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.

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

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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.

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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!

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

Ten Explosive Web3 Trends For 2025

Posted on by Werner

As we hurtle towards the final quarter of 2024, Web3 continues to reshape industries and redefine our digital interactions, while attention remains on the yo-yo prices of cryptocurrencies. Look closer and there’s a lot happening.

From the rise of AI-powered decentralized applications to the tokenization of real-world assets (RWA), the trends emerging in the Web3 space are not just technological advancements, but paradigm shifts that promise to revolutionize the way we interact with the digital world. Let’s delve into the top ten Web3 trends that are making waves in 2024 and are set to shape the landscape in 2025.

1. AI-Web3 Symbiosis: Intelligent Decentralized Systems Are Coming

The integration of Artificial Intelligence (AI) with Web3 technologies in 2024 is pushing the boundaries of what’s possible in decentralized applications (dApps) and distributed ledger technologies.

Oracle networks 

One notable AI-powered smart contract platform is the oracle network Chainlink, which has seen a 300% increase in adoption rates since the beginning of 2024. By leveraging machine learning algorithms, Chainlink has dramatically improved the efficiency and accuracy of oracle networks, reducing transaction times by up to 75% and enhancing the reliability of data feeds.

Decentralized Healthcare Records

The collaboration between AI and Web3 is also revolutionizing data management and content verification. 

In the healthcare sector, encumbered by convoluted data practices that inhibit the sharing of vital medical information across different parties, companies like MedicalChain are using AI algorithms within Web3 frameworks to enable secure, decentralized management of medical records. Techniques such as secure multi-party computation, homomorphic encryption and federated learning allow AI models to analyze sensitive data ‘in a black box’, preserving individual privacy. Medical information remains encrypted and inaccessible to unauthorized parties, yet the AI analysis can still glean insights from it.

2. The RWA Tokenization Revolution

The tokenization of real-world assets (RWA) has gained significant traction in 2024, spearheaded by traditional finance giants like BlackRock. The total market cap of tokenized real-world assets hit $5 trillion in the middle of the year. This trend is making traditionally illiquid assets more accessible and tradable.

Real estate protocols have tokenized over $1 billion worth of properties by Q2 2024. This has allowed fractional ownership of prime real estate, easing access to a market that was previously out of reach for many investors.

In the art world, platforms like Maecenas have tokenized masterpieces like Picassos worth over $500 million, allowing art enthusiasts to own fractions of world-renowned artworks. This trend is changing investment paradigms and reshaping how we perceive ownership in the digital age.

3. Sustainable Blockchain: Crypto Goes Green

Environmental concerns have been a significant hurdle for blockchain adoption, but 2024 has seen a decisive shift from the very energy-hungry Proof-of-Work to Proof-of-Stake. The Ethereum network’s transition to Proof-of-Stake (PoS) in late 2022 blazed a trail, and now we’re seeing the fruits of this green revolution.

Cardano, another proof-of-stake blockchain, reported a 99.9% reduction in energy consumption compared to traditional Proof-of-Work systems. This approach has attracted environmentally-conscious investors and developers, with Cardano’s DeFi ecosystem growing 200% in the first half of 2024.

Carbon-neutral blockchains are becoming the norm rather than the exception. Algorand, which achieved carbon negativity in 2021, has offset over 10 million tons of carbon emissions through its sustainability program by mid-2024.

4. DeFi 2.0: The Next Generation of Decentralized Finance

Decentralized Finance (DeFi) is a new creature in 2024, finally addressing many of the challenges that plagued its early incarnations. DeFi 2.0 platforms are focusing on improved security, scalability, and user experience.

Aave, a leading DeFi protocol, has introduced AI-powered risk assessment tools, reducing the instances of bad debt by 80% compared to the previous year. This has instilled greater confidence in the DeFi ecosystem, attracting institutional investors who were previously wary of the risks associated with decentralized lending and borrowing.

Another milestone in the DeFi space is the rise of cross-chain interoperability. Polkadot’s parachains have facilitated seamless asset transfers across different blockchain networks, with over $50 billion in cross-chain transactions recorded in the first quarter of 2024.

5. The Metaverse Economy: Virtual Worlds, Real Value

The metaverse has gained traction in 2024, with major tech companies and startups alike building immersive digital worlds. These virtual realms are not just for gaming and socializing; they’re becoming hubs of economic activity.

Decentraland, a leading metaverse platform, has seen its virtual real estate market cap surpass $2 billion in 2024. Major brands like Nike and Gucci have established virtual stores in Decentraland, with Nike reporting that 15% of its digital sales now come from its metaverse presence.

The rise of the metaverse has also fueled the growth of virtual economies. Play-to-earn games like Axie Infinity have created new income streams for players, particularly in developing countries. In the Philippines, over 100,000 people now earn a living wage purely from play-to-earn games, marking a significant milestone in the gaming industry.

6. Decentralized Social Media: Taking Back Control

2024 has seen a surge in decentralized social media platforms, as users seek alternatives to centralized platforms plagued by data privacy concerns and algorithmic manipulation.

Mastodon, a decentralized social network, has grown its user base to over 50 million by mid-2024, a tenfold increase from the previous year. This growth has been fueled by its commitment to user privacy and its resistance to censorship, contrasted with growing discontent with centralized platforms.

Another notable player in this space is Mirror, a decentralized publishing platform that allows writers to tokenize their content. By the end of 2024, Mirror had facilitated over $100 million in direct reader-to-writer payments, revolutionizing the economics of online content creation.

Credit: Tesfu Assefa

7. NFTs Beyond Art: Utility Tokens in the Real World

The NFT art market has cooled since its 2021 peak, but 2024 has seen a resurgence of NFTs in practical applications. Utility NFTs, which provide real-world benefits to holders, have gained significant traction.

Ticketing giant LiveNation has partnered with blockchain platform Flow to issue NFT tickets for concerts and events. These NFT tickets prevent fraud and allow artists to engage with fans long after the event, creating new revenue streams through digital memorabilia and exclusive content.

In education, blockchain-based platforms like Learning Economy Foundation have issued over 1 million verifiable credential NFTs as of mid-2024. These NFTs serve as tamper-proof records of academic achievements and professional certifications.

8. DAOs: The Future of Organizational Governance

Decentralized Autonomous Organizations (DAOs) have come of age in 2024, moving beyond crypto-native applications to disrupt traditional organizational structures.

MakerDAO, one of the oldest and largest DAOs, has expanded its reach beyond the crypto world. In a groundbreaking move, it acquired a chartered bank in the USA, bridging the gap between DeFi and traditional finance. This milestone marks the first time a DAO has owned a regulated financial institution.

The DAO model has also gained traction in the nonprofit sector. The Ocean Cleanup DAO, launched in early 2024, has raised over $100 million for ocean conservation efforts, demonstrating the power of decentralized governance in addressing global challenges.

9. Zero-Knowledge Proofs: Privacy in a Transparent World

As concerns about data privacy continue to grow, zero-knowledge proofs (ZKPs) have emerged as a critical technology in the Web3 ecosystem. ZKPs can verify information without revealing the information itself, striking a balance between transparency and privacy.

Zcash, a privacy-focused cryptocurrency that utilizes ZKPs, has seen its adoption rate increase by 500% in 2024. Major financial institutions, including JPMorgan Chase, have begun integrating Zcash’s technology into their blockchain solutions, signaling a shift towards privacy-preserving finance.

In the field of identity verification, Microsoft’s ION project, which uses ZKPs for decentralized identifiers, has over 100 million users by the end of 2024, marking a significant step towards self-sovereign identity.

10. Prediction Markets: Data-Driven Forecasting

Crypto-based prediction markets are all the rage now, particularly in the context of political events like the 2024 U.S. election. Platforms such as Polymarket process hundreds of millions of dollars weekly, offering real-time insights into public sentiment on various outcomes, such as the presidential election in the USA, which recently became their first market with $1 billion in betting volume.

Prediction markets use blockchain technology in the backend to ensure transparency and efficiency, attracting both casual users and respected forecasters. Prediction markets are not limited to political outcomes. They’re increasingly used in fields such as:

  • Economic forecasting
  • Sports betting
  • Entertainment industry predictions
  • Scientific research outcomes

By providing financial incentives for accurate predictions, these markets aggregate knowledge from sources around the world and from every sector of society, outperforming traditional polling and forecasting methods.

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

What is Nosana: Decentralized GPU Computing for AI Inference

Posted on by Werner

Introduction

The marriage between artificial intelligence and blockchain technology is viewed by many now as slightly overhyped. Many projects have failed to live up to expectations, and only a handful like Artificial Superintelligence Alliance (a merger between SingularityNET, Fetch.AI and Ocean Protocol) and Render stand out. 

However, compelling new potential use-cases abound. One is Nosana (NOS), an up-and-coming Solana-based project that aims to revolutionize access to GPU computing power. By creating a decentralized blockchain marketplace for GPU resources, Nosana addresses a critical issue in AI, and also taps into the growing decentralized physical infrastructure (DePIN) sector led by projects like io.Net and Render.

Let’s delve into what makes Nosana a potential game-changer in the world of decentralized computing.

What is Nosana?

Nosana is a decentralized and open-source cloud computing marketplace built on the Solana blockchain. It focuses on AI inference and GPU power distribution, utilizing community-contributed computing resources to run tasks for open-source projects and AI workloads. In short, the project aims to connect AI inference needs and decentralized GPU resources. But what’s AI inference?

Understanding AI Inference

AI inference is the process of applying a trained AI model to new data to get real-time predictions or solutions. It’s the stage where AI models put their learned knowledge to practical use. If you’re an Internet user, you’re probably already using many of these applications on a daily basis without knowing. Some examples include:

  • Real-time object recognition in image, text or video streams
  • On-the-fly language translation
  • Personalized content recommendations on streaming platforms

Nosana specializes in providing computational power for these inference tasks, which are becoming increasingly important as AI applications proliferate across industries.

Key Features of Nosana

FeatureDescription
Decentralized GPU NetworkAllows GPU owners to rent out idle hardware to AI users, creating a peer-to-peer marketplace for computing power.
AI-powered CI/CD AutomationAims to reduce software bugs and enhance user trust by incorporating AI into the software development pipeline.
Nosana ExplorerProvides real-time insights into network performance and statistics, offering transparency to users and stakeholders.
Developer-friendly APIs and Flexible PricingMakes it easier for projects of various sizes to access computing power, potentially lowering the barrier to entry for AI development.
Environmental FriendlinessBy utilizing existing hardware, Nosana potentially reduces the need for additional energy-intensive data centers.

What AI Issues Does Nosana Aim to Solve? 

Nosana tackles three main issues in the AI and computing sectors:

  1. GPU Shortages

The global shortage of GPUs, particularly high-end ones for AI tasks, has been a significant bottleneck in AI development. Nosana provides access to a network of distributed GPU resources, potentially alleviating this shortage.

  1. Idle Compute Utilization

Many GPUs, especially in personal computers, sit idle for long periods. Nosana allows owners of unused GPU power to monetize their resources, improving overall efficiency in the computing ecosystem.

  1. High Public Cloud Pricing

Centralized cloud services charge a lot for AI computing tasks. Nosana offers a more cost-effective alternative, potentially making AI development more accessible to a broader range of organizations and individuals.

Just How Big is Nosana’s AI Potential?

As demand for AI applications increases, so does the need for efficient, cost-effective computing power. Nosana’s decentralized approach could provide several advantages over centralized competitors:

  1. Web3 Scaling

The ability to tap into a global network of GPUs that brings significant scale to AI projects. This could be particularly beneficial for startups and researchers who need to scale their AI operations quickly without massive upfront investments.

  1. Cost Efficiency

AI compute is still very expensive, costing firms like Google and OpenAI billions each year to run. By utilizing idle resources, Nosana may offer more competitive pricing compared to centralized cloud providers, reducing the operational costs of AI projects, making them more viable and sustainable.

  1. Democratizing AI

Democratization of tech is a term bandied around quite a lot in the crypto world, however it could have some substance this time. Lower costs and easier access to computing power could enable more developers and small businesses to work on AI projects. This democratization could lead to more diverse and innovative AI applications across various sectors.

  1. Reducing Latency

Decentralized networks can potentially reduce latency by allowing users to access GPU resources located closer to their geographical position. This could be crucial for real-time AI applications.

  1. Web3 Resilience

A decentralized network is inherently more resilient to outages or attacks compared to centralized cloud services, potentially offering more reliable computing power for critical AI tasks.

How Does Nosana Differ From Competitors? 

Nosana operates in a competitive field alongside projects like Render, Akash, and Golem. However, its specific focus on AI inference, and its integration with the Solana blockchain, set it apart. Here’s how Nosana compares to some of its competitors:

  1. Render: Both focus on decentralized GPU computing. Render has a stronger emphasis on graphics rendering, whereas Nosana specializes in AI inference.
  2. Akash: Akash provides a more general-purpose decentralized cloud computing platform, while Nosana is more focused on GPU resources for AI tasks.
  3. Golem: Golem offers a broader range of computing resources, whereas Nosana concentrates specifically on GPU power for AI.

As of early 2024, Nosana has a relatively small market cap compared to some competitors, potentially indicating room for growth if the project gains traction.

Credit: Tesfu Assefa

Tokenomics and Market Performance

Here’s what you need to know about Nosana’s tokenomics. This information is from CoinMarketCap and the Nosana whitepaper:

  • Total Supply: 100 million NOS tokens
  • Circulating Supply: Approximately 82 million
  • Market Cap: Around $97 million (as of Sept 2024)
  • Token Distribution:
    • 30% private sale
    • 10% public sale
    • 15% team/advisors
    • 20% ecosystem/community
    • 25% foundation reserve

The NOS token has shown strong relative strength in the market, maintaining an upward trend since late 2023 despite overall market fluctuations. 

Staking and Rewards

Nosana offers variable staking options for token holders, with potential annual percentage yields (APY) of up to 40% for long-term stakers. These high yields may not be sustainable in the long run but they currently provide an attractive incentive for token holders to participate in securing the network. Please note that token emissions and unlocks can really destroy a token’s price. 

Partnerships and Ecosystem

Nosana has partnerships with several notable companies in the tech industry, including:

  1. Chaingenius: A blockchain technology company focusing on security and scalability.
  2. HCL Technologies: A global IT services company that uses Nosana to enhance software development processes.
  3. HashiCorp: A software company specializing in multi-cloud infrastructure automation tools.
  4. Akamai: A content delivery network and cloud service provider.

These partnerships could provide Nosana with valuable industry connections and customers.

Risks and Considerations

Nosana does show promise, but potential investors should consider several factors:

  1. Market Competition: The decentralized computing space is crowded and rapidly evolving. Nosana will need to continually innovate to maintain a competitive edge.
  1. Technological Challenges: Ensuring consistent performance across a decentralized network presents non-trivial technical hurdles. Issues like quality of service, data privacy, and network stability will need to be addressed.
  1. Adoption Hurdles: Convincing traditional AI developers to switch to a decentralized solution may require significant effort. Nosana will need to demonstrate clear advantages on cost, performance, and reliability.
  1. Regulatory Uncertainty: The evolving regulatory landscape for cryptocurrencies and decentralized platforms could impact Nosana’s operations. Compliance with emerging regulations will be crucial for long-term success.
  1. Token Volatility: As with many cryptocurrency projects, the NOS token may experience significant price volatility, which could affect its utility within the ecosystem.

Conclusion

Nosana represents an innovative approach to providing GPU computing power for AI applications. Its focus on AI inference, decentralized structure, and its integration with Solana make it a project worth watching in the AI and blockchain space. The potential to democratize access to AI computing resources, and create a more efficient marketplace for GPU power, could be really impactful.

However, as with any early-stage project in a rapidly changing field, potential investors should conduct thorough research and consider the associated risks. The success of Nosana will depend on its ability to deliver on its technological promises, to build a robust ecosystem of users and providers, and navigate the complex landscape of AI and blockchain technologies.

As the AI revolution expands into new corners of both Web2 and Web3, projects like Nosana may play a crucial role in shaping the future of decentralized computing and AI development. Whether Nosana can capitalize on its potential and become a leader in this space remains to be seen, but it certainly presents an intriguing vision for the future of AI DePIN infrastructure.

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

Tron Goes For Throne Via memecoin Minions

Posted on by Werner

The Tron blockchain, established by the TRON Foundation in Singapore in July 2017, has recently cemented its position as a significant new player in the ever growing memecoin sector.

As an EVM-compatible chain, Tron supports smart contracts written in the Solidity programming language, functioning similarly to Ethereum and Binance Smart Chain. Tron’s shrewd founder, Justin Sun, emphasizes the blockchain’s speed and low transaction fees as key network advantages, positioning and aggressively marketing Tron as the ideal network for NFT and memecoin trading.

Despite its growth, Tron has faced skepticism, particularly concerning centralization, the large amounts of stablecoins it has in circulation, and potential market manipulation. 
However, there has been consistent bullish momentum of Tron’s native TRX token (and other coins on its blockchain) ever since the bear market lows in December 2022, and this has quieted many critics. Tron’s trading volumes have surged, with the network recently hitting $280.4 million in daily volume and generating $5.4 million in revenue on August 21 alone – a new all-time high.

Credit: DeFiLlamma

Tron’s Bullish Price Action

The bullish performance of Tron and its native TRX token remains an outlier to its EVM competitors and other layer-1 chains, which have struggled with low or poor price action in mid 2024 as the early bullrun fizzled out. When comparing the charts, Tron is less than 10% from its 2021 bull run highs, while its most obvious competitor; Solana, is approximately 50% from its own 2021 highs.

Credit: TradingView

Tron’s Effect on Solana

Many market spectators have suggested that Solana’s bullish price action after its lows in 2022 are caused by memecoin mania. This craze arose primarily in the Solana ecosystem – with coins such as PEPE, BONK and WIF becoming deeply entrenched names due to their massive gains during this past year. WIF in particular is now ranked as the 55th most valuable crypto by market cap, with a staggering $1,606,879,830 in total market cap. 

The effect that these memecoins have had on the Solana blockchain is undeniable. But with Tron recently launching SunPump, many believe that an even greater number of crypto users might soon be migrating over to Tron. One attraction is the relatively low market cap of many of the Tron memecoins, which offers the possibility for greater gains if the crypto market turns bullish.

Time will tell what effect this will have on Solana, but competition from Tron has thrown a bear among the pigeons of the Solana memecoin community. Metrics have shown a recent decline in transactions on the Solana network as Tron continues to attract memecoin users. 

The rise of Tron created challenges for other blockchain networks – especially at a time when the markets are in limbo and prices generally trending lower in anticipation for rate cuts and presidential elections in the USA.

What is SunPump

A significant development for Tron has been the launch of SunPump, a platform for deploying and trading memecoins. Similar to PumpFun on Solana, SunPump allows users to create and launch their own memecoins on the Tron network, providing a new stimulus to the memecoin sector, which had previously relied heavily on Solana tech. Since its launch on August 9, SunPump has generated over 8.4 million TRX in revenue. That’s valued at approximately $1.4 million.

Justin Sun has suggested that the fees from SunPump could reach $100 million by the end of 2024, with him promising on Twitter that 100% of the revenue generated will go towards burning TRX, a move aimed at reducing supply and potentially increasing the token’s market price. This strategy has bolstered investor confidence and greater interest in the crypto sector, with many viewing it as a positive step toward growing the value of the TRX token. Justin Sun has been very proactive in marketing their new memecoin platform and it underscores his confidence in Tron’s future.

Credit: SunPump

Biggest coins on SunPump

Before mentioning some of the biggest gainers on the SunPump ecosystem, a word of caution to all novice traders; SunPump and other similar memecoin deployers allow anyone to make their own coins. The inherent risk from ‘rug pulls’ is very real so do your own research, and only trade what you are willing to lose. Mindplex does not give financial advice. That being said, many traders have already made small fortunes in the few weeks since the launch of the SunPump platform. Some of the biggest gainers have been: 

  • Sundog ($SUNDOG): Up over 260× since its launch two weeks ago
  • Tron Bull ($BULL): Up over 18× since launch 

Visit the SunPump website for a complete list.

Tron Stablecoins Spark Concerns

However, Tron’s rapid growth in 2024 has brought up several concerns that could affect its future. A primary concern is the large amount of stablecoins circulating on the Tron blockchain, particularly Tether (USDT). 

Stablecoins have long been an integral part to the crypto ecosystem, but the dominance of stablecoins on Tron has led to questions about the network’s decentralization. 

Additionally, the reliance on stablecoins like USDT, which is controlled by a centralized entity, contradicts the core principles of decentralization that blockchain technology was built upon. As of 2024, a higher portion of USDT transactions occur on the Tron blockchain than any other blockchain (even Ethereum). 

While the large amount of stablecoins have increased liquidity and user activity on Tron, it could increase regulatory scrutiny in the U.S. and European markets. 

Regulatory challenges loom large for Tron. In 2023, it received charges from the SEC for violating securities laws. In 2024, regulators worldwide have further increased scrutiny on stablecoin issuers and the platforms that host them, calling for greater transparency, audits, and compliance with anti-money laundering and KYC regulations.

Tron’s DPoS consensus mechanism, while allowing for fast and efficient transactions, concentrates power in the hands of a few validators, raising concerns about potential centralization and the room for actions being taken on the network without sufficient consensus from network participants.

The Tron network’s rapid growth has raised concerns about its security and scalability. As more dApps, DeFi projects, and memecoins are built on Tron, the network’s infrastructure is being put to the test. While Tron’s network allows for high throughput, it is not immune to network congestion and potential vulnerabilities. Ensuring the security and scalability of the Tron network will be crucial to maintaining its leading position in the blockchain industry.

Credit: Tesfu Assefa

Conclusion

The rise of Tron in 2024 has been remarkable. From its origins as a content-focused platform to its current status as a major blockchain player and memecoin platform, Tron has demonstrated it can innovate and adapt to market demands. The launch of SunPump and the subsequent memecoin boom have highlighted Tron’s strengths, but also brought to light important concerns that must be addressed.

But for now, things are looking very positive for the Tron network and its TRX token.With plans to enhance the use of their own USDD stablecoin, and founder Justin Sun’s belief that the blockchain’s revenue could soar to $4 billion within the next year if its current meme strategy proves successful, things are certainly looking up, especially if overall market conditions improve as many market participants are hopeful it will. Time will tell whether Justin Sun’s call to arms of “TO THE SUN” will become the battle cry for enthusiastic and profit-hungry crypto investors across the globe.

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