Scary tech

Is AI bad news for crypto?

Welcome back. The green charts these past few days have truly been a sight for sore eyes—Bitcoin north of $20k again? Seems too good to be true, even if 2021 you begs to differ. But it makes me wonder: Is this the beginning of a new rally or just an overly optimistic case of hopium? Shoot me a reply with your predictions.

Today: What AI means for crypto, details on the Gemini vs. Genesis feud, and new developments in El Salvador. Let’s go.

—Angelina

Is ChatGPT Threatening DeFi?

ChatGPT is verging on “my uncle texted me to ask if he should invest” territory. From writing five-paragraph essays to summarizing entire Shakespeare plays, the AI application/new-age chatbot is a high school teacher’s worst nightmare—and maybe crypto’s too.

Here’s why: A recent report from security firm Check Point Research showed that within a few weeks of ChatGPT’s prototype launch in November, it became a popular tool for cybercriminals. How, you ask?

  • Participants in online cybercrime forums are using ChatGPT to write malicious code which can be used for espionage, ransomware, bots, and other fun stuff.

  • The scariest part? Even opportunistic wannabe hackers without coding skills can use ChatGPT to draft up malignant pieces of script and launch cyberattacks, per the report.

What does this mean for crypto? 2022 laid bare DeFi’s massive security problem—over $50 billion has been lost in the last year in numerous DeFi exploits. If bad actors begin using openly available AI to build scalable hacking tools, DeFi protocols could suffer even more in 2023.

The good news: ChatGPT can’t “generate functional exploits for vulnerabilities that involve complicated DeFi semantics,” Yajin Zhou, the CEO of blockchain security firm BlockSec, told CoinDesk. Translation? ChapGPT isn’t sophisticated enough to threaten complicated DeFi protocols. DeFi’s complexity makes it harder to hack.

Zoom out: AI today is like Justin Bieber in 2009—something big is happening, but we’re only at the very beginning. While ChatGPT might not be a serious threat to DeFi protocols yet, the increasing sophistication of AI tools could threaten that security in the future.

Breakup Drama à la Winklevoss

Try as it might, TradFi will just never top crypto in one major category: entertainment (and financial sovereignty, but that’s a story for another time). The crypto Twitter discourse this week makes Jamie Dimon’s snarkiest insults look like playground stuff.

Who’s going at it this time? The Winklevoss twins’ crypto exchange Gemini vs. Digital Currency Group (DCG) subsidiary Genesis. Let’s unpack what’s going on here.

The TL;DR:

  • Gemini loaned $900 million in customer funds from its now-terminated “Earn” program to Genesis and is demanding the money back—but Genesis isn’t paying.

  • Determined to repay customers, Gemini CEO Cameron Winklevoss accused Barry Silbert (the CEO of Genesis parent company DCG) of fraud and called for his ousting on Twitter. DCG called the move a “desperate and unconstructive publicity stunt.”

  • Gemini then severed ties with Genesis on Tuesday in an effort to force Genesis to return all locked-up assets. To complicate matters, the SEC filed a lawsuit accusing Gemini and Genesis of selling unregistered securities together.

Big picture: DCG is one of crypto’s biggest entities. So while very little about this dispute is black and white, one thing’s certain—the public spat between some of crypto’s biggest CEOs doesn’t exactly inspire confidence in the crypto market.

El Hodlador’s Ready for Bitcoin Bonds

El Salvador’s congress passed a digital securities bill last week that provides the legal framework for the issuance of a Bitcoin bond—a major step toward realizing President Nayib Bukele’s ambitious crypto visions.

Through the first-of-its-kind “Volcano Bond” project, El Salvador plans on raising $1 billion via BTC-backed bonds on Blockstream’s Liquid Network, investing half of the money into Bitcoin and the other half into building “Bitcoin City,” a tax-haven for BTC aficionados powered exclusively by renewable energy.

Big picture: Because the bond issuance had to be postponed several times (bear market = bad timing), this should be music to Bitcoin maxis’ ears.

Read more about how El Hodlador’s BTC experiment is going here.

In other news:

  • SBF took up blogging—and his latest post is ludicrous.

  • North Korean hacker group Lazarus caused a stir by moving stolen funds around.

  • FTX was cleared to sell off its assets, including LedgerX and FTX Japan, to repay creditors.

  • Seoul’s city government proves that the metaverse can have useful real-life applications.

  • Iran and Russia want to jointly issue a new gold-backed stablecoin to evade the impact of foreign sanctions.

Crypto Job Board

  • Fan of true crime? Then maybe you’ll enjoy working as a Fraud Analyst for Yield App.

  • Help bring web3 mobile games to the masses with Finfin Play AG as a 3D Creator.

  • AID:Tech is hiring a Cardano-obsessed Community Manager to be the face of its social media.

And that’s what you need on your radar this week in crypto. Don’t forget to reply to this email with your price predictions—is it only up from here? See you back here next week!