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Blockchain Resilience Shines During Global IT Disruption
On July 19, blockchain networks like Bitcoin and Ethereum demonstrated their remarkable resilience during one of the most significant IT disruptions in history. While numerous centralized services, including courts, healthcare systems, and airlines, were shut down, blockchain transactions continued uninterrupted.
Jeff Garzik, a former Linux kernel and Bitcoin Core engineer, noted on social media that Linux, Bitcoin, and Ethereum remained unaffected during the global IT outage. Casa co-founder Jameson Lopp highlighted the risks associated with automatic updates, suggesting they could introduce systemic vulnerabilities. Senator Cynthia Lummis, a well-known cryptocurrency advocate, highlighted Bitcoin’s uninterrupted operation, praising the strength of decentralized systems with the phrase “Vires in Numeris,” which translates to “Strength in Numbers,” alluding to the vast number of Bitcoin validating nodes.
The root cause of the outage has been identified as the Windows operating system, with many pointing out that blockchains are compatible across operating systems. Dr. Calle, developer of the Bitcoin Cashu wallet, recalled Satoshi Nakamoto’s initial hesitation in creating a Linux client. Bitcoin Core developer Peter Todd attributed Bitcoin’s robustness to its accessibility on Linux.
Initially launched on Windows in January 2009, the Linux version of Bitcoin was released later that year. The global outage was attributed to a faulty CrowdStrike Windows auto-update, which did not impact Mac and Linux systems. CrowdStrike CEO George Kurtz mentioned that efforts were underway to resolve the issue and restore normalcy for affected businesses.
Ethereum’s Potential Supply Crisis
Cryptocurrency trader and founder of Into The Cryptoverse, Benjamin Cowen, has warned that Ethereum’s price could decline once the initial excitement around spot Ethereum exchange-traded funds (ETFs) dies down, if the current supply trend continues. Cowen noted that since April, Ethereum’s supply has increased by about 60,000 ETH per month. By December, this could bring supply back to pre-merger levels.
Onchain analyst Leon Waidmann spoke of Ethereum’s “supply crisis,” noting that exchange balances have fallen to 10.2%, while 39.3% of ETH is locked in smart contracts. Following SEC approval on May 23, five Ethereum spot ETFs are set to begin trading on the Chicago Board Options Exchange on July 23. These ETFs include offerings from 21Shares, Fidelity, Invesco Galaxy, VanEck, and Franklin.
Binance’s Investment in US Treasuries
The U.S. District Court for the District of Columbia has authorized Binance to invest customer funds in U.S. Treasury bonds. According to a court order dated July 19, Binance can make these investments through a third-party investment manager, as long as the funds are not redirected to Binance or its affiliates.
The court also ordered that data related to these Treasury investments be included in Binance’s monthly corporate spending reports. This decision could shed light on the cryptocurrency’s role in supporting demand for the U.S. dollar, especially as BRICS nations pursue de-dollarization strategies.
Stablecoins, especially those backed by U.S. debt instruments, are expected to help maintain the dominance of the U.S. dollar. For example, in 2023, Tether held $72.5 billion in U.S. Treasuries, a sum comparable to the reserves of some developing nations. Tether’s over-collateralization of its dollar-pegged stablecoin is seen as a safeguard against economic instability.
Former U.S. House Speaker Paul Ryan has highlighted the potential of stablecoins to mitigate debt crises and support the competitiveness of the U.S. dollar in global markets. He noted that dollar-pegged stablecoins generate substantial demand for the U.S. dollar and associated debt instruments.
The broader implications of decentralization
The recent global IT outage served as a stark reminder of the resilience of decentralized systems. While centralized services have struggled, blockchain networks have functioned without a hitch, underscoring the potential of these technologies to provide uninterrupted service. As blockchain technology continues to evolve, its ability to provide stability and autonomy over stored value is becoming increasingly apparent. The incident has also highlighted ongoing challenges and debates within the crypto community, underscoring the need for a comprehensive understanding of the broader implications of decentralization.