Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies. | | Heal the world … with blockchains? It’s possible, the World Economic Forum argues in an optimistic new study. The report lays out 65 “existing and emerging use cases” for which blockchains could be used to address environmental problems, from natural disasters to water scarcity and of course, climate change. Concepts like peer-to-peer energy trading could make power grids more efficient and resilient, while decentralized systems would help disseminate critical information in the aftermath of a disaster. As for curbing greenhouse gas emissions? “Tokenized” carbon credits can help with that.
The WEF could be right. But let’s be real: as the report admits, most of these use cases are only concepts or pilots. Blockchain networks can also pose an environmental problem in their own right—the most popular ones use as much electricity as a small nation due to the the process, called proof-of-work, that participants use to reach a consensus that the information in their shared ledger is accurate.
More energy-efficient consensus mechanisms may emerge and find success at a large scale. But the technical obstacles to that cannot be glossed over. Challenges related to scalability and environmental sustainability might be overcome by turning to blockchain networks that require participants to identify themselves. That cuts the cost of convincing the rest of the network to trust them (though many would argue that such a structure undermines the very idea of a blockchain). Whatever the path forward, blockchain networks must address their own environmental challenges before they can address the planet’s. | | For Tezos, it’s time to shake and bake. A poster child of the ICO craze has finally taken off the training wheels. Tezos, which raised $232 million in one of the first shockingly large token sales in 2017, has officially launched its “self-amending crypto-ledger” after a short beta period—and to say it has a lot to prove is an understatement.
Given all the backroom drama and lawsuits that have beset the project, it’s easy to forget that it set out to realize fundamental innovations in blockchain consensus and governance. Now it will serve as testbed for least two innovative concepts: an emerging consensus mechanism called delegated proof-of-stake, and an approach to blockchain governance that lets investors use their tokens to propose and vote on changes to the protocol.
Instead of miners, Tezos’s validators are called “bakers,” or individuals who “stake” their tokens in return for the right to add new blocks to the chain. In theory, the approach can be faster and more efficient than proof-of-work. Another hypothesis is that Tezos governance model will create an incentive for the token holders to participate in making the protocol better, since that should make the value of the tokens rise. Now we’re about to find out whether these theories translate to the real world—and whether Tezos can be anything more than a poster child for irrational exuberance. | | Loose Change Fill your pockets with these newsy tidbits. | | | FOAM, a much anticipated Ethereum-based alternative to centralized location services that uses radio beacons and smart contracts, has launched. (CoinDesk) | | | | Mario Draghi, president of the European Central Bank, says the ECB has no plan to issue a digital currency, since cash use is still high in the euro zone and blockchains still “require substantial further development.” (Reuters) | | | | Despite the bear market, new crypto hedge funds keep launching and established ones continue to expand. (Bloomberg) | | | | Cryptojacking malware has been found on hundreds of government computers in India. (Crowdfund Insider). | | | | Brave, the maker of a privacy-focused web browser that rewards users with crypto-tokens, is suing Google for allegedly violating the EU’s new online privacy rules. (CoinDesk) | | | The Money Quote “When we saw the market begin to correct, which we all expected, institutions didn't lose interest. It was exactly the opposite.” —Adam White, general manager of Coinbase Institutional, to CoinDesk. Coinbase is planning to hire more than 100 new employees for its division focused on institutional investors like hedge funds and family offices. | | | |
