Blockchain Bites: Bitmain's Shakeup, Bitcoin's Resilience and Ethereum's Anonymity

Bitcoin underwent a protocol update to make the network more resilient to state attacks, while researchers separately found Ethereum may be losing its anonymity.

Elsewhere, "Crypto Mom" Hester Pierce has been tapped for a second term at the SEC, and an ex-Yang advisor is making crypto a cornerstone to his House campaign.

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here.

Top shelf

Ethereum
The most popular way to use bitcoin off-chain is on Ethereum, data suggests. Ethereum projects including WBTC and imBTC hold 70% more bitcoins than Bitcoin-native scaling solutions Lightning or Liquid. Separately, researchers have found that governments and private entities can strip away anonymity from Ethereum, and users are making it easier for them by revealing links between deposits and withdrawals. This could also "impact the anonymity of other users, since if a deposit can be linked to a withdraw, it will no longer belong to the anonymity set,” the authors write.

Bitcoin
The 20th iteration of Bitcoin Core, the open source software powering the Bitcoin blockchain, was released Wednesday. Included in the update is an experimental software called “Asmap" to protect against a theoretical “Erebus” attack, which allows nation states and/or large internet providers such as AWS to spy, double-spend or censor bitcoin transactions. Meanwhile, HDR Global Trading Limited, BitMEX’s parent company, has awarded its second grant to a Bitcoin Core contributor. (The Block)

Mining
The Bitcoin blockchain adjusted its mining difficulty downwards, dropping 9.29%, to reach the lowest level since January. This is the eighth-largest negative difficulty adjustment in Bitcoin’s history and the eighth instance of two or more consecutive negative adjustments. Elsewhere, mining firm Argo reported a 34% dip in May mining margins, possibly as a result of the bitcoin halving event. Last but certainly not least, Micree Zhan Ketuan, the ousted Bitmain co-founder, sent a letter calling for employees to return to the office to join him rather than his rival co-founder Wu Jihan. The message offered cash bonuses to loyalists, and said Zhan would complete the company’s long-awaited IPO while pushing its market capitalization to over $50 billion in the coming years. Decrypt reported that Zhan retook the office with a dozen security guards in tow.

Banking
Arival Bank is launching in beta Thursday with a 20-person team and offices in Singapore, Puerto Rico and Saint Petersburg, Fla., to provide banking accounts to crypto startups via a sponsor bank. Japanese banking giants Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group, and Sumitomo Mitsui Financial Group – institutions that control more than $6.6 trillion in assets between them – will participate in a study group to determine the feasibility of a national digital payments solution.

Policy and law
Hester Peirce, also known as “Crypto Mom,” for her favorable outlook on this emergent asset class, has been tapped for a second term at the SEC. Jonathan Herzog, an ex-Andrew Yang advisor, is running for office on the platform of expanding civil liberties, instituting universal basic income and passing a constructive cryptocurrency framework. Exchanges Bittrex and Poloniex have been named defendants in a class-action lawsuit against USDT creators Tether and Bitfinex. (CoinTelegraph)

Use cases
The Offshore Operators Committee, a nonprofit focused on offshore energy, has found a blockchain management system reduces costs and time for transporting wastewater. Luxury asset firm Idoneus used its native token to purchase a Picasso painting. (Decrypt)

Opinion

The Neil Ferguson Affair Shows the Limits of Science During COVID-19
Nic Carter, CoinDesk columnist and partner at Castle Island Ventures, tackles the narrative drama around a U.K. epidemiologist who predicted 250,000 deaths in Britain and influenced lockdown policy in the U.K. and abroad. “The depth of the outrage [which followed] reveals just how scandalized the public can become when trusted institutions are revealed to be less reliable than expected,” Carter writes.

The Last Last Word on Bitcoin’s (Horrifying) Energy Consumption
Michael Reece Purson responds to Nic Carter’s op-ed, “The Last Word on Bitcoin’s Energy Consumption.” Challenging Carter point by point, Purson apparently made his first factual error when saying the VC has “‘analyst’ in your job description.”

Market intel

Bitcoin Doth Protest too Much?
Wall Street traders appear to be looking past the protests roiling across the nation, focusing instead on prospects for an improving economy as states reopen and business activity picks up. The dollar weakened Wednesday against the euro and British pound, seen as a sign that investors in traditional markets are ramping up, not ratcheting back, risk-taking. The bitcoin market, too, has barely reacted to the news. Prices nudged 0.4% higher on Wednesday to about $9,600, leaving the cryptocurrency squarely within the range where it has traded since late April, between $8,500 and $10,200.

Bloomberg Is Bullish
A Bloomberg analyst thinks bitcoin will hit $20,000 this year, after comparing the price action seen over the last 2.5 years to the patterns over the 2.5 years following the leading cryptocurrency’s rise to record highs in December 2013, when bitcoin printed a lifetime high of $1,100 before crashing.

CoinDesk Research

CoinDesk Research: May 2020 Review
Bitcoin’s returns continue to outpace stocks, bonds and gold, and so does its volatility. Spot exchange volumes probed historic highs in May and bitcoin options markets passed a milestone and didn’t look back. Outperforming crypto assets a couple of use-specific crypto tokens that topped crypto returns for the month. Download the full report here.

The Breakdown

5 Numbers That Tell the Story of Markets Right Now
In this episode of The Breakdown, NLW tries to make sense of today's economy by looking at the growth of the S&P 500, unemployment statistics and growing global debt.

Who Won #CryptoTwitter?