Shitcoins

Source

What caught my eye in Olga Kharif's Crypto Delistings From Exchanges Are Already Running at a Record Pace This Year was this:

Trading volume on most exchanges has plummeted in the past year, even as the number of coins has continued to multiply, with more than 1.8 million tokens listed on centralized and decentralized exchanges.

Kharif reported on the collapse of trading volume earlier in Coinbase’s Quarterly Crypto Trading Volume Likely Lowest Since Before Public Debut:

The largest US digital-asset platform registered about $76 billion in spot trading volume, a drop of 52% from the year-ago period, according to data compiled by researcher CCData. The tally is also likely the least since before the company’s much ballyhooed direct listing on the Nasdaq Stock Market in April 2021, or just months before prices of cryptocurrencies peaked.

Thus what caught my eye wasn't the drop in trading volume, it was "more than 1.8 million tokens"! Below the fold I ask how this could possibly make sense.

Elon Musk: Threat or Menace Part 3

Source

I started writing about the danger to innocent road users, pedestrians and first responders caused by Elon Musk lying about the capabilities of his buggy Level 2 driver assistance technologies (Autopilot and FullFake Self Driving) two-and-a-half years ago and followed up with two more posts. I have personally been involved in a near-accident caused by a Tesla randomly stopping for no reason on the Dumbarton Bridge.

The reason for yet another post in the series is that Trisha Thadani, Rachel Lerman, Imogen Piper, Faiz Siddiqui and Irfan Uraizee of the Washington Post have published an extraordinarily detailed forensic analysis of the first widely-publicized fatal Autopilot crash in The final 11 seconds of a fatal Tesla Autopilot crash. This was the crash in which Autopilot failed to see a semi-trailer stopped across its path and decapitated the driver.

Below the fold I comment on the details their analysis reveals.

The Invisible Hand Of The Market

In Not "Sufficiently Decentralized I explained how the SEC's William Hinman kneecapped his agency's ability to regulate Bitcoin and Ethereum, handing the baton to the CFTC. Matt Levine explains the result:

The regulatory situation in the US is that there are exchange-traded funds that allow people to speculate on Bitcoin (and Ether), but those funds hold Bitcoin (or Ether) futures, not actual Bitcoins. The US Securities and Exchange Commission has, so far, declined to approve spot Bitcoin ETFs (funds that just hold Bitcoins). It has said that this is because the spot Bitcoin market is largely unregulated and so there is a risk of manipulation, whereas Bitcoin futures trade on regulated US exchanges and so are safer. This has always struck me as incoherent (manipulating the spot market also manipulates the futures), and in August a federal appeals court ruled that it was “arbitrary and capricious,” which probably means that the SEC will have to approve spot Bitcoin ETFs pretty soon.

Below the fold I discuss an $80M demonstration of the "risk of manipulation".

Not "Suffficiently Decentralized"

Mining power 25 June 2018

Perhaps the most consequential result of the tsunami of Blockchain Gaslighting ocurred on 14^th June 2018 when William Hinman, the Director of the SEC's Division of Corporate Finance gave a speech to the Yahoo Finance All Markets Summit: Crypto entitled Digital Asset Transactions: When Howey Met Gary (Plastic). In it he hamstrung his own agency's ability to regulate the two most important cryptocurrencies by saying (my emphasis):

when I look at Bitcoin today, I do not see a central third party whose efforts are a key determining factor in the enterprise. The network on which Bitcoin functions is operational and appears to have been decentralized for some time, perhaps from inception. Applying the disclosure regime of the federal securities laws to the offer and resale of Bitcoin would seem to add little value.[9] And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value. Over time, there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required.

Follow me below the fold for both the evidence that Hinman was talking though his hat, and also yet another update on the theme of my Brief Remarks to IOSCO DeFi WG, that successful systems claiming to be decentralized, like Bitcoin and Ethereum, aren't.

The Oracle Problem

Source

If you read Molly White's timeline of cryptocurrency catastrophes Web3 is Going Just Great you will notice that many of the more expensive disasters are tagged "oracle manipulation" attacks. Last March, Chainalysis posted Oracle manipulation attacks rising: a unique concern for DeFi in which they wrote:

Overall, we estimate that in 2022, DeFi protocols lost $403.2 million in 41 separate oracle manipulation attacks.

What are oracles and how can manipulating them earn an average of $1.1M/day? Below the fold I attempt an explanation.

LOCKSS Program Turns 25

Happy 25^th Birthday LOCKSS! The fifteen-year retrospective is here, and the twenty-year one is here, in which I wrote:

Thanks again to the NSF, Sun Microsystems, and the Andrew W. Mellon Foundation for the funding that allowed us to develop the system. Many thanks to the steadfast support of the libraries of the LOCKSS Alliance, and the libraries and publishers of the CLOCKSS Archive, that has sustained it in production. Special thanks to Don Waters for facilitating the program's evolution off grant funding, and to Margaret Kim for the original tortoise logo.

Now for some more gratuitous self-promotion. This means:

• I started work on decentralized, permissionless peer-to-peer systems a quarter of a century ago.
• It is two decades since we were awarded an SOSP "Best Paper" for Preserving peer replicas by rate-limited sampled voting.
• Next month it will be a decade since my first post on cryptocurrencies, The Bitcoin vulnerability.
• It is five years since I posted Bitcoin's Academic Pedigree, based on the paper by Arvind Narayanan and Jeremy Clark, showing that all the techniques Satoshi Nakamoto assembled to create Bitcoin were published between 43 and 31 years ago now.