In the U.S, the government is at a stalemate--Trump
is still no closer to getting his wall.
And in the U.K, Theresa May is even further
away from securing a Brexit deal--in short,
the world is in turmoil.
By contrast, the crypto world has been relatively
stable, but nothing lasts forever.
Pablo Escobar’s brother wants to impeach
Trump with his new cryptocurrency, unintentionally
paving the way for a more crypto friendly
2020 candidate: John McAfee.
Also this week, Russia has no plans to hodl,
the Ethereum Constantinople hard fork is coming,
and a New Zealand crypto exchange goes down.
Ladies and gentlemen, I am Molly Jane and
this is your weekly Hodler’s digest.
But first, let’s have a look at the latest
market updates.
The long-awaited Ethereum Constantinople hard
fork, scheduled for Wednesday this week, has
been postponed due to vulnerabilities in the
upgrade.
According to crypto audit firm ChainSecurity,
it turned out that the Ethereum upgrade Constantinople
might be vulnerable to reentrancy attacks,
in which malicious actors can steal cryptocurrency
from smart contracts on the network.
The unexpected delay seems to contradict previous
claims, according to which the upcoming fork
was going to happen smoothly.
A day before the scheduled fork, Ethereum
Core developer Lane Retting told Bloomberg:
"I really can’t imagine a less contentious
hard fork, to be honest.
Of all the hard forks in the history of Ethereum,
it’s probably the least eventful one."
Among other technical changes, the fork will
significantly reduce rewards for miners, from
3 to 2 ETH per mined block.
This is considered a necessary adjustment
in Ethereum’s transition process from the
current Proof of Work to a Proof of Stake
consensus algorithm.
Unlike the controversial Bitcoin Cash hard
fork, Constantinople should not result in
the appearance of competing coins, as the
upgrade secured widespread approval in the
Ethereum mining community.
Also, major players such as Kraken, Coinbase
and Binance confirmed their support for the
upcoming fork.
We reached out to Lane Rettig and asked him
what is going on with the upgrade.
If we don't upgrade the network every so often
and that's.
It could be 8 months, 12 months, 18 months.
Some somewhere in that timeframe right.
Then what happens is the block times actually
begin to tick up.
So we target 14 seconds but it could go to
15 seconds, 18 seconds and it increases exponentially.
So what that means is if we don't hard work
and we still don't hard fork in six months
twelve months go by the entire network just
freezes and dies.
I do think there is a level below which mining
is not profitable.
Right.
So for example we're going from 3 to 2.
If we were to go down to point one per block
then I think it's very likely a lot of miners
would stop mining because at that point they're
probably losing money on electricity or hardware
or something.
But we did math and we did analysis and we
believe that to if there is still more than
enough to cover the costs for most miners.
The original road map that Vitalik shared
was always a transition to Proof of Stake
when it's ready.
And to say slightly more I mean I think one
of the big factors is that it's energy efficient
whereas proof of work wastes a lot of electricity
as you know.
Another reason is that we believe it's more
egalitarian and more decentralized and more
fair because anybody who holds Ether the
minimum is the 32 Ether which you know today
is something like five hundred or four hundred
U.S. dollars worth of ether can participate
and stake and earn rewards whereas in mining
today you know you need to invest thousands
of dollars in hardware.
The only thing in this hard fork in this upgrade
that could possibly be contentious is the
reduction of block rewards.
There's nothing else contentious about it.
It's all just good stuff like reducing gas.
Adding new cool nifty things to etheum
virtual machine and the reason I thought
that the reduction in issuance would not lead
to a contentious hard fork is basically the
reason I already said which is that we had
all the large miners we'd been in touch with
then we discussed it with them and we had
their support.
The specific technical issue that caused the
postponement is we know exactly what it is
it's very clear.
And one thing we may decide to do which is
the simplest possible thing to do is we just
go forward with Constantinople and we leave
out that one EIP.
That's not a big deal.
That's I think that it would take us one day
to prepare technically to do that.
The thing is though there's some bigger questions
here that we may want to discuss.
Right and these are questions like we had
six months eight months to prepare for this
and to review this EIP.
How did we all miss this problem until the
last minute.
The first exchange hack of 2019 did not keep
us waiting too long.
Early this week, New Zealand-based exchange
Cryptopia halted all trading activities after
detecting a security breach.
Even though Cryptopia is yet to disclose the
exact stolen amount, it has been reported
that around $3.5 million worth of crypto was
moved to unknown wallets a couple of days
before the hack was detected.
Later in the week, Binance CEO CZ claimed
that a part of the stolen funds were moved
to Binance and were consequently frozen.
The hack ignited an animated debate on social
media, with some blaming Cryptopia’s weak
security system, and others voicing suspicion
that the hack might have been an exit scam
orchestrated by Cryptopia itself.
We reached out to crypto security expert Anatoly
Woolf, and asked him to comment on the issue.
2018 was a disaster for crypto exchanges.
We have seen over a billion dollar stolen
from crypto exchanges.
Just to name a few, Coincheck, Zaif, Nicehash.
They do not pay enough attention to cybersecurity,
the answer is pretty simple.
Most of them are young companies, with no
well-formed cyber security department.
Some of them simply do not have CISO, chief
information security officer.
They do not have all the security solutions
in place.
They do not have proper web application firewall,
they have plenty of misconfigurations, they
are continuously developing.
In a continuous development sometimes business
is a higher priority than security.
The security is getting better, for sure it
is getting better, but the attacker model
is getting more sophisticated as well.
But while some crypto exchanges fear for their
futures, other seem to have learned the lesson.
This week, Japanese exchange Coincheck obtained
a license from the local financial authorities,
thus joining the list of the regulated exchanges
of Japan.
Just one year ago, Coincheck lost around half
a billion dollars in one of the biggest hacks
in the history of crypto.
After a long period of inactivity, Coincheck
won back the trust of institutions by implementing
a series of safety, governance and risk management
measures.
Roberto Escobar, the brother of legendary
colombian drug lord Pablo Escobar, launched
a new cryptocurrency as a fundraising effort
to impeach U.S. President Donald Trump.
The new Escobar token is an Ethereum based
stablecoin which will be pegged to the U.S.
dollar.
Escobar is leveraging the controversial legacy
of his defunct brother to promote the impeachment
efforts.
“I am afraid of Pablo Escobar” reads a
fictional quotation attributed to president
Donald Trump and shared on the main page of
the campaign.
According to the campaign’s website, raised
funds will be used to gather intelligence
and pay lawyers and lobbyists to go against
Trump.
Some of them will serve to develop further
the Escobar, which is supposed to become Tether’s
direct competitor.
Escobar decided to embrace crypto after the
previous attempt to raise $50 million dollars
on the crowdfunding platform GoFundMe did
not succeed as the campaign was blocked, allegedly,
by the Trump Administration.
Escobar Inc.
CEO Olof Gustaffson said:
“After raising $10 million in just 10 hours
we were shut down by GoFundMe and within 24
hours launched the Escobar stablecoin cryptocurrency
to avoid anyone censoring us again.
We believe the Trump Administration
or President Trump shut us down.”
We launched Escobar stable coin, Escobar token
and we sold out within five days the whole
ICO.
We sold almost a billion coins and they are
1 to 1 USD.
So it was very successful, we had a lot of
big Democrats that came in, some congressmen.
This story spread like wildfire here in the
United States.
A lot of people don't like Trump.
And obviously, Pablo Escobar has a pretty
good history at getting rid of people that
he doesn't like.
So that's what it used to be one of his specialties.
Trump doesn't like Mexicans and Latinos and
obviously, this is a Latino-based company,
South America-based company.
So we stand up for those rights.
Even though some people may think that our
company is a little bit different, not such
a nice company, we think we're nice, we think
we're very nice.
But one thing is for sure: we represent the
Latinos and there's a lot of Latinos in America.
And that's why we got all this money.
We launched this ICO, we sold out in five
days.
We thought it was going to take three months.
We had a ticker for 119 days - 120 days and
we sold out in five days.
Now what happened is, we did a code audit.
We built the smart contract over a year ago.
So we audited the smart contract.
We found some vulnerabilities and we're reissuing,
we did deploying a new smart contract and
we're rebranding the Escobar token and we're
given all those token holders a swap into
the new coin which is going to be called Q
USD.
We're going to launch for trading on January
24th.
We're launching the coin for trading Q USD.
We have multiple exchanges that we're getting
listed on.
The one that I'm allowed to say now is CoinTiger.
They're doing a big campaign and they're going
to be crossing it against everything and we're
going to take over the Tether market on Coin
Tiger.
So it's very interesting, we had a good discussion
with them and what we're trying to do is basically
to remove USD Tether, to remove all these
other coins that are stable coins and go in
and take over the market.
And we'll do it one exchange at a time.
We are taking this quite seriously and we
are really speaking with multiple attorneys
with experience in this and also security
contracting firms that have in other parts
of the world actually removed presidents or
replaced them or have been involved with the
gentle switching of presidents in other countries.
Now it's not going to come to anything too
crazy like that.
It's going to be a legal process.
Of course, the more money we make, the more
we're going to put towards Trump.
But let's say this way: if this was in the
1980s, we would have already impeached Trump.
He would have already been impeached a long
time ago.
So now it's a little bit different.
Now you have to do it the legal way.
That's why it takes time.
But we have the best lawyers and we know what
we're doing.
We're meeting these congressmen.
We're meeting a lot Congresswoman yesterday
and everybody hates Trump man.
People don't like this guy.
So let's get rid of him, but let's do it legally.
It was falsely reported this week that the
Russian state was considering buying $10 billion
worth of Bitcoin, ostensibly to circumvent
sanctions.
The story made it from the Twitter account
of an obscure Russian economist to the Daily
Hodl; and then all the way onto the pages
of major U.K. newspaper the Telegraph.
It soon transpired this economist, who was
reported to have links to the Kremlin, had
no other sources than himself; and the figure
of $10 billion?
That’s anyone’s guess.
However, as is the case with a lot of misreporting,
there is a grain of truth to these claims.
Russia has significantly cut its dollar holdings
to lessen the impact of sanctions, there are
rumblings of a crypto bill in parliament and
Dmitry Medvedev, the Russian PM has recently
come out in support of crypto.
In early January, it emerged that Russia had
cut its dollar holdings by $100 billion and
increased its Euro and Renminbi holdings as
part of a broader anti-sanction effort.
The logic behind this move, according to Russia-Chinese
relations expert, Alexander Gabuev,
“We almost certainly lose a bit over yuan
devaluation, or we less certainly lose a lot
on sanctions from hell.
And the Kremlin thinks: better safe than sorry.”
Lower down from the Kremlin, the Russian State
Duma is planning to discuss a crypto bill
most likely in February.
Despite the fact that there was no mention
of a $10 billion investment in Bitcoin, this
is a positive indicator that the Russian state
is warming to crypto.
A further sign of this was Medvedev’s recent
comments, that ‘a bear market is not a reason
to bury crypto.’
adding ‘there is both a bright side and
a dark side here, as well as in any social
phenomena and any economic institution.
We should monitor carefully what is going
on in the space.”
Finally, while it is not possible for the
Russian state to convert its dollar holdings
into Bitcoin, there is a precedent of other
states, like Iran and Venezuela, who have
made efforts or at least discussed circumventing
sanctions with crypto.
We spoke to Kayla Izenman from the Royal United
Services Institute for Defence and Security
Studies about the sanctions against Russia
and crypto.
It obviously makes sense that Russia would
want to circumvent sanctions in general so
that they can transact with people not only
in the US specifically but in the global international
financial system without relying on the use
of the dollar or relying on other whoever
they're transacting with to be ok with potentially
being subject to secondary sanctions or anything
like that.
So you know these comments of come out
saying Bitcoin cryptocurrency is the best
way for us to circumvent the financial system
to not rely on dollars.
All these things.
So in that sense the intent is there.
They've said they want to do it.
They've also shown initiative regarding blockchain.
Putin has met has met with Vitalik Buterin
the founder of Ethereum.
So you know they're very aware of crypto.
The way that you would need to circumvent
sanctions on a state level isn't necessarily
through like a national cryptocurrency basically
the way you would need to do it isn't through
a national cryptocurrency but more through
replacing or coming up with a parallel to
the financial system where you can settle
accounts only through crypto which is a scale
of adoption that as of right now is unprecedented
but would make it you able to transact without
dollars.
The trouble with cryptocurrency is that it's
not inherently like not subject to sanctions
because if it's used as a transfer value then
it's sort of inherently subject to sanctions.
A better case study in that case is looking
at North Korea which I've done a lot of research
and two for this sort of thing.
And North Korea is hacking Southeast Asian
cryptocurrency exchanges.
You know they've had at least five or so within
the past two years have been confirmed as
North Korea and then more have been suspected.
And if you look at that they're hacking for
massive amounts of money.
They got this money.
Obviously we don't know what they're doing
with it.
They could fundraise they could spot stockpile
all of these things but they're getting that
money.
Granted the difficulty comes with you then
you can pay people and have the financial
system move around like that.
Or are you cashing out into your currency
which makes it more difficult but either way
that would mean that you're getting a certain
amount of money from illicit activities and
that money isn't subject to sanctions.
If Trump avoids impeachment he could eventually
face getting primaried.
On the Democratic side Elizabeth Warren, Tulsi
Gabbard and Richard Ojeda have thrown their
hat in the ring to become the next president
of the United States.
Joe Biden, Bernie Sanders, Kamala Harris and
a whole host of others are yet to declare
their intentions.
One man who announced his candidacy last year,
a man who in his own words, “No one in their
right minds would vote for,” is none other
than libertarian crypto wild man, John McAfee.
His platform, he claims, would fit on the
back of a matchbox.
The sole item is freedom for the people; don’t
ask him about education, immigration or foreign
relations because, again in his own words,
he knows nothing about them.
This week he teamed up with little-known YouTube
rappers Coinbros to release his campaign song, “McAfee 2020”
♫♫♫  Coinbros “McAfee 2020” ♫♫♫
In the song, the bros describe the presidential
candidate as the ‘realest *beep*’ they
ever met and made claims he would fight corruption.
The Coinbros, whose goal is to eventually
go 100% crypto, believe that McAfee is the
man to achieve this, in their own words: Crypto
to the forefront, we’re one step closer.
This is the second time the YouTubers have
worked with McAfee.
Previously they made a music video with him
where they rapped/warned people not to mess
with his dogs.
The lyrics reference allegations that he murdered
his neighbor in Belize after his dogs were
poisoned.
Other allegations from his time in Belize
include rape.
Outside of the crypto world, it is unlikely
the McAfee 2020 campaign will gain much traction,
but if it does, we could see the media take
another look at his time in Belize.
Would buy the Escobar if you knew it would
impeach Trump?
Comment below!
And as always, remember to like, subscribe
and hodl!
