On July 19, blockchain networks like Bitcoin and Ethereum demonstrated their exceptional resilience during one of the most significant IT outages in history. While numerous centralized services, including courts, healthcare systems, and airlines, were brought to a standstill, blockchain transactions continued without interruption.
Jeff Garzik, a former Linux kernel and Bitcoin Core engineer, highlighted on social media that Linux, Bitcoin, and Ethereum remained unaffected during the global IT outage. Co-founder of Casa, Jameson Lopp, emphasized the risks associated with automatic updates, suggesting that they could introduce systemic vulnerabilities. Senator Cynthia Lummis, a known cryptocurrency supporter, underscored Bitcoin’s uninterrupted operation, lauding the strength of decentralized systems with the phrase “Vires in Numeris,” which translates to “Strength in Numbers,” alluding to the vast number of Bitcoin validator nodes.
The root cause of the outage was identified within the Windows operating system, with many pointing out that blockchains are compatible across various operating systems. Dr. Calle, developer of the Bitcoin wallet Cashu, recalled Satoshi Nakamoto’s initial hesitation to create a Linux client. Bitcoin Core developer Peter Todd attributed Bitcoin’s robustness to its accessibility on Linux.
Initially launched on Windows in January 2009, Bitcoin’s Linux version was released later that same year. The global outage was attributed to a flawed CrowdStrike automatic update for Windows, which did not impact Mac and Linux systems. CrowdStrike’s CEO, George Kurtz, mentioned that efforts were underway to resolve the issue and restore normalcy to affected businesses.
Ethereum’s Potential Supply Crisis
Benjamin Cowen, a crypto trader and founder of Into The Cryptoverse, warned that Ethereum’s price could decline once the initial excitement around spot Ethereum exchange-traded funds (ETFs) wanes if the current supply trend continues. Cowen noted that since April, Ethereum’s supply has increased by approximately 60,000 ETH per month. By December, this could return the supply to pre-merge levels.
Onchain analyst Leon Waidmann discussed Ethereum’s “supply crisis,” noting that exchange balances have dropped to 10.2%, while 39.3% of ETH is locked in smart contracts. Following SEC approval on May 23, five spot Ethereum 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 Treasury Bills
The United States District Court for the District of Columbia has authorized Binance to invest customer funds in US Treasury Bills. According to a court order dated July 19, Binance can make these investments through a third-party investment manager, provided that the funds are not redirected back into Binance or its affiliates.
The court also mandated that data related to these Treasury investments be included in Binance’s monthly business expense reports. This decision could illuminate the role of cryptocurrency in supporting demand for the US dollar, especially as BRICS nations pursue de-dollarization strategies.
Stablecoins, particularly those collateralized with US debt instruments, are expected to help maintain US dollar dominance. For instance, in 2023, Tether held $72.5 billion in US 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 US House Speaker Paul Ryan highlighted the potential of stablecoins to mitigate debt crises and sustain the US dollar’s competitiveness in global markets. He noted that dollar-pegged stablecoins generate substantial demand for the US 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 struggled, blockchain networks operated seamlessly, underscoring the potential of these technologies to provide uninterrupted service. As blockchain technology continues to evolve, its capacity to offer stability and autonomy over stored value is becoming increasingly apparent. The incident also highlighted the ongoing challenges and debates within the crypto community, emphasizing the need for a comprehensive understanding of the broader implications of decentralization.