BitDrip

Bitcoin (and other digital currency) prices dropped over the weekend due to a Chinese government crackdown on cryptocurrency mining.

China Communist Party (CCP) doesn’t really like Bitcoin. They can’t control it and can’t easily surveil their citizens on it.

On the flip-side, many Chinese people seem to like it. Easy access to computer hardware and cheap energy made cryptocurrency mining very profitable for many Chinese entrepreneurs.

Earlier this month Chinese miners were responsible for about 65% of the mining computing power worldwide.

But China has a long history of censoring tech platforms they can’t moderate or control. Since the late 90s, China has been using its “Great Firewall” to block sites at the network level, only to replace them with Chinese versions the CCP can easily surveil.

But blocking a decentralized protocol like Bitcoin isn’t as simple. The network is run by thousands of individuals and companies. Each running the full Bitcoin application, myself included. They’d have to get creative to block us all.

Instead, China worked overtime to shut down any business that facilitated crypto trading and now has gone after the miners.

The video was posted on WeChat by #Bitcoin miners who got their operations shutdown in China.

"The lesson from the internet is, anything that China bans, invest in it." – @FredWilsonpic.twitter.com/lwpCPa3MNZ

— Documenting Bitcoin 📄 (@DocumentingBTC) June 19, 2021

In the short term, a decrease in miners makes Bitcoin easier to mine for the facilities still running. With existing miners getting a surplus of Bitcoin, supply goes up and the price goes down.

New mining companies will emerge. The price will go up again, but for now, you can think of it as a sale.

Buy the dip!

Coinbase, arguably the largest cryptocurrency exchange, went public today as its stock was traded on the NYSE for the first time under the ticker symbol “COIN”.

Coinbase did things a little differently than most companies that go public. Specifically, Coinbase did not have a traditional “IPO” event.

In an IPO, a company issues new stock and sells it to new investors, raising a cash for the newly public company, but paying a hefty fee to Wall Street to be the middle man.

Instead, Coinbase went public with a Direct Public Offering (DPO), which basically just allows the existing investors and Coinbase themselves to trade their shares directly with the market.

Fun fact: Ben & Jerry’s was the first company to DPO in 1984. From Investopedia:

One of the earliest notable DPOs was in 1984 by Ben Cohen and Jerry Greenfield, two entrepreneurs who needed funds for their ice cream business. They advertised their ownership stakes through local newspapers for $10.50 per share with a minimum number of 12 shares per investor. Their loyal fan base in Vermont took advantage of the offer and the company, Ben & Jerry’s Ice Cream, raised $750,000 within the year.

Coinbase’s yearly revenue is about $8 billion dollars, while it takes about $3 billion in profit. The revenue comes in through fees of cryptocurrency exchanges so their business will basically rise and fall directly with the overall value of the cryptocurrency market.

CEO Brian Armstrong reflected a bit on building Coinbase. This dude is a powerhouse.

1/ Today is a big moment for @coinbase as we become a public company. But it’s also a big one for crypto. This all started with the Bitcoin whitepaper 12 years ago, a deceptively simple 9 page document by Satoshi Nakamoto that ignited a global movement. https://t.co/4pE006XTFP

— Brian Armstrong (@brian_armstrong) April 14, 2021

The popular private messaging app, Signal, announced yesterday that they are testing cryptocurrency payments within the app.

Users of Signal (starting in the U.K.) will be able send one another money using the MobileCoin cryptocurrency payment network which uses its own currency, MOB.1

While Signal is tightly integrated with MobileCoin, Signal promises that the two services run separately and do not share data.

As always, our goal is to keep your data in your hands rather than ours; MobileCoin’s design means Signal does not have access to your balance, full transaction history, or funds. You can also transfer your funds at any time if you want to switch to another app or service.

There are quite a few “privacy coins” available to the public. It’s not clear why Signal chose to go with MobileCoin instead of a more widely adopted private cryptocurrency like Zcash or Monero.

Either way, it seems like the idea of peer to peer digital money is gaining traction in yet another app!