🧠 Drivechains are dumb

Therapy Recap: Gensler ends his career, Drivechains are not popular and Twitter is dabbling in digital assets

GM.

Welcome to Bitcoin Therapy. We’re like the smell of fresh brownies from the oven - except we don’t make you fat.

First, happy and relaxing Sunday to 2,280 of you reading today. Hello to all new readers 👋

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Alright, let’s get to the juicy stuff.

Here’s what I got for you this week:

  • SEC loses lawsuit against Grayscale - ETF here we come!

  • Controversial Bitcoin change gets backlash

  • Twitter/X acquires a “Currency Transmitter” license. 💩-coins incoming?

Estimated read time: 3 minutes and 48 seconds

Before we begin, a big thank you to Stamp Seed for sponsoring this week’s email. ❤️

SEC LOSES LAWSUIT - ETF EVEN MORE LIKELY

Another week, another L for Gary ‘G-Man’ Gensler.

What happened? Well, the SEC got knocked the f out! 🥊

The U.S. Court of Appeals ruled 3-0 in favor of Grayscale and dropped the SEC's denial of a BTC spot ETF case.

So yeah, it’s official: Grayscale won. The SEC lost.

But why should you care? Well, for the past 2 years, the SEC has blocked ALL spot Bitcoin ETF proposals.

Why? They say manipulation and fraud could affect spot and regulated markets in a different way.

And now, the court has concluded that it was BS. Here’s how the SEC's decision-making was described:

  • “arbitrary and capricious”

  • “falling short of the standard”

  • “absence of a coherent explanation”

This is a bureaucrat-speak for “you guys are clowns”.

And since we’re shitting on Gary, here’s the full list of accomplishments he can add to his resume:

  1. Lost to Grayscale

  2. Lost to Ripple

  3. Shilled a sh*tcoin ‘Algorand’ at the top, and that is now down 98%

  4. Failed to protect consumers from FTX

Gary…maybe it’s time to rethink your career path.

So what next? SEC losing means they have to review Graysacale’s spot ETF application again. After this, they has 2 options:

  1. Accept the application (yay, Bitcoin ETF!)

  2. Find another BS reason to deny the application

I’m betting on number 1. They won’t bother now that Blackrock & Co. are also applying.

It could be that Gary and the SEC were just buying time before Larry Fink and other Wall Street buddies were ready.

Anyways. This was unexpected and positive. This is a strong sign that Bitcoin ETF is likely to be approved.

The negative? Bye-bye, cheap sats. 👋

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CONTROVERSIAL BITCOIN CHANGE PROPOSAL GETS BACKLASH

If you hang out on Bitcoin Twitter, you know it has branched out into two groups:

  1. People fighting about the ETF

  2. People fighting about Drivechains

What’s a Drivechain? Explaining it to you like you’re five might be too complex. So, I will explain it to you like you’re in the XRP Army.

Drivechain (also known as BIP300) is a soft fork proposal allowing anyone to create layer-2 sidechains.

Still confused? Bear with me. Think of sidechains as parallel blockchains that enable BTC to “flow” between two networks. BTC on these sidechains would be pegged 1:1 (not that kind of pegging, you perv) to the mainchain.

This would allow BTC to “leave” the Bitcoin blockchain and have fun on other blockchains and then return like the prodigal son if needed.

Sounds wonderful! So, what is the issue?

There are a lot of red flags surrounding the Drivechain controversy. Here are the 3 big ones:

🚩#1 The framing of Drivechain chain by its creator, Paul Sztorc, is highly suspicious:

A) “It’s an existential requirement for Bitcoin to survive”

B) “It’s needed right now and cannot wait for implementation”

C) “It has enormous upside and zero -- literally zero-- downside”

All 3 statements are false and extremely speculative.

🚩#2 Drivechains would enable scams on Bitcoin

Yup, you read that right. Here’s how Paul Sztorc described Drivechain when asked to describe it simply:

It’s like altcoins but on bitcoin

Paul Sztorc

Narrator: It was at this moment Paul knew he f*cked up

Scammy altcoins on Bitcoin are…well, still scams.

But that’s not all: having unregulated securities on Bitcoin would 100% attract regulators to Bitcoin and give it bad press (understandably).

🚩#3 people pushing for the update have a conflict of interest

Drivechain concept has existed for 2013 years. The technical proposal (BIP300) was created already in 2017. So why a sudden urge to add it to Bitcoin Core?

Well, it turns out the company (Layer 2 Labs) behind drivechains recently raised $3 million. And who is funding this effort?

Paul:That’s not anyone’s business”

Sus.

And it doesn’t help the rumors that Roger Ver (the guy who tried co-opting Bitcoin) invested in Paul’s previous project that requires drivechains to work.

Sus x2.

Anyways, I think drivechains is good for Bitcoin. It’s yet another proof that Bitcoin is resistant to rash changes.

Remember: always be suspicious of people wanting to change Bitcoin.

TWITTER 🤝BITCOIN?

Twitter is making moves (still not calling it X).

Twitter has obtained a license for crypto payments and trading in the U.S. 👀

Here are the details:

  • Twitter now has a ‘Currency Transmitter” license

  • It enables them to transfer, exchange, and store digital assets for users

  • This means Twitter can technically allow its users to store and trade crypto

I’m old enough to remember when birdsite rolled out Bitcoin tipping a few years only to remove it after a few months.

But this is different. This turns Twitter into an exchange/payment processor.

Elon seems serious about tuning Twitter into an “everything app” - just like WeChat in China.

Here’s what the license could mean in my option:

  1. Bitcoin integration

  2. Sh*tcoin integration

  3. Twitter rolls out its own internal database aka Twitter bucks

I think it’s number 3. I doubt Elon wants to deal with the headache that comes with crypto.

Sorry for being the party pooper. 💩

RABBIT HOLE READS 🕳️……🐇

THIS WEEK IN A MEME 📅

Can’t wait for the bear market to be over.

FROM THE ARCHIVE 📁

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