Throwback Thursday: 5 Crypto stories from 2013

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This post looks at crypto stories from April 2013. It covers the disagreement on bitcoin’s environmental impact, OpenCoin’s funding (now called Ripple), bitcoin’s privacy, and bitcoin’s future (viewed from 2013).

Fundings and new stuff

Who does new stuff and who gets the money

Andreessen Horowitz and others invest in OpenCoin (aka Ripple) OpenCoin, now known as Ripple, received as one of the first cryptocurrencies an institutional investment. Involved were Andreessen Horowitz, FF Angel IV, Lightspeed Venture Partners, Vast Ventures, and Bitcoin Opportunity Fund. (marketwired). A lot has happened since. Ripple has grown to one of the biggest currencies, received several new investments, Andreessen Horowitz has opened a dedicated crypto fund and – like Lightspeed Venture Partners – made several other crypto investments. Moreover, three lawsuits were filed against Ripple, the most significant being the one that Ripple could be a security. In this context, Ripple’s CTO David Schwartz recently published a post arguing for the “Inherently Decentralized Nature of XRP Ledger”.Read More: Ripple wanted to pay to get listed on Gemini and Coinbase

aha!?

Stuff that makes one (me) say “aha!?”

‘Zerocoin’ widget promises Bitcoin privacyResearchers at Johns Hopkins University were proposing an add-on to make bitcoin fully private (Coindesk).As far as I know, nothing has come out of that proposal and since then privacy has not been a big (technological) issue for Bitcoin. However, one of the most significant moves towards privacy was the BIP for obscuring IP-addresses in 2017 or Taproot from last week. This lack of activity makes sense given the vast array of privacy coins that render bitcoin privacy somewhat obsolete.

Intelligence

Insights into 29 Privacy Blockchains, Platforms & Currencies. More in Researchly’s Free Crypto Database

Mining and energy consumption

Today Bitcoin mining is an omnipresent topic. Members of the U.S. Senate Committee on Energy and Natural Resources discussed the cost of cryptocurrency mining only a couple of days ago. Moreover, Katrina Kelly-Pitou a researcher of clean energy technology recently urged people to focus on Bitcoin’s carbon production instead of the energy consumption per se because the most important question is bitcoin’s environmental burden and not its general energy consumption.

In 2013 Mining was a topic and the opinions around its impact were split.

Mark Gimein argued on Bloomberg that “If the dreams of Bitcoin proponents are realized, and the currency is adopted for widespread commerce, the power demands of bitcoin mines would rise dramatically.” As a response, Tim Worstall (Forbes) downplayed Bitcoin’s environmental impact arguing that Bitcoin’s energy consumption is trivial when compared to overall energy consumption (e.g. households or businesses). Moreover, he argued against by quoting that “at some point Bitcoin mining will stop”. As it turns out no author was fully right.

Firstly, neither author knew (and possibly couldn’t) about the new coins increasing energy consumption. Secondly, they failed to account for technological progress in mining hardware; energy efficiency of dedicated mining hardware is expected to increase. Moreover, some cryptos such as EverGreenCoin have tried to market themselves as environmental-friendly, although as it seems not particularly successfully.

Bitcoin and its future

Thoughts about bitcoin’s future from back then

Is Bitcoin denting the economy? A very short article on Coindesk was hinting at the fact that bitcoin could have an impact on the global economy. Whereas there was little ground for such discussions in 2013, today there is more to talk about although the impact is probably low, as I have pointed out in Blockchain & Crypto news CW29: cannot without lobbying:

Currently, Malta’s GDP represents 0.02 percent of the world economy (Germany’s in contrast around 6%). In the course of history, how countries handle innovations has caused their rise and fall. And although cryptocurrency transaction volumes are still small compared to traditional investment assets (in 2017 the 24h volume of all cryptocurrencies listed on Coinmarketcap was around $50 billion while the global daily FoRex volume rounded at around $5 trillion) it will be interesting to observe the impact of cryptocurrencies on economies.

People saying stuff.

Stuff that people have said that sounds interesting, contradicting, weird, entertaining, funny…

PayPal ‘thinking about’ accepting bitcoinsDavid Marcus talked positively about Bitcoin:

“I’ve been spending a lot of time looking at it (bitcoin), and it’s truly fascinating the way the currency has been designed […] For us at PayPal, it’s just a question of whether bitcoin will make its way to PayPal’s funding instrument or not … we’re kind of thinking about it.” coindesk

Some context on David Marcus. He is not stranger to the crypto industry. Quite the opposite. Back then he was president of PayPal. In late 2017 while vice president of messaging products at Facebook he joined the board of Coinbase. Then in May 2018 he joined Facebook’s Blockchain Research Unit and left Coinbase (see Speed of acquisition, diversifying exchanges, Blockchain’s changing face (Blockchain & Crypto news CW31)) around two weeks ago. The departure was possibly because Coindesk acquired Distributed Systems. Distributed Systems offers decentralized identity solutions. Although Coinbase did not reveal their intentions with Distributed Systems one possibility is a web-login similar to how a Facebook account acts as an online id.

Going back to PayPal and Bitcoin, it is worth contrasting David’s statement to Bill Harris’ recent post “Bitcoin is the greatest scam in history”. For context, Bill Harris was the CEO of PayPal back when it was called X.com and was also CEO of Intuit. Although David Marcus and Bill Harris do not have any influence on PayPal anymore it is still interesting to observe how managers with the same background and even company can have such opposing views on the same topic.

Nevertheless, those that influence PayPal’s crypto strategy are not fully into it. PayPal’s CEO Dan Schulman argued his reservation on cryptocurrencies in March 2018:

“Regulations need to be sorted out and a whole number of other things,” he said. “It’s an experiment right now that is very unclear which direction it will go.” – Bloomberg

but had a more positive stance on Blockchain:

Blockchain, on the other hand, is a different story. Schulman told the crowd that blockchain will be the more powerful part of the landscape, and that cryptocurrencies are “just one application.” PayPal currently has a team looking into the potential ways it can use blockchain in the future, according to the spokeswoman – Bloomberg

So far nothing has changed and other players such as Bitpay or Coinbase Commerce are exploiting this vacuum by offering Bitcoin payment solutions themselves.