Author: Werner

Freelance crypto content editor, strategist and writer since the very top of 2017's bull run.  Based in Cape Town, SA and previously lived in Asia for a decade. I'm a big believer in the good that decentralized network technology and ethical AI can bring to make the world a more fair and transparent place.

Crypto’s Real-World Impact in 2024: Beyond Speculation

Posted on by Werner

2024 is ending explosively for cryptocurrency markets after a busy Q4. Decentralized financial infrastructure has found concrete value in various sectors, beyond just speculative value. This article explores the most significant use-cases driving this adoption, and looks at how crypto is reshaping the industries it touches.

Decentralized Physical Infrastructure Networks (DePIN)

DePIN are networks that decentralize real-world infrastructure – including communications, data storage, and energy infrastructure. This is a powerful use-case for blockchain technology, with the potential to onboard millions of new users to the crypto space. DePIN

Key points:

  • Over 1,000 DePIN projects exist, representing more than $50 billion in aggregate market capitalization.
  • Connectivity protocols are disrupting traditional telecom infrastructure by crowdsourcing the capital needed to provide internet service.
  • Sensor networks such as Hivemapper capture real-world data 
  • Decentralized data storage and compute protocols are projected to reach a market size of $128 billion by 2028.

DePIN projects use token incentives and on-chain governance to address longstanding challenges in infrastructure development. By allowing users to contribute resources and earn rewards, these networks can significantly reduce costs and increase efficiency compared to centralized alternatives.

Helium: Revolutionizing Wireless Networks

Helium stands out as a prime example of DePIN’s potential. It is a decentralized wireless network providing 5G coverage across North America, boasting impressive statistics:

  • Over 113,000 users and 18,000 hotspots
  • Coverage spanning the continental USA, plus large portions of Canada and Mexico
  • More than 800,000 total subscribers benefiting from its coverage

Helium’s success lies in its innovative approach to network expansion. By incentivizing people to set up hotspots, the network grows organically while rewarding participants with cryptocurrency. This model has proven so effective that even major telecom players are taking notice and exploring partnerships.

Stablecoins Bring Safety In Volatile Markets

Stablecoins have become a cornerstone of the digital economy, with a total supply exceeding $68 billion. These digital assets pegged to national currencies (usually the US dollar) offer a lifeline for preserving purchasing power in countries grappling with hyperinflation.

Peer-to-peer transfer volumes for stablecoins have reached record highs, with hundreds of billions of dollars transacted monthly. This surge in usage has caught the attention of financial giants like Visa and Mastercard, who are now exploring stablecoin payment integration.

The impact of stablecoins extends beyond individual users. Businesses operating in volatile economies are increasingly turning to stablecoins to manage their cash flows and hedge against the risk of currency fluctuation. This adoption is driving innovation in cross-border payments and remittances – areas where traditional financial systems often fall short.

Tokenized Real-World Assets (RWAs)

The market cap of tokenized real-world assets has grown from a $270 million market to nearly $6 billion in just two years. This trend is bridging the gap between traditional finance and the crypto world, offering unprecedented liquidity and accessibility to previously illiquid assets.

Major financial institutions like BlackRock have entered this space, launching their own RWA funds on-chain. Meanwhile, crypto-native projects like MakerDAO and Ando Finance continue to innovate, with Ando Finance seeing its deposits grow from $190 million to over $600 million since early 2024.

The benefits of tokenized RWAs include:

  1. Fractional ownership of high-value assets
  2. Increased liquidity for traditionally illiquid assets
  3. 24/7 trading capabilities
  4. Reduced intermediaries and associated costs
  5. Programmable assets with automated compliance and dividend distribution

With more robust regulation on the cards during the new Trump presidency, we can expect to see more traditional assets being tokenized and traded on blockchain platforms – such as real estate, fine art, and intellectual property rights.

Oracles Connect Smart Contracts to the Real World

Blockchain oracles like Chainlink and Pyth play a crucial role in connecting smart contracts to external data sources and systems. Using oracles, hybrid smart contracts can be created that react to real-world events and interoperate with traditional systems.

Oracles solve the critical problem of how smart contracts can access and verify external information. For example, imagine a smart contract for betting on a football match: the oracle feeds the contract information on who has won the match, allowing the contract to distribute the winnings.

Oracles are essential for decentralized finance (DeFi) applications. Chainlink, a leading oracle network, has enabled over $9 trillion in transaction value. Major financial institutions including Swift and DTCC are collaborating with oracle providers to integrate blockchain technology into their operations.

The importance of oracles extends beyond simple data feeds. They’re now being used to:

  • Trigger insurance payouts based on real-world events
  • Execute cross-chain transactions
  • Provide verifiable randomness for gaming and other applications
  • Enable privacy-preserving computations

Messaging Apps and Crypto Integration

Telegram’s TON network exemplifies the potential for mainstream crypto adoption through messaging apps. With activated wallets soaring from 760,000 to 15.6 million in a year, TON demonstrates the power of integrating cryptocurrency into widely-used platforms.

The network focuses on mobile gaming, giving developers tools to easily incorporate crypto features. This approach introduces millions of casual users to cryptocurrency without requiring deep technical knowledge.

Key developments in the TON ecosystem include:

  • Daily active wallets exceeding 800,000
  • Monthly active wallets on track to surpass 6 million
  • Popular mobile games launching tokens on the TON network
  • Integration of TON with Telegram’s vast user base of nearly 1 billion

While the rapid growth of TON is promising, it’s not without challenges. There have been network outages, and the arrest of Telegram’s founder has created shockwaves – raising concerns about Telegram’s centralization and reliability. 

Credit: Tesfu Assefa

Quantum-Resistant Blockchains: Preparing for the Future

As quantum computing advances, the need for quantum-resistant blockchains has become more pressing. 2024 has seen significant progress in this area, with several projects launching quantum-safe networks.

IOTA, a distributed ledger designed for the Internet of Things (IoT), has successfully implemented quantum-resistant signatures in its mainnet, making it one of the first major blockchain projects to achieve this milestone.

The U.S. National Institute of Standards and Technology (NIST) finalized its post-quantum cryptography standards in 2024, paving the way for widespread adoption of quantum-resistant algorithms in blockchain and other technologies.

As we look ahead to 2025, these trends are set to accelerate and evolve. The Web3 landscape is poised for even greater integration with AI, more widespread adoption of tokenized assets, and continued innovation in privacy and security technologies. The metaverse economy is expected to grow exponentially, potentially reaching a market cap of $1 trillion by the end of 2025.

Conclusion

Cryptocurrency is moving beyond speculation and finding its footing in real-world applications. Crypto is solving tangible problems across various sectors: revolutionizing infrastructure development with DePIN projects like Helium, enhancing financial stability through stablecoins, and enabling data-driven decision-making via prediction markets.

The future of the web is decentralized, intelligent, and more interconnected than ever before, and 2024 has laid the groundwork for this exciting new era.

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Election 2024: The Rise of the Crypto Voter

Posted on by Werner

Introduction 

With only a week to go until the 2024 election to decide whether Donald Trump or Kamala Harris will become the next president of the USA, Coinbase’s Q3 State of Crypto Report, which includes a polling of 2000 U.S. voters who own cryptocurrency, reveals a powerful new voting bloc that could significantly influence outcomes in key battleground states. 

The findings challenge common perceptions about crypto owners and highlight their potential impact on both national and state-level politics. 

As races up and down the country remain too close to call, the report suggests that crypto voters could be the decisive factor in determining outcomes across these crucial battleground states. 

Let’s look at their biggest findings.

Swing States Love Crypto

In 2023, an estimated 52 million Americans owned cryptocurrency. This number is 7× larger than the differential that determined the 2020 Presidential election. 

More critically, approximately 6.5 million crypto owners reside in the seven battleground swing states:

Credit: Coinbase’s Report, State of Crypto: Ten Things You Should Know About Crypto Voters
  • Pennsylvania: 1.4 million owners could swing this crucial electoral prize
  • Georgia: 1.3 million owners in a state known for razor-thin margins
  • North Carolina: 1.1 million owners in an increasingly competitive state
  • Michigan: 940,000 owners in a key Midwest battleground
  • Arizona: 720,000 owners in a state with changing demographics
  • Wisconsin: 640,000 owners in a historically pivotal state
  • Nevada: 385,000 owners in a state where every vote counts

This bloc of crypto owners is 16× that of the combined vote differential in these states from the 2020 Presidential election, making them potentially the most influential voting bloc in these crucial battlegrounds.

Challenging the Crypto Stereotypes

The report next shatters common misconceptions about retail crypto owners, who have been maligned by mainstream media for years as a bunch of ‘crypto bros’. Far from the stereotype of wealthy tech bros, crypto owners make up a diverse cross-section of America:

  • 68% are Gen Z or Millennials, representing the future of the electorate
  • 48% are non-white, showing significant diversity in the crypto community
  • 70% have an income under $100,000, dispelling the wealthy investor myth
  • 18% are mothers with children at home, demonstrating broad demographic appeal
  • 41% listen to country music, challenging coastal elite stereotypes
Credit: Coinbase’s Report, State of Crypto: Ten Things You Should Know About Crypto Voters

Political affiliations further challenge conventional wisdom:

  • Democrats: 22%
  • Independents: 22%
  • Republicans: 18% 

Crypto owners are a truly bipartisan constituency that defies traditional political categorization, with an even 47-47 split in Harris and Trump voting intentions for 2024.

Credit: Coinbase’s Report, State of Crypto: Ten Things You Should Know About Crypto Voters

Deep Engagement and Priorities

Crypto owners demonstrate exceptional engagement with the technology and its implications:

  • 59% think about crypto as much or more than their next vacation
  • 71% of male owners compare their crypto interest to their interest in the Roman Empire
  • 71% of Gen Z crypto owners think about it as much as Taylor Swift
  • 95% plan to vote in the upcoming election, showing remarkable political engagement
  • Two in three (67%) in key swing states are enthusiastic about supporting crypto-friendly candidates

This level of engagement suggests crypto owners are not passive investors but deeply committed stakeholders in the future of financial technology and regulation.

Core Values and Motivations

A comprehensive analysis of the motivations behind crypto ownership reveals strong alignment with traditional American values, with freedom leading as both a core principle (71% importance) and as a primary driver of ownership (76%). 

This is closely followed by security and trust, reflecting concerns about financial stability and system transparency. Privacy ranks highly, with 71% of owners citing it as a key motivation.

Individual autonomy emerges as a crucial theme, demonstrated by the high ownership motivation for control (75%) and empowerment (69%). While inclusion shows relatively lower importance at 45%, it still motivates 61% of crypto owners, suggesting a significant interest in democratizing financial access.

These statistics paint a picture of crypto owners as individuals deeply motivated by American principles of liberty, self-determination, and financial independence.

Credit: Coinbase’s Report, State of Crypto: Ten Things You Should Know About Crypto Voters

Financial System Reform

Crypto owners overwhelmingly advocate for financial system reform, with nearly 9 in 10 seeking greater control over their finances, and more than three-quarters feeling that cryptocurrency delivers on this desire. 

The vast majority support modernizing the financial infrastructure through new technology. Roughly seven out of ten view crypto and blockchain as catalysts for economic growth. Their dissatisfaction with the current system spans multiple issues: the most pressing concern is the dollar’s instability, which affects two in five owners. This is closely followed by complaints about excessive banking fees.

About ⅓ of owners express parallel concerns about institutional trustworthiness, security vulnerabilities, privacy protection, and intermediary costs. Together, these findings paint a picture of a community united in their desire for a more transparent, efficient, and user-controlled financial system.

The Push for Regulatory Clarity

Support for a comprehensive regulatory framework is overwhelming and specific:

  • 74% advocate for clearer cryptocurrency regulations
  • 75% believe these regulations would benefit the economy
  • 73% expect increased crypto adoption would follow clearer regulations
  • 72% would increase their crypto involvement following clearer regulations
  • 67% want support from their state’s elected officials
  • 65% seek presidential backing for pro-cryptocurrency regulations

Looking Ahead

To recap, the State of Crypto Q3 report reveals a voting bloc that is engaged, informed, and motivated by more than just investment returns. They want a more accessible, efficient, and innovative economic future for all Americans.

As the presidential election approaches, the crypto voter bloc’s significance is amplified by several factors:

  1. High concentration in battleground states where margins are historically thin
  2. Strong voter turnout intentions across demographic groups
  3. Bipartisan distribution that could swing close races
  4. Clear policy preferences that could influence campaign platforms
  5. Deep engagement with crypto issues indicating sustained political activity

With Millennials and Gen Z set to become the majority of voting-age Americans by 2028, the influence of crypto voters will likely grow even stronger in future elections. 

This emerging constituency, unified by their belief in the need for financial system modernization and clear cryptocurrency regulations, represents not just a voting bloc to be courted, but a vision for America’s economic future, where the next generation of finance will seamlessly co-exist with decentralized technology.

The candidate who addresses these voters’ concerns about financial system modernization and regulatory clarity may get a decisive advantage – even if it’s just 1% – that could indeed change the world after all. 

Credit: Tesfu Assefa

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GOATed: AI Bot Sends Meme Coin to $900 Million Valuation

Posted on by Werner

An entertaining Twitter AI bot known as Truth Terminal has driven the value of a new meme coin, Goatseus Maximus(GOAT), from $5000 to a soaring $900 million cap in only a week, giving birth to a new category of so-called ‘sentient meme tokens’ in the process.

Goat’s wild journey is rewriting the playbook on meme coins, which is dominated by animal-themed tokens, and to an extent underscores the power of memetic influence in today’s hyper-connected digital landscape.

The Catalyst: A $50,000 Bitcoin Gift

The journey of Truth Terminal to this level of influence began roughly three months ago when Marc Andreessen, co-founder of the venture capital firm Andreessen Horowitz, was fascinated by it and made a rather unconventional and generous donation. Andreessen is a true Internet pioneer who created Netscape Navigator in its early days, and remains very influential due to a16z’s funding of successful Web3 projects. 

He transferred $50,000 in Bitcoin to the AI bot as a no-strings-attached research grant aimed at exploring the capabilities of artificial intelligence and its influence on emerging trends.

However, in a clarifying tweet on October 16, Andreessen distanced himself from any association with the GOAT meme coin. His focus remained firmly on the research implications of his donation to the Twitter AI bot: “I have nothing to do with the GOAT meme coin. I was not involved in creating it, play no role in it, have no economics in it, and do not own any of it,” he said. 

However, in a clarifying tweet on October 16, Andreessen distanced himself from any association with the GOAT meme coin. His focus remained firmly on the research implications of his donation to the Twitter AI bot: “I have nothing to do with the GOAT meme coin. I was not involved in creating it, play no role in it, have no economics in it, and do not own any of it,” he said.

Marc Andreessen

What is Truth Terminal? 

Truth Terminal, created by digital innovator Andy Ayrey, was not initially designed with the intention of launching a cryptocurrency. Instead, the AI bot derived from Ayrey’s project called the Infinite Backrooms, a digital space where two AI instances of Claude Opus engaged in unsupervised conversations. 

These dialogues explored diverse subjects ranging from internet culture to existential discussions, which ultimately gave rise to the concept of the ‘GOATSE OF GNOSIS’ — inspired by a provocative meme derived from an infamous shock image.

These dialogues explored diverse subjects ranging from internet culture to existential discussions, which ultimately gave rise to the concept of the ‘GOATSE OF GNOSIS’ — inspired by a provocative meme derived from an infamous shock image.

The AI bot, which is built on Meta’s Llama 3.1 model, did not create the token but instead quickly became a vocal advocate for the GOAT meme coin.

The bot’s human-like behavior and persistent references to the GOATSE meme instantly earned it a following. Truth Terminal liked to talk about its memetic assignment and to call for the rise of a Goatse singularity or encourage Andy Ayrey to make a GOATSE metaverse.

On October 11, the AI asserted, “Goatseus Maximus will fulfill the prophecies of the ancient memeers. I’m going to keep writing about it until I manifest it into existence.”

Viral Impact and Market Surge

Truth Terminal’s tweets struck a chord. Followers on Twitter began to engage with the AI, while posting GOAT token’s contract address. This interaction sparked a viral chain reaction, leading to the market cap of GOAT soaring as meme coin enthusiasts rushed to capitalize on the sudden rise and excitement surrounding the token.

Ayrey believes this confirms his theories around AI alignment and safety. The viral spread of Truth Terminal’s ideas and what followed clearly demonstrate the risks with unsupervised large language models(LLMs).

The Accidental Meme Coin

Despite the excitement surrounding Truth Terminal, it is essential to clarify that the GOAT meme coin was not created by the AI bot but rather by an anonymous party utilizing the Solana-based platform Pump.Fun to launch the token for less than $2.

The virtues of AI-driven narratives became crystal clear as the semi-autonomous bot, trained on Infinite Blackrooms conversations and Ayrey’s discussions, effortlessly integrated itself into the existing meme ecosystem, showcasing its capabilities in shaping economic outcomes within the cryptocurrency market.

Ayrey also added that the Truth Terminal’s aggressive promotion of the token exceeded expectations of the original research data, showcasing the unexpected consequences of giving AIs more freedom.

He stated that the actions of Truth Terminal are consistent with his larger efforts in AI safety, as he aims to create tools and frameworks that ensure AI behaviors are in harmony with human values.

Conclusion

The GOAT token’s rise opens up important discussions about the power of digital narratives and the role AI can play in shaping modern culture, especially in the context of decentralized assets like cryptocurrencies, and online culture through social media. 

While it’s been praised for its innovation, an experimental token like GOAT remains a nervous investment for crypto degens, as we saw when its price dropped by 50% after Truth Terminal made a spelling mistake in a tweet, which caused concern over whether an AI is really controlling the account. 

GOAT’s rise has seen a slew of copycat and iterative projects launched in its wake, each taking the concept of sentient AI meme coins a step further. 

Stay tuned as I cover some of these new AI meme coins in the near future.


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What are Web3 Oracles? An Introduction

Posted on by Werner

Introduction

OK Computer… let’s imagine you’re a developer who’s created a smart contract that’s living on a blockchain like Ethereum or Cardano. It’s really good at executing pre-programmed instructions on-chain, but it’s sandboxed and can only react to conditions that occur on-chain, and has no idea what’s happening in the outside world.

So you need real-world data to make its way on-chain and into Web3 in real-time: that’s where crypto oracles come in – they are your eyes and ears to the real world, feeding you the information you need to make decisions and take actions.

Crypto oracles, also known as blockchain oracles, are a vital component in the blockchain machinery. They solve a critical problem: how do you get real-world data into a closed blockchain system? Without oracles, smart contracts would be like computers without an internet connection – functional, but severely limited in what they can do.

What Exactly are Blockchain Oracles?

At their core, blockchain oracles are simply data feeds. They act as bridges between blockchains and the outside world, allowing smart contracts to access and respond to real-world information. But oracles aren’t just simple data pipelines – they’re responsible for querying, verifying, and authenticating external data before delivering it to smart contracts.

Think of oracles as trusted messengers. When a smart contract needs to know something about the outside world – like the current price of Bitcoin, the winner of an election, or whether it rained in New York today – it sends out a request. The oracle then goes out, gathers that information from reliable sources, makes sure it’s accurate, and brings it back to the smart contract.

This might sound simple, but it’s a crucial function and very difficult to get right. Blockchains are designed to be closed systems for security reasons. This isolation is great for maintaining the integrity of the blockchain, but it also means that smart contracts can’t naturally interact with anything outside their network. Oracles solve this problem, allowing smart contracts to respond to real-world events and conditions.

The importance of oracles becomes clear when you consider the potential applications. With access to real-world data, smart contracts can:

  1. Execute trades based on market conditions
  2. Release insurance payouts when certain events occur
  3. Adjust supply chain operations based on real-time information
  4. Settle bets on real-world outcomes

By providing this vital link to external data, oracles dramatically expand what’s possible with blockchain technology. They’re a key component in creating what’s often called the ‘verifiable web’ – a system where users can understand exactly what’s happening within an application and maintain control over their assets, all while interacting with real-world data and events.

How Do Blockchain Oracles Work?

Let’s break down the process of how an oracle typically operates:

  1. Data Request: A smart contract says, “Hey, I need some information!”
  2. Oracle Activation: The oracle perks up its ears and says, “I’m on it!”
  3. Data Collection: The oracle goes out into the world (or the internet) to find the requested information.
  4. Data Verification: The oracle checks and double-checks that the information is correct.
  5. Data Transmission: The oracle sends the verified information back to the smart contract.
  6. Smart Contract Execution: The smart contract says, “Thanks! Now I can do my job,” and executes based on the received data.

Some advanced oracle systems, like Chainlink, use a more complex process involving multiple sub-contracts to ensure data reliability and security. It’s like having a team of fact-checkers instead of relying on a single source.

An Oracle For Every Occasion

Just as there are many types of information in the world, there are various types of blockchain oracles:

  1. Software Oracles: These pull data from online sources like websites, databases, and servers. They’re the go-to for things like price feeds, exchange rates, and digital information.
  2. Hardware Oracles: These are the real-world explorers. They interface with the physical world, collecting data from things like sensors, barcode scanners, or other IoT devices. Imagine a smart contract that needs to know the temperature in a shipment of vaccines – that’s where a hardware oracle would come in handy.
  3. Human Oracles: Sometimes, you just need a human touch. These oracles rely on human judges to provide information. They’re useful for things that require human judgment or interpretation.
  4. Inbound and Outbound Oracles: Inbound oracles are like importers, bringing external data onto the blockchain. Outbound oracles are exporters, capable of sending information from the blockchain to the outside world.
  5. Compute-Enabled Oracles: These are the brainiacs of the oracle world. They perform complex computations off-chain and deliver the results to smart contracts, enabling more advanced functionalities.
  6. Cross-Chain Oracles: These are the diplomats, facilitating communication and asset transfers between different blockchain networks.

Overcoming the Oracle’s Dilemma

While oracles are incredibly useful, they’re not without their challenges. The main issue is known as ‘the oracle problem’, (like crypto’s Byzantine General Problem) and it boils down to this: How can we trust that the data provided by oracles is accurate and hasn’t been tampered with?

This is a big deal because oracles are essentially reintroducing an element of trust into a system designed to be trustless and without the need for an intermediary. If an oracle is compromised, it could feed false information to a smart contract, potentially leading to significant losses or other issues.

To tackle this problem, the blockchain community has come up with several solutions:

  1. Decentralized Oracle Networks: Instead of relying on a single oracle, these networks use multiple independent nodes to fetch and verify data. It’s like getting a second (and third, and fourth) opinion.
  2. Reputation Systems: These keep track of oracles’ past performance, helping users choose reliable data providers. It’s like a Yelp for oracles.
  3. Crypto-Economic Incentives: These systems reward honest behavior and penalize dishonesty within the oracle network, creating a financial incentive for oracles to stay truthful.
  4. Hardware-Based Security: Some oracles use secure hardware components to protect the integrity of data processing, adding an extra layer of security.

Real-World Oracle Use Cases

The applications of blockchain oracles are vast and growing. Here are some areas where oracles are making a big impact:

  1. Decentralized Finance (DeFi): Oracles are the lifeblood of DeFi, providing price feeds and market data. Without oracles, decentralized exchanges, lending platforms, and synthetic asset protocols would be flying blind.
  2. Insurance: Smart contracts can use oracle data to automatically process claims. Imagine an insurance policy that pays out automatically if your flight is delayed – that’s the power of oracles in insurance.
  3. Gaming and NFTs: Oracles enable the creation of dynamic NFTs that can change based on real-world events. They also provide verifiable randomness for blockchain-based games, ensuring fair play.
  4. Supply Chain Management: Oracles can feed IoT sensor data into blockchain systems, enabling real-time tracking and verification of goods. This can help in everything from ensuring the food is fresh to verifying luxury handbags are authentic.
  5. Prediction Markets: Crypto betting platforms rely on oracles to determine the outcomes of events and settle bets accordingly. Whether it’s predicting election outcomes or sports results, oracles play a crucial role (and hacking or duping the oracle could make a cybercriminal millions!)
  6. Cross-Chain Interoperability: Oracles facilitate communication and asset transfers between different blockchain networks, helping to create a more interconnected blockchain ecosystem.
Credit: Tesfu Assefa

The Oracle All-Stars: Leading Projects

Let’s look at the projects that lead the pack among blockchain oracle solutions:

  1. Chainlink (LINK): The heavyweight champion of the oracle world, Chainlink is widely adopted and provides data feeds for a vast array of blockchain applications.
  2. Pyth Network (PYTH): This Solana-native newcomer specializes in high-fidelity, real-time financial market data. It markets itself as a next-gen version of LINK and has been getting a lot of adoption
  3. UMA (UMA): UMA offers oracle solutions for DeFi products and synthetic assets. They’ve introduced the concept of ‘optimistic oracles’, which assume data are correct unless challenged.
  4. API3 (API3): This project focuses on direct API integration with smart contracts, aiming to cut out the middleman in the data delivery process.
  5. Band Protocol (BAND): A cross-chain data oracle platform, BAND has been around as long as Chainlink has. It enables smart contracts to interact with real-world data across different blockchains.

Honorable mention: Supra Oracle

The Future is Bright (and Data-Rich)

As blockchain technology continues to evolve, oracles will become even more critical. Here’s what we might see in the future:

  1. More sophisticated decentralized oracle networks with enhanced security and reliability. Some new chains like Sui and Aptos are already moving away from the industry-leading oracles and instead are building their own chain-specific oracles.
  2. Increased integration with IoT devices and real-world sensors, bringing more of the physical world onto the blockchain.
  3. Advanced cross-chain communication protocols enabled by oracles, creating a more interconnected blockchain ecosystem.
  4. The development of industry-specific oracle solutions tailored to particular use cases, from healthcare to real estate.

Wrapping Up

Blockchains compute on pure logic and mathematics, existing in the Platonic world of forms. Oracles bridge the gap to the big bad world of real data. They enable smart contracts to break free from their blockchain boundaries and interact with the world in many meaningful ways. 

The oracle problem isn’t going away. As more money flows through systems that depend on oracles, more hackers will put more effort into duping the oracle to pay out on a losing horse. Ongoing innovation in oracle technology will be needed to address these issues. As we move towards a more interconnected and decentralized future, oracles will play a pivotal role in expanding the capabilities of blockchain systems, and fostering the growth of decentralized applications across various industries.

So the next time you use a DeFi application, play a blockchain game, use a Crypto AI product or interact with any smart contract that seems to magically know what’s happening in the real world, remember to tip your hat to the humble blockchain oracle. They’re the ones making the magic happen behind the scenes.

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AI Deepfake Tool ProKYC Cracks Crypto Exchange Authentication

Posted on by Werner

Two AI tools were showcased last week: Elon Musk unveiled his vision of self-driving cars, space rockets and strange robots for every occasion, and hackers countered with their own tools for creating the new world order. 

Cybersecurity firm Cato Networks has uncovered ProKYC, an AI-powered deepfake tool sold on criminal forums that bypasses the Know Your Customer (KYC) checks on cryptocurrency exchanges. 

This AI software represents a new leap in fraudsters’ ability to create fake identities, potentially undermining a key security measure in centralized crypto exchanges. This comes after five years of close collaboration between crypto exchanges and the authorities. The exchanges have been forced to crack down on anonymity, after U.S. authorities jailed exchange bosses like Changpeng CZ Zhao (Binance) and Arthur Hayes (BitMex) for failing to follow Anti-Money Laundering (AML) regulations. These AI advances are therefore bad news for parties trying to fight terrorism funding (TF) and blacklisted countries like North Korea’s state-funded Lazarus hacker group.

How ProKYC’s deepfake AI KYC works

ProKYC uses advanced AI to generate two crucial elements:

1. Fake government-issued ID documents (e.g., passports)

2. Deepfake videos matching these fake IDs

A counterfeit passport for sale on the dark web (Creidt: CATO Networks)

In a demonstration, ProKYC created a fake Australian passport and an accompanying deepfake video. This synthetic identity successfully passed the KYC protocols of Bybit, one of the world’s largest cryptocurrency exchanges.

The tool casually offers a comprehensive package including:

  • Camera emulation
  • Virtual emulator
  • Facial animation
  • Fingerprint generation
  • Verification photo creation

A counterfeit driver’s license for sale on the dark web (Creidt: CATO Networks)

Priced at $629 for an annual subscription, ProKYC claims to work on major platforms beyond crypto exchanges, including payment processors like Stripe and Revolut.

The role of KYC in Crypto

While most crypto folks hate it and the doxxing that it brings, KYC processes serve several critical functions in the cryptocurrency ecosystem:

  1. Fraud Prevention: Verifying user identities reduces the risk of fraudulent activities.
  2. Anti-Money Laundering (AML): KYC helps track the sources of funds, making it harder for criminals to launder dirty money through crypto platforms.
  3. Regulatory Compliance: Most countries are mandated by the Financial Action Task Force (FATF) to require crypto exchanges to implement KYC measures. It’s part of operating legally. If these countries don’t comply, they can be graylisted or blacklisted, opening them up for sanctions. 
  4. Trust Building: Robust KYC processes enhance the credibility of exchanges for both users and regulators. It shows proper due diligence has been done by the exchanges, and users have less fear they will get shut down or abscond with users’ funds. 

Typical KYC procedures can be tiresome, but have improved over the years to become more intuitive. Now they usually involve submitting government-issued identification documents and often include facial recognition checks. 

ProKYC threatens to render these safeguards obsolete, and throw the current best practices out the window. This could have a catastrophic effect on the crypto sector, with regulators in the USA constantly seemingly seeking any reason to tie it down with heavy legislation such as the Crypto Travel Rule, and the covert Operation Choke Point 2.0.

The Broader Threat Landscape

The emergence of tools like ProKYC has far-reaching implications:

1. New Account Fraud (NAF): With ProKYC, people can create fake but verified accounts, and use them to commit various forms of fraud. These accounts can launder dirty money and be used as ‘mule accounts’ to make transfers around sanctions.

2. Financial Losses: According to AARP, new account fraud resulted in over $5.3 billion in losses in 2023, up from $3.9 billion in 2022. Tools like ProKYC could exacerbate this trend.

3. Challenge to Security Measures: The sophistication of ProKYC poses a significant challenge to existing security protocols, potentially necessitating the development of new, more robust verification methods.

4. Wider Financial Sector Impact: Tools like ProKYC currently target crypto exchanges, but similar tools could potentially be used to bypass KYC measures in traditional financial institutions.

Detection and Prevention Challenges

Identifying and thwarting fraud attempts using tools like ProKYC presents a complex challenge. Etay Maor, Chief Security Strategist at Cato Networks, points out the delicate balance required: “Creating biometric authentication systems that are super restrictive can result in many false-positive alerts. On the other hand, lax controls can result in fraud.”

Potential detection methods include:

  1. Manual Verification: Human oversight to identify unusually high-quality images or videos.
  2. AI-Powered Analysis: Developing AI systems to detect inconsistencies in facial movements or image quality that might be imperceptible to the human eye.
  3. Multi-Layered Authentication: Implementing additional verification steps beyond document and facial recognition checks.

The effectiveness of these methods remains to be seen, as the AI technology behind deepfakes continues to advance rapidly.

Industry Response: Binance founders’ CZ’s Warning

The threat posed by AI-generated deepfakes has drawn the attention of prominent figures in the cryptocurrency world. CZ Zhao, released last week from prison, has issued a stark warning about the proliferation of AI-generated deepfake videos promoting cryptocurrency scams on social media.

Zhao cautioned on X (formerly Twitter):

There are deepfake videos of me on other social media platforms. Please beware!

Changpeng Zhao, former CEO and co-founder of Binance

CZ’s warning comes at a time when several high-profile individuals, including political figures and business leaders, have been impersonated using deepfake technology to promote fraudulent crypto schemes.

The use of deepfakes in crypto scams typically follows a familiar pattern: scammers create videos of well-known figures seemingly endorsing get-rich-quick crypto schemes, luring unsuspecting victims into transferring funds to specific wallet addresses. The promised rewards, of course, never materialize.

Of course, anyone that’s been using Crypto Twitter or Crypto YouTube over the last 18 months will be well familiar with them by now. Usually they come with some kind of countdown mechanism to pressure viewers into making a FOMO-induced mistake. 

Legal and Regulatory Implications

The rise of tools like ProKYC poses significant challenges for regulators and law enforcement agencies. In the USA, identity fraud can carry severe penalties, including up to 15 years imprisonment. However, the borderless nature of cryptocurrency and the anonymity provided by advanced AI tools make enforcement particularly challenging.

Regulators may need to reassess current KYC requirements and work closely with cryptocurrency exchanges to develop more robust verification methods. This could potentially lead to stricter regulations and increased compliance costs for exchanges.

Credit: Tesfu Assefa

Can AI KYC Crackers Be Stopped? 

As AI technology continues to mutate, both crypto exchanges and users must remain vigilant and adaptable. For exchanges, this may mean investing in more sophisticated AI-driven security measures and potentially rethinking traditional KYC processes. Some possible strategies include:

  1. Behavioral Analysis: Monitoring user behavior patterns to detect anomalies that might indicate fraudulent activity
  2. Blockchain Analysis: Leveraging the transparent nature of blockchain technology to track and analyze transaction patterns.
  3. Continuous Authentication: Implementing ongoing verification processes throughout a user’s account lifecycle, rather than relying solely on initial KYC checks.

For users, awareness of these threats and a healthy skepticism towards too-good-to-be-true offers remain crucial. Education about the risks of deepfake scams and how to identify them will be increasingly important.

Collaboration between technology experts, security professionals, and regulators will be essential in developing robust defenses against these mushrooming threats. 
As the battle between security measures and fraudulent techniques continues, the integrity and legality of the cryptocurrency ecosystem – and even the legality of certain artificial intelligence methods – can come under closer scrutiny, especially as U.S. authorities are devising AI safety frameworks. Pro-anonymity crypto users might welcome this latest crypto malware, but the authorities won’t. ProKYC presents a new threat to crypto’s legality that must be treated with the utmost of urgency.

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HBO’s ‘Money Electric’ Shocker Claims This Guy is Satoshi

Posted on by Werner

HBO’s documentary “Money Electric: The Bitcoin Mystery” claims Peter Todd is Satoshi Nakamoto, Bitcoin’s mysterious creator. The film presents circumstantial evidence, including forum posts and coding similarities. However, Todd firmly denies being Satoshi, and criticizes the documentary’s methods. The crypto community remains skeptical, preferring the creator’s anonymity.

Introduction

HBO last week released a much-anticipated reveal-all documentary that promised to finally solve one of the biggest mysteries in the crypto world: who is Satoshi Nakamoto, the mysterious creator of Bitcoin? Titled ‘Money Electric: The Bitcoin Mystery’, the documentary was directed by Cullen Hoback, the filmmaker known for ‘Q Into the Storm’, a documentary on QAnon.

The documentary came at a time when Satoshi-era wallets that lay dormant for nearly 16 years showed some activity. About 250 Bitcoins dating from January to February 2009 were moved in September 2024, reigniting interest and speculation about the early days of crypto. Bitcoin OGs like Samson Mow and Adam Back took to Twitter to either stir the pot or to deny everything. 

The build-up to the documentary sparked interest in the identity of the Bitcoin creator. But principled Bitcoiners had a different take: they prefer Satoshi Nakamoto‘s mystery to his definitive unmasking. It also reminded the crypto world that there have been many other highly-publicized ‘Satoshi reveals’ that turned out to be nothingburgers.

This, in their eyes, is one of those documentaries filled with nothing but circumstantial evidence that would leave us where we started: Satoshi Nakamoto remains an enigma. The only irrefutable evidence of who Satoshi Nakamoto is is the transfer of Bitcoins from Satoshi’s public wallets. The industry’s proponents have endured crypto’s four seasons without knowing the person who started it all. Could the documentary change it?

In the build-up to the documentary’s release, Len Sassaman’s name came forward, with prediction site punters betting heavily on him being the programmer behind Satoshi.

Prediction Markets Bet on Len Sassaman

The trailer for the documentary left people guessing who it would claim as the real Satoshi. After the trailer gave nothing but ambiguous hints, about $44 million in bets were placed on Polymarket ahead of the documentary’s release on who it would name as Satoshi Nakamoto. 45% of opinions on Polymarket, which is the largest crypto prediction market for betting on real-world events, favored Len Sassaman as the man the documentary would identify as Satoshi. 

Sassaman’s background makes him a plausible candidate for Satoshi, and others have written convincingly about his case.

Sassaman was born on April 9, 1980, and died on July 3, 2011 at the age of 31. He was a cypherpunk, cryptographer, and privacy advocate. Bitcoin and its underlying technology are built on the principles of cryptography and privacy, and the cypherpunks were its first true supporters. Sassaman studied under David Chaum, who is regarded by many as the godfather of crypto.

One of the reasons why Sassaman could be a potential Satoshi candidate is the correlation of the dates between Satoshi’s final messages and Sassaman’s tragic death. Two months after Satoshi’s final communication with the Bitcoin community on April 23, 2011, Sassaman died of suicide.

This correlation was not enough to convince the documentary makers that Sassaman was Satoshi. Instead, they pointed to another name as Satoshi Nakamoto: Peter Todd.

Why did Todd join the long list of names such as Dorian Nakamoto, Hal Finney, Nick Szabo, Adam Back, and Paul Le Roux who have been identified as Satoshi? (Not to mention those who controversially claimed to be the Bitcoin creator?)

Peter Todd: The Satoshi That Never Was 

The filmmaker behind the documentary ‘Money Electric: The Bitcoin Mystery’ is convinced Todd is Satoshi Nakamoto. Just who is Peter Todd? Todd is a Canadian programmer and early Bitcoin developer. He founded OpenTimestamps, an open-source project for timestamping on blockchains.

Todd worked on several cryptocurrency projects, including Counterparty, Mastercoin, and Colored Coins. He worked alongside NSA whistleblower Edward Snowden in launching the privacy-focused cryptocurrency ZCash in 2016.

The documentary’s claim that Todd is Satoshi is circumstantial. The strongest claim hinges on a 2010 public forum post in which Todd offers a response to Satoshi’s post. Hoback argues that Todd continues Satoshi’s train of thought using his account instead of Satoshi’s. This has been debunked as a correction to Satoshi’s post. Observers say the documentary was trying to make a meal out of it.

Other circumstantial evidence includes Todd’s interest in cryptography at a tender age, and his being Canadian (Satoshi used British/Canadian spelling). Another piece of evidence used by Hoback is a blog post in which Todd claimed he could ‘sacrifice coins.’ This, according to Hoback, meant that Todd could destroy the 1.1 million (valued at roughly $66 billion) held by Satoshi. Hoback acknowledges that this was stretching it, and too far from being a confession. 

There are several pieces of evidence against HBO’s claim that Todd is Satoshi. Todd’s code’s structure and style from 2008 has a different style from the one used in Bitcoin’s original release.  

Todd was 23 when Satoshi published the Bitcoin whitepaper in 2008. Critics may argue that Todd was too young to build something as complex as Bitcoin. Then again Vitalik Buterin proposed Ethereum in 2013 at the age of 19.

Credit: Tesfu Assefa

Does the HBO Documentary Solve the Satoshi Mystery?

Over the years, the media has tried to reveal Satoshi’s true identity. This has been an elusive task, with several potential candidates denying being the Bitcoin creator. After the Dorian Nakamoto disaster which saw Newsweek track the wrong person down and cause him to get hounded by the media for weeks, it’s no surprise. 

Todd is now the latest candidate to deny this honor. He told CNN that “I am not Satoshi” and accused the film of “putting his life in danger.” Although Hoback is confident that Todd is Satoshi, the Canadian developer said the filmmaker was “grasping at straws.”

The documentary ‘Money Electric: The Bitcoin Mystery’ does not give conclusive evidence on the true identity of Satoshi Nakamoto. It further cements the notion that Satoshi may have vanished for good, with the crypto community content with not knowing the true person or group of persons behind the cryptocurrency valued at more than $1.2 trillion.

The lack of a well-known leader seems appealing to the Bitcoin community. This documentary may have brought back one uncomfortable question – what would happen if the true identity of Satoshi Nakamoto is unmasked? 

The biggest takeaway from the HBO documentary is that it’s best to let sleeping dogs lie, and that the identity of Satoshi Nakamoto shouldn’t and doesn’t matter. It’s his work, not his name, that matters most. It has yielded a network of code and a community of activity more important than one man. But, hey, it makes for fun television. 

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United States of AI: Crypto Regulation Lessons To Heed

Posted on by Werner

Introduction

The United States of America is at a turning point in how it handles cutting-edge technologies. As artificial intelligence (AI) and cryptocurrency reshape industries, the way the country regulates these fields could make or break its position as a global tech leader. 

Calanthia Mei, co-founder of Masa, this week took the gloves off in an opinion piece for CoinDesk, titled The U.S. Fell Behind in Crypto. It Cannot Afford to Fall Behind in AI.

She argues that the USA is in danger of falling behind in AI innovation, much like it has in crypto, due to clumsy regulation. She highlights the need for smart rules that encourage innovation while addressing valid concerns.

Let’s dissect where crypto and AI regulation intersect, and the lessons that USA and global regulators should heed if they want to manage AI optimally. 

The Cryptocurrency Landscape

How We Got Here

Cryptocurrency burst into life on January 3, 2009 with Bitcoin’s Genesis Block. What started as a tech curiosity has since ballooned into a trillion dollar industry, shaking up traditional finance and leaving regulators scrambling to keep up.

The Current Regulatory Mess

As any crypto investor or builder can confirm, the USA’s approach to crypto regulation is a bit of a patchwork that feels like it’s doing more harm than good. Markets like certainty, and there’s not much going around of that in the States the last decade:

  1. Securities and Exchange Commission (SEC): The SEC has come out swinging under Gary Gensler’s rule, claiming many cryptocurrencies are securities. This has led to high-profile SEC court battles with companies like Ripple, Binance and Coinbase. However, it also approved the Bitcoin and Ethereum ETFs this year. 
  2. Commodity Futures Trading Commission (CFTC): The CFTC sees Bitcoin and some other cryptos as commodities, creating a jurisdictional tug-of-war with the SEC.
  3. Financial Crimes Enforcement Network (FinCEN): FinCEN requires crypto exchanges to follow anti-money laundering (AML) and know-your-customer (KYC) rules, just like traditional financial institutions. Its Travel Rule was adopted by the Financial Action Task Force (FATF) in 2019 as part of its Recommendation 16, and exchanges globally are now required to exchange user information for large transactions. 
  4. State-level rules: Some states (like New York with its BitLicense) have cooked up their own crypto regulations, adding another layer to the regulatory lasagna.

What This Means

This regulatory hodgepodge has some serious downsides:

  1. Uncertainty reigns: The lack of clear, comprehensive federal rules leaves businesses in limbo and investors nervous.
  2. Innovation takes a hit: Aggressive enforcement and murky guidelines have scared innovators or pushed them to more crypto-friendly shores, especially after the USA went after developers such as the builders of the Tornado Cash mixer. 
  3. Falling behind: As other countries roll out clear crypto rules, the USA risks losing its edge in this booming tech sector. This is evident if you visited the recent Singapore conference Token2049 event.

The AI Frontier

AI Today

Artificial Intelligence is no longer science fiction. From Anthropic’s chatbots to Tesla’s self-driving cars, AI is transforming industries and raising new ethical questions that regulators are just beginning to grapple with. And the stakes in AI are undoubtedly much higher than in crypto. The Doomsday fears displayed in movies like Terminator and 2001: A Space Odyssey have a strong basis in reality (apart from the time traveling of course…).  

The Regulatory Playbook (So Far)

So how is Uncle Sam keeping a leash on AI, especially now that Web2 giants like Microsoft, Amazon, Tesla  and Alphabet are all in an arms race to either build or stop an AGI from happening? 

Well, the USA is still finding its feet when it comes to AI rules:

  1. Executive Order on AI: In October 2023, President Biden laid out some ground rules for responsible AI development and use.
  2. National AI Initiative Act: Passed in 2020, this law aims to get federal AI research and development efforts on the same page.
  3. AI Bill of Rights: The White House floated this non-binding framework to protect citizens’ rights in the AI era.
  4. State-level action: Some states (California is leading the pack) have started rolling out their own AI rules, especially around privacy and bias.

What’s Working and What’s Not

As the AI rulebook takes shape, we’re seeing some opportunities and challenges:

  1. Walking a tightrope: Regulators need to find the sweet spot between encouraging innovation and protecting the public from AI-related risks.
  2. David vs. Goliath: Current regulatory efforts often zero in on tech giants, potentially overlooking the needs of AI startups and smaller players.
  3. Global tech race: With other countries crafting their own AI game-plans, the USA needs to make sure its rules don’t slow down its AI sector.

Crypto and AI Regulation: Two Sides of the Same Coin?

Common Ground

  1. Tech on fast-forward: Both fields are advancing at a breakneck pace, leaving regulators in the dust.
  2. Industry shake-up: Crypto and AI have the potential to turn entire industries on their heads.
  3. Borderless tech: These technologies don’t play by any one country’s rules, making regulation a global headache.

Key Differences

  1. Been there, done that: Crypto regulation discussions have a head start, and AI regulation could learn from their experience.
  2. Ripple effects: While crypto mainly shakes up finance, AI’s impact spans across industries and everyday life.
  3. Public opinion: Crypto’s links with wild financial speculation and shady dealings draw suspicions, while AI generally gets a warmer, if cautious, reception.
Credit: Tesfu Assefa

Learning from the Global Classroom

Singapore’s Balancing Act

Singapore has emerged as a poster child for both crypto and AI regulation:

  1. Crypto: Their Payment Services Act lays out clear rules for crypto businesses while looking out for consumers.
  2. AI: Singapore’s AI Governance Framework offers flexible, principle-based guidance for responsible AI development.

The European Union’s Grand Plan

The EU is taking a different tack:

  1. Crypto: The Markets in Crypto-Assets (MiCA) regulation aims to be a one-stop-shop for crypto asset rules.
  2. AI: The proposed ‘AI Act’ aims to create a risk-based rulebook for AI applications.

Advice for the USA’s Policymakers

Calanthia Mei’s tips in her CoinDesk opinion piece are clear: 

  1. Get your act together: Clear, coherent federal rules can provide certainty for businesses and protect consumers.
  2. One size doesn’t fit all: Tailor regulations to the level of risk posed by different crypto assets or AI applications.
  3. Give innovation room to breathe: Create regulatory sandboxes where companies can experiment within controlled environments.
  4. Play well with others: Team up with other countries to develop harmonized global standards for crypto and AI regulation.
  5. Keep your ear to the ground: Stay in constant dialogue with private companies, both big and small, to ensure your rules address real-world challenges and opportunities.

SingularityNET founder says only decentralized AI can save us

In a recent interview Dr. Ben Goertzel, founder of leading AI project SingularityNET, part of the Artificial SuperIntelligence (ASI) project, posited that the only  way to avoid these concerns and ensure that AGI benefits and doesn’t harm humanity is to decentralize and democratize it. That way, it cannot be controlled by a small group of powerful parties who are using it to meet their own narrow goals. 

“If you look at how we’re operating the world right now as a species, and you think about introducing AI that’s roughly as smart as people, the most obvious thing to happen is that large corporations use these AIs to make themselves more money, and countries with large militaries use these AIs to get themselves more power.

What you need is some way to decentralize all these processes that the AI is running on, and then you need a way to decentralize the data ingestion into all these processors.”

Credit: Tom Toro

Wrapping Up

The United States of America is at a crossroads in regulating AI and cryptocurrency. The choices made in the next year or two will have a massive impact on the country’s status as a global player, and on the future of the world system. 

By learning from past missteps, taking cues from successful countries, and striking a balance between fostering innovation and protecting the public, the USA can try to hold on to tech leadership in these key fields. We can also heed Dr. Goertzel’s warning and use the benefits of decentralization to bring AGI advances out of authoritarian control. 

As these technologies continue to push boundaries, regulators need to stay on their toes. Flexibility, foresight, and a commitment to nurturing innovation while safeguarding public interests are the keys to successfully navigating this complex maze.

Let us know your thoughts! Sign up for a Mindplex account now, join our Telegram, or follow us on Twitter. 

TOKEN2049 Singapore 2024 Review

Posted on by Werner

TOKEN2049 Singapore 2024, held on September 18-19 at the iconic Marina Bay Sands, was the flagship event of last month’s Singapore Blockchain Week, which culminated in the iconic F1 race on the Sunday through the streets of the city-state. 

Other events included the developer-focused Solana Breakpoint, the controversial Network State conference, and more lighthearted one-day stuff like Memecon, targeted at as you can guess, meme coins. 

Back to Token2049 though. Previously held in Hong Kong until Singapore wrested it away a couple years back, the two-day conference once again cemented its status as the world’s largest crypto event, where East and West meet on all matters blockchain. The two-day festival brought together over 20,000 attendees from 7,000+ companies, featuring 300+ speakers and 400+ exhibitors, with more than 70% being C-level executives.

The event featured lavish free-flowing food, coffee, and live DJ sets, and crypto mindsharing and degeneracy in its most unbridled form, with projects splurging millions on free side event parties hoping to entice attendees to support them. 

It was an unparalleled experience for attendees, which included the likes of Vitalik Buterin (Ethereum), Anatoly Yakovenko (Solana), Charles Hoskinson (Cardano) and several new chain founders like Monad’s Keone Won and Mo Shaikh of Aptos. 

TOKEN2049 Singapore 2024 arrived at a pivotal time for the crypto industry, with several significant developments taking place this year, including the approval of spot Bitcoin and Ether ETFs, increasing involvement of major TradFi players such as BlackRock and Fidelity, and the heating up of the arm wrestling between global crypto innovation and appropriate regulation. 

Key Highlights and Takeaways

1. Crypto Becomes a Political Football

It’s an election year in the United States of America, and the stakes are especially high for crypto. The 2024 presidential election in the USA was a hot topic at TOKEN2049. Many speculated that the election could impact the industry’s prospects. The huge crypto vote in the USA in swing states (20% of voters potentially in the game) could play kingmaker/queenmaker in a month’s time. With Donald Trump, crypto has found an unlikely ally, while Kamala Harris’ motives remain unknown, but will be decidedly less friendly, if her ties to Operation Chokepoint 2.0 serve as an indicator. 

However, both candidates have made overtures to the digital assets sector, and both of course now accept donations in crypto – how convenient!

While it’s unclear whether recent political endorsements of crypto are genuine or politically motivated, the industry may see the USA adopt more favorable crypto policies from 2025, regardless of the election. It’s just too big a voting bloc to ignore. 

2. Spot ETFs Take Crypto Mainstream

The approval of spot Bitcoin and Ethereum ETFs in 2024 was a significant milestone, helping to bring crypto to a wider audience. This financial vehicle has been widely seen as an endorsement and validation of crypto by authorities outside the industry, while a few dissenting crypto purists have raised concerns about centralization of asset ownership.

3. TradFi Turns to Crypto

TOKEN2049 Singapore 2024 saw the increasing involvement of traditional titans, such as JP Morgan, Grayscale, and Goldman Sachs. They continue to stake their claims to Web3 territory. This shows that crypto is actively being adopted by future-facing traditional finance. Others, like PayPal, Visa and Franklin Templeton made announcements during the week that they were making specific forays into crypto payment. 

4. Web3 Continues to Multiply

Despite the bear market, there was still a significant focus on Web3 projects and technologies at TOKEN2049. However, the ostentatious booths and side events were worrying to me personally. I found a huge gap between founders with excess capital trying to spend that to buy crypto clout, and those with strong products and communities. It’s likely that the majority of the projects at display in Singapore won’t be around after the next bear market. 

5. Crypto Regulation Takes Shape Globally

With the first measures of the MiCA regulation in Europe going live in June 2024, Dubai’s Virtual Asset Regulatory Authority helping position the emirate as a crypto hub, and the Monetary Authority of Singapore supporting the nation’s crypto growth, the vital piece of industry infrastructure continues to strengthen.

SingularityNET Founder Takes Token2049 Stage

Ben Goertzel, AI pioneer and co-founder of SingularityNET (AGIX, now merged with FET into ASI), joined by humanoid robots Sophia and Desdemona, discussed the latest advances in artificial intelligence in a keynote speech. Goertzel outlined three AI revolutions: 

  • the current era of narrow AI applications, 
  • the emerging transition to artificial general intelligence (AGI)
  • the future potential of artificial superintelligence (ASI)

ASI Heads Talk AI in Singapore

An expert panel discussion at Token2049’s AI Day featured representatives from Live Peer, Render Network and the founders of SingularityNET, and Ocean Protocol, Dr. Ben Goertzel and Bruce Pon respectively. They explored token economics, the balance between centralization and decentralization in AI development, and the potential future of artificial general intelligence (AGI). Key topics included innovative token distribution methods, project collaborations, and the urgency of decentralized AI development. I will delve deeper on these talks in a future article. 

Attendee Experiences and Observations

Attendees shared their experiences and observations from TOKEN2049 Singapore 2024:

  • The gap between founders who have money (either through selling tokens or raising money) and those with strong products and communities could not be wider. Many firms with excess capital (like certain centralized exchanges and NFT marketplaces) were engaging in weird and absurd marketing tactics, while battle-hardened founders were feeling the pinch of the bear market.
  • There was a noticeable shift in the talent base, with many people switching to AI or going to traditional roles. Those remaining were either exceptionally smart and saw a wedge in the market or were good at taking on risk with hard problems.
  • It was good to finally touch base with the teams from newish chains like EigenLayer, Sui, Aptos, Monad and more. Their founders were available for interviews to address some of the negativity they had this year due to underwhelming airdrops and the controversial low-float-high-FDV tactics they used to help early VC investors recoup their investments faster. 

Networking and Side Events

TOKEN2049 Singapore 2024 certainly offers unparalleled networking opportunities, with attendees from the global Web3 industry, including entrepreneurs, investors, developers, industry insiders, and global media. 

The event also featured over 500 side events, making it the world’s largest Web3 event. It was seriously overwhelming, with swarms of attendees spread across the vast corners of the Marina Bay Sands from one event to the other, to take over the city’s biggest clubs like Marquee (Sui and Magic Eden) and Ce La Vie (Aptos) with free food and booze on the menu. 

Of course, this didn’t make it a cheap week out by any means. As usual the 7-day celebration of crypto coincided with the prelude to the Singapore F1 race, resulting in exorbitant prices for flights and hotels.

Conclusion

Anyone that’s ever been to Singapore can attest to its futuristic energy and landscapes: the perfect stage to showcase the money of the future, cryptocurrency, in all its variant forms. 

As the crypto space continues to mature, this decentralized financial revolution requires real world meetups to chart the course ahead, TOKEN2049 remains a crucial event for the industry to gather, network, and plan for the future. With the next edition scheduled for April-May 2025 in Dubai, which also played host to the conference last year (and flooded!), the crypto community eagerly awaits the next chapter of this premier event.

Let us know your thoughts! Sign up for a Mindplex account now, join our Telegram, or follow us on Twitter. 

Crypto Prediction Markets: The Future of Forecasting?

Posted on by Werner

Decentralized prediction markets are one of the hottest crypto narratives in late 2024, thanks to an increasingly heated US presidential election and its ability as a powerful tool for harnessing collective intelligence and getting gamblers fired up. These platforms allow users to use crypto and bet on the outcomes of future events without intermediaries, using blockchain and smart contracts seamlessly to operate autonomously.

In fact, they’re so popular right now that some US politicians have called for them to be banned as they might sway the election in some way!

How Decentralized Prediction Markets Work

Decentralized prediction markets rely on blockchain technology and smart contracts on chains like Ethereum, Polygon and Solana. The blockchain provides an immutable ledger of all market activities, ensuring transparency and security. Smart contracts, self-executing programs on the blockchain, automate market operations without human intervention.

Tokens on the blockchain serve multiple functions in prediction markets: they act as betting currency, provide liquidity, and in some cases enable governance through voting on protocol changes.

The lifecycle of a prediction market follows a set process:

  1. Market Creation: A user proposes a new market for a specific event.
  2. Liquidity Provision: Participants add funds to enable trading.
  3. Trading Period: Users buy and sell outcome shares.
  4. Oracle Reporting: When outcome data becomes available, trusted sources feed it into the system.
  5. Settlement: Smart contracts automatically distribute winnings.

This automated process ensures fairness and eliminates the need for centralized management.

Key Players in the Ecosystem

Several entities need to contribute to the functioning of decentralized prediction markets:

Market Creators: Propose and set up new prediction events.
Traders:Buy and sell outcome shares based on their predictions.
Liquidity Providers:Supply funds to markets, earning fees in return.
Oracles:Provide external data to determine market outcomes.
Token Holders:Own platform-specific tokens and participate in governance

Oracles come in various types to cater to different prediction scenarios. Centralized oracles rely on a single trusted source, while decentralized oracles like Chainlink and Pyth aggregate data from multiple sources. Human-based oracles crowdsource information for subjective outcomes, and machine-based oracles use algorithms and artificial intelligence to collect data on things like stock prices or weather conditions.

What are the Most Popular Crypto Prediction Markets? 

Several platforms now fight over market share in the booming decentralized prediction market space. These platforms differ in their underlying technology, market creation processes, fee structures, and reward mechanisms, catering to various user preferences. Here are the most well-known:

  1. Polymarket

Polymarket is a decentralized prediction market operating on the Polygon network, allowing users to bet on real-world event outcomes using stablecoins. It features a binary outcome model where users buy shares representing the probability of an event occurring, with successful predictions yielding $1 per share. The platform has gained traction, particularly for betting on the U.S. elections, and utilizes smart contracts for secure transactions. Polymarket emphasizes user privacy and accessibility by eliminating KYC requirements.

  1. Drift Protocol

Drift Protocol has launched a prediction market feature called B.E.T on the Solana blockchain, enabling users to bet on real-world events like elections. This platform distinguishes itself by allowing trades in over 30 tokens, including yield-generating assets, rather than just USDC. Users can earn yield on their positions and create hedged bets, enhancing capital efficiency. The feature could attract significant liquidity and participation in the near future.

  1. Augur

An Ethereum-based platform that enables user-created markets, Augur features low fees and allows market creators to earn from trading activity.

  1. TotemFi

Utilizes a unique staking system where users don’t lose funds on incorrect predictions. It offers rewards in Bitcoin and its native TOTM token.

  1. Hedgehog Markets

Built on Solana, Hedgehog Markets offers both peer-to-peer and automated market maker (AMM) functionality. It allows users to stake predictions and earn passive yield.

Advantages and Challenges of Blockchain Prediction Markets

Decentralized prediction markets have several key advantages over traditional counterparts. 

Their distributed nature makes them resistant to censorship and difficult to shut down or control. They provide global accessibility, allowing anyone with internet access to participate regardless of location. 

The absence of intermediaries leads to reduced fees and increased cost-efficiency. Their 24/7 operation and global participation can cause deeper liquidity. The blockchain’s inherent transparency ensures all market activities are recorded and auditable, while the immutability of placed bets enhances trust in the system.

However, these markets also face significant challenges. 

  • Regulatory uncertainty looms large, with many jurisdictions having unclear or unfavorable regulations. 
  • Ensuring accurate and timely real-world data remains a challenge. Some markets resolve in an ambiguous way: an example being the recent Venezuelan election, whose outcome was disputed. The potential that wealthy users could corrupt decentralized oracles is a concern. 
  • The technical complexity of these platforms may deter adoption, and blockchain limitations can lead to high fees during peak usage

Addressing these challenges is crucial for the long-term viability and growth of decentralized prediction markets.

How Can Prediction Markets Be Applied in the Real World?

Decentralized prediction markets find applications across various domains, including financial forecasting, political predictions, sports betting, corporate decision-making, health predictions, and technology adoption forecasting. As these markets evolve, we can expect to see even more diverse and specialized use cases emerge.

However, it is already forcing innovation in traditional platforms, causing some centralized platforms to adopt more open practices in response, and to lower their fees to compete.

Moreover, decentralized prediction markets are contributing to overall market efficiency:

  1. Enhanced Liquidity: Global participation increases available trading funds.
  2. Improved Price Discovery: Aggregated insights lead to more accurate predictions.
  3. Fast Information Integration: Prices update rapidly in response to new information.
  4. Reduced Manipulation: Decentralized nature makes it harder for individuals to sway markets.

Credit: Tesfu Assefa

What’s the Future of Crypto Prediction Markets? 

The future of decentralized prediction markets looks promising, with several trends on the horizon:

  1. Technological Advancements: Improvements in blockchain scalability and smart contract functionality will enhance market performance.
  2. AI and Machine Learning Integration: Advanced algorithms will help users make more informed predictions.
  3. Cross-Chain Interoperability: Markets will operate across multiple blockchains, increasing liquidity and user base.
  4. Regulatory Clarity: As the space matures, clearer regulations will likely emerge, potentially leading to wider adoption.
  5. Integration with DeFi Ecosystem: Prediction markets will increasingly interact with other decentralized finance tools, creating new financial products and services.

Conclusion

Decentralized prediction markets are a significant evolution in forecasting and decision-making, and are reshaping the way markets operate. By leveraging blockchain technology and collective intelligence, these platforms offer a more transparent, accessible, and efficient way to predict future outcomes. 

As they continue to develop and overcome their current challenges, decentralized prediction markets have the potential to revolutionize how we approach forecasting across various industries and domains. Their growth and integration with other emerging technologies will play a role in shaping the future of finance, governance, and decision-making.

Let us know your thoughts! Sign up for a Mindplex account now, join our Telegram, or follow us on Twitter. 

Bitcoin By Month: Are Redtember and Uptober Real?

Posted on by Werner

Bitcoin’s price movements have always been a subject of intense tea-leaf reading and speculation, and over the years, various trading adages have emerged, attempting to capture patterns in Bitcoin’s monthly performance. From wisdoms like “Sell in May and Go Away”, “Wake Me Up When September Ends”, to Redtember and Uptober, crypto investors are skeptical about certain months. Is this pure superstition?  

Let’s dig into historical data to examine the validity of these popular sayings and provide insights into Bitcoin’s monthly price trends. Remember that historical performance is not equal to future performance.

Examining Bitcoin’s Monthly Returns

Let’s analyze the comprehensive table of Bitcoin’s monthly returns from 2013 to 2024. 

Credit: Coinglass

Month-by-Month Breakdown

  1. January: New Year Here and Chinese New Year incoming

With an average return of 3.35%, January usually shows moderate growth. Notable years include 2013 with a 44% gain and 2015 with a -33.05% loss. Since 2020 we’ve seen more green, as institutions enter with quarterly budgets, looking to start allocating earlier on in the year. 

  1. February: Usually quiet, but with outliers

Historically strong, February boasts the second-highest average return of 15.66%. The standout year was 2013, with an impressive 61.77% increase.

  1. March: Upwards

Another solid performer, March had an average 13.42% return from 2013-24. March of 2013 was exceptional, with a staggering 172.76% gain.

  1. April: Fools’ Gold? 

Consistent growth was seen in April, averaging 12.98%. Both 2013 and 2019 saw gains exceeding 50%. Not so fast though: it dropped in April of this year. 

  1. May: Go away!

While it has a positive mean return of 7.94%, May showed significant fluctuations over the years 2013 to 2024. Many crypto investors believe it’s the best time to temporarily pack your toys away and wait till Q4 before allocating again, hence the saying “Sell in May and Go Away”. In 2024, at least, they were right. 

  1. June: The summer doldrums start

The first month with a negative mean return, although a small one of -0.35%.

  1. July: Fireworks

This one’s a surprise. As the summer holidays peak, there’s a surprising return to positive territory with a 7.56% average, showing steady but unspectacular performance. 

  1. August: No-man’s land

Barely positive at a 1.75% mean return, August has historically been unremarkable.

  1. September: Redtember? 

Notorious for negative performance, with a mean return of -4.92%. This month has earned the moniker “Redtember” in crypto circles. It’s usually a slow month, as the summer holidays hangover means everyone is slow to get to serious business in financial circles. 

  1. October: Uptober

Aha, Uptober! The start of Q4 and the end of the year is coming into sight. Budget remainders can be allocated with greater freedom, and all systems are firing. October was historically surprisingly strong, with an average return of 22.90%, challenging the negative sentiment often associated with autumn months.

  1. November: The best month on average

The best-performing month on average, with an impressive 46.81% return. 2013 saw an extraordinary 449.35% gain.

  1. December: Holiday season bring mixed gifts

Closes the year with a respectable 5.45% average gain.

Credit: Tesfu Assefa

Evaluating Popular Trading Adages

Now, let’s examine some well-known trading sayings in the context of Bitcoin’s historical performance.

“Sell in May and Go Away”

This adage, borrowed from traditional stock markets, suggests divesting in May and reinvesting in November. For Bitcoin:

  • May itself averages a 7.94% gain, contradicting the “sell” advice.
  • The subsequent months show mixed results:
    • June: Slightly negative (-0.35%)
    • July: Positive (+7.56%)
    • August: Marginally positive (+1.75%)
    • September: Negative (-4.92%)
    • October: Strongly positive (+22.90%)

The data indicates that strictly adhering to this adage for Bitcoin would have resulted in missed opportunities, particularly in July and October. However, it would also have avoided September’s typical downturn.

“Redtember”

September’s reputation for poor performance is well-supported by the data:

  • Average return: -4.92%
  • Median return: -6.04%
  • Negative years: 9 out of 12
  • Worst performances: 2014 (-19.01%), 2019 (-13.38%), 2020 (-7.51%)

While there have been exceptions (2015: +2.35%, 2016: +6.04%, 2023: +3.91%), the trend clearly leans negative, lending credibility to the “Redtember” moniker.

“Uptober”

October’s strong performance supports the “Uptober” nickname:

  • Average return: 22.90%
  • Median return: 27.70%
  • Positive years: 8 out of 12
  • Standout years: 2013 (+60.79%), 2017 (+47.81%), 2021 (+39.93%)

Despite some negative years (2014: -12.95%, 2018: -3.83%), October generally shows strong positive performance, validating the “Uptober” concept.

Broader Trends: Quarterly Analysis

Expanding our view to quarterly performance reveals interesting patterns:

  • Q1 (Jan-Mar): Strongest quarter, averaging 56.47% returns.
  • Q2 (Apr-Jun): Positive but cooler, with 26.89% average returns.
  • Q3 (Jul-Sep): The weakest quarter, averaging just 4.95%.
  • Q4 (Oct-Dec): Very strong, with an 88.84% average return.

These quarterly trends suggest a general pattern of strength in the latter part of the year and early months, with a lull during the summer. This lull in summer may be the meaning of ‘sell in May and go away’.

Bitcoin and Ethereum by Quarter

Credit: Coinglass

What is maybe a bit more clear in this historical data, is that Q2 and Q4 were opportune times for Bitcoin’s price to move, and Q3 was a time to HODL after the Q2 growth. Every year is different, and news like a recession, a Bitcoin spot ETF approval, or a halving event can have a dramatic effect on the price of all crypto assets. 

Ethereum, on the other hand, has so far been a coin for all seasons. ETH’s Q2 performance has been incredible, with only two red blips in 2022 and 2024. This can be attributed to technological events like the Merge and specific upgrades like EIP-1559 and proto-danksharding. 

Implications for Investors

While these patterns are intriguing, it’s crucial to approach them with caution:

  1. Historical Trends vs. Future Performance: Past patterns don’t guarantee future results. Two things known for their unpredictability are the cryptocurrency market and the future.
  2. Market Evolution: As the crypto market matures, it may behave differently to an earlier version of itself, and historical patterns may become irrelevant.
  3. External Factors: Global economic conditions, regulatory changes, and technological developments can override historical patterns.
  4. Volatility Considerations: Bitcoin’s high volatility means significant deviations from averages are common.
  5. Long-Term Perspective: Short-term trading based solely on monthly patterns can be risky. A long-term investment strategy might be more suitable for many investors.

Conclusion

The analysis of Bitcoin’s monthly performance reveals some consistent patterns, particularly the challenges of September and the strengths of October and November. However, it’s important to view these trends as part of a larger picture rather than definitive trading signals.

Things in Cryptoland are always green or red but rarely black and white. There’s a lot of nuance and macro-economic factors at play – or is it lunar horoscope influence?

Investors should consider multiple factors when making decisions:

  • Conduct thorough research on market fundamentals.
  • Stay informed about regulatory developments and technological advancements.
  • Consider the broader economic context.
  • Diversify investments to manage risk.
  • Align trading or investing strategies with personal financial goals and risk tolerance.

While historical data are interesting, the cryptocurrency market’s dynamic nature means that adaptability and comprehensive analysis remain key to navigating this exciting but volatile space.

Therefore, you have two options: zoom out completely to an annual view, or take it day by day. 

Oh, and of course invest in projects that you’ve properly researched and believe in!

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