The Vitalik Buterin-David Schwartz feud shows crypto’s divisions
Hello and welcome to Protocol Fintech. This Friday: explains the latest Ethereum-Ripple battle, digs into Apple Pay’s numbers and Bill.com’s earnings spree.
Off the chain
Web 2.0? Web3? How about somewhere in between? “I think we’re going to finish [with] web 2.7, where there’s some centralization, keeping people safe, but the ability to port your assets with you to any site.” cringecore said crypto-lawyer Randi Zuckerberg at the Global Supertrends conference. The elder Zuckerberg actually makes some good points about the lack of usability in metaverse wallets that her younger brother might want to keep in mind as he tries to turn Meta Pay into something more than a button you push to buy used bookcases on Facebook Marketplace.
– Owen Thomas (e-mail | twitter)
Ripple and Ethereum’s crypto uproar
While Ripple has been busy battling the SEC, the crypto giant also found itself battling online with a longtime nemesis. Ethereum co-founder Vitalik Buterin and Ripple chief technology officer David Schwartz launched a heated tit-for-tat on crypto Twitter this week. The dispute became so heated because it revolved around key questions in crypto: Which tokens are legal and which are not? Which companies deserve the crypto world’s support and which should be avoided?
This is an old feud. It began when Buterin backed a snarky Twitter post against XRP, the token that Ripple uses in payments, arguing that Ripple “lost its right to protection when they tried to throw us under the bus.”
- Buterin was referring to an argument Ripple made in the ongoing SEC lawsuit in which the company referred to bitcoin and ether as “China-controlled” due to the location of many mining operations in that country at the time.
- Buterin retweeted a 2020 tweet accusing Ripple of “descends to new levels of weirdness” and called XRP a “shitcoin.” The link to the Ripple document included in the tweet has been disabled. Ripple did not comment.
- Schwartz quickly hit back on Twitter, by compare the proof-of-work systems used by the bitcoin and ether blockchain networks to the way investors in a company like eBay make money.
- Shareholders, he argued, “want to leave as much friction between buyers and sellers as they can because it’s their revenue stream, as do ETH and BTC miners. That’s part of why they have higher fees than XRP.”
- Ripple also claimed that the SEC suit helped ether overtake XRP as the second most valuable digital asset after bitcoin. (It actually happened more than a year before the lawsuit.)
The debate highlights one of crypto’s key rivalries, although the relevance of some arguments has faded.
- Buterin’s 2020 tweet was from a time “when Chinese mining firms controlled the majority of the hashing power” for bitcoin and ether, Michael Fasanello, head of compliance for LVL, told Protocol. China has since cracked down on crypto mining.
- Schwartz’s proof-of-work dig may still apply to bitcoin, but not quite to ether, as the Ethereum blockchain makes its long-awaited Merge upgrade to a proof-of-stake system. (XRP uses a completely different consensus mechanism to confirm transactions.)
- Technical details aside, the argument illustrates how fierce the arguments are getting over three top crypto-tokens: bitcoin, ether and XRP.
Ripple’s legal battle with the SEC, which determines whether crypto tokens are securities, could have far-reaching consequences for the entire industry, including Ethereum. Crypto may be fast-growing and fast-moving, but some of the players have been at it for a while, and their rivalry could be long-lasting. This week’s Twitter spat between Schwartz and Buterin showed these simmering divisions.
—Benjamin Pimentel (e-mail | twitter)
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On the money
Is Apple Pay everywhere now? The debate unfolds in the media. The Wall Street Journal says Apple’s digital wallet is headed for ubiquity, counting the percentage of iPhone users and retailers ready to use it. But Pymnts says the tech giant still only facilitates a small percentage of transactions.
Crypto crash victims are fighting to get their money back. A group of people locked out of their accounts by the bankrupt Celsius organized a group chat and raised $100,000 to hire a lawyer to fight for them in bankruptcy court.
Bill.com’s share price got a boost from earnings. Wall Street investors liked that the firm more than doubled year-over-year revenue to $200 million and expects further growth next quarter.
Crypto.com is quietly laying off several employees. The crypto exchange had fired several hundred employees since it announced it was cutting about 260 jobs in June, according to The Verge.
The House Energy and Commerce Committee is scrutinizing crypto mining. Lawmakers on the committee sent letters to Core Scientific, Marathon Digital Holdings, Riot Blockchain and Stronghold Digital Mining seeking information about the environmental impact of their operations.
Tether has got a new accountant. The issuer of the world’s largest stablecoin changed the accounting firm that signs its attestation reports to BDO Italia. Tether has yet to provide the full revision of reserves it promised five years ago.
Crypto traders’ data bills go up. Stock and crypto price movements have become linked to the point that digital asset hedge funds have to consider paying for expensive data from exchanges and other traditional markets, so as not to trade in the dark.
Overheard
CFTC commissioner Christine Johnson sounds on the debate on crypto regulation. “It is to the benefit of market participants to know who their regulator is,” she told CoinDesk.
Real-time payments may not need a digital dollar, according to a top Fed official, since the upcoming FedNow system could meet those needs. “My expectation is that FedNow addresses the issues that some have raised about the need for a CBDC,” Federal Reserve Governor Michelle Bowman said at the VenCent Fintech Conference this week.
The diagram
The dramatic drop in crypto prices has led to a drop in criminal activity involving cryptocurrencies. Well, except in one area. Hackers have raked in more revenue by attacking vulnerable DeFi protocols and network bridges. Nearly $2 billion in cryptocurrency has been stolen in July, compared to just $1.2 billion in the same period last year, according to Chainalysis. The hacks include $190 million stolen from the Nomad bridge.
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Thanks for reading – see you on Monday!
