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📈 PoW Lives On (in Europe)

  • March 15, 2022

Good morning! This is your Tuesday edition of Crypto Dispatch. Thanks for opening us!

How secure are your NFTs? If you responded “not very,” you’re not alone. A new survey of 1008 people by PrivacyHQ found that over 50% have lost access to a NFT they owned. Two-thirds of those surveyed said they had “panic sold” a digital asset, and nine out of ten had been victims of a NFT scam, like Todd Kramer, who lost US$2.3 million worth of Bored Apes. 

For an industry that generated almost US$18 billion in 2021, that’s a lot of collateral to be left vulnerable. So what steps can you take to protect your artsy investment?   

“You should have a burner wallet when you’re minting, have a cold wallet for storage of your NFTs, and you should be aware of phishing attacks,” according to Justin Kan, co-founder of Fractal, a NFT gaming marketplace.

In today’s edition:

🇪🇺EU votes against PoW ban

🦍 BAYC and CryptoPunks merge

EU says PoW A-OK

The European Parliament has voted against a legal framework that would have seen restrictions applied to cryptocurrencies mined through energy-intensive Proof of Work (PoW) processes on the blockchain, most notably, Bitcoin.

What happened: Yesterday, members of the economic and monetary affairs committee struck down the provision to ban PoW mining across all 27 member nations in a vote of 32-24. 

  • The EU’s Markets in Crypto-Assets (MiCA) framework is a regulatory package governing cryptocurrencies and other digital assets. 
  • Lawmakers approved a version of the regulation that does not limit PoW mining, something critics have called for to reduce emissions that contribute to climate change.
  • Stefan Berger, an EU parliament member, tweeted that this vote was a step towards paving “the way for future-oriented crypto regulation.”

The package approved by lawmakers had as its top priority “ensuring that the EU financial services regulatory framework is innovation-friendly and does not pose obstacles to the application of new technologies.”

PoW vs PoS: Proof of Work (POW) uses a large amount of computing power to create a “new” block to validate transactions. This process is used by Bitcoin and Ethereum, two apex cryptocurrencies. 

Proof of Stake (PoS) employs a network of “validators” who stake their crypto for the chance to validate a new transaction, add to the blockchain, and earn more crypto. Solana, Cardano and the ETH2 blockchain all employ PoS.

Why it matters: This vote was very close, highlighting the growing debate surrounding the regulation of cryptocurrencies and environmental impacts of mining, particularly in Europe where environmental sustainability is a “key sticking point” to crypto adoption.

  • Bitcoin mining has been pushing its way further into renewable energies because it is more cost-effective and looks good from an ecological standpoint. Still, it seems nearly impossible to transition Bitcoin to a PoS model.
  • The approved draft of the EU’s regulation says that crypto assets “shall be subject to minimum environmental sustainability standards with respect to their consensus mechanism used for validating transactions.”

Apes + Punks Unite

Yuga Labs, creator of the Bored Ape Yacht Club NFT collection, has purchased the intellectual property of CryptoPunks maker and former rival Larva Labs for an undisclosed sum.

What happened: The purchase includes the intellectual property of the CryptoPunks and Meebits NFTs, giving Yuga Labs control of three of the most valuable NFT collections, together worth roughly $3.5 billion. The acquisition follows talks with venture capital firm Andreesen Horowitz last month.

  • Yuga Labs said its first move will be to “transfer IP, commercial, and exclusive licensing rights to individual NFT holders,” as they have done with BAYC ownership.
  • Larva Labs has come under fire for its reluctance to grant NFT holders any commercial ownership, leading one high-profile holder to cash out his collection for US$10 million over an IP dispute.
  • “Our personalities and skillsets aren’t well suited to community management, public relations, and the day-to-day management that these kinds of projects require and deserve,” Larva Labs tweeted after the sale, explaining why Yuga would make a better steward of the projects. 

Why it matters: The NFT market has taken a downturn lately, with trading volumes cooling off and sales numbers cut in half. But Yuga Labs hopes that their “social club” strategy will help them weather the storm and continue to pull in celebrity buyers (like Justin Beiber, who dropped $1.3 million on Bored Ape #3001, paying a 300% markup).

  • Yuga now plans to branch out from the NFT space into gaming, events, branded clothing, and whatever else they can slap a Bored Ape or CryptoPunk on. “It’s just a matter of figuring out and extending that utility to these new IPs,” co-founder Wylie Aronow said.
  • The floor price of BAYC surged 25% less than a day after the purchase was announced.

Bits & Blocks

Bryce Paul, co-author of Crypto Revolution, is inviting you to The LIVE Crypto Forecast. Join Bryce for a live and unscripted market breakdown of the hottest trends! Click here to register.*

Elon Musk and Michael Saylor had an interesting exchange via Twitter on inflation, with Musk offering suggestions on where us non-billionaires should store our savings to hedge against inflation. He mentioned homeownership, and I feel very attacked.

Jack Dorsey’s payments company Block will use fingerprint ID for its newest crypto wallet design as an alternative to a passphrase or key.

Mila Kunis’s new show “The Gimmicks” will let NFT owners determine the plot of the show and character arcs. The show is Kunis’ second web3 project. 

A Massachusetts man has been sentenced to 8 years in prison and ordered to forfeit over US$2 million in Bitcoin after he was found guilty of selling drugs for crypto on his darknet market “EastSideHigh.”

A Michelin star chef in Malta has begun accepting Bitcoin as payment.

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