Binance's drug fueled growth
GM, we take the latest Web3 news and translate it into plain old English - so you can stay up to date, without your eyes glazing over.
In today’s edition:
Is this a scandal or triumph for Binance?
We need more ideas like this...
RESOURCE: How stablecoins work. (Learn in ~7:30)
This niche lawsuit could permanently change crypto
Terms used (click for translation):
Web3, NFTs, Crypto Wallet, Decentralized Finance (DeFi)
Is this a scandal or triumph for Binance?
Car safety standards, George Clooney's baritone, anti-money laundering measures on Binance's crypto exchange.
These are all things that have gotten better with time.
The latter has recently come into question after Reuters published a report that claims:
'Binance has been key to allegedly support illicit activity around the world, failed to provide assistance to authorities to prevent money laundering cases, and failed at imposing a robust Know Your Customer (KYC) policy.'
With the report going on to claim that Binance has processed over $2.3 billion in illicit funds.
Yikes.
What takes the bite out of this alleged revelation is that, as of 2021, Binance implemented a KYC policy that put a stop to just about all of it.
Not only that, but they've assembled a rag tag team of ex-FBI, Secret Service and Europol experts, as part of their cyber forensics team.
This is largely being reported as a scandal, but to us, it feels like a net positive for Binance - here's why:
Crypto constitutes less than 0.9% of annual global money laundering.
Regardless of its net contribution, big players in the space (like Binance) are actively creating solutions that cripple darknet cashflow.
Don't believe us? Here! Have a graph:
Identifying a problem AND implementing a solution that works?
Idk, sounds pretty good to us!
Web3 needs more ideas like this...
We harp on about it a lot, but it's true:
Web3 has an onboarding problem.
I.e. a product can have the coolest features in the world, but if it's too hard to use, it's not going to scale.
It's half the reason we write this newsletter, and it's why we love stories like this one.
Photographer Justin Aversano's 'Quantum Space' is a physical NFT gallery that's just opened in LA.
Sure, a physical NFT gallery isn't exactly revolutionary...but that's kind of the point.
The Web3 space has plenty of high concept ideas with a million different moving parts. What's needed are more 'cultural stepping stones' (like Quantum Space).
This approach says:
"If you don't really 'get' NFTs - it doesn't matter! The art is the point, NFTs are just the distribution method."
Previously, getting into the NFT space might look something like this:
Go to OpenSea.
Sift through the millions of NFTs on offer.
Choose one.
Go to Reddit and ask how to set up your crypto wallet.
Get called a noob.
Suffer through the public ridicule.
Ask how you go about to buying ETH.
Find an exchange to buy ETH from.
Have your eyes water at the outlandish transaction fees.
Send your ETH to your wallet.
Use it to buy your NFT.
Figure out how to display it.
Now, it could look like this:
Walk into an art gallery.
Pick the art you want to buy.
Get the gallery to show you how to do the rest.
Neat!
Resource of the day
How stablecoins work.
(Learn in ~7:30)
This niche lawsuit could permanently change crypto
There's a spicy little niche that is starting to become popular in the banking system.
The basic concept is this:
You don't earn interest on your savings, instead you earn 'entry tickets'.
Each month, the bank takes a huge sum of money, breaks it up into prize pools of varying sizes, and gives it away.
The more money you have in your account, the more 'entry tickets' you earn, the higher chance you have of winning a larger piece of the prize pool.
...so, like, a lottery?
Yeah, pretty much - weirder still, it's legal.
Someone took this idea to the crypto world and created a Decentralized Finance (DeFi) platform called 'PoolTogether'.
...and now they're getting the pants sued off them.
(But that's not the interesting part).
This lawsuit could set an important precedent in the DeFi space, here's why:
In the normal world, corporations are (legally) considered people.
Sounds weird - and we're not legal experts in any sense of the term - but we're guessing this concept exists (in part) so that if a company has no majority owner, an 'entity' can still be formally charged for any wrong doing.
In Decentralized Finance, the whole point is to not have any majority owner.
The code that runs a DeFi product, runs itself...and it runs itself across thousands of independently owned computers around the world.
...so who in the world do you sue when something goes wrong?
The people who wrote the original code?
One (or all) of the thousands of people around the world who rent out their computing power to run that code?
Or the users who bought into the product?
We have no idea what the answer is, but the courts are going to have to decide.
And when they do, it'll likely set a legal precedent that will shape how DeFi products are built from that point forward.
Let's hope it's a positive ruling.
Your Daily Dose of Web3
Whistleblower accuses Terraform Labs of owning shadow wallets
Ethereum NFT game Illuvium sells over $72M in digital land plots
SEC wants to be funny with new game show, but social media is outraged
NY bill aims to limit crypto miners using fossil fuel-generated power
Alright, that’s it for today!
Love to the family,