ProBit Bits — ProBit Global’s Weekly Blockchain Bits Vol. 17
How Ethereum’s The Merge could improve crypto payments and lead to a chain split top ProBit Global’s Weekly Blockchain Bits this edition
The Merge to improve crypto payments
Ethereum co-founder, Vitalik Buterin, last week said he is confident that cryptocurrency payment will become mainstream once their network becomes cheaper. He told the audience at the Korea Blockchain Week 2022 that Ethereum will also be more accessible to a broader user base.
With the Merge upgrade, transaction fees would be cut to as low as $0.05 or lesser, as “rollup” combines a bunch of transactions into one. Greater access to crypto transactions will make blockchain affordable to many as people in lower-income countries won’t have to “pay five hours’ worth of salary” for a transaction.
inflation due to ineffective financial systems and not being well-connected to developed countries’ economies make these countries suffer. However, many opportunities lie ahead for crypto payments, he said. The week saw ETH break through $2,000 since May 2022.
Proposed contentious Ethereum split continues to generate rancor
Starting with exchanges, Huobi says it does not encourage forks “with no tangible innovation and improvement” and opposes “any form of pre-mining behaviors” but would support the planned ETH forked assets provided they meet certain security requirements.
These include the implementation of two-way replay protection; the new chain not being covered or eliminated; and the official client software passing the public test and evaluation.
MEXC exchange says ETH holders would be able to swap into the two “potential forked” tokens: ETHS and ETHW at a 1:1 ratio.
ETHPOW supporters plan to abolish EIP-1599
While yet to be confirmed, ETHPOW proponents (mainly miners) have announced their plan to abolish the EIP-1559 once a new chain is forked. In “An Open Letter to the Ethereum Community”, they note that introducing the proposal that changed the transaction fee mechanism and burns the base fee that must be paid was unjustified.
They see EIP-1559 as “an attempt to create a bullish narrative at the expense of the miners.” Whereas, they argue that miners ought to be seen as a political force with some influence rather than all powers being “dangerously centralized” by the Ethereum Foundation.
EIP1559 has so far made it possible for up to 2.588m ETH to have been burned. The most ETH-burning behavior is found in ETH transfers (238,796 ETH as of the time of writing) while Opensea, Uniswap V2, and USDT follow.
ETC Cooperative sent an open letter to Chandler Guo
Chandler Guo, one of the main advocates for ETHPOW has been sent a letter from the Ethereum Classic (ETC) camp. The ETC Cooperative stated unequivocally that an Ethereum POW fork won’t work and will be an awfully hard thing to do. They cite codebases that will need to have the POS transition logic removed, difficulty bomb disabled, and Chain ID updated to provide replay protection. They also mentioned that mining software would have to be likely forked.
Rather, they suggest — like several industry players have said — that ETH miners should move to ETC to maximize their revenue long-term. With the looming split, Ethereum miners would end in either of two camps in a post-merge world:
There are the ETHPOW proponents (comprises mostly Chinese miners) who want to fork Ethereum to maintain a proof-of-work chain and the others from the group that will migrate to other blockchains like ETC.
Tornado Cash sanctioned as a mixer
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) last week sanctioned crypto mixer Tornado Cash.
They claim the platform has been used to launder over $7 billion worth of crypto since 2019 including over $455 million stolen by North Korea-sponsored Lazarus Group. All property and interests in property of Tornado Cash in the US or in the possession or control of US persons are blocked. Any entities that are owned, directly or indirectly, 50% or more by one or more blocked persons are also blocked.
As a result, OFAC has reportedly added Tornado Cash’s website http://tornado.cash, 39 ETH addresses, and six USDC addresses to its Specially Designated Nationals and Blocked Persons list.
Around the same time, Dutch Fiscal Information and Investigation Service arrested a 29-year-old suspected developer of Tornado Cash on August 10 in Amsterdam. Cypherhunter claims the man arrested is Alexey Pertsev, the CEO of Tornado investor PepperSec and a member of the Tornado Cash team. While EU citizens are not impacted by the US sanctions on Tornado Cash, a justification for using mixers might be required under the upcoming EU regulation in 2024 or flagged as high-risk transactions.
Iran makes its first import trade payment using cryptos
The past week saw the Vice Minister of Industry, Mine and Trade, and President of Iran Trade Promotion Organization, Alireza Peymanpak, writes that Iran made its first official order of imports worth $10 million with cryptocurrencies. A loose translation of his tweet states that by the end of September, the use of cryptocurrencies and smart contracts will be widely used in foreign trade with target countries.
Public Bitcoin miners sold more than mined as bear market summer continues
Public miners sold more Bitcoin in July than they mined, Luxor Mining which provides crypto mining data showed last week. The miners, it says, collectively have sold more Bitcoin than they mined in the month: 5,767.9 BTC sold vs. 3,478 BTC mined going by their July production updates released a week earlier.
It notes that the miners’ oversell is seen as a hallmark of the bear market summer.
Aside from Riot which sold less, Bitfarm, Hive, Argo, Cleanspark, and Core Scientific sold more BTC than they mined. Luxor showed that Hut 8 and Marathon were the two miners that didn’t sell while Greenidge and DMG Blockchain had not reported their July numbers at the time of its publication.