Welcome back to Chain Reaction.
In this week's Chain Reaction, we talked with the CEO of Sequoia Capital about why gaming is skeptical of NFTs and where decentralization really matters. There are more details below.
Last week was our first newsletter and we talked about the changes that could be made to expand its business. At that point, I was operating under the assumption that the Musk deal was doomed, but now we have a deal. I can't shake the feeling that something is going to kill this deal in the last minute. If Musk walks away from the deal, the board will have to pay a $1 billion penalty, but I think we will see that.
You can get this message in your inbox on Thursday mornings if you subscribe to the newsletter. I encourage you to follow me on social media.
The images are from the same source.
There are many reasons to criticize the industry, but most of the complaints are about the belief that the industry is burning too much energy.
The latter is a little harder to deny than the former. According to the tracker built by Digiconomist, the power consumption of Thailand is equal to the power used by Bitcoin. The energy footprint of Ethereum is half the size, but still comparable to the power consumption of the country. The United States' total consumption of electricity was 4,222.5 TWh.
Those numbers are hard to swallow for some legislators. The New York State Assembly passed a bill this week that caused a lot of uproar. The bill prevents the formation of firms that use non-renewable power. It doesn't apply to existing facilities. The bill is currently being considered by the state senate.
This is fascinating for a lot of reasons.
It is becoming a partisan topic. A number of major figures in the party have thrown their full support behind the project, despite being wary of regulating unregulated industries. Prospective future party leaders include the governors of Texas and Florida. It is not a party-line issue for most of the critics to be Democrats. The recent executive order from President Biden was generally viewed as friendly to the space by industry insiders. The energy usage is one of the main sticking points for many regulators.
How Texas is becoming a bitcoin mining hub
The bill only affects a few of the major networks, but it also affects the two biggest ones;Bitcoin andEthereum.
A proof-of-work mechanism is used by these networks. The work in this case is mining that involves computers working around the clock to solve math problems that are protecting the integrity of the blockchain, making it extremely expensive and technically challenging for hackers to overwhelm the network to make unauthorized transactions and steal token. Proof-of-work seems to be a thing of the past in the world of cryptocurrencies, as evidenced by the fact that Ethereum is in the process of transitioning its network to a less energy-intensive consensus method. The regulatory maneuverings of New York and other states are likely going to be more hostile towards the use of Bitcoin.
This could lead to an interesting scenario where the industry finds mainstream tolerance among its critics but is growing more and more politically isolated.
The libertarian bent of the coin is a bit more prominent than other coins. At recent industry events, it's become clear that the philosophy of the Bitcoin network is becoming more and more harmonize. The continued resistance to criticism and calls for change may only embolden its supporters, but the power consumption of the network may only make it a more visible target for regulation.
Some politicians love and hateCryptocurrencies, but not all of them.
Bitcoin miners say energy efficiency and regulatory certainty are crucial for the industry’s success
Hey, all, it'sAnita, here. We thought we'd tackle two other topics first to get our minds off the bird app for a second, because we've been so immersed in the Musk news.
Fidelity, the largest retirement plan provider in the United States, announced this week that it will bring the digital currency, bitcoin, to its 401(k) plans. It's a bold move from this incumbent because it legitimizes the asset as a long-term investment just a month after regulators tried to discourage retirement plan providers from doing it. We kicked off the show with spirited back-and-forth about who will benefit from Fidelity's move, especially if it takes off as a larger trend. The news is great for non-billionaires, you can read about it here.
We also covered it.
Our guest interview this week was with an investor and a person on the internet. We talked with him about the possibility of a multichain future, and whether or not we will ever reach true decentralization at a mass scale.
You can subscribe to Chain Reaction on Apple or another platform to keep up with us. Follow Chain Reaction on social media.
The person is Anita Ramaswamy.
Where startup money is moving.
Some more analysis from our subscription service.
Stable coins are here to stay, but will they see wider adoption?
Over the past year, the total circulating supply has grown, but the future of it is unclear. The subasset is in abrian moment as they gather their foothold in the market. Stable coins have the potential to boom in two different ways, but not everyone is a fan of them.
Harry Connick Jr. is using web3 to engage with his fans.
Web3 has attracted people from all walks of life. Artists have been entering the space over the last year. Some creators are diving into web3 for more than just a new revenue stream, and there are financial incentives for that.
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Have a great weekend.
Lucas Matney.
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