The Disrupt Weekend

A provision looking to force proof-of-work cryptocurrencies like bitcoin to switch to the more environmentally friendly proof-of-stake consensus mechanism is in a draft of MiCA up for a parliamentary vote on Monday.

A previous draft of the MiCA framework contained a strongly worded provision that proposed a prohibition of crypto services that rely on environmentally unsustainable consensus mechanisms starting in January 2025. But the provision was later scrapped following industry backlash.

One version of the new draft has a similar provision though toned down from the original. It says that crypto assets ‘shall be subject to minimum environmental sustainability standards with respect to their consensus mechanism used for validating transactions, before being issued, offered or admitted to trading in the Union.’

It also says that energy-intensive crypto assets that are already in use in the EU before the legislation comes into effect, will have to ‘set up and maintain a phased rollout plan to ensure compliance with such requirements.’

The crypto community has been swift to react, with some calling on citizens in the EU to contact their parliamentarians to oppose the measure. Ledger issued a statement saying:

Individuals and organizations should be free to choose the technology most appropriate to their needs. Policymakers should neither impose nor discriminate in favor of a particular technology. This is deeply concerning and would have serious consequences for Europe.”

See Also: Bitcoin-Banning Measure Seen Too Close to Call in Tomorrow’s EU Parliament Vote

“A layer 1 blockchain called Juno is on the verge of doing something radical: taking away tens of millions of dollars’ worth of a holder’s tokens using an on-chain vote by other users. The proposal appears to be the first major instance of a blockchain community potentially voting tokens out of the hands of a fellow holder.

Juno, a smart-contract layer 1 in the Cosmos ecosystem, was allegedly the victim of a Sybil-like attack in which one user faked multiple wallets to receive a disproportionate share of a recent airdrop. The wallet alleged to belong to the airdrop gamer now contains more than 3.1 million JUNO tokens with a market value of just over $122 million.

A new Juno proposal, Proposal 16, would draw down the “Whale Wallet” to 50,000 JUNO tokens, which the proposal describes as a “fair share” of the airdrop. The proposal argues that, beyond a matter of simple fairness, the reversal is an existential necessity for Juno, because the whale now has a huge share of the network’s voting and economic power.

The debate about such deep intervention changes considerably when it’s happening via on-chain voting, rather than through a fork. A fork is a fundamentally social and nebulous process, often initiated by people with power and influence, but requiring public persuasion to make sure miners continue extending the “correct” chain. On-chain voting, by contrast, is both more rigorous and more opaque: Proposals lay out clear outcomes, but as Buterin himself has pointed out, it’s quite easy to buy votes or manipulate the process in various ways.

Whether it winds up being manipulated, the scary part about Juno’s Proposal 16 is something more fundamental. In a very loose sense, it undermines the core cryptocurrency value proposition that if you control your own private cryptographic keys, you have total control over your tokens. Instead, it shows that blockchains, too, involve social as well as technical consensus.

For some, this response will be seen as an upside and even an evolutionary path – a significant step, in particular, toward decentralized autonomous organizations (DAOs) that have real enforcement power and are willing to flex it.

Even if you’re focused on the upside, it will be important and difficult to create a stronger distinction between systems with this sort of on-chain capability, and those that offer true irreversibility. Bitcoin, Ethereum and most other major chains don’t have on-chain proposals or governance mechanisms that would make this possible. Unfortunately, that’s a distinction likely to be lost on the general public and even on most crypto speculators.”

Unless users or applications are running their own node, they are completely relying on third parties like Infura and Alchemy to interact with the blockchain for them. The concept of “Stateless Ethereum” would help remove the reliance on centralized service providers and would allow blockchain users to access the chain locally in dire situations, especially if they are being blacklisted.

But how could ordinary users spin up their own full node, especially as it will continue to become more memory and software intensive as Ethereum’s state grows? According to Ethereum developer Ben Edgington, you can fix this at the protocol level by making state storage somebody else’s problem. By introducing state providers, tasked with the core job of maintaining the history of Ethereum, you can also introduce stateless clients that make running an Ethereum node easier than ever, leading to true decentralization and resilience of the network.

Stateless Ethereum is just one of the exciting upgrades that will become possible after the Merge, and 2022 is lining up to be one of the most exciting years in the network’s 6-year history.”

“The first version of the open-source project is not ready for real funds because it needs more testing. But the release shows CoinSwap, a long-standing idea – first described by cryptographer Gregory Maxwell on the Bitcointalk forum in 2013 – finally coming to life.

Belcher believes Teleport’s CoinSwap has advantages over CoinJoins. ‘Imagine a new privacy tech for bitcoin, like CoinJoin, but can’t be blocked [because] the [transactions] look exactly the same as regular [transactions].’

If done the right way, CoinSwap transactions can’t be detected on the blockchain. They look just like normal transactions.

For anyone looking at the blockchain her transaction appears completely normal with her coins seemingly going from address A to address B. But in reality her coins end up in address Z. Anybody doing analysis on the blockchain would always have a niggle in the back of their mind: ‘What if this transaction I’m looking at was actually a CoinSwap?

The doubt and uncertainty added to every transaction would greatly boost the fungibility of bitcoin and so make it a better form of money.”

“It’s a blockchain startup project that few people have heard of, involving a cryptocurrency that barely anyone trades. But the saga of LBRY is being closely tracked by lawyers who say the low-profile case now before the U.S. Securities and Exchange Commission could have massive implications for the key question of which cryptocurrencies might be deemed to be afoul of regulations and why.

The SEC’s civil lawsuit against LBRY might end up setting a regulatory precedent for hundreds of small-scale crypto projects.

A judicial opinion in the LBRY case will have much more impact for people looking for clarity than the Ripple case. There are so many, many projects that did similar things to what LBRY did compared to what Ripple did.

The SEC sued LBRY last March for allegedly offering unregistered securities to raise a total of $6.2 million starting in 2016. The SEC accused LBRY of offering and selling LBC to institutional investors and using the proceeds to pay bills for operating expenses. Investments where returns are closely intertwined with a business’ managing performance are typically considered securities, regulated assets that need to be registered with the SEC.

Unlike bitcoin and some other cryptocurrencies that are more decentralized, LBC is managed by a centralized team. That is why the SEC thinks LBC should be considered a security instead of a currency. LBRY also made an ambitious promise about the token’s future value that the SEC thought to be misleading.

What the SEC is targeting in this case is how LBRY publicly announced to its community (investors in the crypto world) that it planned to engage with a “market maker.” A market maker is an entity that is supposed to buy and sell the company’s crypto token on a regular basis at prevailing market prices. Such an announcement is likely to increase the price of their token, striking a nerve with the SEC.

LBRY responded to the SEC in June, writing ‘the SEC is squeezing a new technology into an outdated and vague definition of security.'”