Here is the Perfect Cryptocurrency!

Many people have asked me in the past what the perfect cryptocurrency is. My usual answer is that it doesn’t exist yet. There are of course many projects striving towards that goal. That said, nothing can ever be defined as “perfect,” as that would imply that it couldn’t be improved.

Yet, I still get this question persistently. So, it got me thinking…

What would be the “ideal” cryptocurrency? How would it look and how would the protocol be designed? What would the team look like and what utility would it provide? And, most importantly, how would it go about solving the “blockchain trilemma?”

So, the team here and I put our heads together and came up with some of the most important characteristics this idealistic cryptocurrency would have. You can also view this as a bit of a checklist to see how well some of the current cryptocurrencies out there stack up.

Of course, they won’t have all of the characteristics we identified, but that isn’t to say their developers can’t improve and build out their protocols and ecosystems to the point at which they do. Let’s hope they keep striving.

You can watch that video here.

📊 My Personal Portfolio 📊

ETH 42.35% | BTC 30.63% | SOL 5.08% | DOT 4.30% | USDC 4.03% | ATOM 3.41% | RUNE 1.78% | NEAR 1.56% | ADA 1.36% | MATIC 1.33% | STETH 1.27% | HNT 0.92% | FTM 0.83% | LINK 0.61% | INJ 0.53%

📈 Thoughts on Market 📈

Wow, just wow. It has been a phenomenal week for the crypto market, and it’s all thanks to the abnormally low CPI print for July that came out on Wednesday. Investors were expecting it to come in much hotter, and the fact it came in cooler suggests the Fed will not raise interest rates as aggressively when it comes back in September. Funnily enough, it looks like the Fed will still be coming in with a big rate hike, but it looks like investors don’t mind!

Another thing that happened on Wednesday was Ethereum’s final testnet in preparation for the merge which, if you haven’t noticed, went pretty damn well. As many of you will know by now, Ethereum’s upcoming transition to proof of stake is why ETH has been leading the recent recovery rally. What some of you may not know is that Ethereum developers moved up the date for the merge from the 19th of September to the 15th. Naturally, ETH rallied.

This has many wondering just how high ETH could go, and it looks like the range to be on the lookout for is 2.5-3.5k, as this is where there’s lots of resistance on ETH’s weekly chart. This is consistent with BTC’s price action, as BTC could rise as high as 35k in the coming weeks. Given that ETH has been gaining against BTC for over 2 years and is on the brink of a breakout, a 0.1 BTC per ETH would work out to an ETH price of, you guessed it, 3.5k.

Now, as impressive as these theoretical gains are, they’re actually not all that big in percentage terms. For ETH to go from 2k to 3.5k wouldn’t even be a 2x, which is why investors are starting to pay close attention to other cryptos that could rally more because of the merge. Ethereum Classic’s ETC is one many have their eye on, but the thing is there may be another PoW fork which could steal ETC’s thunder and rally even harder.

Another crypto that’s been appearing on these lists is Lido Finance’s LDO, which is another logical choice because Lido Finance’s purpose is to make liquid staking on Ethereum 2.0 possible. As it so happens, Coinbase CFO Alesia Haas recently noted that institutional staking won’t achieve mass adoption unless liquid staking is available. This is bullish for LDO post merge, and even in general, as it provides liquid staking for other cryptos besides ETH.

Some other cryptos that people believe will pump because of the merge are all tokens associated with Ethereum’s leading layer 2 scaling solutions. The top contender in this category seems to be Optimism’s OP, which has actually been hitting new all-time highs recently. The medium sized market caps of OP, LDO, and to a lesser extent, ETC, means all of them could in fact perform better than ETH in percentage terms thanks to the merge.

If you’re looking for moonshots however, it looks like the place to go is probably on Ethereum’s layer 2 ecosystems, especially those up-and-coming layer 2s. The logic there is that ETH hype will result in L2 speculation, which will lead to interest in L2 ecosystems, and a portion of that L2 speculation will find its way into micro caps that you’ve never even heard of which will pump by 10x or more. It’s already happening - DYOR!

Also be aware that we are still very much in a bear market. I know this recovery rally looks like the start of another bull market, but pay attention to other indicators besides price. Crypto search trends are at yearly lows. Europe will likely enter a deep recession in the winter, as a result of insanely high energy prices. Last but not least, the Fed will definitely continue raising interest rates because inflation is still running too hot for anyone’s comfort.

When will the recovery rally come crashing down you ask? Well, I have a bad feeling about Ethereum’s next fork, which is scheduled for the 6th of September. This is probably just the PTSD I got from watching ADA top out shortly before the roll-out of Cardano’s smart contracts last September, when the project’s concurrency challenges were revealed. Similarly, if there are any bugs or issues with Ethereum’s upcoming fork, the merge could be delayed last minute.

Assuming Ethereum’s final hard fork goes smoothly, there’s still a cloud of regulatory uncertainty hanging over the crypto industry. It seems everyone forgot about that stablecoin bill that was pushed back to September, and it seems everyone missed the recent headline about Iran planning to use crypto payments to evade sanctions at the end of September. A very timely announcement given everything that’s been going on with Tornado Cash.

Speaking of which…

Sanctioning Free Speech ❌

This week, we got the news that the US treasury was placing sanctions on the Tornado Cash smart contract and funds. I gave an overview of this in a video that I did earlier this week. This is arguably one of the biggest attacks to date on crypto privacy. But what’s most interesting about these actions are the legal questions they raise.

This is the first time in history that the US government is effectively sanctioning a tool. Not only that, but it's sanctioning an open-source tool that is free for anyone to use. Apart from being highly impractical to enforce, it’s opened up a number of questions around free speech.

Firstly, given that Tornado Cash is a smart contract, it’s effectively a bunch of code. And, as we have seen in a landmark case of Bernstein vs. the DOJ, code has been established as free speech. What that means is that, by restricting this code, the treasury could effectively be trampling on the first amendment. It also doesn’t help that GitHub effectively deplatformed the code, as well as the accounts of all the contributors.

One has to wonder whether there will be legal challenges to this. Of course, these could take years to play out and, until that time, the law stands. There are already a number of services and platforms that have effectively blacklisted the TC smart contract. Stablecoins have frozen funds, RPC providers have restricted access, dapps have done the same.

Then there are the broader practical implications of this. I came across this really interesting thread the other day which made the argument that code like the Tornado Cash smart contract is a public good. Because it’s open-source, anyone can use it. This would mean that by restricting the use of the tool, you are effectively restricting the use of a public good based on the fact that others use it for illicit purposes.

That would be akin to banning roads because drug dealers drive on them, or parks because drug deals are done in them. It would be like banning the TCP-IP protocol because hackers use it. You effectively destroy all legitimate use of that public good in order to stop some illicit use.

But, like I said in my Twitter thread on the matter, you can’t stop criminals from using the smart contract just because you have made it illegal. They are criminals and hence have no consideration for the law. They will just copy over that smart contract code and continue in their endeavours. It’s the law abiding citizens that now have to clean up the mess.

We can all agree that there is a need to arrest and prosecute those who launder funds and steal in cyberspace. And, the treasury has in the past sanctioned the wallets of known North Korean hacking groups. This is a lot more surgical and just. It takes down the perpetrators and has limited collateral damage. Yes, when the hackers use tools like TC they make it harder to track, but there are some highly sophisticated firms that have developed tools which have been increasingly successful at untangling mixing services.

But alas, they wanted to make a statement on mixers and they have. Some in the no-coiner community will view this as a win for the Treasury. But, for those in the crypto space who value their privacy, it’s a loss of freedom. It’s also particularly troubling that the authorities are also going after those who wrote the open-source code.

I hope to be doing a complete video on this topic in the coming week - so keep a look out for that.

💸 CBDCs Being Rushed Out 💸

Whenever something unprecedented happens, I often find myself asking that curious question ‘why now?’. Why does it seem like countries around the world, be it Uzbekistan or the Philippines, are taking steps to crack down on the crypto industry?

I find it hard to believe that they care about their citizens losing money. Never mind that the politicians in many of these countries can be easily lobbied into submission by crypto companies and projects.

This tells me there must be a reason that’s bigger than money that’s at stake in these countries, and if you think about it, the only thing bigger than money is… control. Although the governments of many developed countries are still in control, governments in countries like Argentina and Turkey are quickly losing it. Specifically, these governments are losing control because their national currencies are crumbling; losing value by the day.

All this inflation has the citizens of such countries looking for alternatives, and it looks like the number-one alternative is dollar-denominated stablecoins like Tether’s USDT and Circle’s USDC. The availability of these stablecoins is basically guaranteed to undermine any efforts by these governments to get their national currencies back under control. This means there’s only one other option, and that’s to ban crypto payments, as Russia recently did.

Banning crypto payments is not nearly enough, however. As we’ve seen in countries like China, even an all-out ban isn’t enough to stop crypto. Banning crypto payments also doesn’t address the underlying cause of a citizen’s crypto or stablecoin obsession, which is of course inflation. This means there’s only one solution, and that’s to take total control of all transactions in the economy using central bank digital currencies or CBDCs.

Over the last couple of weeks, I’ve noticed an uncanny amount of headlines about CBDCs being rapidly researched and developed in multiple countries, including Australia and Russia. This is significant because institutions like the Bank for International Settlements or BIS and its member central banks have claimed in many reports that CBDCs were years, in some cases decades, away. This doesn’t seem to be the case, and that’s very concerning.

It’s also not very surprising, because I don’t imagine any government would advertise just how advanced its CBDC technology is, nor how far along it is in its development. Besides opening themselves up to cyber attacks from hostile countries, it would probably accelerate the adoption of cryptocurrencies. This is because CBDCs are incredibly dystopian, to the point that even journalists attending the BIS’s press conferences were opposed.

But back to the CBDC timelines. What was supposed to take years now seems to be months away, with countries like India and Thailand expected to roll out their CBDCs as soon as the end of this year. Call me crazy, but I think this means we will see even more crypto crack-downs in these regions, followed by crypto bans which, again, won’t work to completely eliminate crypto, but they will almost certainly crash the crypto market and stall adoption.

And to think that this is just one of many reasons why the current recovery rally is unlikely to last…

🔥 Deal of The Week 🔥

This summer is crazy hot! If you are feeling the heat and wanting to look fly for a crypto guy, then our latest summer merch drop is for you. Highlights include…

Remember, proceeds from store sales go towards improving the content on the channel. That makes buying merch a great way to support our work in crypto education.

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🔮 Video Pipeline 🔮

  • Solana Update: Is SOL Undervalued?
  • PoW vs. PoS, According to Kraken
  • How To Survive The Great Reset?

🏆 What's New At This Week? 🏆

Curve Finance Review: Is Curve the Backbone of DeFi?

What is a Layer 1 Blockchain Protocol?

Crypto Rug Pulls: How To AVOID Them and Keep SAFE!

That’s all for now. However, the whole team at Coin Bureau would like to give you a big thank you for continuing to support our work in crypto education. We know we are so fortunate to do what we love full time and that’s all thanks to you!

Guy your crypto guy

Guy Turner

Guy is one of the founding members and face of the Coin Bureau. Like many of us, he is just an average joe who became “crypto curious” back in 2013. After recognising the potential of blockchain technology, Guy set off on a mission to create crypto educational content, working with others to start the Coin Bureau website and released our first video on YouTube in 2019. You can learn more about him in his Who is Guy? blogpost.

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