DECENTRALIZED: Recent Episodes
Lorraine Mutyaba
In this podcast, host Lorraine Mutyaba, a crypto enthusiast, demystifies the crypto space, sharing what she loves and hates about it, and what she’s learned about the crypto market since she was bitten by the bitcoin bug in 2013. Tune in to hear her discuss cryptocurrencies, crypto news and trends, market cycles, and interesting crypto projects and protocols. Disclosure: I hold some cryptocurrencies.
Episode Highlights
- Crypto does “present opportunities for the downright criminal” but those can be limited and law enforcement’s ability to tackle crypto crime has improved.
- In certain countries and among certain populations, crypto is an alternative to fiat––it is a store of value, used to conduct cross-border transfers, and serves as a medium of exchange.
- Most illicit crypto transactions involve centralized crypto entities or exchanges that lack strong know-your-customer (KYC) and anti-money laundering (AML) policies.
- The decentralized nature of the crypto space necessitates innovative approaches to combat illegal activities. However, its open nature could also limit criminal activity.
Helpful links
- https://decrypt.co/96822/bank-of-england-governor-bailey-sounds-alarm-on-crypto-scams
- https://www.reuters.com/markets/europe/deutsche-bank-263-mln-shareholder-settlement-over-epstein-russian-oligarch-ties-2022-09-23/
- https://beincrypto.com/tethers-2022-settlement-volume-flips-visa-and-mastercard/
- https://go.chainalysis.com/rs/503-FAP-074/images/Crypto-Crime-Report-2022.pdf
- https://www.bou.or.ug/bou/bouwebsite/bouwebsitecontent/MonetaryPolicy/Monetary_Policy_Statements/Monetary-Policy-Statement-for-February-2023.pdf
- https://www.reuters.com/business/argentinas-economic-crisis-whack-a-mole-goes-into-overdrive-2022-06-28/
- https://www.nytimes.com/2022/08/20/world/americas/argentina-cryptocurrency-value.html
Episode Highlights
Stable coins were created to provide stability to crypto assets by being pegged to a stable asset like the US dollar.
Stable coins are integral to the crypto space, and transactions involving them accounted for $1 trillion in 2022.
The failure of SVB caused the value of USDC, the second largest stable coin, to drop to $0.82 on certain protocols, as $ 3 billion of Circle's cash reserves were held by SVB, and only $250,000 was insured. This led to panic among USDC holders, which led to USDC’s drop in value.
Stable coins are subject to the vagaries of human nature and counterparty risks, and their success is dependent on the confidence people have in them.
There is a need for more robust stable coins, because their usage and adoption is based on their perceived stability.
Additional reading
- https://www.coindesk.com/learn/why-stablecoin-usdcs-unstable-weekend-matters/
- https://cointelegraph.com/news/usdc-depegged-but-it-s-not-going-to-default
Fiat-backed stable coins
- https://www.coindesk.com/learn/fiat-backed-stablecoins-what-you-need-to-know-about-tether-usd-coin-and-others/
- https://www.coindesk.com/learn/whats-the-point-of-stablecoins-understanding-why-they-exist/
Stable coin usage and adoption
- https://thedefiant.io/stablecoin-volume-hits-record-high-of-7-4t-in-2022
- https://www.bloomberg.com/news/articles/2022-05-29/moneygram-ceo-sees-a-future-in-stablecoin-remittances
Crypto-specific news websites
- Coinmarketcap: https://coinmarketcap.com
- Coindesk: https://www.coindesk.com
- Cointelegraph: https://cointelegraph.com
- The Block: https://www.theblock.co
- Decrypt: https://decrypt.co
Episode Highlights
Three US banks, Silvergate Bank, Signature Bank, and Silicon Valley Bank, failed days apart. Although all banks were crypto friendly, crypto was not to blame for their collapse. Bank runs, dwindling deposits, and losses sustained following the sale of long-date government bonds contributed significantly to their failure.
Other banks serving disparate customers have experienced similar headwinds. The number of banks willing to serve crypto banks has reduced.USDC and other stable coins lost their $1 peg following the collapse of SVB but have since recovered.
Additional reading
Collapse of SVB, Signature, and Silvergate
- https://www.theguardian.com/business/2023/mar/13/silicon-valley-bank-why-did-it-collapse-and-is-this-the-start-of-a-banking-crisis
- https://www.investopedia.com/signature-ny-real-estatefor-real-estate-7367631
- https://cointelegraph.com/news/silvergate-silicon-valley-bank-collapses-represent-a-big-challenge-for-crypto
https://www.reuters.com/technology/crypto-focused-bank-silvergate-plans-wind-down-operations-2023-03-08/
Stable coins depeg
- https://decrypt.co/123211/usdc-stablecoin-depegs-90-cents-circle-exposure-silicon-valley-bank
- https://www.coindesk.com/markets/2023/03/11/usdc-stablecoin-and-crypto-market-go-haywire-after-silicon-valley-bank-collapses/
- https://www.coindesk.com/business/2023/03/11/circle-confirms-33b-of-usdcs-cash-reserves-stuck-at-failed-silicon-valley-bank/
- https://www.coindesk.com/markets/2023/03/11/dai-depegs-as-stablecoin-rout-plagues-crypto/
Crypto-specific news websites
- Coinmarketcap: https://coinmarketcap.com
- Coindesk: https://www.coindesk.com
- Cointelegraph: https://cointelegraph.com
- The Block: https://www.theblock.co
- Decrypt: https://decrypt.co
SBF is awaiting trial after being indicted on eight counts, including securities fraud.
The prices of cryptocurrencies seem to be recovering from their 2022 lows. Tokens and coins associated with layer 2 solutions have outperformed Bitcoin and Ether over the last two months
There have been louder calls for crypto regulation. Japan’s stringent crypto regulation prevented the collapse of FTX Japan; as a result, FTX Japan’s users will be able to withdraw their crypto assets, unlike those of FTX.com
Crypto regulation should be thoughtful and not stifle innovation.
Additional reading
Link to newsletter
FTX, Genesis, and Gemini
- https://blockworks.co/news/new-ftx-ceo-says-exchange-commingled-assets
- https://www.coindesk.com/business/2023/01/20/genesis-global-files-for-bankruptcy-protection/
- https://www.reuters.com/business/finance/geminis-winklevoss-calls-removal-dcg-chief-barry-silbert-2023-01-10/
Crypto Regulation
- https://www.japantimes.co.jp/news/2023/01/04/business/tech/japan-crypto-2022-review-regulation-future/
- https://beincrypto.com/hong-kong-open-door-crypto-efforts-bitcoin-high/
- https://www.coindesk.com/policy/2022/08/19/south-africas-monetary-authority-greenlights-banks-to-serve-crypto-clients/
Crypto-specific news websites
- Coinmarketcap: https://coinmarketcap.com
- Coindesk: https://www.coindesk.com
- Cointelegraph: https://cointelegraph.com
- The Block: https://www.theblock.co
- Decrypt: https://decrypt.co
Episode Highlights
- Ethereum has transitioned to the more energy-efficient proof of stake consensus mechanism.
- This transition will lead to lower transaction fees, faster transactions, and a 99.5% reduction in energy consumed by the Ethereum network.
- FTX faced a liquidity crunch in November that eventually led to its collapse, as well as the collapse of its sister company Alameda Research.
- It appears FTX funneled funds, including user deposits, to Alameda Research to prop it up earlier this year as other centralized entities were failing.
- Centralized crypto entities have started publishing proof of reserves to reassure customers
- DeFi protocols have continued to work as programmed.
Helpful links
Ethereum Merge and Proof of Stake
- https://www.google.com/search?client=safari&rls=en&q=ethereum+merge&ie=UTF-8&oe=UTF-8
- https://www.coinbase.com/learn/crypto-basics/what-is-mining
- https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume
- https://www.nytimes.com/interactive/2021/09/03/climate/bitcoin-carbon-footprint-electricity.html
- https://ark-invest.com/articles/analyst-research/bitcoin-myths/
The FTX Collapse
- https://www.coindesk.com/ftx-news-coverage/
- https://www.coindesk.com/markets/2022/11/15/defi-protocols-are-winning-users-as-centralized-crypto-exchanges-suffer-ether-outflows/
Proof of Reserves and Centralized Exchange Transparency
- https://www.kraken.com/proof-of-reserves
- https://www.investopedia.com/proof-of-reserves-6830204
- https://niccarter.info/proof-of-reserves/
Episode Highlights
- It has been suggested that cryptocurrencies will never be adopted.
- BlackRock and Fidelity have given their clients direct and indirect exposure to Bitcoin.
- The number of crypto wallets has increased by more than 20 times since 2019.
- Cryptocurrencies, particularly stable coins, are seen as stores of value and a hedge against hyperinflation in sub-Saharan Africa
- Cryptocurrencies are being used to transfer value across borders, especially in countries with strict capital controls and across remittance corridors that are underserved.
Helpful links
BlackRock, Fidelity, and JPMorgan Chase
- https://decrypt.co/112499/fidelity-ethereum-trading-institutions
- https://www.investopedia.com/fidelity-to-launch-crypto-exchange-6665544
- https://www.coindesk.com/layer2/2022/08/18/the-blackrock-trust-crypto-legitimacy-or-the-beginning-of-the-end-for-bitcoin/
- https://qz.com/2072753/jamie-dimon-says-bitcoin-is-worthless-but-jpmorgan-will-sell-it
Cryptocurrency adoption
- https://blog.chainalysis.com/reports/sub-saharan-africa-cryptocurrency-geography-report-2022-preview/
- https://www.cryptovantage.com/news/tracking-crypto-adoption-is-hard-but-data-points-to-nearly-a-billion-users/
- https://www.coindesk.com/markets/2021/03/15/nigerians-turn-to-stablecoins-for-protection-against-inflation/
- https://techcrunch.com/2022/02/23/cryptocurrency-payments-key-to-lowering-cross-border-remittance-charges-and-boosting-microwork-uptake-in-africa-study-shows/
- https://africa.businessinsider.com/local/markets/7-worst-performing-african-currencies-in-2022/s5kqzk1
Episode Highlights
- Public Wi-Fi is not secure, for the most part. If you must use public Wi-fi, then consider downloading a VPN
- If you can, use a designated malware-free device for all crypto-related activities, and limit the amount of time that it is connected to Wi-Fi
- Bookmark all the crypto websites that you frequently visit, and always double- and triple-check their URLs before entering any login credentials
- Enable multiple-factor authentication for all accounts. The harder it is for you to log into your account, the harder it will be for a bad actor to do so as well.
- Backup all wallet recovery phrases, keys, and seed phrases, and 2fa recovery codes.
Helpful links
- https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html
- https://beincrypto.com/fake-crypto-exchanges-dupe-indians-128m-binance-investor-education/
- https://cointelegraph.com/news/fbi-issues-public-warning-over-fake-crypto-apps
Google Authenticator and Authy
- https://play.google.com/store/apps/details?id=com.google.android.apps.authenticator2&hl=en≷=US
- https://apps.apple.com/us/app/google-authenticator/id388497605
- https://authy.com
- https://coinmarketcap.com/alexandria/glossary/two-factor-authentication-2fa
Episode Highlights
- Crypto wallets give you access to your cryptoassets; they do not store your crypto
- Public addresses are derived from public keys, which are derived from private keys; crypto is sent to a public address, while private keys prove ownership of that crypto, allowing you to spend it
- Private keys should be kept safe and offline; moreover, they should be backed up
- There are pros and cons to using non-custodial and custodial (crypto exchange) wallets
- Your choice of non-custodial wallet depends on your investment strategy and whether you prioritize convenience or security
Helpful links
- Coinbase’s Terms of Service: https://www.coinbase.com/legal/user_agreement/united_states
- Celsius freezing withdrawals: https://www.coindesk.com/policy/2022/06/13/crypto-lending-service-celsius-pauses-withdrawals-citing-extreme-market-conditions/
- Voyager limiting withdrawals: https://www.coindesk.com/business/2022/06/23/voyager-digital-cuts-daily-withdrawal-limit-to-10k-amid-3ac-exposure/
- James Howells and the lost Bitcoins: https://www.newyorker.com/magazine/2021/12/13/half-a-billion-in-bitcoin-lost-in-the-dump
Select hot wallets
- https://www.myetherwallet.com
- https://mycrypto.com
- https://metamask.zendesk.com/hc/en-us
- https://trustwallet.com
- https://www.exodus.com
- https://www.coinomi.com/en/
Select cold wallets
- https://trezor.io
- https://www.ledger.com
Episode Highlights
- Peer-to-peer marketplaces are popular in Africa
- They give those who are unbanked access to the crypto economy
- They are fairly easy to use, offering a flexibility that you do not find on centralized exchanges
- Despite their merits, they have limitations
Helpful links
- https://qz.com/africa/2050735/kenyans-lead-the-world-in-peer-to-peer-crypto-trade/
- https://www.nasdaq.com/articles/kenyans-can-now-buy-and-sell-crypto-through-paxfuls-p2p-marketplace-2020-12-10
Peer-to-peer marketplaces
- Paxful: https://paxful.com
- LocalBitcoins: https://localbitcoins.com
- Binance Marketplace: https://p2p.binance.com/en
Episode Highlights
Centralized exchanges facilitate the buying and selling of crypto
Signing up for an account on an exchange is fairly straightforward
Always do your due diligence before you sign up for an account; in particular, read the terms of service.
Funding a crypto account can sometimes be convoluted.
There are various exchanges that Ugandans can use.
Helpful links
Exchanges
- Binance: https://www.binance.com/en
- Kraken: https://www.kraken.com
- Coinbase: https://www.coinbase.com
- Kucoin: https://www.kucoin.com
- Bitstamp: https://www.bitstamp.net
- Gemini: https://www.gemini.com
Exchange hacks
Mt Gox hack 2014: https://www.investopedia.com/terms/m/mt-gox.asp
Binance hack 2019: https://www.coindesk.com/markets/2019/05/07/hackers-steal-407-million-in-bitcoin-from-crypto-exchange-binance/
Terms of service
Coinbase terms of service: https://africa.businessinsider.com/tech-insider/coinbase-warns-users-could-lose-their-crypto-holdings-if-the-company-goes-bankrupt/r6bs75w
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/89c60d81-41a2-4a3c-86fb-b4067ab1016c.pdf
Highlights
- FUD (Fear, Uncertainty, and Doubt) is not always FUD.
- There is no substitute to doing your own due diligence in the crypto space.
- Always invest what you are prepared to lose.
Additional reading
- Taiwan bans credit card cryptocurrency purchases: https://www.coindesk.com/policy/2022/07/22/taiwan-set-to-ban-crypto-purchases-using-credit-cards-report/
- Deloitte survey: http://uk.businessinsider.com/deloitte-study-91-percent-agree-terms-of-service-without-reading-2017-11
- Celsius Terms of Service: https://fortune.com/2022/06/14/celsius-network-terms-of-use-bankruptcy-digital-assets-deposit-insurance-fdic/
- Celsius “FUD”: https://www.coindesk.com/business/2020/07/28/what-crypto-lender-celsius-isnt-telling-its-depositors/
- Terra/UST “FUD”: https://www.bloomberg.com/news/articles/2022-05-15/luna-crash-this-crypto-insider-warned-of-terra-ust-s-collapse?sref=zVYYYI5e
- 3AC:https://cointelegraph.com/news/3ac-founders-reveal-ties-to-terra-founder-blame-overconfidence-for-collapse
Some crypto-specific news websites
- Coindesk: https://www.coindesk.com
- Cointelegraph: https://cointelegraph.com
- The Block: https://www.theblock.co
- Decrypt: https://decrypt.co
Episode Highlights
Macro conditions have not spared the crypto markets.
The implosion of UST/LUNA, and crises in the centralized crypto lending space have further shaken investor confidence.
Regulation might be needed to protect crypto lending firms from themselves and to protect investors
Retail investors need to protect themselves as well.
Episode Links:
Bloomberg: https://www.bloomberg.com/news/articles/2022-05-20/outflows-hit-every-asset-as-bofa-signal-flashes-buy-for-stocks
Celsius:
https://www.coindesk.com/business/2022/06/16/how-crypto-lender-celsius-overheated/
https://decrypt.co/104698/celsius-lost-390m-client-funds-from-high-risk-levered-trading-arkham-report
Vauld: https://www.coindesk.com/business/2022/07/04/lending-platform-vauld-looks-to-restructure-amid-crypto-downturn-suspends-transactions/
3AC:
https://cointelegraph.com/news/three-arrows-capital-has-failed-to-meet-margin-calls-report
https://www.theblock.co/post/155578/three-arrows-capital-files-for-chapter-15-bankruptcy-in-new-york
Exposure to 3AC
Blockfi: https://blockfi.com/a-message-from-our-founders-july-2022
Voyager: https://www.newswire.ca/news-releases/voyager-digital-provides-market-update-825686912.html
Genesis:https://cointelegraph.com/news/genesis-trading-ceo-confirms-3ac-exposure-parent-company-helps-plug-losses
Blockchain.com: https://www.coindesk.com/business/2022/07/08/crypto-exchange-blockchaincom-faces-250m-hit-on-loans-to-three-arrows-capital/
The crypto space is imperfect and ever-evolving, with tremendous potential There is more to crypto than Bitcoin, Ethereum, and Dogecoin. Approximately 97% of the cryptocurrencies listed on Coinmarketcap are vaporware DeFi, Web3.0, the Metaverse, and crypto infrastructure are the crypto sectors seeing the most development
Episode Links
Coinmarketcap: https://coinmarketcap.com
Satoshi Nakamoto ‘s Bitcoin whitepaper: https://www.google.com/search?client=safari&rls=en&q=bitcoin+whitepaper&ie=UTF-8&oe=UTF-8
Further Reading
DeFi: https://www.coindesk.com/learn/what-is-defi/
Metaverse: https://www.coindesk.com/learn/everything-you-always-wanted-to-know-about-the-metaverse-but-were-afraid-to-ask/
Web3.0: https://coinmarketcap.com/alexandria/article/what-is-web-3-0