It would not be an exaggeration to state that the year 2022 may be the worst year the digital asset market has seen since Bitcoin was launched in 2009. On top of crypto prices crashing—Bitcoin alone had a total of $195 billion in realized loss in 2022—centralized crypto exchanges, and firms filing bankruptcies, and crypto and NFT trade falling, the year ended with the sensational collapse of FTX and its FTT coin.
So, it is not a surprise that policymaking bodies and law enforcement agencies tightening the noose on crypto crooks will be on top of 2023 blockchain predictions. Calvin Ayre, publisher, gambling industry pioneer and founder of global investment firm Ayre Group and crypto conglomerate CoinGeek, forecast that 2023 will see regulators and law enforcement agents finally crack down on “layer 1 fraud” before they move on to the “deeper, more insidious layer 2 fraud.”
The Pending Collapse of Binance
Regulators can hardly lift their heads following their failure to prevent crypto users and investors from losing hundreds of billions of dollars in cases like the Terraform Labs, CelsiusNetwork, Forsage and FTX. And what better way to redeem themselves than to successfully file charges against Binance, one of the five largest crypto firms in the world.
“Binance seems the logical place for them to start their revenge tour, particularly given the pre-Christmas revelation that Binance US—the allegedly independent, regulatory compliant U.S.-facing operation—was routinely transferring billions in customer funds to and from wallets associated with Binance’s international operations,” Ayre wrote in his 2023 blockchain predictions.
John Reed Stark, former chief of the United States Securities and Exchange Commission (SEC) Office of Internet Enforcement and president of cybersecurity and incident response firm John Reed Stark Consulting, is of the same mind as Ayre. Stark also predicted that Binance will collapse in 2023 if it does not overcome “mammoth” challenges.
In order for Binance to remain in business, it would need to provide legally valid financial audits and proof of reserves, have the Binance stablecoin (BUSD) hold its peg, prevent mass withdrawals and avert the U.S. Department of Justice from being able to file charges against the exchange and its executives. These hurdles are especially tough to overcome as most are beyond Binance’s control. Using government connections and spending millions on hiring supposed experts may not do the trick.
Layer 2 Fraud
In contrast to the layer 1 fraud that targets crypto users and investors, layer 2 fraud involves the manipulation of the technology behind crypto, which is blockchain. While all digital assets are built on a blockchain, it is something that can be utilized as a foundation for other emerging technologies, such as the metaverse, artificial intelligence (AI), IPv6 and Web3.
“While the ‘layer 1’ fraudsters have done significant damage to millions of retail investors around the globe, the damage is insignificant compared to the damage done to society as a whole from the ‘layer 2’ fraud,”
“Because this larger fraud threatens to hold back progress in the form of Web3 projects that will allow individuals to wrest control of their online data from today’s Web2 giants and the payment infrastructure that supports them,” Ayre added.
Hampering blockchain’s development in order to benefit a few major companies and businesses or hide the fact that their blockchains do not scale will prove to be more catastrophic than losing trillions of dollars because it will delay what people have dubbed as the Fifth Revolution.
The scalability of blockchain is something that Bitcoin white paper author Satoshi Nakamoto has reiterated many times, stating that scaling is crucial to the survival of Bitcoin. However, the Bitcoin Core (BTC) network continues to refuse to scale, instead changing the original Bitcoin protocol in order to maintain its 1MB block size and throughput of only 7 transactions per second (tps)—figures that were meant by Satoshi Nakamoto as mere starting points.
While BTC takes pride in being a speculative investment in the form of “digital gold” that only the wealthy few can afford, those who believe in the vision of Satoshi Nakamoto that Bitcoin is for everyone to use has established Bitcoin Satoshi Vision (BSV) in 2018. Since then, the BSV network has restored the original Bitcoin protocol and unlocked unbounded scaling.
This means that block sizes and throughput can be increased according to market demand. This not only minimizes network latency and failed transactions, but also lowers down transaction fees to minute fractions of a penny. Currently, BSV is processing 4GB blocks averaging 20,000 tps at $0.00015 per transaction.
In numbers, it is obvious that the BSV Blockchain can provide utmost utility to many global industries due to its ability to handle massive amounts of data and an extremely high throughput at fees that are next to nothing. However, BSV’s efficiency and practicality have been denied by major players in the industry in order to justify their blockchain’s expensive transaction fees, network crashes and latency, and highly volatile crypto prices.
As regulators and law enforcement agents go deeper into layer 2 fraud, Ayre predicts that these centralized crypto firms and exchanges, as well as the credit card networks working with them, will finally be filtered out one by one.
“The thinning of this herd will allow the market to see BSV for what it is: a regulatory friendly and legally compliant blockchain that can serve as both the backbone of the Web3 revolution and an environmentally friendly data storehouse without peer. A little late, in my opinion, but better late than never,”
The world is greatly anticipating the launch of a working and high-definition metaverse and a faster Internet in the form of Web3 as powered by blockchain and IPv6. AI and other technologies only depicted in sci-fi movies will soon follow. And these will all be possible if layer 2 fraud is eliminated and blockchain is developed and utilized as it should be. If Ayre in his 2023 blockchain predictions, then there is much to expect this year.
*This article was paid for. The Cryptonomist did not write the article or test the platform.