🇺🇸 September 11, 2022 🇺🇸 | Issue 31
BE CURIOUS, LEARN, AND SHARE
When I was a first year law student studying legal research and writing, I was instructed to write legal briefs as if the reader was an intelligent 12 year old.
It did not matter that the reader was a lawyer or judge, I had to explain the facts, legal issues, law, my analysis and conclusions so that the reader could easily understand and follow my logic.
I've been working on this skill since I was 25 and it is still challenging.
Understanding the crypto industry requires learning about economics. This week's Crypto Class is about the Federal Reserve's efforts to improve the payment system in the US. This entailed learning about the existing system that banks use to pay each other and the private systems layered on top.
My research meandered from podcasts, blog posts, videos, Federal Reserve reports, and transcripts of Senators speeches.
Sound boring? Not to me. I love learning new things and the more challenging the topic, the more interested I am. But it's not until I finish taking notes and write my article that I am forced to explain things so that an intelligent 12 year old would understand.
If there is ANY crypto topic that you would like me to explain, let me know. I'll dive in and share what I've learned with everyone else.
Have a productive week and stay crypto curious!
Rich Hopen
richard.hopen@compass.com | 908.917.7926
PS. You can find all CNR newsletters here and my new YouTube Channel.
PPS. This newsletter is supported by home buyers and sellers in NJ who retain me as their real estate agent. If you know of anyone looking to buy or sell a home, please reach out to me.
CRYPTO NEWS
▸ White House Releases First Crypto Report & It's a Disappointment
The White House Office of Science and Technology Policy (OSTP) released a report requested in President Biden's March 9th Executive Order "Ensuring Responsible Development of Digital Assets."
The report focused on the environmental impact of digital assets. The recommendations revolve around the administration's goals to minimize carbon emissions and ensure that crypto mining doesn't increase the cost of electricity for consumers.
The report initially received a lot of attention because of a statement that it would consider banning energy-intensive mining if it cannot be made more sustainable.
The report states: "Should these measures prove ineffective at reducing impacts, the Administration should explore executive actions, and Congress might consider legislation, to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining.”
Was Congress going to ban proof-of-work mining? There were a lot "click-bait" headlines asking whether Bitcoin mining would be banned in the US.
Most of the criticism by industry insiders and crypto commentators centered around the sloppiness of sources relied upon by the report authors. The critics claim that key data underpinning the recommendations were from older studies that have been widely debunked.
The bottom line is that this report will be one of dozens that will be considered in the next congressional session when a comprehensive bill is introduced.
▸ The Ethereum Merge Is On Schedule This is a very big week in crypto. The network for the second largest digital asset will make the transition from the energy intensive proof-of-work protocol to proof-of-stake. The Ethereum blockchain will reduce its energy needs by 99.95%. (See Proof-of-Work and Proof-of-Stake.)
The PoS protocol, also called a "consensus mechanism," will authenticate crypto transactions. It's referred to as a merge because an Ethereum PoS network was introduced in 2020, the "Beacon Chain." So far it has only been used as a staging area to prepare for the PoS upgrade. Ethereum's core developers decided that rather than setting a specific date and time for the transition, they determined that once miners reached a set level of difficulty, the merge would occur. (See TTD below in Crypto Word). This should happen this week.
▸ Startup Venture Mysten Labs Created By Former Meta Employees Raises $300M Meta's efforts to build a commanding presence in Web 3.0 was too slow for a handful of Meta engineers. So they left the company to launch their own venture.
In a Medium post of December, 2021, the team stated "We believe fundamental limitations in existing crypto infrastructure are frustrating broader adoption of Web 3.0." The founders are cryptographical program engineers who were building the blockchain architecture for Meta's crypto-payments platform and mobile wallet. Mysten's new round of funding raises the company's valuation to over $2B. The VCs behind Mysten include FTX Ventures, a16z crypto, Binance Labs, Franklin Templeton, Coinbase Ventures, Apollo, and other top firms. This infusion of venture capital is part of the $33.8B invested in 2022 to crypto and blockchain-related startups through August. In a Wall Street Journal article, crypto research firm Messari, said that the VC spending this year has exceeded the total invested in 2021.
CRYPTO CLASS – The Federal Reserve Is Committed To Meet Consumer Demand For Instant Payments
Receiving payment immediately is essential to many. For example, those who cannot wait several days between receiving a paycheck and having the money to pay their bills are forced to choose between paying late fees to landlords/mortgage companies or, paying fees to check-cashing stores or payday lenders.
The Federal Reserve Bank Vice Chair, Lael Brainared said, “FedNow will transfer the way everyday payments are made throughout the economy bringing substantial gains to households and businesses through the ability to send instant payments at any time on any day, and the the funds being immediately available to recipients to make other payments or manage cash flow efficiently.”
The US electronic banking system relies on two systems that transmit funds between financial institutions.
The Automated Clearing House (ACH) provides overnight transactions and also offers same day payment transfer. Also, the Real-Time Payments system, a network owned by the large banks, allows customers get their money almost instantly.
FedNow should be operational the summer of 2023.
The Federal Reserve has also been studying implementing a CBDC. It’s possible that many of the problems that a CBDC seeks to address would first solved by FedNow.
This Federal Reserve project should be compared to efforts by private developers who are building systems such as Bitcoin and Lightning Network which allow for cheap and instant payment.
INFLUENCERS - People to follow Margaux Nijkerk-@cryptauxmargaux Nijkerk is a reporter with CoinDesk and reports on blockchain protocols. She focuses on the Ethereum network. She has terrific guests on her interviews and panel discussions. She never hesitates to ask hard-hitting questions.
RESOURCES – Books, websites, podcasts, interviews, articles, videos CoinDesk has been covering the countdown of Ethereum's Merge. In this interview, an Ethereum protocol developer, Preston Van Loon, explains how the transition will occur.
CRYPTO WORD – TTD As the Ethereum Proof-of-Work network transitions to a Proof-of-Stake network, miners will encounter a growing difficulty adding blocks to the PoW network. At some point, it will become so difficult that miners will be forced to transition to the PoS network. The level of difficulty is measured by TTD, the total terminal difficulty. The TTD is calculated to be 58,750,000,000,000,000,000,000.
OH, ONE MORE THING – Below is my new YouTube channel which will feature crypto videos including selected portions of the Crypto News for Realtor newsletter and other crypto videos. Want to help me with a successful launch? Please go to the site, WATCH a video, LIKE it, SUBSCRIBE, and SHARE a video with a friend or colleague. Thanks very much! YOU are the best!!!
Thanks for reading! See you next week. Go to Crypto News for Realtors to read previous issues.