Hello everyone and welcome back to Chain reaction
In our Chain Reaction Podcast This week, Anita and I sat down with Sean Maguire of Sequoia Capital about why gamers are skeptical of NFTs and where decentralization really matters. More details below.
Last week was our first newsletter and we had a long chat about the changes Twitter could make to expand its crypto business. At the time, I, like many others, was on the assumption that Musk’s deal with Twitter was ultimately doomed, but we have a deal. Everything is approved for now, but I can’t shake the feeling that something is going to kill this deal at the eleventh hour. If that happens, the Twitter board or Musk could face a $1 billion fine for pulling out of the deal, but I guess we’ll see… This week I’m watching the controversial bitcoin mining ban being passed by New York City regulators and what the like bills could mean for the political reputation of the #1 cryptocurrency.
the hottest double
The biggest crypto skeptics see many reasons to criticize the industry, but the majority of the complaints are usually based on the belief that cryptocurrencies provide very little benefit to society, burning a huge amount of energy.
While crypto proponents can squabble over the first point until they’re blue in the face, the second is a little harder to deny. According to the oft-quoted tracker created by Digieconomist, this number is equal to Thailand’s energy consumption. Meanwhile, Ethereum’s energy footprint is half that, but still comparable to Kazakhstan’s energy consumption. In 2018, the United States reported a total electricity consumption of 4,222.5 TWh.
Some lawmakers find these numbers hard to swallow. New York State Assembly this week passed the bill who had a team of crypto in arms. The bill blocks the creation of cryptocurrency mining firms in the state that rely on non-renewable energy. In particular, this does not apply to existing objects. The corresponding bill is currently passing through the Democratic-controlled state senate.
This is exciting for a number of reasons.
First, cryptocurrency is becoming more and more of a biased topic. Republicans are generally wary of regulating unregulated industries, and as such, a number of big figures in the party have fully supported crypto with few concessions. This includes prospective future party leaders such as the governors of Texas and Florida. Meanwhile, most of crypto’s most outspoken critics appear to be Democrats, but that doesn’t mean it’s a partisan issue. President Biden’s recent executive order on cryptocurrencies in general has been hailed by industry insiders as very space-friendly. Energy use seems to be the most important stumbling block for many regulators considering sweeping bans.
Another reason this is interesting is that this bill only really affects a few large crypto networks, but includes the two biggest ones, Bitcoin and Ethereum.
These networks use a so-called health check mechanism to secure their networks. In this case, the job is mining, where computers work around the clock to solve mathematical problems that protect the integrity of the blockchain, making it extremely expensive and technically difficult for hackers to overload the network to make unauthorized transactions and steal tokens. Crypto seems to be moving away from proof-of-work in general, with Ethereum in particular in the process of transitioning its network to a less power-hungry consensus method. But it is unlikely that Bitcoin will make its own transition, assuming that regulatory maneuvers such as the New York bills are likely to become increasingly hostile to Bitcoin (and a few smaller networks).
This could lead to an interesting scenario where the crypto industry finds more and more tolerance among its current critics, but Bitcoin becomes more and more politically isolated.
Bitcoin is already broadcasting its libertarian leanings a little more prominently than other blockchains. At recent industry events, it is becoming clear that with the growing ecosystem of developers for blockchains such as Ethereum and Solana, the infrastructure philosophy of the Bitcoin network is becoming an increasingly harmonious element. Bitcoin’s continued resistance to criticism and calls for change may only encourage its supporters, but criticism of the network’s power consumption is here to stay, and further adoption may only make it a more visible target for aggressive regulation.
Some politicians may love cryptocurrency but still hate bitcoin.
this week’s package
hello everyone this is Anita here. Our second installment of the weekly Chain Reaction podcast just aired, and we’ve been so wrapped up in Elon Musk/Twitter this week that we’ve decided to touch on two other topics first to take our mind off the Bird app. second.
Earlier this week, I wrote about how Fidelity, the largest provider of retirement plans in the United States, announced its plans to bring bitcoin to the 401(k) plan he manages 23,000 companies. This is a bold move by the current tradfi because it legalizes cryptocurrency as a long-term investment just a month after regulators tried to dissuade pension plan providers from doing so. We kicked off the podcast with spirited conversations about who would benefit from Fidelity’s move, especially if it becomes a broader trend. Personally, I think the news is great for non-billionaires – you can read about why in my last one for TC+ is here.
We also looked at:
- Coinbase CEO Brian Armstrong casts a shadow on Apple for their App Store policy
- Elon Musk’s Twitter bid and what it means for web3. We just couldn’t miss it, especially due to Twitter’s position as a watering hole for the crypto community.
Our guest interview this week was with Sean Maguire, a Sequoia investor and, of course, Twitter crypto personality. We spoke with him about Sequoia’s recent cryptocurrency moves, the possibility of a multi-chain future, and whether we will ever achieve true decentralization on a massive scale or be stuck in a “2.5 network” forever.
keep track of money
Where is startup money moving in the crypto world:
- P2P exchange 0x receives $70 million from Greylock Partners
- NFT launch Proof receives $10 million from 776 Alexis Ohanian
- Launch of Crypto TV Crazy realities receives $6 million from Paradigm
- African crypto application Afriex receives $10 million from Sequoia China and Dragonfly Capital
- Gaming DAO diner raises $9 million from Animoca
- DeFi Platform Tonic receives $5 million from Electric Capital and Move Capital
- Cricket NFT platform Rario raises $120 million from Dream Capital
- NFT game Apeiron stole $10 million from Hashed
- NFT infrastructure CXIP Laboratories receives $6.5 million from Courtside Ventures and Wave Financial
- Launch of crypto banking Cogni receives $23 million from Hanwha Asset Management and CaplinFO
Some more cryptanalysis from our TechCrunch+ subscription service:
The total number of stablecoins in circulation has grown significantly over the past year, but their future is unclear. Kraken’s general counsel said the subasset is experiencing a “Cambrian moment” as they gain ground in the market. But not everyone is a fan of stablecoins as they are in their infancy and have the potential to boom in two very different ways.
Web3 attracts people from all walks of life, from traditional financial analysts to software developers. But in the past 12 months, a fairly new group has entered the space: the artists. While there are financial incentives, some say these creators are diving deep into web3 for more than just a new source of income.
Thank you for reading! And, again, to get this in your inbox on Thursday morning, you can subscribe to TechCrunch newsletter page.
Credit: techcrunch.com /