No Leader, No Problems?: Digital Asset Digest Volume #54

Welcome to the 54th edition of ‘The Digital Asset Digest’. Today, we talk about Bitcoin’s resistance to a leader, explain how Tether works, and look at this week’s token.


Ethereum to Reduce Energy Consumption by 99.95 Percent: Research

Source: U.Today

“Ethereum to consume 99.95 less power after transitioning to proof of stake (PoS), according to researcher Carl Beekhuizen.”

MATIC says ‘no’ to crypto bears with new all-time highs, weekly gains near 120%

Source: Coin Telegraph

“MATIC is now the 17th-biggest cryptocurrency by market cap as an exchange listing sees it reject the bearish mood afflicting major tokens.”

Fox Unveils NFT Company, Blockchain Creative Labs

Source: Crypto Briefing

“Leading American mass media company, Fox Corporation, is joining the crypto trend with an NFT business and ‘the first-ever animated series curated entirely on the blockchain.’ “

Bitcoin’s Market Share Falls Below 40%

Source: Trustnodes

“Bitcoin’s market share has fallen below 40% for the first time in three years as altcoin sezun gives rise to many cryptos.”

Elon Musk Tweets About Starbase: Shortly After, Starbase Token (STAR) Soars 6000%

Source: Crypto Potato “Following a picture of Tesla’s Starbase posted on Twitter by Elon Musk, Starbase Token (STAR) pumped 6000% and crashed almost immediately.”

No Leader, No Problems?: Digital Asset Digest Volume #54


No Leader, No Problems?: Digital Asset Digest Volume #54


No Leader, No Problems?: Digital Asset Digest Volume #54


No Leader, No Problems?: Digital Asset Digest Volume #54


Bitcoin’s Resistance to the cult of personality

Technology’s history is deeply intertwined with the cult of personality phenomenon. Apple’s rise was driven by a passionate and sometimes controversial founder. Mark Zuckerberg, Bill Gates, and Jack Dorsey have left a similar legacy at their respective companies.

This idolatry of individual entrepreneurs and passionate creators isn’t restricted to Silicon Valley. Henry Ford, JP Morgan, and Warren Buffett have arguably created cults of personality too. These lionized individuals help drive the enterprise forward by attracting talent and capital while warding off detractors. In some ways, they’re all examples of exceptionally successful leadership. 

However, Bitcoin has so far resisted this cult of personality. Users and developers in the community don’t identify anyone as a clear leader of the movement. In some ways, this lack of a cult of personality has helped the ecosystem become more robust, decentralized, and meritocratic. 

A leaderless movement

The fact that Bitcoin’s creator, Satoshi Nakamoto, is an anonymous individual could be part of the reason why the community has resisted mascots or leadership from other sources. 

Although there are some influential members of the community, including Anthony Pompliano, Barry Silbert, Michael Novogratz, Balaji Srinivasan, and Michael Novgratz, none of the influencers are ever insulated from fair criticism. This approach to open debate was on full display last week when the community confronted perhaps the most influential Bitcoin hodler of them all – Elon Musk. 

Shortly after Musk published a statement saying Tesla would no longer accept BTC payments for its vehicles, Peter McCormack called him out by saying his criticism was “poorly informed.” This sparked a debate that drew in experts such as Kraken’s Dan Held and Coin Metrics co-founder Nic Carter. Anthony Pompliano tweeted his disappointment by saying “never meet your heroes.” 

The rebuttal of the world’s third-richest man and a bonafide tech innovator reinforces the Bitcoin community as truly leaderless. Actions and ideas are given precedence over personality and status. That makes the ecosystem larger than any one person and, perhaps, more durable.

The lack of a clear leader may also make the digital asset more acceptable across national and cultural boundaries. Bitcoin has already gained adoption in Nigeria, Turkey, India, and even North Korea. Being politically and ideologically neutral may be a core reason for the asset’s unprecedented success across the world. 

Final Thoughts

Most revolutions have a clear leader. However, the digital assets revolution triggered by Bitcoin has remained decentralized since its inception. The pseudonymous creator vanished from the public debate years ago, and since then the mission to spread BTC across the planet has been driven by early adopters and passionate developers.  This resistance to a figurehead is part of Bitcoin’s decentralization and, perhaps, part of its appeal for some users. 


Is Tether really backed by cash?

Since its inception in 2014, Tether has been as controversial as it has been popular. The most widely used stablecoin was often criticized for lacking transparency. While the company claimed its USDT token was backed by U.S. dollars 1:1, it refrained from providing proof of its holdings. This week, it finally published a breakdown of its underlying collateral, which has answered some pertinent questions but raised even more. 

Here’s a closer look at Tether’s recent report and its implications for the wider digital assets industry. 

Tether’s collateral

As with any stablecoin, the value is derived from an underlying asset or currency. In Tether’s case, that underlying collateral is the U.S. dollar. Each USDT token was meant to be backed by individual dollars to help bolster the confidence of investors and traders who used the tokens. 

Since Tether accounts for a substantial portion of daily crypto trading volume and is worth $60 billion in aggregate, the token and its underlying collateral are both integral parts of the global digital assets infrastructure. However, Tether’s reserves were never made public and couldn’t be independently verified by the traders and investors who relied on it. 

In 2019, the company modified its claim that the tokens were backed by “reserves,” instead of “dollars.” That was seen as an admission that the tokens were backed by cash equivalents or other derivatives. In February, the company hired a Cayman Islands-based accounting firm, Moore Cayman, to publish a report that claimed the company had at least $35.28 billion in total assets against total liabilities of $35.15 million.  However, as part of a settlement with the New York District Attorney’s office, Tether has now published a full breakdown of its underlying assets. Here it is:

No Leader, No Problems?: Digital Asset Digest Volume #54
Source: Tether

Cash and cash equivalents are just 75.85% of total reserves, which is already well below the 100% some traders had expected. However, of that segment, only 3.87% is actual cash. This implies that each USDT token is backed by just 2.9% of real U.S. dollars. 

The rest is a mix of Treasury bills, repo notes, fiduciary deposits, and precious metals. A portfolio of assets, with some level of counterparty risk because Tether hasn’t mentioned who issued the ‘commercial paper’ that constitutes the majority of its reserves.

This degree of convolution undermines investor trust. It seems likely that other competitors could emerge with greater transparency.

Emerging competitors

Emerging U.S. dollar stablecoins promise greater transparency. The most popular rivals to Tether are USDC, Binance USD, Dai, and Paxos Standard. The companies that manage these, such as Circle and Gemini, say they are committed to regular updates that verify their reserves. Gemini’s GUSD, for instance, is FDIC insured up to $250,000 per user.

Regulators are stepping in too. The proposed “STABLE Act” would compel stablecoin issuers to obtain a banking license.


Tether’s complicated and insufficient reserves highlight a key challenge of stablecoins – trust. Emerging rivals and stronger regulations could plug this gap and bolster investor confidence in the future.


Wrapped BTC

Bitcoin is a digital store of value. Ethereum is a global decentralized virtual computing platform. These two projects are the most popular and widely adopted in the crypto industry. This is why it was inevitable that some developers would eventually consider a cross-platform asset that combines unique features from both. 

This cross-platform asset is known as Wrapped Bitcoin or WBTC. Here’s a closer look at our token of the week.


Smart contracts on the Ethereum network allow for the creation of digital tokens that can be backed by other assets. This technique has been used to create stablecoins, such as USDC which was discussed last week. Other developers have used this technique to create proxies for publicly traded companies and gold on the Ethereum network. 

Crypto companies BitGo, Ren, and Kyber came together to create WBTC, an ERC-20 token backed by Bitcoin. Each WBTC is backed 1:1 by an underlying BTC. Since the Bitcoin network is public, this collateral can be easily verified. Thus, it serves as the perfect bridge between Bitcoin and Ethereum. 

Use Cases

Bitcoin’s immense value cannot be fully utilized in the emerging field of decentralized finance or DeFi. DeFi applications are primarily based on the Ethereum network, which is incompatible with Bitcoin’s underlying blockchain. 

However, WBTC bridges that gap. It allows users to stake, borrow, lend, and use smart contracts with the world’s most popular digital asset. Now, BTC can be used as collateral for securing crypto-backed loans, to earn interest in decentralized lending pools, to earn liquidity mining/yield farming revenues, or to margin trade on decentralized derivative exchanges.


WBTC is managed by a group called the WBTC decentralized autonomous organization (DAO). This DAO currently has 30 members, including the original three founding members, who act as custodians for the wrapped Bitcoin. Users can reach out to one of these WBTC partners to wrap or unwrap their BTC. 

A proof-of-reserve system can be used to verify that each WBTC is, indeed, fully backed by a legitimate BTC. This level of transparency has helped make WBTC popular, with Bitcoin worth over $8 billion locked on the platform. In fact, 1% of all outstanding BTC are wrapped in this way. 

Recent developments

WBTC has seen increased transactions and adoption in recent months. Last week, it was added as a payment method on the BitPay platform. This means it can now be used for merchant services and cross-border transactions. WBTC was also on the list of accepted cryptocurrencies when the city of Williston in the U.S. state of North Dakota announced local residents can pay their utility bills in crypto

Final Thoughts

Global payments giant, Visa, recently adopted USDC to settle transactions on its payment network. This week, the Visa WBTC serves as a bridge between Bitcoin’s store of value and Ethereum’s decentralized applications. This token allows users to use BTC as part of smart contracts that unlock the benefits of DeFi. As such, it adds incremental value to both blockchain networks.


Markets, in general, are trading in a slightly positive tone today, ahead of tomorrow’s release of the FOMC meeting minutes. Equities were up across Asia and Europe and US futures are pointing to a positive open. US yields continue to weigh on the greenback with the 10-year benchmark hovering around 1.65%. USDCAD is drawing closer to key support at 1.2000, a six-year low.

Bitcoin is trying to make a timid comeback this morning, after sliding almost 10% yesterday. BTCUSD clocked its lowest rate near $42,000, with its market dominance now dropping to a three-year low. This further confirms our recent observation that market participants could be looking for alternative crypto assets and defis. As of this writing, BTC represents 39.7% of the combined crypto asset capitalization. 

Over the past 24 hours, BTC open interests were 3.0% lower and funding rates were flat.

For now, the sell-off seems to cool off, but we remain cautious as long as BTC/USD remains inside the $42k – $47k trade range.

Market participants are showing caution about the next directional move. Momentum remains bearish to neutral. We should expect some price consolidation around current levels with the next key psychological support at $40,000 (on a weekly outlook).

No Leader, No Problems?: Digital Asset Digest Volume #54


Is Chamath Behind The Controversial BitClout?

Source: Bitcoinist

“Notorious billionaire Chamath Palihapitiya’s tweet about BitClout raised a few red flags. Since we at Bitcoinist checked the project’s documentation and explored the possibility of it being a scam, we had to investigate. Is Social Capital’s CEO more involved in BitClout than he’s letting it out to be?”


After a long hiatus from reports, you can look forward to our NFT report at the end of this week. But in the meantime, you can look forward to our upcoming NFT Summit on June 1st/2nd. We’ve got a great list of speakers lined up, and you’ll be an NFT expert by the time the summit is over.

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