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News Overview 8/9: Solana, Microstrategy, Coinbase, Ethereum, Instagram, Aptos

Up to 10,000 Solana wallets were hacked. Michael Saylor announced that he is stepping down as CEO. Coinbase signed a major deal with BlackRock. Ethereum will have a Proof of Work fork. Aptos could be the hottest platform project in the next bull market.

Thousands of Solana wallets hacked

The popular smart contract platform Solana is back in the headlines. The platform has had a lot of technical problems over the past year, but this time it’s an app-related hack. Around 10,000 users had their wallets emptied last week.

This is a very unusual case in the category of hacks. How is it possible that users of several wallet apps became compromised at the same time? It would be highly unlikely to find the same bug in two different apps.

A large team of professionals worked around the clock to investigate the issue, but the cause of the vulnerability was still unclear for a long time. Eventually, the problem was narrowed down to the Slope wallet app. The company also issued an official statement last week.

The problem was caused by Slope’s poor handling of user information. The private keys generated by the software were stored as plain text on a server, where they could be accessed by hackers. How did the popular Phantom wallet also come under attack then?

This is because it is also possible to use a private key generated by a Slope wallet in a Phantom wallet. If a person had created a private key in Slope and imported it into Phantom, these funds were also easy to steal.

Around 10,000 users have suffered from this attack. The total damage is around $10 million, which is a relatively small amount compared to the $100-$300 million hacks. What makes this attack exceptional is the high number of victims. Most of them were ordinary small investors.

The important thing here is the fact that the vulnerability was in a single piece of software, not in the Solana blockchain. Users of cold wallets (Ledger Nano, Trezor, etc.) were also safe.

Although there was nothing wrong with Solana this time, it was another unfortunate piece of negative news. The lesson to be learned from this case is that it is best to keep only small amounts of your portfolio in hot wallets. A significant proportion of your funds should be kept safe in a cold wallet.

The hack had almost no impact on the Solana price. There was a small drop at the time of the incident, but the price recovered quickly after the vulnerability was narrowed down to Slope.

Michael Saylor steps aside as CEO of Microstrategy

The world’s best-known Bitcoin holder Microstrategy dropped a news bombshell last week with its Q2-2022 review. The company’s founder Michael Saylor announced that he was going to step aside as CEO. Saylor had held the position since 1989.

The news received very little attention, partly because of the Solana scandal mentioned above. Another reason is probably that Saylor’s change of role is not believed to have an impact on the company’s Bitcoin strategy.

Michael Saylor was a completely unknown name to Bitcoin investors until a couple of years ago. But he became an overnight celebrity when Microstrategy announced a $250 million Bitcoin purchase almost two years ago to the day.

Since then, Saylor has appeared on thousands of TV shows and podcasts. He has arguably become one of the world’s best-known Bitcoin advocates. Saylor is also an active leader of the Bitcoin Mining Council, founded in the summer of 2021.

The founder of Microstrategy also has his critics. While Saylor’s first purchases are up more than 100 percent, the company’s entire Bitcoin position is down a billion dollars. During Q2-2022, the company’s balance sheet became negative by more than $900 million due to the fall in the Bitcoin price.

Saylor’s critics spun last week’s news as the man being fired for Bitcoin losses. This was hardly the case. According to Saylor, the move had been planned for years. He stepped down as an executive to focus more on the company’s Bitcoin strategy.

Coinbase’s deal with Blackrock

Last week there was a massive institutional deal announced in the crypto industry. Few investors understand its importance at this stage. It involves the American crypto exchange Coinbase and the asset management company BlackRock.

The former is a familiar name to every crypto investor, but BlackRock’s status is not that widely understood. It is the largest asset management company in the world. BlackRock has around nine trillion dollars in AUM. It has a huge influence on the investment market, and BlackRock also has very close ties to the US administration.

So what is last week’s news about? Joint customers of BlackRock and Coinbase will be able to invest in Bitcoin (and other cryptos in the future) through Coinbase.

BlackRock’s institutional clients use a platform called Aladdin. In the future, these entities will also have access to crypto trading, custody services, and other cryptocurrency-related activities through Coinbase Prime. At this stage, only Bitcoin is included.

The importance of the deal can be assessed through the stock market. Coinbase’s stock (COIN) was up more than 40% after the news was published. The company’s share price has risen by as much as 80% in two weeks.

This is not just a boom in Coinbase’s share price. Working with the world’s most influential investment firm will certainly enhance Coinbase’s status in the eyes of the US regulators.

Ethereum PoW chain will be created

Ethereum’s upcoming The Merge update has been one of the biggest talking points of 2022. It will be the most important update in the history of the smart contract platform. Ethereum will move from Proof of Work to Proof of Stake consensus, which means abandoning mining.

The effects of The Merge are not limited to mining, but it is arguably the most visible effect of the update. The end of mining also raises an important question: what will the thousands of Ethereum miners do next? Not all of them will sell their equipment and stop mining. Some will move on to Ethereum Classic or other cryptocurrencies.

A new option has also emerged in recent days. What if the Proof of Work branch of the Ethereum blockchain lives on? Will “Ethereum PoW” cryptocurrency be created with The Merge?

There seem to be two masterminds behind the Ethereum fork: Tron founder Justin Sun and the famous Chinese miner Chandler Guo, who was already forking Ethereum Classic in 2016. Gao made the following tweet a couple of weeks ago.

Justin Sun is involved in supporting hard fork through the Poloniex exchange, which he currently owns. Both Poloniex and Sun have announced their support for the “ETHPOW” fork and the cryptocurrency it creates.

But, there is already a Proof of Work version of Ethereum – Ethereum Classic. Why would you need another PoW blockchain? This is a good question. The project smells badly like a money-making scheme, where the “ETHPOW” will be shilled to small investors and dumped by the whales after a short while

It is difficult to see such a fork gaining any wider market support. However, all indications are that Proof of Work Ethereum will be created nevertheless.

Is Aptos the new Solana?

Although cryptocurrency prices have risen in recent weeks, a new bull market and real hype are still a long way off. A bear market is a lean time for investors, but it is when the next crypto success stories are built. Will Aptos be a hype coin in the next bull market?

Solana was undoubtedly one of the biggest success stories of last year. It was backed by all the biggest VC firms in the industry, as well as the FTX exchange, which is involved in all the major deals these days. Solana’s SOL token rose more than 100x in 2021 at its peak.

Now it looks like Aptos could be “the next Solana”.

The Aptos blockchain has much the same characteristics as Solana. Its founders are from the Meta (ex-Facebook) Diem project, which officially died in early 2022. Diem was launched under the name Libra in the summer of 2019. Meta eventually abandoned its own stablecoin idea, notably due to regulatory issues.

Like Solana, Mo Shaikh, who is responsible for Diem’s strategic partnerships, and Avery Ching, the technology director, have received a huge amount of funding for their project. First $200 million in spring 2022, followed by a $150 million funding round in July. All the biggest VC companies are involved, including a16z, Tiger Global, Circle and of course FTX.

Aptos is marketed with exceptional parallel execution technology, which, according to developer Aptos Labs, enables scalability of up to 160,000 transactions per second.

So, this project has essentially the same characteristics as Solana. A smart contract platform funded by the largest VC firms and marketed as the fastest and most scalable solution on the market. Sounds familiar…

The Aptos token has not yet been launched on the market. When it is released with Aptops MainNet, it is likely to be one of the hottest and most hyped cryptocurrencies.

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