☕️ DeFi's Dystopian Debt Markets 🔥 🚨

💰 Could Debt be the Asset of the Future? 🤖

You’ve probably already heard “buy the dip,” but what about “buy the debt”?

No, we’re not telling you that you should accumulate debt, we’re talking about buying other people’s debt.

It’s an exciting, dark, wacky little piece of trade action, but it could be so potentially explosive, that even Brian Armstrong and Coinbase want a piece.

Espresso Shots

☕️ Orb on the Move 🔮 🏃‍♂️

Worldcoin, headed by reinstated CEO, Sam Altman, has announced some big expansions for its eyeball-scanning World ID.

Microsoft’s Minecraft, Reddit, Telegram, Shopify, and Mercado Libre are among the institutions that have expressed interest in Worldcoin’s person-verification program.

Though we’re all still a little nervous about the dystopian potential for biometric scanning, it does seem like a more effective way of detecting AI than asking someone to identify “Which of these pictures is a crosswalk?”

In addition to World ID logins for the aforementioned institutions, Worldcoin is also rolling out an “Orb Plus” which has stricter security measures and would require re-verification on every login.

Honestly, we just thought Orb Plus was designed with cave creatures and those with “fuller-figured” eyeballs in mind.

☕️ Crypto’s Losing Losses ⬇️ 📉

Crypto hacking losses in 2023 are down roughly 50% from 2022, says a new report from blockchain intelligence firm, TRM Labs.

According to the report, the 160 crypto-related hacks in 2023 only totaled around $1.7 billion in 2023. That’s down more than half from the $4 billion stolen in exploits in 2022.

The report chalks this positive trend up to heightened security measures, particularly the implementation of real-time transaction monitoring and anomaly detection systems.

Here’s to losing more losses and gaining more gains in 2024.

☕️ IRS “Wrapped”: A Year in Review 🧳 💳

The IRS has released its 2023 crime statistics, and unfortunately, crypto made four out of the top ten fraud busts.

At number eight there was Bruno Block, the founder of the crypto token “Oyster Pearl,” who was sentenced to four years in jail for his fraud scheme.

At number seven, there was the seizure of $3.4 billion worth in crypto from James Zhong, a prominent member of the Silk Road operation.

Number four was a Bitcoin money laundering scheme in New Hampshire and crypto topped out at the number three seed with Karl Greenwood, the founder of OneCoin, being sentenced to 20 years in jail for his role in OneCoin’s massive, fraud scheme.

Weirdly, the IRS also bragged that it was in the .01% of listeners to that “Bad Boys, Bad Boys” song from COPS.

Spilling the Beans

For All Debts Public and Private 💳 💸 

Debt is a scary word.

It’s a contract we’re told to avoid… if you can. You make a deal with the devil and your soul is in debt.  Even Han Solo, a guy who seemed to have a pretty good handle on things, couldn’t manage his debts to Jabba the Hutt and ended up in carbonite.

But debts are a necessary evil. Credit card debt, a car lease, student loans, like fleas on a dog, it’s rare to go through life without accumulating some of these nasty buggers.

Though there’s an outlook you probably haven’t considered, what if instead of a drain on your finances, debt could be repurposed for money-making potential?

It appears that’s exactly what Brian Armstrong and Coinbase have in mind with the launch of Project Diamond, a new platform built on Base that would allow the institutional trade of digital financial instruments, such as debt.

When we say, “digital financial instruments,” in a sense, we really just mean tokenized assets.

And by this point, we’re very familiar with the tokenization of assets. We’ve seen cars, houses, concert tickets, and just about anything of value tokenized on the blockchain.

It’s been ubiquitous, yes, but has it been revolutionary? Well, not exactly.

But where Project Diamond stands to shine is in the protocols and ownership of these more abstract financial instruments.

While the idea of buying and selling somebody’s medical debt or student loans sounds like Repo Man or a slightly dryer Kronenberg movie, Project Diamond could actually be incredibly helpful when it comes to managing debt and bonds.

Rather than have your outstanding medical debt purchased by an agency of debt collection vampires or losing your grandfather’s yellowing war bonds to booklice, Project Diamond intends to clear up those muddy waters with a transparent, on-chain alternative.

Yes, we’re currently only at tokenization, now, where these debts and bonds will have to be both digital and physical, but Coinbase predicts a full, digital transition is inevitable.

"Tokenization is an important first step, but the natural conclusion is a transition to digitally native assets," said Shaun Martinak, head of infrastructure development at Coinbase Asset Management, in an email to Coindesk. "Instead of tokenizing off-chain assets, this digitally-native debt instrument was created and matured fully on-chain, with an automated lifecycle that takes full advantage of next-generation infrastructure."

It’s an exciting development but unfortunately for America, Coinbase is moving forward with regulators in Abu Dhabi. American regulators are quickly developing a reputation as… less than receptive to these sorts of DeFi developments.

Project Diamond is currently only available to institutional investors outside the U.S..

But that doesn’t mean that Project Diamond won’t become available to Americans in the distant future.

And when that day comes, we’ll be ready to put money down when it’s someone else’s turn to pay up.

Crypto 101

Chain Development Kit (CDK): This is a toolkit released by Polygon, that allows developers to built their own, customizable layer 2 blockchains.

These chains are powered by zero-knowledge proofs and connected by zero-knowledge bridges.

Together, these community-created chains form what Polygon refers to as the “Value” layer.

The Last Sip

The Last Sip: When Sam Altman was ousted from Open AI, we were interested and thought it was going to be more of a scandal. Fired from the company on November 17. Reinstated as CEO on November 30th? You don’t have to be a BladeRunner to figure out that’s not Sam Altman. This, this is how they’re going to replace us with AI.

Stay Caffeinated,

Coffee & Crypto Team

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.presi