CoinDesk Crypto

It was all a meme. 

Well, Dogecoin still is a meme – just a more expensive meme. And as the price rises from the depths, Dogecoin’s historically scattered development is rising with it.

Take Dogecoin lead maintainer, Ross Nicoll, for example. His last commitment to the open source project on Github came in October of 2019, but in the past two weeks he’s taken on a handful of new pull requests to make changes to the coin.

Related: Amazon Preparing to Launch a ‘Digital Currency’ Project in Mexico

As he and four other Dogecoin developers take up the keyboard in the name of the Shiba Inu-emblazoned memecoin (which is now worth over $9 billion at $0.07 a coin), they’re tasked with upgrading a software whose last major release happened nearly two years ago in June 2019.

“People say it’s a joke coin but we’re very careful to take care of the code. When it took off, there was a resurgence in attention and we want to keep the currency operational,” Ross Nicoll told CoinDesk.

When Jackson Palmer co-created Dogecoin, he meant it as a joke, a mockery of the cryptocurrency space that he didn’t take seriously. The memecoin launched on December 6, 2013, and was a fork of Bitcoin’s codebase that tweaked a few of Bitcoin’s key design features.

For one, Dogecoin’s inflation is significantly larger than Bitcoin’s own and it hasn’t had a supply halving since 2014. Each block contains 10,000 DOGE, so some 5.2 billion DOGE are mined each year. Dogecoin’s mining difficulty adjustment (which controls how hard or easy it is to find a block) is tweaked every block, unlike Bitcoin which adjusts every 2,016 blocks. It is sometimes “merged mined” with Litecoin, meaning miners run programs to mine both chains simultaneously.

Related: Mark Cuban, Lindsay Lohan, Gene Simmons and Snoop Doge: Celebs Join the Crypto Bandwagon

Additionally, DOGE has faster bocks than Bitcoin (1 minute vs. 10 minutes), so transactions are faster and cheaper than Bitcoin. This comes at the cost of producing many more orphan blocks than Bitcoin – blocks that are rejected by the network and do not contribute to the longest blockchain transaction history.

Dogecoin also includes a community-donated developer fund, which currently holds just over $1,700,000 worth of DOGE. Nicoll said that the developers share access to the fund via a multisignature wallet.

One of the things that brought Nicoll and others back to DOGE were the “scaling problems” the team discovered. Over the past month, Dogecoin’s full node count (those running the Dogecoin source code and recording the network’s transaction history) has grown from a few hundred to some 1,300, Nicoll said. Most Dogecoin nodes, he continued, are running on the default setting that only allows outbound connections but not inbound ones. 

Because Dogecoin node users are not disabling this firewall to allow incoming connections from peer nodes, the network’s topography is wonky, Nicoll explained. Hundreds of nodes only have a one-way connection to the rest of the network, and since they aren’t connecting to other nodes, some wallets are having trouble syncing.

Nicoll and his peers are tackling this problem first. They also have their hands full catching up to the 7 major releases Bitcoin Core has made since Dogecoin’s development more or less stopped. 

That’s because, for many years, Dogecoin’s technical development was copied step-for-step from Bitcoin Core, meaning the code for any new Bitcoin release was copied and adapted for Dogecoin. Since March 2014, “[Dogecoin Core] has always been based on Bitcoin,” Dogecoin developer Maximilian Keller told CoinDesk. This was a security decision that he said “has contributed significantly to the stability” of Dogecoin.

“[The Bitcoin] rebuild has gotten extensive review and testing, and ever since we have used the knowledge gained there to push out updates. Given that, I don’t see the latest release being that long ago as an issue. It has been running stable, and the rules of the network have not changed since in a way that would put it at risk.

“The Dogecoin network does not necessarily have the same challenges as Bitcoin, so it’s less of a pressing issue for us [to update regularly],” Keller said.

The technical mimesis stopped a few years back, so now there’s a gulf in development between the last minor release of Dogecoin (v.1.14.2, which came in November of 2019) and the most recent activity. (If you look at Dogecoin’s GitHub, for example, you’ll notice that all of its top 20 most popular contributors are Bitcoin Core developers).

So Dogecoin’s development group of five is “working on new versions,” primarily Dogecoin version 1.21, which will take aspects of Bitcoin Core 0.21 but will still require remolding the code to fit into Dogecoin’s design, Nicoll said.

He continued to say that it would be best to push the update within a year lest it “get to the point where Bitcoin Core is accelerating away from us.”

Nicoll and his compatriots are reinvolving themselves at a time when Dogecoin’s price is howling at the moon, but would they be turning their attention to it if porn stars, rappers and the world’s richest man weren’t tweeting about it?

“We’ll always prioritize security. I’m not going to say that [development] won’t slow down again, but we will always be there looking for security issues to make sure the software is kept up to date,” Nicoll said when asked if new DOGE holders should be leery of Dogecoin’s spotty development.

Looking past Dogecoin’s technical architecture (which, to be clear, does not have any gaping holes), the network’s hashrate is roughly 300 terahashes. To put this into perspective, Bitmain’s latest and most powerful miner produces over 50 terahashes at peak performance and Bitcoin’s hashrate is roughly 161 exahashes (or 161,000,000 terahashes).

But Dogecoin uses the Skrypt hashing algorithm instead of Bitcoin’s SHA-256, which is supposed to be ASIC resistant, meaning most Dogecoin mining is done with computer processors (CPUs) or graphics cards (GPUs), resulting in a lower hash, though ASICs like the Antminer L3+ run Skrypt.

It’s theoretically very easy to 51% attack Dogecoin to cheat its network to print new coins (or steal coins from others). Some back-of-the-napkin figures crunched by CoinDesk suggest that it would cost roughly $8 million to attack the Dogecoin network for a week.

Why hasn’t it been attacked, then? Maybe it’s because it really is too much of a joke to be worth it. Then again, maybe it’s because no one is so low as to attack a coin bearing the face of a puppy.

Update 13:17 UTC: This article has been updated to say Dogecoin’s developer fund is worth some $1,700,000, not $100,000 as originally stated.

• TokenInsight: 2020 Cryptocurrency Options Industry Report
• Twitter’s Dorsey Elaborates on New Decentralized Social Media Platform

Utility tokens for centralized exchanges including FTX, Binance, Huobi and OKEx, hit all-time highs Wednesday, not long after some of them set price records earlier this month.

• At press time, FTX’s FTT, Binance’s BNB and Huobi’s HT have seen the most significant growth since the beginning of the year, up about 249%, 238%, and 161%, respectively, according to Messari.
• As CoinDesk reported previously, exchange tokens are logging impressive returns as more traders, especially new retail traders from the equity market, are using these exchanges to invest in cryptocurrencies.
• “FTX has set all-time highs in volume, traffic, and revenue this month, and outgrown most of other exchanges as well,” said Sam Bankman-Fried, CEO of derivatives exchange FTX.
• Ciara Sun, vice president of Huobi Global Markets, also said HT’s price surge on Wednesday is partly driven by bitcoin’s new record high price earlier this week.
• “HT is the native token that reflects the community perception of our ability to grow our influence in the blockchain realm,” Sun said. “When we are doing well and the industry is doing well, it gets reflected by its price.”
• Binance had not responded to CoinDesk’s request for comments, as of press time.
• Data from Skew shows that Binance, OKEx, Huobi and FTX are among the top exchanges with some of the most bitcoin futures open interest.

• Crypto Use in Terrorism ‘a Growing Problem,’ Yellen Says
• Nigerian Crypto Users Fight Back Against Central Bank Decision
• Elon Musk Knocks Exchanges That Don’t Support Private Keys
• Amazon Preparing to Launch a ‘Digital Currency’ Project in Mexico

Utility tokens for centralized exchanges including FTX, Binance, Huobi and OKEx, hit all-time highs Wednesday, not long after some of them set price records earlier this month.

• At press time, FTX’s FTT, Binance’s BNB and Huobi’s HT have seen the most significant growth since the beginning of the year, up about 249%, 238%, and 161%, respectively, according to Messari.
• As CoinDesk reported previously, exchange tokens are logging impressive returns as more traders, especially new retail traders from the equity market, are using these exchanges to invest in cryptocurrencies.
• “FTX has set all-time highs in volume, traffic, and revenue this month, and outgrown most of other exchanges as well,” said Sam Bankman-Fried, CEO of derivatives exchange FTX.
• Ciara Sun, vice president of Huobi Global Markets, also said HT’s price surge on Wednesday is partly driven by bitcoin’s new record high price earlier this week.
• “HT is the native token that reflects the community perception of our ability to grow our influence in the blockchain realm,” Sun said. “When we are doing well and the industry is doing well, it gets reflected by its price.”
• Binance had not responded to CoinDesk’s request for comments, as of press time.
• Data from Skew shows that Binance, OKEx, Huobi and FTX are among the top exchanges with some of the most bitcoin futures open interest.

• Amazon Preparing to Launch a ‘Digital Currency’ Project in Mexico
• Mark Cuban, Lindsay Lohan, Gene Simmons and Snoop Doge: Celebs Join the Crypto Bandwagon
• Dogecoin’s Surging Price Has Resurrected Its Technical Development
• TokenInsight: 2020 Cryptocurrency Options Industry Report

Mastercard is planning to give merchants the option to receive payments in cryptocurrency later this year.

According to a source familiar with the matter, the functionality will see Mastercard customers’ digital currency payments settled in crypto at participating merchants, a first for the financial giant. The company has not yet disclosed which digital currencies it intends to support, or where.

The details shed new light on CEO Michael Miebach’s Q4 pledge to integrate digital currency payments “directly on our network” in a move the new chief, helming his first earnings call on Jan. 28, said will provide maximal flexibility to customers and merchants alike.

Related: Amazon Preparing to Launch a ‘Digital Currency’ Project in Mexico

Previously, Mastercard supported limited cryptocurrency transactions through its cryptocard partners Wirex and Uphold. But those programs only cover payment, not settlement; the coins are converted to fiat currency well before reaching the merchant.

The new initiative promises to upend that dynamic among the store owners and businesses who opt in. They will be able to conduct their business beyond the bounds of the fiat ecosystem, assuming, of course, their customers have crypto they’re willing to spend. 

That’s hardly a safe bet given the buy-and-hold mantra pervading the world’s largest cryptocurrency. The source pointed out most bitcoin buyers primarily treat their coins as investment vehicles, not payment tools. And the source underscored there’s no guarantee Mastercard’s crypto settlement initiative will support bitcoin. 

Instead, cryptos will be evaluated against Mastercard’s 2019 “Principles for Blockchain Partnerships” framework, the source said. Released in the wake of Mastercard’s Libra exit, the document placed emphasis on stability, consumer protection and regulatory compliance in vetting potential partners.

Related: Mark Cuban, Lindsay Lohan, Gene Simmons and Snoop Doge: Celebs Join the Crypto Bandwagon

“Many of today’s 2,600 digital currencies today fail to do this,” Mastercard said at the time.

In a blog post published after this story, Mastercard Executive Vice President for Blockchain and Digital Asset Products Raj Dhamodharan hinted stablecoins will be the primary beneficiary of Mastercard’s coming integration.

“Our philosophy on cryptocurrencies is straightforward: It’s about choice. Mastercard isn’t here to recommend you start using cryptocurrencies. But we are here to enable customers, merchants and businesses to move digital value,” Dhamodharan said.

Relatively few merchants currently accept crypto, bitcoin or no. Tesla’s stated plans to sell cars for bitcoin remains a hypothetical. A widespread crypto economy is still far from reality.

Read more: Mastercard President Says Crypto Patents Will Pay Off When Central Bank Digital Currencies Arrive

But Mastercard has been laying the groundwork for that future through years of patents around the digital currency space. The company said it holds 89 blockchain patents and is waiting for approval on an additional 285 around the world.

In the U.S. those filings have included: methods to keep crypto transactions private, on-chain credit card payment verification, instant blockchain payment processing and how to handle crypto refunds, among others.  

Mastercard first filed a patent for handling bitcoin payments in 2013 but abandoned that effort in 2015. It began hiring a team of wallet developers and crypto veterans in 2019. The company now hosts a platform through which central banks can test digital currencies. 

The payments space is rushing to support blockchain-based currencies at a pace not seen since Bitcoin pioneered the concept of stateless, peer-to-peer immutable transactions in 2009. PayPal intends to roll out bitcoin payment functionality later this year. Visa’s CEO said the rival company may add crypto payments in the future. 

UPDATE (Feb. 10, 2021, 22:20 UTC): Mastercard published a blog post following this article’s publication, confirming its plans to settle transactions in crypto on its network.

• Dogecoin’s Surging Price Has Resurrected Its Technical Development
• TokenInsight: 2020 Cryptocurrency Options Industry Report

A Bank of America cryptocurrency report warns of the risks and potential market disruption from anti-privacy government measures.

Cryptocurrencies “challenge the ability of governments to levy taxes and to control capital flows more broadly,” according to a recent report from Bank of America Securities obtained by CoinDesk. Uncertainty over how the U.S. governments will act to limit these use cases presents an key risk for cryptocurrency investors.

“Encrypted private wallets with digital assets that can be transferred across borders would seem to undermine the monetary sovereignty of every nation-state,” the report says.

Related: Amazon Preparing to Launch a ‘Digital Currency’ Project in Mexico

In an “extreme case,” regulators could simply ban all institutions and intermediaries from transacting with cryptocurrencies. Or the government could increase customer information reporting and access requirements for cryptocurrency exchanges, which the report describes as a more plausible possibility.

Also, support for central bank digital currencies (CBDCs) are not “just a form of payments competition,” the report says. “They are also an effort to replace private digital assets with publicly-controlled ones.”

How effective state-run counter-privacy measures will be is a separate question. The authors admit that no matter how burdensome, anti-privacy regulatory changes “might instead be meaningless”. Users committed to transaction privacy “could potentially create a second ‘truly private’ wallet to which they send currency from their now-public wallet, and continue to make anonymous cross-border transactions.”

“At some threshold, banning private digital assets would become too politically risky, too disruptive to constituents,” the report says. But carefully targeted regulations designed to restrict privacy could impose a “serious burden” on users.

Related: Mark Cuban, Lindsay Lohan, Gene Simmons and Snoop Doge: Celebs Join the Crypto Bandwagon

Bank of America’s analysts said they are closely watching the risks and expected responses by the US government to limit private cryptocurrency transactions. And given “uncertainty about how cryptocurrency markets would react to a reduced-privacy environment,” the report suggests investors should “approach digital assets cautiously.”

• Dogecoin’s Surging Price Has Resurrected Its Technical Development
• TokenInsight: 2020 Cryptocurrency Options Industry Report

Jack Dorsey donated $1 million to cryptocurrency policy think tank Coin Center, per a tweet announcement from the organizations director Jerry Brito.

• The donation comes amid Grayscale’s donations campaign for Coin Center offering to match up to $1 million in donations on top of an additional $1 million gift from Grayscale.
• “Thank you for your incredible work,” Dorsey told Brito on Twitter.
• These donations are the latest in a flood of support for the Washington, D.C.-based organization. In late December, crowdsourced donations on Gitcoin and other gifts from crypto companies saw hundreds of thousands of dollars gifted to Coin Center.

• Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says
• How Nigeria and India Are Dealing With Crypto Bans
• A Leading Crypto-Advocacy Group Is Optimistic New U.S. Regulatory Leaders Will Adopt “Thoughtful” Crypto Policies
• Nouriel Roubini Reacting to Tesla’s Big Bitcoin Buy: SEC Should Investigate Market Manipulation

A Tesla has sold for bitcoin before, perhaps with a side of buyer’s remorse.

Back in 2013, Lamborghini Newport Beach sold a Tesla Model S Performance for 91.4 BTC at an exchange rate of $1,126 per coin, according to a CNN Business report at the time. The Model S retailed at the dealer for $103,000.

Elon Musk sparked a conversation on the payments role of the original cryptocurrency after his electric vehicle firm announced a $1.5 billion purchase of bitcoin earlier this week. Not only that, but Tesla has plans to accept bitcoin for purchases going forward.

Related: Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says

“That’s right, an electronic currency was used to purchase a fully electric vehicle,” the dealership’s 2013 blog post reads.

However, the price of that bitcoin has appreciated 4,100% since the 2013 transaction. The digital asset broke above $43,000 to a high of $47,700 after the electric vehicle giant announced a $1.5 billion purchase in an SEC filing earlier this week.

As of press time, the value of the bitcoin used to buy the 2013 Tesla would be over $4.1 million.

The purchase was not necessarily the first of its kind concerning electric vehicles (although in terms of Tesla it seems to be). In 2013, a Toyota Prius was purchased for 1,000 BTC by one early bitcoin investor who lived off the digital currency.

Related: How Nigeria and India Are Dealing With Crypto Bans

Sadly, it seems Lamborghini Newport Beach did not hodl its bitcoin stash. Although more customers came forward after the news, the dealership apparently flipped the bitcoin for dollars using payment processor BitPay, CNN reported at time.

Lamborghini Newport Beach did not return questions for comment when reached by phone.

Bitcoin’s recent surge has brought Laszlo Hanyecz, the man behind the infamous “Bitcoin Pizza,” into the limelight this week. He told Bloomberg that he was “not too interested in Tesla” and advocated for bitcoin holders to not sell their digital currency.

• A Leading Crypto-Advocacy Group Is Optimistic New U.S. Regulatory Leaders Will Adopt “Thoughtful” Crypto Policies
• Twitter CEO Donates $1M to Coin Center

The New York Stock Exchange (NYSE) halted trading of Virginia-based Blue Ridge Bank’s stock (BRSB) after a spike in trading activity Wednesday, the company told CoinDesk in an email. 

The company announced late Tuesday that it had opened up bitcoin redemptions and purchases at 19 of its ATMs. The stock started the day trading just under $20 and jumped to $22.61 before settling to $21.22 as of press time. 

“NYSE told us the company’s stock reacted to the news and due to the volatility, a Limit Up/Limit Down (LULD) trading halt was triggered,” said Blue Ridge external spokesperson Jon Amar. “The LULD is a 5-minute trading pause. Currently, the stock is trading up approximately 5% on 75K shares vs. its 30 Day ADV of 10K shares.”

Related: Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says

The NYSE did not respond to a request for comment by press time.

• How Nigeria and India Are Dealing With Crypto Bans
• A Leading Crypto-Advocacy Group Is Optimistic New U.S. Regulatory Leaders Will Adopt “Thoughtful” Crypto Policies
• Twitter CEO Donates $1M to Coin Center

Bitcoin liquidity appears to be falling as the demand that has driven the recent bull market appears to be concentrated among a relatively small number of investors who are unwilling to sell, according to new research by Morgan Stanley. That lack of liquidity potentially hurts its use for transactions, the investment bank said.

Addresses holding amounts of bitcoin worth more than $1 million are on the rise, with wallets holding over 100 bitcoin owning over 60% of all coins issued. Almost 30% are held in wallets that hold between 1,000 and 10,000 coins.

In the report, Morgan Stanley said the case for bitcoin as a means of exchange “becomes harder to defend” if liquidity continues to fall, as it won’t be as attractive a vehicle for trading in goods and services.

Related: Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says

This however could change with the evolution of products that enable a user-friendly experience for spending crypto assets.

Morgan Stanley highlights PayPal’s confirmation of its entry into the bitcoin market in October 2020 as an example of this even if its use proves modest. With 325 million potential customers on PayPal’s platform, companies should see significant opportunity in creating products and services that can facilitate the use crypto for buying and selling.

Ruchir Sharma, Morgan Stanley’s head of emerging markets and chief global strategist, echoed this view in a bullish new blog post, in which he is suggests bitcoin could replace the dollar as the world’s reserve currency.

He acknowledges that almost all bitcoins are held as investment rather than to transact, but believes this is changing thanks to developments such as PayPal adoption.

Related: How Nigeria and India Are Dealing With Crypto Bans

See also: Tesla’s Bitcoin Buy May Not Trigger Wave of Corporate Demand, Says JPMorgan

• A Leading Crypto-Advocacy Group Is Optimistic New U.S. Regulatory Leaders Will Adopt “Thoughtful” Crypto Policies
• Twitter CEO Donates $1M to Coin Center

1. Tesla caught a lucky break in announcing its $1.5 billion bitcoin purchase when it did. The auto giant is reportedly being investigated by Chinese authorities over safety and quality concerns, news that came to light the same day headlines were dominated by Tesla’s treasury, according to CoinDesk markets reporter Muyao Shen.

• Media gadflies, like NYU economics professor Nouriel Roubini, have criticized Tesla and bitcoin. Speaking on CoinDesk TV this morning, “Dr. Doom” raised questions about “market manipulation” – including CEO Elon Musk’s public comments on crypto and that a particular wallet “sucks” – and Tesla’s “failing” business model, which, he says, is now being masked by an asset with “no intrinsic value.”
• Still, it’s an open question as to whether other corporations will follow Tesla, Square and MicroStrategy’s lead in chipping into dollar reserves with bitcoin. JPMorgan thinks the strategy is an anomaly, due to the crypto’s volatility, while CNBC screaming head Jim Cramer said it’s “almost irresponsible” to not have the asset on a corporate balance sheet. Twitter is reportedly considering it.

2. Decentralized finance is heating up. Most notably, Amazon’s AWS Marketplace is offering Origin Protocol’s decentralized e-commerce platform Dshop to software-as-a-service customers (SaaS), as part of its partner network.

• Never mind bitcoin on the balance sheet, a subsidiary of Europe’s biggest telco is taking a stake in DeFi heavyweight Flow Network, a proof-of-stake blockchain, and becoming a data provider to the Chainlink oracle network. (CoinDesk’s Ian Allison reports out what this might say about the future of enterprise blockchain.)
• Meanwhile, a version of Curve Finance’s automated market maker is being built on Polkadot, a proof-of-stake chain that offers an alternative to Ethereum. Separately a piece of digital land sold for a record 888 ETH.

3. A U.S. citizen is suing the Internal Revenue Service, which could have wide implications for all cryptocurrency holders and privacy rights. CoinDesk privacy reporter Ben Powers gives a rundown of James Harper v. Charles P. Rettig, in which the plaintiff argues the IRS had violated Coinbase users’ constitutional rights by sending 10,000 letters warning they may not have paid taxes properly.

• The suit centers around how the government requests and comes into possession of personal data, and whether individuals have lost their right to privacy by dealing with “third parties” like Coinbase. In an increasingly web-mediated world, more and more behavior is based on network technologies – meaning, theoretically, more private information may be subpoenaed by the government.
• Nigerian citizens are rejecting governmental overreach in banning cryptocurrencies by turning to peer-to-peer exchanges. “Decentralized systems are hard to ban,” one user told CoinDesk contributor Alyssa Hertig.

Related: Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says

Bitcoin ban?
With bitcoin going parabolic and maverick boosters like MicroStrategy CEO Michael Saylor earning ears to the thesis that the dollar is a “melting ice cube,” concerns that the U.S. government could outright ban the cryptocurrency are surfacing.

“If you think the U.S. Treasury and the U.S. government will let this thing get out of hand where literally corporates are starting to replace dollars…” Dan Nathan, founder and principal of Risk Reversal Advisors, said on CNBC yesterday.

Well, as the segment host asked: “What can they do?”

“They can regulate the hell out of it,” the reply went. Indeed, governments across the world are shifting their weight around on crypto. India has floated a ban on “private currencies.” The U.K. recently squashed crypto derivative products and regimes in China and Nigeria have long-standing restrictions on crypto trading.

Related: How Nigeria and India Are Dealing With Crypto Bans

But whether the U.S. government could interfere with the nascent digital economy is another question. This is the land of the free, after all, and what’s more sovereign than bitcoin? More to the point:

Bitcoin has a $647.2 billion market cap, and much of the infrastructure is being laid down in the U.S. Multi-billion dollar companies like Coinbase are gearing up to go public, while INX is already selling shares on the Ethereum blockchain. Surveys reveal that anywhere from one-tenth to half of the U.S. population owns cryptocurrency.

It’s for these reasons that industry watchers like Wall Street Journal MoneyBeat reporter Paul Vigna think “the ship has sailed” on a full-throttle ban, as he said yesterday afternoon on All About Bitcoin, a new CoinDesk TV show.

This morning on First Mover, Blockchain Association Executive Director Kristin Smith gave a sobering appraisal of the current prospects for crypto regulation: More is coming, but it’s more likely to be informed and beneficial.

Under the Trump administration, regulators like former acting head of the OCC Brian Brooks laid the foundation for “banks and institutions” to grow into their role with cryptocurrencies, Smith argued. This happened despite Brooks’ bosses Treasury Secretary Steven Mnuchin and Donald Trump thinking little of the industry.

“With the Biden administration, we’re going to see a much more thoughtful, measured approach [to crypto policy],” Smith argued. This is a particularly insightful comment considering the 11th hour legislative attempt to limit on-chain privacy with FinCEN’s “unhosted wallet rule.” (More on the status of that here.)

“They [Mnunchin’s admin] had written something that was so crazy, without understanding how these networks work that we were able to threaten to sue based on process,” Smith said.

While she predicts Biden appointees to be more open to civil discussion, Smith notes that regulators that know how the snaking process of rule-making works could be dangerous. “It’s a risk that you run when you have someone who knows what they’re doing… They have the ability to inflict an incredible amount of damage,” she said.

Has the ship sailed? It’s hard to say – but commenters aren’t speaking from the dock, waving their hats in farewell. Everyone, regulators, bulls and reporters are all on deck bracing against turbulent waters. Who knows, maybe Roubini is right, maybe it’s a ship of fools.

• On the Bitcoin energy debate: Does a greener world need fewer greenbacks? (Reuters)
• Billionaire Tilman Feritta sold cars for bitcoin in 2017 (beating Elon to the punch?) (CNBC)
• QuadrigaCX is back from the dead – sorta. An imitator is using the defunct exchange’s URL, likely to scam unsuspecting users or even those spurned by the original, which went down after the mysterious death of its founder. (CoinDesk)
• Legacy exchanges are more than pulling their weight in crypto adoption, argues Kaiko’s head of research. (CoinDesk Opinion)
• Rumors that WallStreetBets had an early bead on Tesla’s BTC buy were started by a high German politics student. (NY Post)
• Intangible qualities like brand and community give Bitcoin and Ethereum an edge in the world of open-source development. (CoinDesk Opinion)

• A Leading Crypto-Advocacy Group Is Optimistic New U.S. Regulatory Leaders Will Adopt “Thoughtful” Crypto Policies
• Twitter CEO Donates $1M to Coin Center

Donations to the Brink open-source development fund are now tax exempt for U.S. donors.

Founded and directed by Bitcoin Core contributor John Newbery, Brink provides grants to Bitcoin developers who work on its open-source tech stack. Now, it has secured 501(c)(3) status from the Internal Revenue Service, meaning any U.S. taxpayer donating to the fund can receive a tax break contributing to the fund.

Donors who have already made contributions can retroactively apply the tax break as well, Brink’s blog post reads.

Related: Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says

“Brink was started with a simple mission: Strengthen Bitcoin by Supporting Bitcoin Developers. Critical to that mission is our ability to raise money to fund our grant and fellowship programs.

“Making the organization as tax efficient as possible ensures that donors’ funds are used to the maximum possible benefit of the mission…Furthermore, donations of long-term appreciated assets like Bitcoin generally don’t incur capital gains tax and can be claimed as an income tax deduction for the full fair-market value,” the blog post reads.

Brink applied for the exemption on the grounds that it is conducting research, providing education and funding public infrastructure (Bitcoin).

Launched in September of 2020, Brink has partnered with other primary players in the Bitcoin development grant space like Square Crypto, the Human Rights Organization, Kraken and Gemini. Brink’s first grant recipient, Bitcoin Core contributor Gloria Zhou, is working on optimizing how Bitcoin’s mempools (the global holding tanks for transactions) send and store data.

Related: How Nigeria and India Are Dealing With Crypto Bans

Brink is currently accepting applications for future grants.

• A Leading Crypto-Advocacy Group Is Optimistic New U.S. Regulatory Leaders Will Adopt “Thoughtful” Crypto Policies
• Twitter CEO Donates $1M to Coin Center

Blue Ridge Bank is letting customers buy bitcoin where they retrieve cash.

Customers at the Charlottesville, Va.-based bank will soon be able to buy and redeem bitcoin at 19 of its ATMs, with an 8% fee on transactions. To make this happen, the bank has partnered with BluePoint ATM solutions, a national ATM operator, and LibertyX, a Boston-based bitcoin ATM software provider.

The number of bitcoin ATMs surged last year as the COVID-19 pandemic accelerated the need for contactless payments. The bank joins a small list of community banks interested in serving the bitcoin community, including New York-based Quontic Bank, which launched a bitcoin rewards debit card this year. 

Related: Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says

Blue Ridge has $2.8 billion in assets after completing a merger with Richmond-based Bay Banks early last year, and adopted the service to further evolve for serving the next generation of customers, said Bank CEO Brian Plum.

The bank didn’t act in response to requests from its current customer base, Plum told CoinDesk in an interview.

“You do have growing interest in cryptocurrencies,” Plum said. “It doesn’t diminish what we can do with our current ATMs, so it’s not like this was a matter of substitution.”

Anti-money laundering watchdogs have warned of the potential for illicit activity posed by bitcoin ATMs. In June 2020, a CipherTrace report said bitcoin ATMs were used to send money to “high-risk exchanges” known for facilitating criminal activity. 

Related: How Nigeria and India Are Dealing With Crypto Bans

The ATMs limits for bitcoin purchases are capped at $5,000 per day, said Justin Pence, BluePoint’s chief operating officer. Customers are also buying the bitcoin with a bank-issued debit card, he added.

In April of last year, Blue Ridge extended a Paycheck Protection Program loan to MobileCoin, but the bank does not yet have a core crypto banking team, Plum said. 

“We are open and pursuing what makes the most sense for us based on economics and the regulatory environment,” Plum said about potential additional crypto services in the future. “It is a volatile space. If you think about commercial banking it is anything but a volatile business. … A lot of what’s happening in crypto right now is exciting, but you need to have the infrastructure in place.”

Update (Feb. 10, 17:53 UTC): Additional comments added from Blue Ridge and BluePoint executives.

• A Leading Crypto-Advocacy Group Is Optimistic New U.S. Regulatory Leaders Will Adopt “Thoughtful” Crypto Policies
• Twitter CEO Donates $1M to Coin Center

Ethernity, a new non-fungible token (NFT) art project, is set to auction off digital artworks featuring and backed by public figures including the Cameron and Tyler Winklevoss.

According to an announcement Wednesday, the digital artworks are represented by NFTs (also termed crypto collectibles) and created by in-house artists from across the globe. The project said it’s talking to artists like Mad Dog Jones and motion graphic designer Esteban Diacono about possible collaborations ahead.

The NFTs, which include one-of-a-kind trading cards and 3D abstract art, will also feature public figures such as Philadelphia 76ers-owner Michael Rubin, Swedish DJ Alesso, soccer star Christian Vieri, among others.

Related: Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says

A portion of all funds raised through the sale of the NFT initiative will go towards a charity of the public figure’s choice. This can range from 5%–95% depending on the donation agreed between celebrity and artist, Ethernity told CoinDesk. These details will be announced with every NFT “drop,” the firm said.

Founded by early bitcoin investor Nick Rose Ntertsas, Ethernity said it now has 75 celebrity-backed artworks already authenticated on the blockchain and plans to reach 200 in circulation this year.

The first auction should be held in coming weeks, with more to be held on an ongoing weekly basis, the project said.

See also: NFT Art Sales Reached All-Time High of $8.2M in December

• How Nigeria and India Are Dealing With Crypto Bans
• A Leading Crypto-Advocacy Group Is Optimistic New U.S. Regulatory Leaders Will Adopt “Thoughtful” Crypto Policies
• Twitter CEO Donates $1M to Coin Center

Bitcoin (BTC) was lower, after an intraday price spike on Tuesday took the largest cryptocurrency to a new all-time high of $48,226.25, based CoinDesk 20 data.   

$50K in sight: “Bitcoin needs a couple more big endorsements, and that could be the key to take prices above the $50,000 level,” Edward Moya, senior market analyst for the foreign-exchange broker Oanda, wrote Tuesday. 

Inflation watch: European shares and U.S. stock futures were higher as Bloomberg News reported that “inflation has quickly become the biggest issue in markets on speculation the Federal Reserve will let the economy run hot out of the pandemic.” The U.S. Labor Department’s Bureau of Labor Statistics reported Wednesday in its monthly CPI report that the consumer price index rose 0.3% in January, for a 1.4% increase over the past 12 months. The headline reading was in line with economists’ expectations.  

Related: Bitcoin News Roundup for Feb. 10, 2021

Argo Blockchain plans new bitcoin mine in western Texas: The publicly-listed company has agreed to buy 320 acres of land to build the 200-megawatt data center, at a cost of $17.5 million to be funded via the issuance of ordinary shares. Argo will use a $100 million credit facility to fund the construction of the site, which ostensibly would be one of the world’s largest bitcoin mines.  

Bitcoin ‘can’t be stopped’: Nigerians look to peer-to-peer exchanges after crypto ban. Some Nigerians plan to continue using bitcoin and other cryptocurrencies despite a directive issued by the Central Bank of Nigeria last week ordering banks to close down accounts associated with cryptocurrencies.

Salesforce.com going remote: The company is the largest private employer in San Francisco and occupant of the city’s tallest building, known as the Salesforce Tower, and yet it’s planning for most employees to work remotely part- or full-time after the pandemic, the Wall Street Journal reports. First Mover has written previously about how a permanent shift toward remote working could represent one of the biggest labor-market trends in generations, and yet the Federal Reserve and other economic authorities have barely begun to address the transition. 

Everybody wants bitcoin, but where will it come from? 

Related: Winklevoss Twins, DJ Alesso Back Crypto Collectible Artworks up for Charity Auction

A collision course is setting up in the bitcoin market: a wave of new buyers appearing just as easily-obtained supplies of the cryptocurrency fall to their lowest levels in more than three years. 

Electric-vehicle maker Tesla’s announcement this week that it had bought $1.5 billion of bitcoin triggered a new round of wagering that more corporate treasurers might soon follow CEO Elon Musk’s lead. 

At least one Wall Street analyst argued that iPhone maker Apple, the world’s largest company, should push into the game. There’s also speculation that software giant Oracle might be next, partly fueled by CEO Larry Ellison’s service on Tesla’s board of directors. Facebook, Amazon, Netflix, Google and Microsoft could all be candidates, suggests Mati Greenspan, founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics.  

Even the obstreperous CNBC personality Jim Cramer weighed in on Tuesday: “Every treasurer should be going to boards of directors and saying, ‘Should we put a small portion of our cash in Bitcoin?'” Cramer said on the financial-news network. (A JPMorgan analyst, for what it’s worth, argues that corporate treasurers are likely to be turned off by bitcoin’s notorious price volatility.)  

Yet if companies start buying bitcoin en masse, finding fresh supplies of the cryptocurrency is likely to come at a cost, according to professional analysts in digital-asset markets. 

The number of bitcoins sitting on cryptocurrency exchanges – ostensibly ready for a quick sale if the price is right – has fallen to about 2.3 million, the lowest since July 2018, based on data from Glassnode, a blockchain analysis firm. It’s down from about 3 million as recently as early 2020.

The decline may reflect the activity of big investors who bought bitcoin over the past year and then swiftly transferred their holdings to custody providers or offline “cold storage” solutions, awaiting long-term gains, according to Arcane Research, a Norwegian cryptocurrency-analysis firm.  

“A proper supply crisis is taking place in front of our eyes,” the Arcane analysts wrote. 

Prices for bitcoin are already up 62% year-to-date, versus 4.1% for the Standard & Poor’s 500 Index of large U.S. stocks. That track record alone might be enough to tempt more companies, investment firms, endowments, pension plans, governments, endowments, pension plans and regular people – especially at a time when bitcoin is increasingly viewed as a hedge against currency debasement, during an era of easy-money policies from central banks around the world.  

“If you think Bitcoin is lively now, wait till there’s a liquidity crunch,” says Matt Blom, head of sales and trading for the cryptocurrency exchange firm EQUOS.

Some 900 new bitcoins are minted each day by the underlying blockchain network, worth roughly $42 million at current prices. 

Compare that with the $2.02 billion that has flowed into bitcoin-focused investment products so far this year, based on a report Tuesday from the digital-asset manager CoinShares. That works out to an average $51.9 million per day.

And the CoinShares report doesn’t even cover demand from investors or corporate treasurers who may be buying bitcoin directly through their own accounts, or from retail traders who are looking for a piece of the action. 

The math is pretty simple: There’s not a lot of bitcoin for sale at current price levels.

“Holders are not selling their bitcoin in response to price increases,” says Philip Gradwell, chief economist for the blockchain-forensics firm Chainalysis. “If this behavior continues, then price should continue to rise if demand continues.”

“Doji candle” signals indecision, CoinDesk’s Omkar Godbole writes

Bitcoin’s daily price chart shows signs of indecision in the form a Doji candle. The range play is typical of price consolidation seen after a notable rally.

• If buyers fail to defend Tuesday’s low of $45,060, bitcoin may revisit the former record high of $41,962, now perceived as a new level of support. 

Ether (ETH): Second-largest cryptocurrency by market capitalization hit fresh all-time high Tuesday of $1,824, according to CoinDesk 20 data. “We expect some exhaustion on ether coming from the price itself, above $2,200, but also from the fees to use the network itself while solutions are being built to tackle this issue,” Jean-Baptiste Pavageau, partner at quantitative trading firm ExoAlpha, told CoinDesk’s Daniel Cawrey. 

Litecoin (LTC): Alternative cryptocurrency hits 3-year highas network activity picks up, with the number of new addresses climbing to the highest since 2019.  

DeFi Soars: Collateral locked in decentralized-finance protocols closes in on $40 billion, up from about $1 billion a year ago, according to DeFi Pulse:

Opinions and observations

Has Ethereum already passed threat from Ethereum killers? Sure, other “smart-contract” blockchains might eventually do what Ethereum does, and do it faster and cheaper. But “Ethereum’s immense intangible assets are the real moat behind its dominance,” including a cryptocurrency brand second only to Bitcoin’s and a “fanatically loyal community,” Zabo co-founder Alex Treece writes for CoinDesk Opinion. 

End of “Petrodollar” era could loosen U.S. dollar’s domination as global reserve currency, according to Reuters column by Mike Dolan. 

“Investors who have grown accustomed to central banks always coming to the rescue could find themselves in serious pain” if inflation ticks up and the Federal Reserve steps in to tighten monetary policy, columnist James Mackintosh writes for WSJ.  

Bitcoin to Keep Dominating? David Russell, an analyst for TradeStation, emails First Mover to say: “Lots of people expected a rally in altcoins this year, and there are legitimate reasons to like smaller coins associated with the growth of DeFi. But investors shouldn’t overlook the much bigger trend of institutional adoption, which could channel hundreds of billions of dollars into the market much faster than anyone thought. It’s a completely different catalyst that could disproportionately favor bitcoin at the expense of altcoins. DeFi and Altcoins offer a steady trickle of innovation and excitement. But institutional adoption could represent a tsunami of cash. Risk-averse corporations and institutions are doing the buying. If they’re just now getting the courage to enter a market that was previously viewed as risky, they will favor the safest asset in that market. This is similar to global investors in a new emerging market. They often target the biggest and most mainstream companies like banks and telecoms rather than smaller industrials.”

Opportunism is alive and well in crypto: After just two days, it appears that a website called The Doge Store is already selling a T-shirt for $19.99 with the words “Elon’s Candle” and an image of bitcoin’s price chart (candle view) leading up to the moment earlier this week when Tesla announced its $1.5 billion purchase of the cryptocurrency. By the way, the 19.5% price jump over the course of Feb. 8 was the largest daily move in percentage terms since Dec. 7, 2017, and  also represented the largest-ever daily price increase in absolute dollar terms, at more than $7,500, according to Arcane Research. (EDITOR’S DISCLAIMER: We know absolutely nothing about this retailer.) 

• Twitter Considering Bitcoin Options, Including on Balance Sheet, Exec Says
• Rhode Island Lawmakers Hope to Boost State Economy With Blockchain-Friendly Legislation

Twitter is considering adding bitcoin to its company reserves, according to chief financial officer Ned Segal.

Segal told CNBC’s Squawk Box Wednesday that the social media giant is also looking at payment options involving the top cryptocurrency by market cap.

“We have done a lot of the upfront thinking to consider how we might pay employees should they ask to be paid in bitcoin, how we might pay a vendor if they asked to be paid in bitcoin and whether we need to have bitcoin on our balance sheet,” he said.

Related: Bitcoin News Roundup for Feb. 10, 2021

The CFO added that the team watches closely what other companies do to see what can be learned from them.

In recent months, major firms like MicroStrategy started to invest in bitcoin as a hedge against inflation and a devaluation in the U.S. dollar. Most notably, Fortune 500 firm Tesla announced Monday it has put $1.5 billion into bitcoin.

Segal’s comments are perhaps not surprising. Twitter CEO Jack Dorsey is a noted advocate of bitcoin, having brought in payments in the cryptocurrency at Square, which he also heads. He also set up Square Crypto, a small team dedicated to supporting bitcoin development.

Twitter shares were trading up 11.67% at $66.88 on Wednesday at the time of publication. 

Related: Winklevoss Twins, DJ Alesso Back Crypto Collectible Artworks up for Charity Auction

Read more: Twitter CEO Jack Dorsey Has Set up His Own Bitcoin Node

• First Mover: As Wall Street Fixates on Inflation Hedges, Good Luck Finding Bitcoin
• Rhode Island Lawmakers Hope to Boost State Economy With Blockchain-Friendly Legislation

The Rhode Island General Assembly is to consider draft legislation aiming to harness blockchain technology as a means to stimulate growth, create jobs and diversify the U.S. state’s economy.

The “Rhode Island Economic Growth Blockchain Act” aims to to nurture a “welcoming business environment” for technology and blockchain companies. It highlights how existing frameworks are unfit for purpose due to being created at a time when products and services were not technology focused.

The act, introduced Tuesday by House Minority Leader Blake Filippi and fellow Republican representative David Place, proposes the creation of a regulatory sandbox for “innovators to develop the next generation of digital products and services” and help the state compete in the 21st century economy.

Related: Bitcoin News Roundup for Feb. 10, 2021

According to the bill, the state should seek to offer banking services tailored to innovators in this space, highlighting the difficulties experienced due to federally insured institutions not being permitted to manage accounts in cryptocurrency or other digital assets.

House Bill 5425 emphasizes the importance of cooperation between the public and private sectors to provide greater trust and accountability between government, businesses and citizens.

The legislative bid marks Rhode Island’s latest attempt to attract companies harnessing blockchain technology. In June 2019, the state sought proposals from companies to explore the viability of distributed ledger technology to improve state operations, in areas such as notarization, registration and licensing, contracts and fraud mitigation.

See also: Rhode Island Will Regulate Crypto Under Money Transmitter Laws

• Winklevoss Twins, DJ Alesso Back Crypto Collectible Artworks up for Charity Auction
• First Mover: As Wall Street Fixates on Inflation Hedges, Good Luck Finding Bitcoin
• Twitter Considering Bitcoin Options, Including on Balance Sheet, Exec Says

Mobile-focused blockchain payments startup Celo has raised $20 million from the likes of Andreesen Horowitz (a16z), Greenfield One and Electric Capital.

According to a press release on Wednesday, the funding will go towards fleshing out its suite of offerings.

Celo is a proof-of-stake blockchain built on Ethereum, designed to support stablecoins and tokenized assets, while utilizing cellphone numbers to secure a user’s public keys.

Related: Litecoin Hits 3-Year High as Prices Surge Across Altcoin Markets

To date, the startup says it has raised more than $65 million from high-profile industry backers including Polychain Capital, Reid Hoffman, Jack Dorsey, Coinbase Ventures, among others.

“We now have the technology to create a better financial system, a rich ecology of digital assets and products that allow individuals and organizations to … transact and manage risk,” said Celo co-founder Rene Reinsberg.

Since Celo’s initial development in 2017, the project has launched a mainnet, a native token (CELO), a stablecoin (cUSD), a mobile payments app and has been listed on major exchanges including Coinbase and Binance.

See also: Big Guns Back $10M Investment in DeFi’s dYdX

• 10 Arrested Over SIM-Swap Hacks That Stole $100M in Crypto From Celebrities: Europol
• Elon Musk Bites Back at Freewallet After Dogecoin Tweet
• Mystery Entity Just Set up 20K Bitcoin Miners in Siberia: Report

Alternative cryptocurrencies such as litecoin, Cardano and Chainlink are flying high Wednesday, as bitcoin takes a bull breather.

Litecoin traded at $195 earlier on Wednesday, its highest level since March 2018, according to CoinDesk 20 data. At the lower press-time price of $180, the cryptocurrency is up 8.3% on a 24-hour basis.

Litecoin’s network activity has picked up alongside the 25% price gain seen this week alone. The number of active addresses has risen to 231,973 – the most since June 5, 2020, according to data source Glassnode. Meanwhile, the number of new addresses has increased to a 22-month high of 101,862.

Related: Payments Startup Celo Raises $20M From a16z, Electric Capital

The uptick in the number of new addresses is widely taken to represent an influx of investors. However, it is not a perfect indicator, as a single user can own multiple addresses.

Cardano (ADA) is also seeing keen trading, having surged by 28% to over $0.87 – a level last seen in January 2018.

Meanwhile, oracle provider Chainlink’s LINK token has rallied to fresh record highs above $28.50, taking the year-to-date gain to 150%. Chainlink’s oracles act as a bridge between cryptocurrency smart contracts and off-chain data feeds, and are widely used by decentralized finance (DeFI) protocols.

Other altcoins such as XRP, Stellar, bitcoin cash, and privacy-focused monero have also charted impressive gains over the 24 hours.

Related: 10 Arrested Over SIM-Swap Hacks That Stole $100M in Crypto From Celebrities: Europol

Meanwhile, bitcoin is trading in a range of $45,600–$47,400. The price action is typical bull market consolidation often seen after a notable rally.

Bitcoin cruised past the Jan. 8 high of $41,962 on Monday after Tesla disclosed purchases of the top cryptocurrency, and set new all-time highs above $48,000 early Tuesday. Traders expect more corporates to copy Tesla’s move, leading to a stronger price rally, although JPMorgan analysts played down the likelihood over bitcoin’s volatility risk.

Also read: Tesla’s Bitcoin Buy May Not Trigger Wave of Corporate Demand, Says JPMorgan

• Elon Musk Bites Back at Freewallet After Dogecoin Tweet
• Mystery Entity Just Set up 20K Bitcoin Miners in Siberia: Report

Crime-fighting agency Europol says 10 people have been arrested for SIM-swap attacks that stole over $100 million in cryptocurrency from celebrities.

• According to a Wednesday announcement, eight individuals were arrested on Feb. 9 in an international operation coordinated by Europol, following two arrests made previously in Malta and Belgium.
• All 10 are said to be part of a global criminal network that carried out SIM swapping attacks in the U.S. throughout 2020 and targeted online influencers, sports stars, musicians and their families.
• SIM swapping involves taking over victims’ phone numbers and then using cellphone authentication methods to access their apps or bank and cryptocurrency accounts by changing passwords.
• To apprehend the group, Europol worked with law enforcement authorities from the U.K, the U.S, Belgium, Malta and Canada in a year-long investigation.

Read more: Europol, Spanish Police Bust Alleged Scam Posing as Crypto Investment Training Firm

• Payments Startup Celo Raises $20M From a16z, Electric Capital
• Litecoin Hits 3-Year High as Prices Surge Across Altcoin Markets
• Elon Musk Bites Back at Freewallet After Dogecoin Tweet
• Mystery Entity Just Set up 20K Bitcoin Miners in Siberia: Report