Crypto Weekly News Recap: Bitcoin as Legal Tender 2.0

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Apologies that this newsletter is going out late. However, on Thursday night, I met Camila Russo of The Defiant for the first time and trying to fit in a social event on my busiest day of the week scrambled my brain. So this is going out a bit late! This is us holding each other's Ethereum books.

On this Friday's Unchained, Chris Perkins, president of CoinFund, explains a new proposal by FTX.US that could revive crypto derivatives trading in the US -- and disrupt traditional finance. In the episode, he explains how derivatives are currently settled, what FTX.US's proposal is, and how the traditional financial world is reacting. Be sure not to miss it -- plus, he spoke from the Bahamas, where he was attending FTX's Crypto Bahamas conference.

And now onto the rest of this week's news.

Bitcoin Is Now Legal Tender in Central African Republic

The Central African Republic (CAR), a country home to 4.9 million people, has adopted Bitcoin as legal tender within its borders.

According to the AFP news agency, CAR president Faustin Archange Touadera signed a law legalizing all cryptocurrencies and recognizing Bitcoin as legal tender this week.

Finance Minister Herve Nboda was proud of the country’s move. He explained to Bloomberg, “There’s a common narrative that sub-Saharan African countries are often one step behind when it comes to adapting to new technology…This time, we can actually say that our country is one step ahead."

CAR is the first country to legalize bitcoin as legal tender in Africa and the second in the world – joining El Salvador.

Notably, the CAR news came during the same week that former BitMEX CEO (and noted analyst) Arthur Hayes made the case for “The Doom Loop” in his most recent article – arguing that Bitcoin adoption at the country level would lead to a $1 million price per coin. He wrote:

“Flags [nations] will pursue a savings policy mix that includes storing commodities and purchasing gold / Bitcoin. The fact that USD and EUR assets are not part of this mix, combined with entrenched real goods [and] energy inflation puts the Doom Loop into motion. The Doom Loop will usher in $1 million Bitcoin and $10,000 — $20,000 gold by the end of the decade.”

Elon Is Buying Twitter, Here’s Why That’s Important for Crypto

Twitter is set to go private after formally accepting a $44 billion bid from Tesla CEO Elon Musk. The news was announced in a press release Tuesday, with the Twitter Board “unanimously” approving the deal that will see every shareholder receive a payout of $54.20 per share.

While there are still some details to work out before the Elon deal officially goes through, the news had some instant implications for the crypto market – and could have far-reaching effects as well.

Just as I did in a Bulletin newsletter this week, let’s break down three ways Musk’s bid for Twitter is noteworthy for crypto:

Fidelity Bitcoin 401ks Are On the Way

Fidelity Investments will allow clients to add bitcoin to their 401(k) retirement plans later this year, the firm announced on Tuesday. Employers will be able to cap bitcoin savings at 20% of an employee's account.

“There is growing interest from plan sponsors for vehicles that enable them to provide their employees access to digital assets in defined contribution plans, and in turn from individuals with an appetite to incorporate cryptocurrencies into their long-term investment strategies,” said Dave Gray, head of workplace retirement offerings and platforms at Fidelity Investments in a press release.

(Crazy stat: According to CoinDesk’s research, Cerulli Associates estimates that Fidelity held around $2.4 trillion in 401(k) assets in 2020 – nearly triple Bitcoin’s market capitalization.)

The Michael Saylor-led software firm MicroStrategy is at the front of the line for Fidelity’s offering and announced on Tuesday that it plans to offer employees access to BTC via Fidelity 401(k)s. “MicroStrategy looks forward to working with Fidelity Digital Assets to become the first public company to offer their employees the option to invest in bitcoin as part of our 401(k) program,” tweeted Saylor.

In related traditional-finance-meets-crypto news…

Vitalik Seems Optimistic About Optimism

Optimism, the third-largest Ethereum layer 2 by total-value-locked (4th if you count Polygon), announced plans for governance this week.

Called the “Optimism Collective,” Optimism will now be operated by two distinct groups, the “Token House” and “Citizens’ House.”

As its namesake implies, Token House will be run by the soon-to-be airdropped OP token, which will govern the Optimism protocol via on-chain voting. This is more or less industry standard.

With Citizens’ House, Optimism is trying something new. The L2 plans to use soulbound NFTs, or NFTs that are non-transferable, to allow non-token OP holders to decide how future revenue collected by Optimism is used. The plan has Ethereum co-founder Vitalik Buterin excited. “Possibly the biggest attempt at non-token-holder-centric DAO governance so far. Excited to see where this goes,” he tweeted.

As for the token, 20% of OP is set aside for public goods funding, 25% for an ecosystem fund, core contributors will receive 19%, investors 17%, and 19% of the OP supply is allocated for airdrops, with 5% being airdropped soon in the first “season.” Over 250,000 addresses met Optimism’s round 1 airdrop criteria.

A $34 Million Smart Contract Error

Akutars, a much anticipated NFT project headed by digital artist and former major league baseball player Micah Johnson, underwent its initial drop with a faulty smart contract, leading to $34 million worth of ether being locked away from both creators and purchasers.

Two smart contract errors were found shortly after the drop started, though Aku developers denied anything was wrong. The first was rectified after a hacker froze and unfroze the refund capability of the Akutar mint. However, the second error, which miscounted the number of NFTs necessary to unlock funds, proved fatal and led to 11,539 ETH, or $34 million, being locked into a smart contract.

“I'm so sorry. I'm so sorry to the Aku family. I care so deeply about the Aku family, I let you all down & I'm so sorry,” wrote Johnson on Twitter.

Since then, the Aku team has refunded affected users and successfully finalized an airdrop of the NFTs. Despite the shaky drop, the 15,000-piece collection holds a floor price of 1.9 ETH on OpenSea.

A Tale of Two Cities

New York Passed a Law Looking to Pause PoW Mining

The New York State Assembly passed a law that would place a two-year moratorium on the approval for new mining operations utilizing the proof-of-work consensus algorithm and powered by non-renewable energy. Furthermore, the bill would prevent existing operations from renewing their permits.

This could stymie new Bitcoin and Ethereum mining in New York if the law passes in the State Senate and if many of these miners don’t use renewable energy. Of the total hashrate in the US, 19.9% is housed in New York.

Fort Worth: The First Mining City

On the opposite end of the spectrum lies Fort Worth, Texas, which is set to become the first city in the United States to start mining bitcoin in a pilot project. Through a partnership with Texas Blockchain Council, the city will be maintaining three mining rigs in a climate-controlled location in City Hall.

$77 Million in BTC Will Be Donated to Ukraine – in Fiat

Earlier this week, it was reported that Finland was considering ways to donate up to $77 million worth of seized Bitcoin to Ukraine.

Finland’s Helsingin Sanomat (HS) first reported the development, noting that various ministers have been discussing ideas on how to donate a portion (or all) of the 1,890 bitcoin that the country’s customs department has seized. Notably, there was disagreement about whether the bitcoin should be sent over the Bitcoin network or whether customs should cash out the BTC and donate the resulting fiat.

On Thursday, it was confirmed that Finland would be doing the latter, and will give Coinmotion and Tesseract, two crypto firms, the 1890 BTC by early summer for them to sell for euros – which will then be donated to Ukraine.

DeusDAO Down $13.4 Million Due to a Hack

Deus Finance, a DeFi application, was exploited, with the hacker getting away with $13.4 million. According to CoinDesk, the hacker utilized a specialized $143 million flash loan attack to artificially inflate the value of assets, borrow funds, and make a profit after selling.

This is the second exploit in 2022 for Deus.

Whoa: Edward Snowden Played a Role in the Birth of Zcash

The founding of Zcash, a much-covered story that involved six participants breaking up a private key controlling the ability to mint tokens in a plan called “The Ceremony,” just got a little bit crazier.

The publicly known Zcash founders have so far included Zooko and Nathan Wilcox, Coin Center’s Peter Van Valkenburgh, security engineer Derek Hinch, and Bitcoin developer Peter Todd, who each went to great lengths via overseas flights, burned equipment, tinfoil, and air-gapped computers to make sure “The Ceremony” was completed without a nefarious hacker gaining access to the key controlling the supply of Zcash. However, until this week, it was not known that rounding out the group of six was the famous whistleblower and former US defense contractor Edward Snowden.

Snowden’s involvement in the 2016 event occurred three years after the US charged him with espionage and was done under the pseudonym “John Dobbertin.” However, according to Snowden, it was not the opportunity to invest, but his interest in Zcash technology, which is privacy-focused and helps users obfuscate blockchain transactions through dark pools, that led to his involvement. “As long as it is clear that I was never paid and had no stake, it was just a public interest thing, I think you can tell people,” wrote Snowden.

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