"A Letter to Jamie Dimon" and Anyone Else Struggling To Understand Bitcoin And Cryptocurrencies

Written in 2018 by Adam Ludwin - CHAIN Co-Founder & CEO

March 20, 2023

(Dinarian Note: This letter has been virtually erased from the internet. It was a letter written by Chain's (Now Being Rebranded as "ONYX") Co-Founder and CEO, to Jaimie Dimon of JP Morgan, who is working on a new financial program called, yep you guessed it, "ONYX". Onyx will be a inter-Intra bank Unified Ledger Platform. Pure coincidence im sure... I advise everyone read this, then watch the video below and it will connect the dots nicely as to why this letter is so darn IMPORTANT...)

To Mr. Dimon, and anyone struggling to understand cryptocurrencies.

Hi Mr Damon, I'm Adam Ludwin and I have a company called "Chain". I have been working in the cryptocurrency field for many years. You spoke publicly about Bitcoin last week:

It is not difficult to convince people that cryptocurrencies have no intrinsic value, or that governments will easily destroy them.

At the same time, another theory is becoming more and more popular: that cryptocurrencies will rewrite the way banks and governments operate, and then Silicon Valley giants will rule the world.

Both extreme statements are not true.

The real facts are carefully understood and are very important.

That's why I decided to write this letter to you, hoping it will help you gain a deeper understanding of what cryptocurrencies really are. Let me start with what I believe: the current cryptocurrency market is overheated and irrationally exuberant. There are a lot of people who pretend to be creating cryptocurrencies and scams are everywhere.

Few people in the media understand what it's all about
Few people in finance understand what it's all about
Few people in technology understand what it's all about
Few people in academia and politics understand what it's all about
Few of the people who buy crypto understand how it all works and probably neither do I.

Besides: Banks and governments are not going away, traditional software is not going away either.

To put it simply: there is a lot of noise, but there is also a real message in it. To grasp it, we need to start by defining a cryptocurrency. Without a specific definition in place, when most people argue about cryptocurrencies, they are talking differently. Because they never stopped to ask each other's definition of cryptocurrency.

Here's my definition: "Cryptocurrency is a new asset class characterized by its ability to power decentralized applications".

If I'm right, your view of cryptocurrencies really has to come from your view of decentralized applications and their value compared to current software models, not from your view of traditional currencies or securities Regardless of its evaluation. If you don't have an opinion on decentralized applications, then, sorry, you can't have an opinion on cryptocurrencies yet.

Please read on!

Since this is not a comparison between cryptocurrencies and traditional currencies, let's stop using the word "currency". This is a misnomer, the word has too many connotations. Mr. Dimon, I noticed that when you talk about bitcoin publicly, you often compare it to the dollar, the euro, the yen, etc. Such analogies will not help you understand the truth of the matter. In fact, it can actually get in the way. So, next, I will use "crypto assets" to refer to so-called cryptocurrencies. Let’s review: cryptocurrencies are a new asset class that is uniquely positioned to power decentralized applications.

As with other classes of assets, there must exist a mechanism for allocating resources to a particular form of organization. Although the recent short-sighted focus of all parties has been on the trading of encrypted assets, the purpose of their existence is not just to be traded.

That said, crypto assets are not meant to exist, at least in principle. To help you understand, we can refer to other asset classes and the organization of their corresponding services: Company Shares vs. Corporations Government Bonds v.s. State, Levels of Government Mortgages vs. Asset Owners Then, now we're talking about: Cryptoassets v.s. Decentralized Applications.

Decentralized applications are a new form of organization, and a new form of software: a new model of creating, supporting, and operating software services in a completely decentralized manner. This does not mean that this new model must be better or worse than the existing software operation methods or companies.

We'll discuss the main pros and cons of this in a moment. We can only say that encrypted assets and decentralized applications are fundamentally different from the current software operations and their corresponding organizational forms that we are familiar with.

How different?

Think of this analogy: You grow up in a rainforest, and I give you a cactus and tell you it's a tree. How would you react? You might laugh and say it's not a tree, because a tree doesn't have to store a bunch of water in its body and then protect it with armor. Yes, after all, in the tropical rainforest, water is everywhere! This is pretty much the first reaction of many people working in Silicon Valley to decentralized applications. I digress, I should give you a good explanation:

What are decentralized applications?

Decentralized applications are a way of creating services that don't have a single actor. We'll discuss whether they actually have value in a moment, but for now, you need to understand how they work.

Let's go back to the beginning of this idea.

It was November 2008, and the financial crisis was sweeping the world. An anonymous author published a paper explaining how to build a viable electronic payment system without a trusted third party such as Chase, PayPal, or the Federal Reserve Bank. This is the first time in history that a decentralized application of this type has been proposed. It's about decentralized applications for payments.

The title of the paper is: Bitcoin

How does this work?

How is it possible to send an electronic payment without a pre-designated entity that can track and update everyone's account balance?

Electronic data is not a bearer instrument, and data requires a reliable intermediary and authentication.

This paper proposes a solution: form a peer-to-peer network, open the network, and publish every transaction to everyone on the network.

When you post a transaction, point to the account information on this network involved in the transaction. Use encryption principles to sign your release with the software key of the account so that others can confirm that it is your account.

Nearly working, there is one more requirement: if there are two releases competing with each other (ie, you want to spend the same money twice) only one release will be adopted. Wrong solution: Design a unit that timestamps transactions, and then incorporates the earliest.

But in this way, you have to rely on a third-party unit, which is tantamount to doing nothing. An epoch-making solution: Let all units compete to be "time stamp executors"! We must have a unit to perform the action, but we can avoid appointing a specific person in advance, or using the same person every time, to perform the action.

"Let's compete!" sounds like a market economy. What is missing? Competitive rewards. excitation. Or, assets. Let's call this asset "Bitcoin". Let's call the parties competing to validate the timestamp of the latest batch of transactions "miners". Let's open up the code and the web so anyone can join the race at any time. Now, we need a real competition.

This article shows a way: get ready, start! Find a random number generated by the Internet! This random number is very, very difficult to solve, so difficult that the only way is to use a lot of computing power and consume electricity to find it. Just like in "Charlie and the Chocolate Factory", the spoiled Veruca asked her father and the poor laborers to help her find a lucky golden ticket to visit the chocolate factory, and the miners used calculations to search for their lucky gold "number" ".

Why such deliberate and resource-intensive competition for something as simple as timestamping the network? Because we want to ensure that the competitors will pay the real cost for this, so that if they really win the game of finding random numbers and become the designated time stamp executors, they will not do evil with this power (such as review transactions).

Instead, they diligently scan every pending transaction, weed out any users attempting to double-spend the same funds, ensure all rules are followed, and broadcast authenticated batches to other network participants.

Because if they play by the rules, the network is designed to reward them...in newly minted bitcoins, and transaction fees in bitcoins for those who want to transact. (Can we now know why they are called miners instead of timestamp messengers?)

That is to say, miners follow the rules because of self-interested motives and act beneficial to the entire network. You know, Adam Smith, the father of economics, said:

Our supper is not in the benevolence of the butcher, the vintner, or the baker, but in their regard to their own interests.

Encrypted Assets: The Invisible Hand of the Internet.

Bitcoin is capitalism, pure and simple. You should love it!

So, now that these miners have bills to pay (mainly electricity), they should sell their newly earned bitcoins on the open market for whatever fiat they need to pay for them, and the rest is profit. So bitcoins will go into circulation, bought by those who need them, and even speculators can participate (more on who “needs” it, and who speculates later.)

Got it?

This kills two birds with one stone: a financial asset that replaces our need for a trusted centralized authority with a market of In the payment network, it is used as a digital bearer paper for circulation (yes! This is a circular argument, I know.) Now that you understand Bitcoin, let's further extend this logic to the discussion of decentralized applications as a whole superior.

Generally speaking, decentralized applications allow us to do many things (such as payments) that we can do today without a trusted central authority. Another example: Filecoin, a decentralized application, allows users to store files on computers in a peer-to-peer network without the need for centralized file storage services such as Dropbox or Amazon's S3.

The app's encrypted asset, also called Filecoin, is used to incentivize the public to share excess hard drive space with the network. Digital file storage is not a new concept, nor is electronic payment.

What's new is that these services don't need a company to operate, which is a new form of organization. Let's talk about another example. Be warned, this can be a bit confusing as the application is a much lower level concept.

There is a decentralized application called "Ethereum" (Ethereum), Ethereum is a decentralized application for building decentralized applications.

I believe that most readers have heard the words ICO (Initial Coin Offering) and Token (token), most of which are issued on Ethereum. To build a decentralized application, you don't have to start from scratch like Bitcoin, you can choose to do it on Ethereum because: a) the network is already working, and b) it is specially designed to build various applications. sex platform.

Ethereum's protocol is designed to incentivize parties to contribute computing resources to the network in order to earn Ether (Ether; Ethereum's encrypted asset). This makes Ethereum a new computing platform for decentralized applications of these new types of software.

This is not cloud computing, because Ethereum itself is decentralized (you can look up the meaning of the word ether in the history of physics), which is why its founder, Vitalik Buterin, calls Ethereum the "world computer." To sum it up, in just a few short years, the world has found a way to build software services without a central operator.

These services are called decentralized applications, and the main key is to use encrypted assets to motivate non-specific people on the network to contribute the resources required to provide services, including computing, storage, computing, etc. At this point, you can take a breath and feel that this thing is actually amazing.

All we need is the Internet, a set of open protocols, and a new type of asset, and we can build a network that can organically integrate resources and provide various services. Many people believe that this is the path that all software will eventually take in the future, and that this can fundamentally challenge the four kings of FANG (Annotation: Facebook, Amazon, Netflix, Google) and venture capital.

Except for one feature.

And this is not just a superior property of all decentralized applications, it's the only way we know how to do it.

What am I talking about? That is, censorship resistance.

This is the real message that is not easy to grasp in the interference I mentioned. Free from censorship means: the use of decentralized applications is open and unrestricted, and service transactions cannot be stopped.

More specifically, there is nothing stopping me from sending bitcoins to whoever I want, nothing stopping me from executing code on Ethereum, nothing stopping me from storing files on the Filecoin network... just I can connect to the network and pay network transaction fees with the corresponding encrypted assets, and I am free to do whatever I want. (If Bitcoin is pure capitalism, it's also pure freedom. This is where libertarians might be obsessed.) If you're a cryptocurrency fanatic and don't want to take my word for it, at least you're willing to listen.

What did Adam Back say to Charlie Lee?

So, we certainly cannot say that Bitcoin is better than Visa for everyone, but it is possible that for some users, Bitcoin is the only way they can pay. We can ask the question: "For whom does this trade-off make sense?

Who needs freedom from censorship over the speed, cost, scalability, and user experience of a centralized service?

If decentralized applications are to be valuable to a certain group of people, then they must choose such services out of the consideration of being free from censorship.

Of course, this is not from the point of view of investment speculation, but in essence. Who are these people? Although there is not very complete data to analyze, it seems that users of decentralized applications can be roughly divided into the following two categories:

People who want to connect to the world: There are many parts of the world where people don't get enough services that operate in traditional ways, but still have ways to get online.
People who don't want to be connected to the world: Anyone who doesn't want their transactions reviewed or known.

Under this framework, one can further ask:

For whom is Bitcoin the best or only form of payment?
For whom is Filecoin the best or only way to store files?
For whom is Ethereum the best or only way to execute programs?

These questions point directly to the ultimate value behind this technology.

Currently, most decentralized applications are not of much use. In the case of Bitcoin, fewer mainstream U.S. merchants accept it as a payment option than in 2014.

A lot of people talk about the use of Bitcoin as a payment system in developing countries, but in China for example, traditional software applications such as Alipay or WeChat Pay are really the way to drive the big revolution in payments here.

At the same time, the considerations of using bitcoin on the darknet or ransomware are obvious.

But don't people use Bitcoin for "store of value" reasons?

Of course, this is just another claim that people invest in Bitcoin to hold it for the long term. But remember I haven't talked about investing in cryptoassets, I'm talking about whether decentralized payment applications powered by this asset are useful to some people.

Only on the premise that human beings are willing to live and work in buildings in the future can real estate have the function of long-term value preservation. The same goes for decentralized applications.

So how to understand Ethereum in terms of immunity from censorship? After all, it seems like a lot of developers are using it these days.

Since Ethereum is a development platform for decentralized applications, are many developers being censored or restricted? In a way, yes. Developers or new entrepreneurs who want to develop financial products do not have open and unlimited access to the world's financial infrastructure.

Of course, Ethereum has no way to provide such usage rights, but it provides another different infrastructure for all parties to use, such as creating and executing a financial contract.

Because Ethereum is a platform, its ultimate value comes from the sum of the value of the applications built on it. In other words, we can evaluate whether Ethereum is useful by looking at whether things built on Ethereum are useful. For example, do we need a censorship-free prediction market? Censorship-free meme? A censorship-free YouTube or Twitter?

It’s still early days, but if none of the 730+ decentralized applications that have been created on Ethereum so far seem to be useful, then it seems like something is going to mean something. Even in the first year of the internet, there were chat rooms, e-mail, cat photos and sports scores worth talking about. Where is Ethereum's killer app today?

So, what does this mean?

Decentralized applications have characteristics so different from the software applications we know and love, is anyone really going to use them? Do they have the chance to become an integral part of the economic system? It's hard to say, because the answer, although related to the technological evolution of the technology, is more important to society's acceptance of them.

For example, sending encrypted messages is usually only used by hackers, spies and neurotic users, and this phenomenon does not seem to change until recently, after the Snowden and Trump era, almost everyone from Silicon Valley to the Acela corridor started using Signal or It's Telegram, WhatsApp is end-to-end encrypted, and the press uses SecureDrop to pay fees... There have been some improvements in technology in this area, but the most important thing is that social changes are driving popularization.

In other words, we grew up in the rainforest, but sometimes the environment changes, and it would be helpful to know how to adapt to other environments.

This is the basic discourse on investing in encrypted assets and decentralized applications at present: it is still too early to draw conclusions, this change is too big, if one or two decentralized applications really become part of the future world, then the Cryptoassets are going to be extremely valuable, so invest early and see how things play out, don't quit just because you haven't seen a killer app yet.

That's a pretty good statement, and I'm inclined to agree.

Let me summarize: In the long run, the value of cryptoassets is driven by the usage of the decentralized applications they support. Although it is still early, the current high valuation still makes sense, because even if the probability of mass popularization is not high, the potential impact is huge, so it is not bad to get in the car first and follow along to see the future development.

But how to explain the latest madness?

Bitcoin has increased five times within a year, and Ethereum has increased thirty times. The total market capitalization of cryptocurrencies has soared to as high as $175 billion from $12 billion a year ago. Why? (Annotation: This is the statistics of 2017.10.17)

As with all crazy history, irrationality is the most rational option right now.

In order to understand the truth of the matter, let us examine the thinking logic of buyers and sellers. Start with the buyer.

If you started investing in bitcoin or ethereum early on, you made a windfall. In psychology, it is called the "banker effect". You start to disregard this money as your real money. You feel that you are very powerful and more willing to take risks, and you may even spread the risk to one or two other encrypted assets.

If you haven't invested yet, the fear of missing out continues to build up until the moment comes when you go all out and buy. Maybe you just saw the news about Bitcoin and didn't understand it, so you followed Buffett's (good) advice and didn't buy it. Friends around you bought it and made money, but you still ignored them. Then you saw the news about Ethereum, and you didn’t understand it, and you didn’t buy it, and then your friends bought it and started planning for retirement. This lesson seems to be contrary to Buffett's teachings. It seems that you should only invest in things you don't understand? So people started rechecking their investment logic from the ground up, and when Bitcoin hit new highs, they finally got in.

it's not a good thing.

Because, there will always be sellers in the market to fill the demand, especially when the demand comes from a group of people who think they will never understand and decide to bet their money on anything that sounds complicated and can make a big difference.

Check out the seller now. I don't mean the people who buy and sell, but the issuers, the teams that create new cryptoassets.

The basic model is: before the planned decentralized application is launched, a certain proportion of newly created encrypted assets is pre-sold for development funds. This means that the funds so raised are a) non-dilutive, not securities, and b) not debt, and you have no obligation to pay anyone back. Basically free money, even the dot-com bubble of the 90s wasn't such a good thing, it was the golden age of entrepreneurs. Therefore, this lure attracts people from all walks of life to rush into ICOs, not even to develop decentralized applications. After all, an ICO can get you out of the game before it goes live!

There is another effect that catalyzes entrepreneurs to create new encrypted assets: selling encrypted assets early creates a group of "visionary investors" who bought your assets early and actively assist you in promoting them. Impossible to exist.

The problem with this kind of thinking is that it merges the roles of early investors and early adopters. There is very little overlap between people who buy digital assets and people who use services associated with them, especially in the current market situation. This creates an illusion of product versus market. Yes, people are buying your cryptocurrency, but only because they want to get rich, and what you're selling is "the way to get rich".

But "it's okay" because everyone is getting rich right now.

The most rational choice right now is to be irrational.

As long as that line graph is always going up.

Only when the tide goes out do you know who's without pants.

At the same time, I would not be bearish on crypto assets.

Those who live off crystal balls end up swallowing broken glass.

Consider the following scenario: the total market value of encrypted assets increases by an order of magnitude every few years, so how much will it reach in 2022? It is certain that many (or most?) cryptoassets created today will not exist then, but many cryptoassets (known as altcoins) started in 2013/2014 are also long gone now. The only exception is Ethereum, which has driven this wave of enthusiasm by relying on platform functions to support other encrypted assets.

Mr. Dimon, what is the conclusion?

Let me conclude by summarizing.

Cryptocurrencies (what I prefer to call cryptoassets) are a new asset class for the development of decentralized applications.
Decentralized applications provide services that we already enjoy today, such as payment, storage or computing, but the difference is that the services here do not need a centralized institution.
This new way of operating software is useful for people who need protection from censorship, often because they either can't use normal services or don't want to be identified.
It is better for most people to use the current normal application services, because they are 10 times better than decentralized applications in all aspects, at least for now.
Society's embrace or rejection of new technologies is hard to predict (think of the example of encrypted communications).
In the long run, the value of encrypted assets depends on whether the decentralized applications they provide are useful. In the short term, the volatility will be intense, with FOMO competing with FUD, doubt competing with understanding, greed competing with fear (both buyers and sellers).
Most people who buy crypto assets have re-examined their investment logic.
Most of the sellers who create new crypto assets are not actually building dapps, they are just selling their new tokens along the mad bull market; this does not mean that dapps are bad, it just means that someone is taking advantage of ignorance , and even they themselves know little about it.
Don’t take the long-term view of cryptoassets in a bad light: we’re approaching the 10th anniversary of the Bitcoin thesis, cryptoassets are still showing no signs of fading, and decentralized applications are likely to have a place in the world like the ones we’ve long taken for granted same organization.

I wish you well,

Adam

p.s. — You may have noticed that I didn't use the word "blockchain", which I think probably created more confusion than knowledge.

p.p.s.—There is a related topic that I did not mention here: encrypted ledgers used by enterprises. My views on this can be found here.

(Annotation: All pictures come from the original content)

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February 17, 2025

The Dawn of DeFi: The Hidden War for a Decentralized Future

👉 DON'T FADE THIS ARTICLE~ Crypto Michael AKA "The Dinarian"

The below article is NOT financial advice, it is being broadcast for entertainment purposes only. You should DO YOUR OWN RESEARCH and NEVER invest any more than you are willing to lose. On that note, THIS ARTICLE AND THE UNDERLYING ASSET DISCUSSED COULD CHANGE YOUR LIFE FOR THE BETTER FOREVER! You SHOULD pay close attention as this MAY BE THE MOST IMPORTANT article you could ever have read, unless you were fortunate enough to read the Bitcoin whitepaper and had invested in it back in 2008. The asset I am about to present to you, COULD EASILY FLIP BITCOIN! ESPECIALLY WITH TODAYS ADMINISTRATION IN PLACE!
~ Namasté 🙏 Crypto Michael AKA "The Dinarian"

Attempted Theft of the World's Most Valuable Property, SEC Lawfare & The ETHgate Scandal

It is widely accepted that the media often spreads misinformation and hides any truth that challenge the establishments narratives. Well, this is one of those hidden truths...

Loans without Banks, Trades without Exchanges, Contracts without Lawyers. Peer to Peer Capital Markets disrupts traditional finance by removing middlemen and counter-party risk, enabling you to become your own bank by holding the keys to it all in your own privately held digital wallet.

To what lengths do you think the establishment would go to defend their control of the financial system? A system seemingly ripe with market manipulation, naked shorts, money laundering and regulatory capture.

The Myth of Open Source

For context, in the realm of open source, major corporations can engage in Intellectual Property theft by using open source projects to gain insights, technology, or legal protections without fully reciprocating to the community. Companies might contribute code to an open source project, only to later use that same code in commercial products, extending it with enhancements, essentially using open source as a low-cost R&D resource. Patents are crucial here, serving as a defense mechanism. Although open-source licenses cover copyrights, they don't extend to patents, meaning that companies holding patents can enforce legal protections against unauthorized commercial use, ensuring that any commercial application of their patented technology within open-source software requires proper licensing or recognition. This protection has historically led to the hyper-growth of industries like mobile phones and the internet, where patented technologies could be safely shared and built upon, promoting innovation and market expansion.

Validating Inventorship

In fields such as technology, pharmaceuticals, and manufacturing, patents are vital for safeguarding new inventions, with Nikola Tesla's extensive patent portfolio serving as a testament to his contributions to science.

However, Tesla's revolutionary inventions, like the Wardenclyffe Tower which aimed at providing free wireless energy, faced fierce opposition due to their potential to disrupt established control over energy markets. Financially sabotaged by investors like J.P. Morgan, legally challenged through "the war of currents" by Thomas Edison's promotion of the less efficient Direct Current system, and undermined by media smear campaigns, Tesla's work was systematically suppressed. After his death, the FBI's seizure of his documents further suggests efforts to control or conceal his ideas that could disrupt centralized energy distribution, illustrating how innovation can be stifled to maintain existing power structures.

Could this type of suppression still be happening today?

The Genesis of Decentralized Finance

Reggie Middleton first introduced Distributed Finance what would later become known as Decentralized Finance (DeFi), in 2013 when he invented and patented technologies under the title "Devices, systems, and methods for facilitating low trust and zero trust value transfers." This included groundbreaking concepts like programmable Smart Contracts, Swaps, Tokenized Assets, NFTs, Stable Coins, Digital Wallets, and even underpin Central Bank Digital Currencies (CBDCs).

https://patents.google.com/patent/US11196566B2/en?oq=US11196566+

Called by many as "The Most Valuable Property in the World", his patents US11196566B2, US11895246B2, JP6813477B2, JP7204231B2, JP7533974B2, & JP7533983B2 have been cited over 138 times by major financial institutions, underscoring their foundational role in the blockchain industry.

His patents cover:

Trustless Peer-to-Peer Value Transfers: Systems for enabling decentralized and secure value transfers between parties without the need for intermediaries. Applicable to cryptocurrency transactions, DeFi platforms, and digital payment systems.
Decentralized Financial Systems (DeFi): Methods and devices that facilitate decentralized trading, lending, borrowing, and yield generation. Impacting decentralized exchanges (DEXs) like Uniswap, SushiSwap, and similar platforms.
Smart Contracts: Implementation of self-executing contracts on blockchain networks, used to automate agreements and enforce conditions without intermediaries. Essential for platforms such as Ethereum, Cardano, and other Layer-1 and Layer-2 blockchain protocols.
Tokenized Asset Trading: Methods for creating, transferring, and trading tokenized assets, including cryptocurrencies, non-fungible tokens (NFTs), and digital securities. Platforms like OpenSea, Rarible, and asset tokenization platforms may fall within the scope.
Cryptographic Security and Wallet Systems: Systems for securing digital assets using cryptographic methods, including cold storage, multi-signature wallets, and multi-party computation (MPC). Potential overlaps with services offered by companies like Coinbase, Kraken, Gemini, and institutional custody providers.
Decentralized Identity and Verification Systems: Technologies for managing and verifying digital identities on decentralized networks, including for KYC (Know Your Customer) purposes. Likely touching on identity solutions like Civic, BrightID, and Blockstack.
Blockchain-Based Voting and Governance: Systems for implementing decentralized voting, governance, and consensus mechanisms, foundational to DAO (Decentralized Autonomous Organizations). Relevant to governance platforms like Aragon, Snapshot, and MakerDAO.
AI Economic Agentic Computing: First introduced by the VeADIR Platform refers to the application of autonomous agents in economic systems, where software entities can make decisions, negotiate, and execute transactions independently. These agents use artificial intelligence to analyze market data, predict trends, and optimize economic activities like trading, resource allocation, and supply chain management. Used by OpenAi, Claude Sonnet, Meta and xAI.

The societal value of these patents to disrupt traditional financial models and fintech business practises, by essentially removing the banks as middlemen, create significant economic incentives to suppress his work.

True Decentralization

Current Decentralized Exchanges (DEXs) often fall short of being truly decentralized due to various practical and structural limitations. Although DEXs leverage blockchain technology and smart contracts to enable trading without a central authority, aspects like governance, liquidity, and user interface can introduce centralization. Governance tokens might be concentrated in the hands of a few, influencing decision-making unevenly. The frontend, controlled by developers, represents a centralized point of control or potential failure. Liquidity pools can be dominated by a handful of large providers, leading to centralized liquidity dynamics. Some DEXs implement regulatory compliance like KYC/AML, which inherently involves centralized oversight. The use of layer-2 solutions for scalability might also undermine decentralization if not fully autonomous.

However, patents like US11196566B2 and US11895246B2 could pave the way for true decentralization by introducing innovations in blockchain interoperability and decentralized governance mechanisms. These patents potentially offer solutions for more evenly distributed control over exchange operations, enhancing the autonomy and distribution of decision-making, thus moving closer to genuine decentralization in the DEX ecosystem, which can be expanded to other industries like Healthcare, Supply Chain, or any other industry that trades value.

Who is Reggie Middleton?

Reggie Middleton, through his BoomBustBlog, became a notable figure in financial analysis, particularly for his early and accurate predictions regarding the collapses of Lehman Brothers and Bear Stearns during the 2008 financial crisis. His blog was renowned for providing in-depth, contrarian insights into economic trends, investment opportunities, and corporate vulnerabilities. Reggie won the CNBC's stock draft consecutively for two years, and appeared on major financial news networks like CNBC, BBC and Bloomberg where he discussed market trends, his forecasts, and the implications of financial strategies adopted by major firms. His track record has undeniably positioned him as a significant voice in the financial commentary space.

Reggie's work gained public attention when he appeared on the Keiser Report and CNBC in 2014, premiering his innovations built on the Bitcoin blockchain called "Ultracoin", two years before Ethereum captured the crypto limelight.

His vision was to create sound markets for a financial ecosystem where loans could be issued without banks, trades executed without exchanges, and contracts enforced without lawyers, aiming to disintermediate traditional finance by removing the middleman that doesn't add value.

In 2014, Reggie pioneered a simple Apple trade using a Pure Bitcoin Wallet: The Ultracoin Client.

Ultracoin later renamed VERI short for “Veritaseum” meaning "of truth", was the

first to market in tokenizing precious metals, offering VeGold, VeSilver and even tokenized fiat currencies or so called "Stablecoins". Veritaseum also introduced VeRent creating yield through P2P lending, and the revolutionary VeADIR platform, an autonomous, blockchain-powered research platform that independently evaluates and acts on dynamic research in real-time, communicates in machine language, and operates by purchasing, analyzing, and distributing insights on various assets while allowing VERI token holders to access and trade this research.

In 2018 he created the worlds first Gold Denominated Blockchain Mortgage

with traditional written note, mortgage as well as a smart contract on a public blockchain, both of whom incorporate each other by reference. The transaction had traditional title insurance and the note was recorded with the county clerk. The mortgage was denominated in Veritaseum's VeGold product, a digital form of gold in bearer form, fully transferable and redeemable upon demand.

Merely a few examples of groundbreaking products offered by Veritaseum.

Coinbase's Challenge: The Patent Infringement Suit

Coinbase, a dominant force in the cryptocurrency exchange market, enlisted the services of Perkins Coie, one of the largest patent law firms, to contest the validity of Reggie Middleton's patents.

They launched an Inter Partes Review (IPR) at the Patent Trials and Appeals Board (PTAB), arguing that Middleton's patents lacked novelty. An overwhelming 85% of patents are invalidated through this process. However, Coinbase's challenge was denied along with the appeal, thereby upholding and strengthening the validity of Reggie's patents.

This IPR challenge came after Veritaseum sued both Coinbase and Circle USDC for $350 million each over patent infringement. Unfortunately, Reggie's patent attorney and close friend passed away during this suit, so the cases has been dismissed without prejudice, meaning they can be negotiated or the cases reopened at any time. This leaves Coinbase in a precarious position, especially if shareholders have not been properly informed of this risk.

This lawsuit details how Coinbase's infrastructure, specifically its Ethereum and Solana validator nodes, engage with client devices to facilitate transactions. Exhibit #3 meticulously outlines the patent's claims, detailing the roles of computing devices, the use of memory for key pair storage, network interfaces for transaction terms, and the generation and dissemination of transaction data records. It provides concrete examples such as the processing of NFT transactions on Ethereum and the management of transaction fees on Solana, supported by in-depth references to code and API interactions. Furthermore, the exhibit explains the verification of transactions through an external state, illustrating how Coinbase's technology aligns with the patent's principles for decentralized transaction processing without a central authority.

SEC's Intervention: A Turning Point

In 2019, with promising negotiations on the horizon with both the Jamaican and the Nigerian Stock Exchanges for digital asset platforms, Reggie's world was turned upside down.

The SEC accused Reggie of fraud, alleging he misled investors about the functionality of Veritaseum's VeADIR platform, which the SEC ordered to be shut down following a live demonstration. The SEC also made claims on the validity of Reggie's patent applications, which have since been approved by both the USPTO and the Japan Patent Office. Oddly enough, the SEC may actually infringe on these very patents through the disgorgement and storage of seized crypto tokens.

Despite Veritaseum's cooperation with the SEC over a two-year period, along with a detailed response addressing the SEC's allegations, and not one token holder claiming to be defrauded, these allegations still led to a Temporary Restraining Order (TRO) that froze millions in assets, destroying the company's operations, and forcing a consent judgment "neither confirming or denying the allegations". The SEC would top it all off with a gag order that barred Reggie from publicly discussing the matter.

Keep in mind, the SEC is claiming jurisdiction by calling Utility Tokens "Digital Asset Securities" but recently SEC Commissioner @HesterPeirce stated:

"...by using imprecise language we've been able to suggest the token itself is a security, apart from that investment contract, which has implications for Secondary Sales, it has implications for who can list it...

We've fallen down on our duty as a regulator not to be precise. So, tucking into a footnote that yes we admit that now that the TOKEN ITSELF IS NOT A SECURITY, that is something we should have admitted long ago and then started wrestling with the difficult questions."

This calls into question if the SEC even had jurisdiction to bring forth this case to begin with. The Veri Community would later challenge the SEC's unproven allegations against Reggie with

a Dossier supporting the Vacating or Setting Aside of this case, and suggesting possible misconduct by the SEC.

Allegations of SEC Misconduct:

Misrepresentation of Facts: Assertions that the SEC deliberately mischaracterized the
functionality of the VeADIR platform, along with the patents and their value, by labeling them as lacking novelty and part of fraudulent activities.
Misleading Evidence: The SEC's use of declarations from Patrick Doody and Roseann Daniello, which contained misleading information about the personal ownership of a Kraken account used to misappropriate funds. Doody would later correct his statement, but the SEC did not update the court with this new information, potentially misleading the judicial process.
Conflict of Interest: Doody's undisclosed financial interests in the digital asset space through Lily Pad Capital LLC could suggest a bias in his testimony, which was pivotal in obtaining the TRO.
Coercion and Intimidation: Witnesses like Lloyd Cupp and John Doe provided affidavits claiming coercion by SEC attorneys to alter their testimonies, pointing towards witness tampering and intimidation.

FOIA Responses: The SEC's FOIA department initially denied any communications with Kraken, only later admitting to subpoena issuance, suggesting an attempt to obscure facts.
RICO Allegations: A 95 page RICO Dossier, supported by extensive evidence, alleges that the SEC's actions could resemble an organized crime syndicate, with systemic coercion, misrepresentation, and procedural misconduct aimed at Reggie Middleton.
Bar Complaint: The Veri community lodged a Bar Complaint against the SEC's Lead Attorney
over the use of misleading evidence, coercion and intimidation of witnesses.

Summary Articles of the B ar Complaint and RICO Dossier

Comparisons with the SEC Misconduct in the DEBT Box Case

The DEBT Box case shares a troubling parallel with the Veritaseum case. In both cases a Temporary Restraining Order (TRO) freezing funds was issued using dubious evidence which suppressed the ability to defend themselves. This behavior was already admonished by five US Senators

in a letter to Commissioner Gary Gensler in which the SEC presented misleading claims in this now high-profile cryptocurrency case.

"Regardless of whether Commission staff deliberately misrepresented evidence or unknowingly presented false information, this case suggests other enforcement cases brought by the Commission may be deserving of scrutiny. It is difficult to maintain confidence that other cases are not predicated upon dubious evidence, obfuscations, or outright misrepresentations."

Given the similarities in alleged procedural misconduct between the cases, it raises systemic questions about the SEC’s litigation approach in cryptocurrency matters.

This parallel underscores a potential agency-wide issue that could involve either implicit biases against crypto companies or an explicit strategy to pursue aggressive, potentially misleading tactics in court.

Is The Fox Guarding the Hen House?

In a significant development, the Attorney Grievance Committee (AGC) has decided to forward a complaint against SEC attorney Jorge Tenreiro to the SEC's Office of General Counsel (OGC) for investigation. This controversial move suggests a potential conflict of interest, given that the OGC is part of the SEC, the very agency where Tenreiro was recently promoted to Chief Litigation Counsel. The complaint, filed by the Veri community, accuses Tenreiro of misconduct including alleged coercion, witness tampering, and misrepresentation during SEC investigations. The Veri Community argues that this decision undermines the integrity of the legal process, as the OGC's role is to provide legal advice and defend the SEC, not to independently investigate its own employees. This raises questions about the impartiality and transparency of the disciplinary process for attorneys, especially when it involves high-profile figures like Tenreiro.

"As noted in re Rowe, 80 N.Y.2d 336 (1992), the public’s confidence in the legal profession depends on transparent and impartial disciplinary processes. Delegating oversight to the SEC, where Mr. Tenreiro remains a senior official and where the OGC has a clear institutional stake, jeopardizes this confidence and risks the appearance of protectionism.”

The VeriDAO has submitted a response letter to the AGC along with creating a PDF generator
to help the estimated 100 complainants and anyone else interested in requesting the AGC to reconsider this action.

Legal and Judicial Trials

The legal battles would only continue for Reggie. The case of Hall v. Middleton, in which Hall, a 1% shareholder sued Reggie, raises concerns of judicial bias and procedural mishandling. In this case, Reggie was denied Due Process and barred from presenting crucial evidence or calling witnesses due to his former attorneys' "Office Failures" that missed deadlines to submit evidence without the knowledge of Reggie or the firm Brundidge & Stanger that outsourced his counsel as detailed in their affirmations.

"In my many years of practice it is a rare instance where I have witnessed an attorney intentionally not file critical documents as required by Court Order without the permission or knowledge of his client, who had an established and fully developed attorney client-relationship with said attorney, and then misrepresent that the requirements of the Court Order were being satisfied. This is one of those instances and I hope not to see another."
~ Carl Brundidge

The judge ruled that Reggie must:

Pay a $1M fine to his company Veritaseum Inc., in which he owns 99%
The plaintiff was awarded costs of $495k against Veritaseum Inc.
The Judge ordered Patents (filed before the creation of Veritaseum Inc.) to be assigned to the company without compensation.

Attorney's "Office Failures":

Sheridan England missed critical deadlines, resulting in the striking of exculpatory evidence. England’s inaction or inadequate defense exacerbated Middleton’s legal vulnerability, directly leading to adverse outcomes.

Judge Schecter’s Conduct:

Ignoring Exculpatory Evidence: Despite knowledge of its existence, Schecter struck Middleton’s post-trial memorandum.
Procedural Bias: The judge’s decisions systematically favored Hall, including allowing him to collect attorney fees from Middleton personally, contrary to the principles of derivative law.
Forced Patent Transfers: Schecter’s order to transfer patents to an underfunded entity (Veritaseum) which were court restrained by the same judge, rendering them defenseless against attacks and IP theft.

This ordeal was compounded when Reggie was held in Contempt for using personal funds (while Veritaseum’s funds were court-restrained) to successfully defend his patents against an IPR challenge by Coinbase in the PTAB of the USPTO in an attempt to invalidate these patents. The Forced Patent Expropriation to Veritaseum without compensation or the ability to defend them could be seen as coordinated as it benefited very large competitors seeking to avoid licensing fees or infringement claims, or possibly even IP Theft.

Judicial Complaint: A formal complaint has been filed with the NYS Commission on Judicial Conduct by the Veri Community.

ETHgate: The Broader Conspiracy Allegations

Parallel to Middleton's struggles, "ETHgate" emerged, involving allegations by Ethereum co-creator @StevenNerayoff. Nerayoff claimed a government conspiracy aimed at controlling or monopolizing cryptocurrency development by targeting key figures. This narrative suggested that by attacking innovators (like Reggie Middleton as the Veri Community contends), the SEC might have indirectly cleared a path for Ethereum, which, despite its decentralized claim, benefited from a regulatory environment less scrutinized than its competition.

The term "ETHgate" encapsulates the belief that Ethereum's "Free Pass" from regulatory scrutiny might not just be due to its technological merits but also due to strategic regulatory maneuvers, where attacking smaller or less established DeFi projects could safeguard larger, more influential platforms like Ethereum.

Back in 2021, @JohnEDeaton1 from @CryptoLawUS explained XRP's side of Ethereum's "Free Pass". More recently, further SEC RICO Claims are insinuated in "RIGGED from the start" a documentary by @Fruition_News , along with posts by @KuwlShow and the XRParmy involving the SEC, Ethereum, a16z, and Consensys surrounding the Bill Hinman speech. Active FOIA requests by @EleanorTerrett seek to shed light on meetings between Hinman and Ethereum members.

Given the SEC protection of ETH and the high probability of Ethereum infringing on Reggie Middleton's patents as meticulously detailed in Exhibit #3 of the Coinbase case, is it ridiculous to believe Reggie Middleton could have been targeted?

Community Support: The Backbone of Resilience

Despite the SEC's narrative labeling them as "The Defrauded," the Veritaseum community rallied around Reggie.

SmartMetal with embedded NFT avalaible through VeriDAO.io

Financially devastated and with his funds frozen, Reggie faced foreclosure and was threatened with jail time after contempt charges for defending his patents using personal funds. In a remarkable show of support, the Veri Community rallied, raising an impressive $149,000 in less than two weeks to cover the fine while the case is under appeal.

They funded legal battles largely through donations and more recently with innovative means like NFT silver rounds called SmartMetal using Reggie's patented technologies, underscoring their belief in his vision. The first minted round was auctioned off for an astonishing $14,000 won by "M S"

"There is no better witness to the veracity of any defense than the alleged defrauded defending the alleged fraud at their own expense"
~ The Veri Community

This community support was not just financial but also moral, with efforts such as an Amicus Brief in the case against XRP, a No Action Letter (NAL) seeking clarity on secondary market sales of tokens, a Bar Complaint against the SEC's newly promoted Chief Litigation Counsel, and the @dao_veri's

#ProjectSunlight The SEC RICO Revelation.

A Call for a New Regulatory Paradigm

Reggie Middleton's saga is emblematic of the challenges faced by pioneers in the blockchain and DeFi arenas. His patents, now granted, underscore their foundational nature, yet the path to their recognition was marred by legal battles, suggesting a systemic issue where the regulatory framework might not fully comprehend or support emerging tech. His resilience, supported by an unwavering community and the validation of his intellectual property, underscores the need for a regulatory environment that fosters rather than stifles innovation. As blockchain technology continues to evolve, Reggie's story serves as a critical reference for balancing innovation with legal and ethical governance, ensuring that the future of finance remains open to all, not just those with the resources to navigate the legal maze.

For more information visit https://veridao.io/

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