Relocating to Kiev

Good morning. Over the weekend an upgrade to the Bitcoin network went live, a spot ETF was rejected by the SEC (Friday), and a court case that could reveal the identify of Satoshi Nakamoto continued in Florida.

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A "Top 5" of crypto, digital asset, and other blockchain related news sent to your inbox on a daily basis

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Top 5:

1. The Crypto Capital of the World
   Ukraine, a nation known for corruption and bribery running rife in both its business and government dealings (which are many times one in the same), is looking to overhaul its image with cryptocurrency playing a key role. This September the Ukrainian Parliament passed a law legalizing and regulating Bitcoin in a move designed to put the nation's growing crypto industry at the front of an economic rebrand. “The big idea is to become one of the top jurisdictions in the world for crypto companies,” said Alexander Bornyakov, deputy minister at the Ministry of Digital Transformation. Outside of newly created jobs and taxable revenue, crypto offers an alternative to the country's esoteric banking system which makes it difficult to send or receive even small amounts of money from other countries. Today, $150 million of cryptocurrency enters and exits the country on a daily basis, according to Chainalysis. This number outpaces interbank exchanges of fiat currency. Compound an ineffective banking system with inflation and no major stock market in which to invest and Ukrainians are left with two investing options: real estate and crypto.
   
2. What Is the Lightning Network?
   "Lightning is a decentralized network using smart contract functionality in the blockchain to enable instant payments across a network of participants." The Lightning Network provides faster and cheaper transactions than traditional on-chain transactions. The functionality of this network relies on three key features outlined in the article and condensed below:
   
   - Bidirectional Payment Channels
   Two participants create an entry on the blockchain which requires both participants to sign off on any spending of funds. Both parties can create transactions which refund the ledger entry to their individual allocation, but do not broadcast them to the blockchain. Only the most recent version is valid, which is enforced by blockchain-parsable smart-contract scripting and can be closed out at any time by either party by broadcasting the most recent version to the blockchain.
   
   - Lightning Network
   By creating a network of these two-party ledger entries, it is possible to find a path across the network similar to routing packets on the internet. The nodes along the path are not trusted, as the payment is enforced using a script which enforces the atomicity (either the entire payment succeeds or fails).
   
   - Blockchain as Arbiter
   As a result, it is possible to conduct transactions off-blockchain without limitations. Transactions can be made off-chain with confidence of on-blockchain enforceability. This is similar to how one makes many legal contracts with others, but one does not go to court every time a contract is made

3. Bitcoin Creator Satoshi Nakamoto Could Be Unmasked at Florida Trial
Satoshi Nakamoto's cache of ~1 million Bitcoin ($64 billion) is the subject of a lawsuit in Florida (where else?) in which the family of a deceased man is suing his former business partner over distribution of partnership assets. Craig Wright claims that he is the pseudonymous creator of Bitcoin, while the family of David Kleiman argue that the two worked on the project and authored the nine-page whitepaper together. Wright has previously claimed to be the creator of Bitcoin, but backed down after facing intense skepticism from those in the Bitcoin community. Most agree that it is unlikely Wright is the creator of Bitcoin. And while some think it is possible that Kleiman was the creator or involved in the creation of the world's largest cryptocurrency, it will be very difficult to prove without providing the private key to Satoshi Nakamoto's wallet holding the aforementioned stash.

4. SEC Rejects VanEck’s Bitcoin ETF in Latest Spot-Listing Snub
On Friday, the SEC rejected the VanEck application for a spot-Bitcoin ETF that would have traded on Cboe Global Markets Inc. The move was widely expected and was the SEC's first ruling on a crypto product since the launch of the Bitcoin futures ETFs in October. The Commission has been clear that they believe a spot product could violate securities rules because the market is too prone to abuse. “The Commission has consistently required that the listing exchange have a comprehensive surveillance-sharing agreement with a regulated market of significant size related to Bitcoin, or demonstrate that other means to prevent fraudulent and manipulative acts and practices are sufficient,” the SEC said. “The listing exchange has not met that requirement.” Most analysts expect that an Ether-back futures ETF will be the next new crypto product to be approved.

5. Bitcoin’s biggest upgrade in four years just happened – here’s what changes
The first upgrade to the Bitcoin network in four years, Taproot, went live this weekend. Unlike the last update in 2017, which was highly contentious, the Taproot upgrade was almost universally supported in part due to the incremental nature of the changes. The two key updates to the network are 1) Schnorr signatures which will make multi-signature transactions indistinguishable from single-signature transactions leading to more privacy and 2) enhanced smart contract capability and efficiency. Smart contracts, which are self-executing agreements that live on the blockchain, can be used for practically any kind of transaction, from paying your rent each month, to registering your vehicle. Currently the Ethereum network is the dominant blockchain for development of decentralized applications (dApps) that rely on smart contract capabilities to execute.

Top Sharers of the Crypto Top 5:
1. Cameron S. - New York, NY
2. Jake Y. - Greenville, SC
3. Lauren A. - Nashville, TN

Disclaimer: The information contained in this newsletter shall not be understood or construed as financial advice. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be, and the information provided is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation.