Is there anyone happier than your dumbest friend? The guy who always comes running after the group like a golden retriever? He’s always got a big grin on his face, like he was the first to learn that ignorance is bliss.

And there’s probably no animal more content than one of those blind cavefish. They swim their entire lives in an algae-laden puddle, as blissfully unaware of sunlight as they are of the food chain.

But let’s pause for a moment: while we’re not endorsing sheer ignorance, we are interested in Zero Knowledge.

Because when it comes to your crypto security, wouldn’t you rather have your vendor know absolutely nothing about you?

Espresso Shots

☕️ Congress Avoids Government Shutdown

The United States Senate passed a bipartisan stopgap bill on Saturday night that will avert the coming government shutdown, just three hours before the deadline.

“I just signed a law to keep the government open for 47 days. There’s plenty of time to pass Government funding bills for the next fiscal year, and I strongly urge Congress to get to work right away.” President Biden tweeted on X.

It’s big news for crypto, as the government shutdown would have halted the progress of several crypto-related bills, such as the Financial Innovation and Technology for the 21st Century Act and the Clarity for Payment Stablecoins Act.

Additionally, this development will force the hand of the SEC. The SEC had previously announced it would delay decisions on four of the most prominent Bitcoin ETFs pending the government shutdown.

But this is unfortunate for the mole men who live in Washington’s underground tunnels, and emerge during government shutdowns to eat staplers and pens. They’ll have to wait until at least November 17 to collect their delicious, crunchy treats.

☕️ Ethereum Grows While Gas Fees Fall

The Ethereum supply is steadily increasing while the price of gas fees falls.

Higher gas fees indicate that more of the given crypto is being burned. Lower gas fees on Ethereum signify that Ethereum’s transaction volume is dipping, which means a lower barrier of entry.

The Ethereum ecosystem has been relatively healthy since last year’s Merge, wherein the Ethereum network transitioned from proof-of-work to proof-of-stake.

However, if gas fees get too low, it’s concerning. But in the short term, these cheaper prices may bring more potential Ethereum buyers on-chain.

But we’re hoping that the gas price gets just low enough that the whole family can drink from the pump, like in the Reagan years.

☕️ FTX Hacker on the Move

A wallet associated with the massive FTX hack is making moves for the first time in almost a year.

During November of 2022 — what we bitterly refer to as the “crypto winter solstice” — FTX declared bankruptcy.

And though we now know that was just the tip of the iceberg, some hackers saw that as the perfect opportunity to make an assault on the beleaguered firm, draining FTX’s accounts of $415 million.

Now, one of the wallets containing roughly $4 million in crypto stolen from the exchange, is on the move.

The wallet, inactive since the hack, transferred 700 ETH via the Thorchain router, and an additional 1,200 ETH using the RailGun privacy tool.

Brutally, the current staff of FTX can only stand and watch. But interim CEO John J. Ray III is supposedly rubbing a pair of fingerless gloves on the noses of a pack of bloodhounds to try and catch the hacker’s scent.

Spilling the Beans

Zero Knowledge: Zero Problems 🌴 😎

One of the foremost promises of crypto is privacy.

DeFi offers the appealing blend of democratization, equality, and greater community involvement — without the data breaches, data mining, and identity theft that have sadly become normal parts of our digital existence.

Naturally, the idea of a hack-free internet sounds a little idealistic, but there are solutions to the plagues of the digital age.

And Zero Knowledge Proofs may be the most promising solution yet.

Zero Knowledge (ZK) Proofs, when you get down to it, are almost philosophical in nature. They allow users to share the proof of a statement without revealing the contents of the statement or how they revealed the truth.

However, beyond melting the minds of Plato or Aristotle, these proofs have an incredible utility when it comes to crypto transactions.

A user can prove the veracity of their transaction to verify without having to give away any sensitive data — like your personal information, or even passwords.

The successful implementation of zero-knowledge proofs wouldn’t just mean a world with more digital security. It would also mean an end to forgotten passwords and CAPTCHA tests.

We can only select which images have crosswalks so many times before we begin to wonder if we, ourselves, aren’t robots.

Still, zero-knowledge proofs present an exciting possibility, and Polygon 2.0, the latest iteration of the Polygon ecosystem, is making strides to make that possibility into reality.

Polygon 2.0, which was officially announced in June, is a truly massive upgrade. Polygon is the eleventh-largest crypto project in the world, so this update will have proportionally significant ramifications.

And the cryptocurrency that will most likely see some serious bolstering from this project is Ethereum, but more on that later.

Now, one of the most exciting aspects of the upgrade is that Polygon is currently establishing a network of zero-knowledge, layer-2 chains.

Previously, projects have shied away from implementing zero knowledge on this scale, just because of the raw computing power associated with high zero-knowledge transaction numbers.

But it appears Polygon has enough computational gas in the tank to walk the walk.

And zero knowledge isn’t all that Polygon has planned for Polygon 2.0.

In September, Polygon announced its first set of Polygon Improvement Proposals (PIPs) for Polygon 2.0. These PIPs include staking upgrades, upgrades to Polygon’s PoS native token, and backward compatibility.

Now, what does all of this Polygon evolution mean for Ethereum?

Polygon is a scaling solution that runs parallel to the Ethereum blockchain.

As Polygon 2.0 takes Polygon to the next level, this development may stir some competition from Polygon’s biggest rivals — Arbitrum and Optimism — two other layer-2 solutions that are both compatible with Ethereum and offer zero-knowledge proofs.

And this healthy rivalry, coupled with the fact that, as we mentioned in our espresso shots, the Ethereum supply is rising while gas prices fall…

In other words, we may be poised for an Ethereum bull run.

Ethereum has long played second fiddle to Bitcoin, but these market conditions may have Ethereum poised to finally unseat the king of the crypto hill.

And these zero-knowledge developments could finally be the fuel that ETH needs to push into the stratosphere.

As the Dalai Lama once said, “A zero itself is nothing, but without a zero you cannot count anything; therefore, a zero is something, yet zero.”

And with Ethereum, zero may make all the difference. In fact, this may be the most important zero since the quiet kid who saved Stanley Yelnats from Camp Green Lake.

Crypto 101

RailGun: This is a smart contract system that affords crypto users security and privacy while they negotiate transactions.

Unfortunately, as we’ve seen with the FTX hacker, this tool can be used by hackers to maintain their anonymity.

RailGun also offers a “proof of innocence” system, which utilizes zero-knowledge proofs to let users prove haven’t had any shady dealings with hackers while maintaining their anonymity on-chain.

The Last Sip

The Last Sip: If John J. Ray III’s pack of bloodhounds aren’t able to track the FTX hackers, he’ll have to resort to plan B: harpooning the wallets with a series of floating barrels like in the third act of “Jaws.”

Stay Caffeinated,

Coffee & Crypto Team

Premium Market Report

Indices / Futures / Options

Index & Index Funds

Futures

Options

☕️ Our Take:

That's all for today! If this email got you hooked on our unhinged crypto takes, be sure to get a full dose on Twitter @GetCoffeeCrypto.

Want cutting-edge market analysis delivered to your inbox three times a week? Sign up for Premium Roast! We'll cut through the BS floating around on Twitter and CNBC and help you finally understand the markets, all for the price of a single cup of coffee.

If you find yourself smiling at any of our dumb jokes, or even *learning* something - make sure to share this newsletter with your friends!

If you get 5 friends to sign up - or even enemies, we don't care - we'll send you our Bitcoin Bootcamp Ebook! This thing is packed with info and is the ultimate guide to the world’s ultimate currency.

Just hit the Click to Share button in the section below to get started!

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.