Benjamin Franklin Meets the Blockchain

Hi, everyone. Another grim week. The plain truth is that we have got to stop selling weapons of war to random civilians.

The Plain View

In 1727, 21-year-old Benjamin Franklin invited, as he put it, “my most ingenious acquaintance[s] into a club of mutual improvement.” He dubbed his new club the Junto, after the Spanish word for “join.” On Friday evenings Franklin and the dozen Junto members (all men, of course) would meet in a Philadelphia tavern to discuss topics of morals, politics, or national philosophy, conducting debates “in the sincere spirit of inquiry after truth … without fondness for dispute or desire of victory.”

Almost 300 years later, I Zoomed into a study group inspired by Franklin’s colloquies. It consisted of budding tech founders discussing Web3. All the virtual attendees were young and super serious, and all seemed to have completed the assigned technical readings on subjects like token velocity and the design space of liquidity mining. [...]  read more

A Bored Ape Lawsuit Won’t Set the NFT Precedent Seth Green Wants

The first thing you should probably do if you find yourself in Seth Green’s position is not tweet about how much you’re “looking forward to precedent setting debates on IP ownership & exploitation.”

Green, an actor best known for his pouty portrayal of archvillain Dr. Evil’s disappointing son in the Austin Powers franchise, has become the butt of crypto’s latest bad joke. Earlier this month, Green lost his prized Bored Ape when he fell for a scam and made himself vulnerable to thieves by interacting with a clone of another NFT project’s website. Clone sites can be virtually indistinguishable from the originals, often with only a letter or two missing from their domain names. Green is not the first to lose an NFT this way, and he won’t be the last. Hacking and good old-fashioned con artistry are endemic in the magical world of Gutter Cats and Happy Hippos.

What makes Green unique is that he had a lot more riding on his Ape than most members [...]  read more

Welcome to the Zombie Cryptocalypse

People have forgotten what unregulated markets are like. We’ve had 90 years of the SEC and reasonably regulated, well-behaved stock markets. And it turned out really well. People can trade in some sort of confidence that there are rules and so on. And people talk about crypto and Bitcoin and so forth as if this is a well-behaved, high-volume market where someone checking that nobody is just lying about everything. And none of that’s the case.

A pile of crypto is not a pile of capital that you can develop or invest or whatever. It’s just some stuff you can buy, sell, or hold. And early investors can only pay with money from later investors. There is no way “we’re all gonna make it” because it’s a game of winners and losers, and the winners are the big guys, and the losers are the moms and dads and grandmothers and the young people who are desperate in their economic situation and looking for “one weird trick” they can have to win.

This [...]  read more

US Courts Are Coming After Crypto Exchanges That Skirt Sanctions

Cryptocurrencies have long been seen as the Wild West of money transfers, but few online payment and money transfer platforms have been as blatant in appealing for illicit cash as this one. The platform, highlighted but not named in a memorandum opinion unsealed on May 13 in the US District Court in Washington, DC, was based in a “comprehensively sanctioned country”—likely North Korea, according to those within the crypto law space—and advertised its services as evading US financial sanctions. It was built using a US front company that facilitated the purchase of domain names, according to court records.

The platform, which was designed to sidestep financial bans designed to cripple pariah countries, handled more than $10 million worth of bitcoin that was transferred between the United States and the sanctioned country using a US-based crypto exchange, which, the opinion implies, was not aware that it was helping avoid sanctions.

 [...]  read more

The Web3 Decentralization Debate Is Focused on the Wrong Question

Web3 advocates promise decentralization on an unprecedented scale. Excessive centralization can stymie coordination and erode freedom, democracy, and economic dynamism—decentralization is supposed to be the remedy. But the term on its own is too vague to be a coherent end goal. Getting the job done takes the right kind of decentralization, and we worry that Web3 is thus far heading down the wrong track.

In particular, we worry about the focus on degree, rather than type, of decentralization. Focusing on degree—whether we want more or less decentralization—can lead Web3 advocates to mischaracterize both the reality of existing centralization, as well as the possibility of pure decentralization. On the one hand, existing “centralized” systems are not nearly as centralized as Web3 advocates commonly describe. “Legacy” banks delegate many activities to local branches, and even central banks are often consortia. Architecturally, “centralized” clouds are rarely [...]  read more

The Web3 Movement’s Quest to Build a ‘Can’t Be Evil’ Internet

Owocki was something of a rock star at the conference. He is credited with coining the term BUIDL in 2017. Admirers approached him nonstop to talk, express their support, or ask for a copy of his book, GreenPilled: How Crypto Can Regenerate the World, which was the talk of the conference and quickly sold out of the 400 copies he had ordered. Owocki is about as far from a casino person as you’ll find in the crypto world. In one of several presentations he gave, Owocki told the crowd that since research shows money stops increasing happiness after about $100,000 in annual income, Web3 founders should maximize their happiness by giving their excess money to public goods that everyone gets to enjoy. “There’s cypherpunk, which is all about privacy, decentralization: hardcore libertarian shit,” he told me. “I’m more of a leftist. I’m more solarpunk, which is, how do we solve our contemporary problems around sustainability and equitable economic systems? [...]  read more

Crypto Is Poised to Reshape Taxes—and Cities

Taxes, CityCoins founder Patrick Stanley says, can stop being a mind-numbing civic ritual and become an exercise in freedom—if we tokenize and calibrate them the right way. Stanley’s crypto-based invention is what he calls “an opt-in tax of opportunity, as opposed to obligation,” wherein boosters tithe a particular city with crypto because they have faith in the municipality and its mission. “They want to see the city working as a capital allocator, and they want to bet on the success of the city,” Stanley said in a podcast interview. Essentially, they can cheer a city government on through computational processing worth millions, if not billions, of dollars—the equivalent of a gilded “like” button.

CityCoins launched its first project with the city of Miami in August 2021, raking in $2.5 million in “pseudo-tax” income in its first 20 days. New York City and Austin now have their own coins. Within the CityCoins matrix, miners receive a city-specific [...]  read more

NFTs Are a Privacy and Security Nightmare

Venmo’s baffling decision to turn payments into a social media feed, where public transactions are the default, has rightly been met with criticism. But at the very least, it’s always been possible to make Venmo transactions private. Now, imagine a financial system that’s not just public by default, but can’t ever be made private, and nothing can ever be removed or deleted.

That’s how crypto works. And for years, it’s been too seldom recognized as an issue—in large part because systems like Bitcoin, Ethereum, and other crypto platforms are technically “anonymous.” More specifically, unlike a bank or financial app, you don’t have to attach your real name, address, or other identifying information to a wallet. Sure, everyone can see what a random wallet is doing, but they don’t necessarily know who is doing it.

NFTs, however, radically undermine this already tenuous anonymity. 

Public Blockchains Are Low-Privacy Environments

With [...]  read more

What Twitter Is Really Planning for Crypto

You might have heard of crypto Twitter, the corner of the social network where accounts have Bored Apes as profile pictures, posts are rife with talk of tokens, blockchains, and buying the Bitcoin dip, and Elon Musk is venerated.

Photograph: Christian Peacock

Then again, you might have heard of Twitter Crypto, the business unit devoted to developing the social network’s strategy for cryptocurrency, blockchains, and that grab-bag of decentralized technologies falling under the rubric of Web3.The team’s unveiling came in November 2021 via a tweet from the newly hired project lead, Tess Rinearson, a Berlin-based American computer scientist whose career includes stints at blockchain companies such as Tendermint and Interchain.

Rinearson joined Twitter at a crucial moment. Jack Dorsey, the vociferously pro-Bitcoin company CEO, would leave a few weeks later, to be replaced by CTO Parag Agrawal. Agrawal had played an instrumental [...]  read more

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