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Bitcoin enthusiasts and miners are celebrating a major milestone of the network this week, with the mining of the 800,000th block since its inception in 2009. Only 40,000 blocks remain to be mined before the next reduction of the network’s mining reward. The 800,000th block, discovered on July 24, contained 3721 transactions at 1.64 MB while the BTC price was $29,815. The mining reward is the amount of cryptocurrency you receive for successfully extracting a block of the said currency. For Bitcoin, the mining reward is halved every 210,000 blocks, approximately every four years. Initially, the reward for a bitcoin block was 50 BTC. Today, it’s only 6.25 BTC.
The 800,000th block was mined at a time when Bitcoin’s hash rate – the total computing power used to mine and process transactions on the network – is near historic highs. In parallel, Bitcoin’s mining difficulty – another key measure of how hard it is to find a new block – reached a new record at the last adjustment about two weeks ago. Historically, each “halving” has led to a dramatic rise in prices. The next is only 269 days away according to current forecasts.
Worldcoin, a project co-founded by OpenAI CEO Sam Altman, launched its ecosystem token on July 24, aiming to provide a decentralized, private solution for verifying human identity online in the face of rising artificial intelligence technologies. The project, which aims to solve issues of income inequality and online identity authentication, has drawn divergent opinions, some praising it for its ambition, while others label it dystopian. The World ID, a global digital passport storable on a phone, allows users to prove they are not robots without providing personally identifiable information. On May 8, the project launched a fee-free crypto wallet for verified humans, offering fee-free transfers in exchange for World ID registration. The developers claim that the user-provided data is not stored and a zero-knowledge proof is generated to verify the user’s humanity without revealing the data used to create the proof.
Vitalik Buterin, the co-founder of Ethereum, expressed serious reservations, identifying four “major issues” with the project’s design. Buterin considers a proof-of-humanity system like Worldcoin “seems very valuable,” but warns that developing such a system carries significant risks. His first concern is about privacy and scanning someone’s iris. He fears this could capture far more data than it appears, including a person’s gender, ethnicity, and certain medical conditions. Jack Dorsey also seems unconvinced. In a short message via Twitter, he wrote: “‘ ’Worldcoin is an attempt at global alignment…’ cute.” Bitcoin advocate Anita Posch also suggested that the centralized nature of the Worldcoin project and the amount of data it handles could constitute a potential failure point: ” A global database of human IDs issued after an eye scan, paid for with useless Worldcoin token, connected with all financial transaction data of each individual managed by a centralized non-profit collecting sensitive data for KYC/AML. WHAT COULD GO WRONG?”
Following a mixed court ruling in favor of Ripple in its lawsuit against the US SEC, the agency has filed new documents in its lawsuit against Terraform Labs and its CEO Do Kwon, arguing that the Ripple decision was wrong and could be contested. According to the SEC, although Ripple did not violate securities laws by offering its XRP token to retail investors, the company violated the law regarding institutional investors. The SEC thus responds to a statement from Terraform’s lawyers, who believe the decisions on Ripple strengthen their defense and support their request to dismiss the lawsuit. The SEC believes that Ripple’s distinction between the expectations of institutional and retail investors creates an artificial distinction and reverses the Howey test, which determines whether a financial instrument constitutes an investment contract subject to SEC regulation. The SEC argues that even if the alleged factual differences were substantial, the Ripple case supports the SEC’s position.
According to lawyer John Deaton, founder of Crypto Law, this potential appeal signal of the decision in the Ripple case is nowhere near a setback. He asserts that it would take a long time for the appeal to be processed by the judicial system. “It will take two years before a decision is rendered by the second instance,” said Deaton. “The Torres decision is the law until then.”
Russian President Vladimir Putin signed a law granting the “digital ruble” the status of legal tender, amid heavy Western sanctions and increasing inflation due to the war in Ukraine. Under this law, the Bank of Russia, the country’s central bank, has been given legal authority to serve as the platform operator for the central bank digital currency (CBDC). The law also provides legal definitions for users and outlines how banks will operate in this new framework. Although the law now has Putin’s green light, Russian officials have said they do not expect the digital ruble to be widely adopted for several years. Olga Skorobogatova, the central bank’s deputy governor, said in an interview with Forbes that most citizens will not have access to online wallets until at least 2025. Following this signature, the central bank can begin CBDC testing as early as August 1.
Bitcoin and ether are little changed as they await the Federal Open Market Committee’s interest rate decision on Wednesday. Since March 2022, the Fed has implemented its fastest rate hike policy in decades, raising benchmark borrowing rates from zero to a range of 5% to 5.25%. The CME’s FedWatch tool shows a 99.8% probability that the Fed will announce a 25 basis point increase at this week’s meeting. In short, the chances of a major market-moving surprise seem slim.
After bitcoin lost the $30,000 mark, it’s the significant 50-day moving average that everyone is watching. This long-standing resistance led to a strong price increase when it broke in June. It has now been serving as support for three days.
Rivemont Investments, manager of the Rivemont Crypto Fund.
The presented information is as of July 26th, 2023, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
