Bitcoin Takes A Breather

Facebook’s David Marcus Leaves Novi Crypto Wallet

David Marcus, the executive who co-founded Facebook’s cryptocurrency project, Diem, announced he will depart the company at the end of December. His departure follows the company’s failed attempt to launch a cryptocurrency that could be used to send money overseas using Facebook products.

“While there’s still so much to do right on the heels of launching Novi — and I remain as passionate as ever about the need for change in our payments and financial systems — my entrepreneurial DNA has been nudging me for too many mornings in a row to continue ignoring it,” Marcus said in a tweet thread.

Marcus was the face of the Facebook-led project. He joined Meta (formerly Facebook) in August 2014 as vice president of the company’s Messenger service. He later became involved with Facebook’s financial projects, including the Libra stablecoin and the Calibra digital wallet, hoping that both projects would go live in 2020. 

But things didn’t work out as planned. Facebook faced backlash from lawmakers and regulators worldwide. The Libra Association lost eight of its founding members in the last two years, including financial titans PayPal, MasterCard, and eBay. The currency’s name also changed to Diem, and there seems to be no plan to launch it anytime soon. After these ups and downs, Novi, the company’s digital wallet product, was finally released in October.

Executive departures in the past have plagued the Digital Currency Project at Facebook. For instance, Diem co-founder Kevin Weil left the project back in March, and Andreessen Horowitz hired Novi’s top engineers earlier this year as well. It has yet to be determined how Marcus’ departure will affect the project; but his decision has definitely added another twist to the ongoing drama.   

Kimbal Musk To Launch a DAO Addressing Food Justice 

Kimbal Musk—Elon Musk’s brother—plans to create a DAO (decentralized autonomous organization) focusing on food justice.

The DAO is called Big Green DAO, which is a web3 charity that aims to decentralize philanthropy. He tweeted: “I’ve decided to run an experiment to decentralize philanthropy. This #GivingTuesday I’m launching the first Giving DAO.” 

A DAO is like direct democracy. It is a decentralized form of governance that allows stakeholders (people who hold coins, tokens, NFTs, or other assets) to voice their two cents and vote on proposals. In an interview with CoinDesk, Kimbal said he likes how DAOs bring people together and decentralize power. He also mentioned that when he released Big Green DAO’s Litepaper, describing the project’s roadmap, he expected criticism on Twitter. Surprisingly, he hasn’t gotten a single Twitter troll yet. 

Musk has always been active in environmental conservation and food security. He launched Big Green in 2011, a program that teaches children how to grow food in schools and provides resources to plant gardens.

Canine-based cryptocurrency Floki Inu reacted overly positively to the news — after all, once it had raised $1.4 million in just 35 minutes in a donation drive for Kimbal Musk’s ‘Million Gardens Movement.’ It tweeted: “This sounds exciting! The true power of crypto and the blockchain to disrupt philanthropy is yet to be tapped, so it’s great to see you pioneering in this arena.” The digital currency, $FLOKI.X, rose by 12% to $0.0001895 today.

What is PoW vs. PoS?

Vitalik Buterin, the co-founder of Ethereum, advocates shifting from ‘Proof-of-work’ to ‘Proof-of-stake’ as it will solve environmental issues. Let’s break down what exactly that means. 

Proof-of-work (PoW)

In the banking system, if John sends $1 to Marry, then the bank deducts $1 from John’s account and gives it to Marry. This is not possible with crypto transfers since there’s no third party involved who can verify the transaction. In cryptocurrency, proof-of-work helps determine how much money each person has. 

Proof-of-Work, or PoW, is the original consensus algorithm in a blockchain network. This algorithm is used to confirm transactions. With PoW, miners compete against each other to complete transactions on the network and get rewarded. Miners are responsible for verifying the transactions just like the bank does in monetary transactions. So, John sends one Bitcoin to Marry, miners check, secure and complete the transaction. 

Proof-of-work aims to prevent users from printing extra coins they didn’t earn or double-spending. It’s a proven way of maintaining a secure decentralized blockchain. However, it’s an energy-intensive process, and that’s why alternatives have been developed, the most popular of which is called proof of stake.

Proof-of-stake (PoS)

In a PoS, a person can mine or validate block transactions according to how many coins they hold, giving more mining power to people based on the percentage of coins they hold.

For example, limiting the amount of power a miner has means a PoS miner who owns 10% of the coins available can mine only 10% of the blocks. There’s no need for expensive hardware in PoS. That’s because in PoS capital is staked and deducted when validators make errors or act maliciously.

Major cryptocurrencies like Bitcoin, Litecoin use the PoW method. While it consumes a lot of energy, PoS uses less energy than PoW. 

Currently, Ethereum also uses the proof-of-work protocol. Over the next few years, proof-of-work will be phased out in favor of proof-of-stake. This will make PoW or traditional Ethereum miners obsolete because PoS does not have this traditional form of mining. In PoS, the validators are simply paid block rewards to risk capital as they validate network data.

Fidelity Heads to Canada With Bitcoin ETF 

While waiting for the U.S. Securities and Exchange Commission’s approval for a Bitcoin ETF in the USA, Fidelity has decided to offer a spot Bitcoin ETF in Canada, subject to regulatory approval. Rather than obtaining exposure to Bitcoin through derivatives, the new fund will acquire physical Bitcoin directly.

Bloomberg’s senior ETF analyst Erick Balchunas shared the information on Twitter, saying that Fidelity Advantage Bitcoin ETF is currently pending listing on a Canadian exchange. He also mentioned that it would become the largest asset management firm that offers Bitcoin services if it gets approval.

The new fund will be actively managed and will directly obtain physical Bitcoin instead of getting exposure to BTC through a derivative instrument.

So far, the SEC has rejected all applications for a Bitcoin spot ETF, stating that it is too volatile. This has led asset management companies to move to countries like Canada and Brazil, which have always welcomed bitcoin-backed ETFs.

Fidelity Investments, a Boston, Massachusetts based investment company with over $4 trillion in assets under management, has stated in its prospectus that it was free to move forward with its Canadian product as “no securities regulatory authority has expressed an opinion about these securities, and it is an offense to claim otherwise.”

Bloomberg’s analyst Erick Balchunas called it an embarrassment for the SEC that one of the country’s biggest firms had to go up north to serve its clients.