https://www.wired.com/story/guide-blockchain/

The XRP Ledger’s Failure to Meet the Howey Test and it’s Implications for Cryptocurrencies

The idea is that investors can get in early while giving developers the funds to finish the tech. These offerings have historically operated outside the regulatory framework meant to protect investors.

The sale of XRP by the company doesn’t qualify as an investment contract due to the fact that no contracts were signed when the transactions took place, and separately, that it does not fulfill the requirements of the Howey test.

After more than two years of protracted legal conflict, all of the evidence has been heard, and there remains nothing left but for Judge Analisa Torres of the Southern District of New York to issue a verdict. Those with a stake in the outcome, which will reverberate throughout the crypto sector, have been attempting to divine when a judgment might land, based on the judge’s past ruling patterns. A resolution is only days away according to some.

It would be bad news for the businesses that useCrypto, according to John Deaton, the defense lawyer who supplied expert testimony on the case.

In the United States, the question of whether a asset is a security or not has to be assessed on case by case basis through the Howey test. A security is defined under the test for being an investment in money in a common enterprise with a reasonable expectation of profits.

Some of the executives from Ripple were involved in the development of the token, as it sat atop the open source XRP Ledger. The firm had also received a donation of 80 billion XRP in the early 2010s (worth around $30 billion at present) to develop use cases—some of which it sold off.

Seeing Blockchains in Booths at SXSW 2022: Discovering a New Network of Cryptography Startups in Polkadot

For the uninitiated, SXSW is an event that takes over nearly the whole city of Austin. There’s the main convention center, panels at different hotels, and concerts at the biggest stadiums. Every bar, club, and venue has a concert or party. Those that don’t host official SXSW events are allowed to hold unofficial ones to catch some of the hype.

It isn’t terribly surprising that there is very little of acryptocurrencies presence at South by Southwest. The way NFTs work isn’t what many of their advocates say it is. Many artists have rejected NFTs entirely and find them to be an external headache, rather than a useful business tool.

In 2022, crypto blew the doors off the entire city. An outdoor venue with giant domes housed bombastic raves celebrating some little-known bunny NFTs called Flufs. (Incidentally, I attended the event last year, and the 3D images of crudely rendered rotting rabbits still occasionally haunt me.)

On the expo floor, I saw a few companies that were still proud to admit they used crypto tech to insert a financial layer into an otherwise existing product. I saw a blockchain-based camera and a crypto streaming platform—both with names I’d never heard of—in tiny booths. Polkadot, a startup that protects and organizes a growing network of specialized Blockchains called parachains, was highlighted by the largest booth.