Top 10 Moments of The Crypto Revolution
What we are undergoing currently in our world is change. A revolution is taking place in our very lives. This is similar to what happened with the internet after the 2000s. There has been a global outburst in the use of the internet ever since and the internet keeps evolving and growing at a rapid pace. But the internet is so unfair, we spend 70% of our entire lives on the internet but we get to own none of it. Only few companies in the world owned most of the internet: Google, Apple, Meta and others as well. While these companies monetized our data, we got nothing out of it. Then crypto came along and now for the first time ever, you can own the internet. It is as simple as that. You can own cryptocurrencies like Bitcoin, Ethereum and the likes but you can also own pictures, video games, virtual lands and even parts of companies (stocks). Before crypto, none of this was ever possible. Now more than ever before, a girl in India can own the internet just as much as an executive in Silicon Valley. All of this and so much more is possible due to the underlying technology behind Web 3. You can read more about cryptocurrencies and Web 3 in our previous articles on our homepage.
So we will be discussing about the top 10 remarkable moments of this new revolution as we have seen it so far in the space.
1. The First and Most Expensive Nft Ever Sold at Auction
"It is the first NFT ever sold at auction, the most expensive NFT ever sold and one of the top 20 works of art period ever sold at auction"
- CNBC -
We all agree that the crypto art bubble was quite short lived. But what sparked the "NFT" hype? An artist who goes by the name Mike Winkelmann known professionally as 'Beeple' and who lives in Wisconsin, USA created a digital artwork known as "Everydays: The First 5000 Days". This work is a collage of 5000 digital images created by Winkelmann for his Everydays Series. It's NFT sold for a whooping $69.3 million last year at Christie's auction house. The digital replica was purchased by Singapore-based programmer Vingesh Sundaresen a cryptocurrency investor and the founder of the Metapurse NFT project also known by his pseudonym Metakovan. Metakovan purchased the masterpiece for about 42,392 ETH. Both Metakovan and Beeple wanted to drive attention and sales for a speculative asset related to twenty other Beeple works also known as B-20 tokens. The artwork is currently under display in a digital museum within the metaverse which the general public can view through a web browser.
So what made the EveryDays so valuable? The key factor is to understand the nature of the digital artwork. Winkelmann was inspired by British artist Tom Judd and he began the 'Everydays' project on 1 May 2007. Some of the pictures were hand-drawn and not computer produced. So everyday for 5000 days, Beeple had been producing an artwork daily. After the 5000th day, he combined all 5000 artworks into a collage of artworks. Indeed, the story of the 'Everydays' is not just a normal story, it is a story of perseverance and commitment. Another factor is that over the years, he had developed a large fan base of around 2.5 million followers across all social media handles which was a major boost in outreach for him. In response to the incredibly successful auction of the Everydays, he says: "I do view this as the next chapter in art history. Now there is a way to collect digital art". The sales of the Everydays fuelled the hype in the NFT space. This led to the success of future projects such as the Bored Ape Yatch Club (BAYC), Cryptopunks, Lazy Lions as well as other NFT projects.
2. The Youngest Crypto Billionaire in the World
Carl Runefelt a.k.a The Moon is the youngest billionaire in the world from crypto with a networth of $1.1 billion. He has about 4 million followers across all social media platforms. During an interview with Entrepreneur Middle East (a Franchise of Entrepreneur), Carl states: "I've personally invested in almost 400 crypto startups because I am extremely confident that crypto will dominate the world in the future. That is why I have co-founded and managed multiple crypto entities. For me, it is enough to only bet my net worth but my entire being is a big bet on crypto. I'm all in". His personal story seems to have somewhat of a strong captivating effect on youngsters after all it stars Runefelt as a college dropout and grocery store cashier in Sweden who went on to achieve a Bugatti-driving lifestyle in Dubai in just a couple of years. He states: "I had no real business experience but I had the will to be successful and I set clear goals, researched Bitcoin, cryptocurrencies, entrepreneurship and how to build a successful business". Carl Runefelt is also a fan of the law of attraction. He believes that a couple of affirmation and mantras he used helped him to get to this point. "I believe that your success is not determined by your degree or work experience but your mindset and belief system. Whether you believe in yourself or not, whatever you believe becomes your reality". Carl Runefelt currently runs and manages The Moon Group with quarters in several locations such as Estonia, The Seychelles, Dubai and many others.
3. The Earliest Commercial Transaction With Bitcoin
Programmer Lazlo Hanyecz made history when he made the first real world purchase with Bitcoin more than a decade ago. However, little did he know that when he spent 10,000 bitcoin on two Papa John's Pies, it would also secure him a spot in the cryptocurrency hall of fame. He also had no clue that 11 years later, the coins worth around $32 at the time will be worth more than $326 million. It is a fortune which could have bought him a private island, a luxurious mansion and several private jets. It is amazing that Lazlo insists that he has absolutely zero sleepless nights over his impulse purchase one lunchtime in 2010. He said: "I don't regret it. I think it is great that I got to be part of the early history of Bitcoin in that way". The Florida man was an early contributor to Bitcoin's software when it was barely a year old. He even coded a program that made it possible for fans to mine the currency using their computer graphics card (GPU). However his life changed forever when he posted a message on a bitcoin chat forum on May 22, 2010.
He wrote on Bitcointalk: "I'll pay 10,000 bitcoins for a couple of pizzas like maybe 2 large ones so I have some left over for the next day. I like things like onions, peppers, sausage, mushrooms, tomatoes, pepperoni e.t.c just standard stuff, no weird fish topping or anything like that. If you're interested, please let me know and we can work out a deal". His post caught the eye of another forum user who agreed to order two large supreme pizzas in return for 10,000 bitcoin. "I wanted to do the pizza thing because to me it was free pizza," Lazlo later explained. "I got pizza for contributing to an open-source project. Usually hobbies are a time and money sink and in this case, my hobby bought me dinner. I was like, Man, I got these GPUs linked together, now I'm going to mine twice as fast. I'm just getting to be eating free food,' I'll never have to buy food again". After the first transaction, Lazlo Hanyecz would go on to do it many more times and spend a total of 100,000 bitcoins on pizza that summer - now worth $6.5 billion. To commemorate Lazlo's legendary transaction, May 22 is dubbed Bitcoin Pizza Day.
4. The Pioneer and Inventor of Crypto
"The root problem with conventional currency is all the trust required to make it work. The central bank must be trusted not to debase the currency but the history of fiat currencies is full of breaches of that trust"
- Satoshi Nakamoto -
Satoshi Nakamoto is the pseudonym used by the person or group of people who created the cryptocurrency called Bitcoin. The true identity of Satoshi Nakamoto has never been revealed and it is possible that the name represents a group of people rather than a single individual.
Satoshi Nakamoto's mission as outlined in the bitcoin whitepaper was to create a system that was transparent, secure and resistant to fraud and that could be used by anyone around the world. To achieve this, Satoshi Nakamoto implemented a number of innovative technical features including a distributed ledger called the blockchain and a consensus mechanism called proof-of-work. Since its release in 2009, Bitcoin has become a force to reckon in the world of finance and technology and it has inspired the development of many other cryptocurrencies. While Satoshi Nakamoto's original vision for bitcoin has evolved over time, the underlying principles of decentralization, security and transparency remains central to the mission of cryptocurrencies. Satoshi owns about 1 million bitcoins today which is roughly 5% of Bitcoin's entire supply.
5. The Richest Man In The World From Crypto
Chanpeng Zhao also known as CZ is the founder and CEO of Binance, one of the world's leading cryptocurrency exchanges. Before starting Binance, CZ had a diverse career in the tech industry including roles as a developer, trader and entrepreneur. In 2013, he became interested in Bitcoin and began working on various cryptocurrency projects. In 2017, CZ founded Binance which quickly became one of the largest and most popular cryptocurrency exchanges in the world. The company's rapid growth was aided by its focus on user experience and a wide range of offerings, including support for a large number of cryptocurrencies and multiple languages.
Binance has also made strategic acquisitions such as the acquisition of Trust Wallet, a popular mobile wallet. In addition, the company has launches several initiatives to promote the adoption and development of cryptocurrency including a charity foundation and a venture capital arm. With a net worth of $11.7 billion in 2022, CZ has become a well-known figure in the crypto space and he is one of the top 5 most most influential men in crypto on Earth.
6. The Second Largest Bitcoin Whale On Earth
In August 2021, Microstrategy announced that it had purchased $250 million worth of Bitcoin as part of a new investment strategy. Since then, the company has made additional purchases of Bitcoin and as of december 2022, it holds over 170,000 bitcoins worth billions of dollars. Micheal Saylor is indeed the second largest bitcoin whale behind Satoshi Nakamoto with about 17,740 bitcoins in his possession.
Saylor has been a vocal advocate for Bitcoin and has spoken publicly about the potential for the digital currency to serve as a hedge against inflation and a store of value. He has also encouraged other companies to consider investing in Bitcoin. Under Saylor's leadership, Microstrategy has made significant investments in the digital currency and become a major player in the bitcoin market. Saylor, in turn used his position as CEO and public platform to promote bitcoin and advocate for its adoption as a legitimate investment asset.
7. The Rise of Dogecoin and The Elon Impact
Elon Musk is a technology entrepreneur and CEO of SpaceX and Tesla. He has a reputation for being active on social media and has often made headlines for his tweets and public statements. In recent years, Musk has shown an interest in cryptocurrency, particularly Dogecoin. Dogecoin is a cryptocurrency that was created as a joke back in 2013, based on the popular "Doge" internet meme. It originally had little value and was primarily used for online tipping and as a means of sending small amounts of money between users. However in the past year or so, Dogecoin has gained a significant amount of attention and its value had skyrocketed partly due to Musk's tweets and public statements around it. Musk has tweeted about Dogecoin several times and has even referred to himself as the "Dogefather". He has also mentioned Dogecoin on public appearances such as on the popular TV show "Saturday Night Live".
While Musk's tweets and statements about Dogecoin have certainly contributed to its popularity and increased value, it is important to note that the value of any cryptocurrency can be highly volatile and unpredictable. It is always important to be cautious when investing in any cryptocurrency and to thoroughly research the risks involved.
8. The Collapse Of Terra Luna and Do Kwon
Terra network and its lender Do Kwon rose to prominence in the cryptocurrency world over the course of four years, all ending in a disastrous fall from grace. The Luna crypto network collapsed in what's considered the largest crypto crash with an estimated $60 billion wipeout, shaking the global digital currency market.
There are two stories regarding Luna crypto; The Terra USD/UST stablecoin and the actual Luna coin. Once Luna and UST crashed, there was a total liquidity crunch in the cryptocurrency space that caused an even more catastrophic loss of value. The crypto community still hasn't recovered from it up till now.
Terra USD(also known as UST) and Luna are two sister coins on the same network. Terra is a blockchain network similar to Ethereum or Bitcoin that produces Luna tokens. The network was created in 2018 by Do Kwon and Daniel Shin of Terraform Labs. Terraform Labs created the Ust coin to be an algorithmic stablecoin on the Terra Network. While other stablecoins (USDC or Tether) are fiat backed, the UST could not be backed by real assets. Instead, the value of UST would be backed by its sister token Luna . Stablecoins are supposedly a safe haven in the crypto space. Since they're meant to have a fixed value of around 1 USD. The goal is to be a steady store of value for investors unlike volatile coins like Ethereum.
A Luna coin was going for around $116 in April and ended up dumping to the fraction of a penny before being delisted. Before that, the coin went from being worth less than $1 in early 2021 to creating many crypto millionaires within a year. This led to Do Kwon's cult hero status among retail crypto investors. Many success stories popped up in the media about how regular folks were able to get rich from Luna.
The Luna token skyrocketed about 135% in less than two months until its peak in April 2022. The largest incentive was the option to stake one's UST holdings on the Anchor lending platform for a 20% annual yield. Then Anchor would and turn around and loan the deposit to another investor. At one point, as much as 72% of UST was deposited in Anchor because the platform was the primary driver of demand for Terra.
So why did UST crash? Now a stablecoin is pegged to a more stable currency like the US dollar. Tether and USDC are both tied to USD. So if the price of Ether was $1000, you could exchange one Ether for 1000 USDC tokens. The UST tokens was not backed by an actual US dollar but rather an algorithmic stablecoin. The belief was that Terraform Labs could use clever mechanisms along with billions in bitcoin reserves to maintain the peg of UST without the backstop of the USD. To create UST, you have to burn Luna. So for example, when Luna token's price was 85 UST, you could trade one token for 85 UST. This deflationary protocol was designed to ensure that there was long-term growth for Luna. For UST to retain its peg, one UST could be changed for $1 worth of Luna at any point in time. If UST slipped, traders could make money from buying UST and then exchanging it for Luna. Both Luna and UST crashed once UST lost its peg to the dollar which was what qualified it as a stablecoin. Terra USD was risky because it wasn't backed by cash, treasuries or other traditional assets like the popular stablecoin Tether USDT. The stability of UST was derived from algorithms that linked the value to Luna. Many experts were skeptical that an algorithm could keep two tokens stable. The Luna crypto crash was caused by its connection to Terra USD (UST), the algorithmic stablecoins on the Terra network. On May 7, over $2 billion worth of UST was unstaked and hundreds of millions of it were quickly liquidated. The huge selloff brought down the price of UST to $0.91 from $1. As a result, traders started to exchange 90 cents worth of UST for $1 of Luna.
Once a large amount of UST has been offloaded, the stablecoin started to depeg. In a panic, more people sold off UST, which led to the minting of More Luna and an increase in the circulating supply of Luna. Following this crash, crypto exchanges started to delist Luna and UST pairings. It is estimated that the Luna crash ended up taking the price of Bitcoin causing an estimated loss of $300 billion in value across the entire crypto space. What is worst? Crypto lenders Voyager and Celcius filed for bankruptcy. Three Arrows Capital(3AC) was forced into liquidation.
So let's consider the back lash from the users. With great losses come great wins. Many people lost their life savings and suffered financial hardships due to the Luna crypto crash. One retail crypto investor even that they lost their savings of 20,000 in Luna. But some were fortunate enough to exit their positions before the crash. An example of that was the hedge fund Panthera Capital. They saw a 100x return on their initial investment of $1.7 million. The company liquidated its Luna position prior to the collapse for a return of $171 million.
Do Kwon shared a recovery plan for Luna but the plan ultimately failed. On September 15, it was announced that a court in South Korea had issued an arrest warrant for Do Kwon. This came almost four months after the Terra Luna crash. This was one of the worst events in the crypto revolution in 2022 but was nothing compared to what happened next.
9. The Collapse Of FTX and Alameda Research
FTX filed for Chapter 11 bankruptcy protection on Nov 11, 2022 after a swift fall from grace. The company's valuation plunged from $32 billion to bankruptcy in a matter of days dragging Founder and CEO Sam Bankman-Fried's $16 billion networth to near zero. Sam said he had about $100,000 in his bank during a Nov. 30 interview with New York Times columnist Andrew Ross Sorkin during the Deal Book Summit. So what happened to FTX?
FTX's collapse took place over a 10-day period in November 2022. The catalyst was a NOV. 2 scoop by CoinDesk that revealed that Alameda Research, the quant trading firm also run by Bankman-Fried held a position worth $5 billion in FTT, the native token of FTX. The report revealed that Alameda's investment foundation was also in FTT, the token that its sister company had invented, not a fiat currency or other cryptocurrency. This prompted across the crypto space regarding Bankman Fried's companies and undisclosed leverage and solvency.
Binance, the world's largest crypto exchange announced on Nov. 6 that would sell its entire position in FTT tokens roughly 23 million FTT tokens worth about $529 million. Binance CEO Chanpeng Zhao "CZ" said the decision to liquidate the exchange's FTT position was based on risk management following the collapse of the Terra (Luna) crypto token earlier in 2022. By the next day, FTX was experiencing a liquidity crunch. Bankman-Fried attempted to reassure FTX investors that its assets were stable, but customers demanded withdrawals worth $6 billion in the days immediately following the CoinDesk report. Bankman-Fried searched for additional money from venture capitalists before turning to Binance. The value of FTT fell by 80% in two days. On Nov 8, Binance announced it had reached anon-binding agreement to buy the non-US business of FTX for an undisclosed sum - effectively the world's largest cryptocurrency exchange bailing out its close rival. The promise of a rescue was short-lived ad Binance backed out of the deal a day later on Nov 9, the exchange said that it would cancel the FTX deal after corporate due dilligence raised concerns about the mishandling of customer funds among other issues. On Nov 10, the Bahamas securities regulator froze the assets of FTX digital markets, FTX'S Bahamian subsidiary , following news that Bankman-Fried was seeking up to $8 billion in capital to bail out the exchange. On the same day,
the California Department of Financial Protection and Innovation announced that it had initiated an investigation of FTX. Bankman-Fried apologized the same day for the liquidity crisis and admitted on Twitter that FTX's non-US exchange had insufficient funds to meet customer's demands. Sam claimed that "poor internal labelling" caused FTX to miscalculate leverage and liquidity. In the same thread, he said Alameda would wine down trading.
Sam Bankman-Fried stepped down on Nov. 11 as CEO of FTX, replaced by Ray who led energy trading firm Enron though bankruptcy proceedings years earlier. FTX filed for Chapter 11 bankruptcy proceedings years earlier. FTX filed for Chapter 11 bankruptcy along with 130 other affiliated companies. The bankruptcy filings revealed that FTX had assets in the range of $10 billion to $50 billion. Within hours of filing for bankruptcy, FTX said that it had been a victim of unauthorized transaction stating it would move its digital assets to cold storage for security purposes. Analysts report that about $477 million was stolen from FTX in the suspected hack. As of mid-November 2022, the Bahamian regulatory securities had frozen all of FTX's assets. The fall of FTX had somewhat of a domino effect on the crypto industry. Crypto lender Blockfi paused client withdrawals on Nov. 11, 2022. Crypto.com saw withdrawals increase from Nov. 12 to Nov. 13, 20, Genesis Global Capital halted customer withdrawals from its crypto lending unit, Nigerian startup Nestcoin began laying off their workforce.
On Nov. 16, a class action lawsuit was filed in a Florida federal court against popular celebrities such as Stephen Curry, Shaquille O'Neal, Shohei Othani, Noami Osaka, Larry David and Kevin O' Leary who allegedly helped Bankman-Fried facilitate the plan.
As of Dec 31, SBF was charged on eight counts including securities fraud and money laundering. Sadly though, following a court hearing on Dec 22, a federal judge decided to release Bankman-Fried from custody after his attorneys and federal prosecutors agreed to a $250 million bond, the largest bailout in history dwarfing that of famed financial fraudster Bernie Mardoff who was granted a $10 million bail agreement in 2008. This 30 year old former crypto executive will live with his Stamford Law professor parents in Palo Alto, California and be confined to the Northern California area, wear an electronic monitoring bracelet and submit to mental health and substance abuse counselling. SBF's next court hearing is in January.
10. The Ethereum Merge
At around 3am on Thursday Morning on September 15, Ethereum founder Vitalik Buterin announced that "The Merge" was successful. "The Merge" saw the popular blockchain network move from its hardware-based PoW (proof-of-work) model to the more enviromental-friendly PoS (proof-of-stake) model.
Like most cryptocurrencies, Ethereum follows a decentralized governance system. Any decisions about the blockchain protocol are up to the community. In early 2020, the community decided to change the blockchain's POW mechanism to POS to lower energy usage and drive faster transactions. Following the decision, the "Beacon Chain" - a testing ground for the PoS mechanisms - was launched on December 1 2020. The Beacon Chased Eain ran in conjunction with the main PoW based Ethereum chain and its purpose was to test the potential consequences of shifting the PoS model. Over 400,000 validators collectively staked over 32 ETH on the chain. It was a success as the Beacon chain showed that Ethereum could sustain the PoS system. Fast forward to September 15, 2022, the Beacon Chain was merged into the main Ethereum chain replacing the legacy PoW system. As the Merge successfully happened, we're now officially upgraded into Ethereum 2.0.
However, the upgrade also created a new fork of the blockchain and the forked tokens - Ethereum PoW or ETHW. Why was this fork created?
Although the majority voted to upgrade to the PoS system, a large part of the community still wanted to remain on the POW model. Most of these community members were ETH miners who believed that the new upgrade will drive them out of work - because a PoS mechanism dosen't require hardware-based mining. The Ethereum PoW fork allowed them to hold on to their profits. ETH is the new native token for this forked network. Most exchanges have also listed ETHW for spot trading on their platform.
What are the benefits of the Ethereum Merge?
- Lower Transaction Fees: The Ethereum Mainnet doesn't only host ETH tokens but also hundreds of other cryptocurrencies known as ERC-20 tokens including some of the most popular coins such as USDT, Link and Wrapped Bitcoin. These tokens will now leverage the PoS model and traders will enjoy lower-transaction fees.
- Lower Energy Consumption: After the Ethereum Merge, the Ethereum blockchain reduced its carbon footprint by 99.9%. This was just about right coupled with the fact that we are currently entering into a global energy crisis. Soon energy-friendly POS system will definitely attract more new users.
- Increased Profitability: Following the upgrade, Ethereum also announced plans for sharding and plunging decreasing the total ETH supply in the long run, making the altcoin profitable for long-term holders. Bitcoin is often dubbed as "digital gold" due to its constrained supply. We may see the same supply to Ether shortly.
So these are the major moments of the crypto revolution. There is still a lot more to anticipate in the coming years. As more and more investors and institutions continue to pour capital into cryptocurrencies, we can expect this to be a catalyst for growth in the entire crypto industry. Thank you for reading and we are looking to see you in the next article.
Comments
Post a Comment