Connect with us

Cryptocurrency

Cryptocurrency: An Evolving Market Still in its Infancy and Where it Stands Today | Vandeventer Black LLP

Published

on

Bitcoin was first introduced in a 2009 whitepaper, Bitcoin: A Peer-to-Peer Electronic Cash System.[1] Since then, cryptocurrencies[2], also known as virtual or digital currencies, have exploded, with thousands of different types floating around, reaching a market capitalization of $ 2K in early 2021[3], and the number of blockchain wallet users rose to more than 70 million in May 2021.[4]

However, the blockchain concept that enables cryptocurrencies remains a mystery to most. For years, niche corporations have benefited from this often mysterious and confusing technology; But it wasn’t until 2014 that well-known companies like Overstock began to make a foray into the cryptocurrency arena by accepting BTC (currently the market-leading cryptocurrency) as a means of payment for online purchases.[5] The finance industry later followed suit with JPMorgan, which launched a cryptocurrency exposure basket[6], and Goldman Sachs endorses cryptocurrency as a new asset class.[7] While not all companies have billions to invest in this new asset class, savvy industry leaders seem to be watching these market makers’ moves as a sign of the future.

In 2020, many investors flocked to cryptocurrencies as an inflation hedge[8]as the recent stimulus packages passed by Congress have ushered in dramatic inflation that has not yet been fully realized.[9] Many companies are already feeling the impact, especially those in the construction industry, where prices for lumber and other materials have risen significantly over the past year.[10]

In January 2021, Tesla hit the headlines by announcing it would buy $ 1.5 billion worth of Bitcoin and accept BTC as payment for its cars. However, this was short-lived. Despite widespread advertising for cryptocurrency, Elon Musk announced in May that Tesla would no longer accept BTC payments, stating that it would resume doing so once “the transition to more sustainable energy” is promoted, noting that Tesla will Look for cryptocurrency that uses significantly less energy per transaction than BTC[11], which is limited by its software to around 7 transactions per second, regardless of the computing power.[12] Shortly after these announcements, the price of BTC dropped significantly, bringing the entire cryptocurrency market with it.

To the uninitiated, cryptocurrency is a history of encrypted transactions, known as a blockchain, that is recorded on a distributed ledger and verified by a network of computers commonly known as “miners” that validate the legitimacy of transactions. In most cases, a distributed ledger is a public database that shows how much cryptocurrency is stored in each wallet, when incremental amounts were received, and where they came from.[13] While wallet addresses are usually public, wallet ownership is more difficult to determine because cryptocurrencies are decentralized, which gives the system anonymity.[14] The decentralization of the cryptocurrency means that there is no single governing body, rather the users and the software themselves dictate the flow of transactions.

Cryptocurrency functions are built into software at the beginning of a cryptocurrency’s life, and when changes are required, new cryptocurrencies are typically created through “forks”.[15]instead of allowing changes to the software. Cryptocurrencies usually have a limited “token” supply or a set inflation rate for token generation. A token is a unit of property and can be secured by physical assets or nothing. Often times, a single token is denoted in hundred millionths of a unit, often referred to as “satoshis” or “sats”, inspired by the pseudonym of the 2009 white paper author, Satoshi Nakamoto. Blockchain technology has many use cases. Some examples are smart contracts, which facilitate the automatic execution of multi-party transactions, while others include security features such as increased mining complexity and transaction confirmation requirements (which could one day replace paper stocks) that are tradable in real time and have the potential to act as a cash substitute, that facilitates transactions efficient enough to buy a lemonade at a point of sale.

Given the fixed or predictable shipments of cryptocurrencies, some argue that the widespread adoption of cryptocurrency allows companies to peg future spending to a non-inflationary or fixed-inflationary asset, which, along with many other benefits, can bring stability to strategic forecasting of future spending ; However, others argue that the deflationary trends of most cryptocurrencies created by their fixed supplies will prevent their use as a global currency.[16] However, as Tesla’s actions show, we still have a lot to learn before widespread adoption of virtual currency takes place. Our next article on cryptocurrency will examine the state of the legal framework surrounding the cryptocurrency industry.[17]

[1] Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, bitcoin.org, https://bitcoin.org/bitcoin.pdf (last visited May 26, 2021).

[2] While Bitcoin (BTC) is the most famous cryptocurrency, there are many others like Ethereum (ETH), Monero (XMR), Solana (SOL), Bitcoin SV (BSV), and Ravencoin (RVN), all of which have different uses.

[3] CoinMarketCap, https://coinmarketcap.com/ (last visited on May 25, 2021).

[4] Number of blockchain wallet users worldwide from November 2011 to May 18, 2021, Statista, https://www.statista.com/statistics/647374/worldwide-blockchain-wallet-users/ (last visited May 26, 2021).

[5] Rob Wile, Someone Has Already Purchased A $ 2,700 USD 13 Piece Decking Set On Overstock.com Using Bitcoin, Business Insider, (Jan 9, 2014), https://www.businessinsider.com/overstockcom-is- now-officially-accepting -Bitcoin-2014-1.

[6] Insight Notes relating to the JP Morgan Basket of Companies with Exposure to Cryptocurrency (March 2021), due May 5, 2022, US Securities and Exchange Commission, https://www.sec.gov/Archives/edgar/data/0001665650 / 000121390021014247 / s131027_424b2.htm (last visited on May 26, 2021).

[7] Crypto: A New Asset Class ?, Goldman Sachs – Global Macro Research (May 21, 2021, 6:00 p.m.) https://www.goldmansachs.com/insights/pages/crypto-a-new-asset-class-f/ Report.pdf.

[8] Erik Schatzker, Paul Tudor Jones buys Bitcoin as a hedge against inflation, Bloomberg, (May 7, 2020, 3:46 pm), https://www.bloomberg.com/news/articles/2020-05-07/paul- tudor-jones-buys-bitcoin-says-he-remembers-gold-in-the-70s.

[9] William Watts, Hot Inflation Readings Drive Data Surprises “Almost Off The Chart”, MarketWatch (May 25, 2021, 3:20 pm), https://www.marketwatch.com/story/inflation-is-running-so-hot- that -data-surprises-are-almost-off-the-chart-11621966487.

[10] Framing Lumber Prices, National Association of Home Builders, https://www.nahb.org/news-and-economics/housing-economics/national-statistics/framing-lumber-prices (last visited May 25, 2021).

[11] @elonmusk, Twitter, (May 12, 2021, 6:06 pm) https://twitter.com/elonmusk/status/1392602041025843203?s=20; see also New York Senate Bill S6486A https://www.nysenate.gov/legislation/bills/2021/s6486 (Act Establishing a Moratorium on the Operation of Cryptocurrency Mining Centers Pending a Full Review of the General Environmental Impact Statement).

[12] See Bitcoin Scalability Problem, Wikipedia, https://en.wikipedia.org/wiki/Bitcoin_scalability_problem (last visited May 26, 2021).

[13] E.g. Bitcoin SV Explorer, Blockchair, https://blockchair.com/bitcoin-sv (last visited on May 26, 2021).

[14] Some cryptocurrencies, such as Monero (XMR), differ in functions that increase the anonymity of transactions. One way to do this is to eliminate the public visibility element of the distributed ledger. See Monero, https://www.getmonero.org/ (last visited May 26, 2021). This makes XMR a cheap cryptocurrency for hackers looking for a ransom. See Tanzeel Akhtar, Acer reportedly affected by crypto ransomware demand amounting to $ 50 million, Coindesk (March 22, 2021, 2:27 p.m.) https://www.coindesk.com/acer-reportedly- hit-with-50m-crypto-ransomware-demand.

[15] What is a Bitcoin Fork ?, Robinhood, (December 29, 2020) https://learn.robinhood.com/articles/106Xi5TFQK4pAFB1jSaijz/what-is-a-bitcoin-fork/.

[16] Frances Coppola, Is a Global Digital Reserve Currency on the Horizon ?, American Express, https://www.americanexpress.com/us/foreign-exchange/articles/is-global-digital-reserve-currency-on-horizon/ ( last visited on May 26th, 2021).

[17] Link to full disclaimer: The information on the Vandeventer Black website is for informational purposes only; The information is general and may not reflect the current legal status. The content is provided “as is”. The information on this website should not be viewed as professional legal or financial advice and should not be processed without consulting a qualified lawyer or other professional in the relevant jurisdiction.

Cryptocurrency

Crypto retreats as bitcoin and ethereum lead mild sell-off

Published

on

Bitcon and Ethereum prices fell 4% on Friday. Photo: Yuriko Nakao / Getty Images

The cryptocurrency market saw a small sell-off on Friday morning, with Bitcoin (BTC-USD) and Ethereum (ETH-USD), the world’s first and second largest coins, down around 4%.

Bitcoin, currently trading at $ 37,866 (£ 27,259), hit levels of $ 41,330 on June 15, a key resistance area of ​​$ 41,250, but has continued to decline since then.

This week it was rocked by an announcement by the US Federal Reserve that it could hike rates through the end of 2023. Assets deemed risky, such as certain stocks and crypto, have also been weighed down by ongoing fears that the Fed may unwind its bond purchase program earlier than expected.

Bitcoin has been in decline for the past few days.  Chart: Yahoo Finance

Bitcoin has been in decline for the past few days. Chart: Yahoo Finance

On Thursday, the World Bank also rejected a request from El Salvador to help introduce Bitcoin as legal tender.

The bank said it could not support El Salvador’s plans due to the environmental impact of Bitcoin mining and the transparency drawbacks.

It came when the UK’s Financial Conduct Authority (FCA) reiterated its warning that people “should be ready to lose all their money” when investing in cryptocurrencies.

The regulator estimates that 2.3 million adults in the UK now own crypto assets, up from 1.9 million last year, with more and more people viewing them as either a complement or an alternative to mainstream investments.

Enthusiasm for crypto assets is also growing. More than half of crypto users said they have had positive experiences so far and are likely to buy more, from 41% to 53%, according to the FCA. Fewer people also regret buying cryptocurrencies, from 15% to 11%.

Sheldon Mills, FCA’s Executive Director, Consumer and Competition, said, “The market has continued to grow and some investors have benefited from rising prices.

Watch: What is Bitcoin?

“However, it is important that customers understand that if something goes wrong, they will likely not have access to the FSCS or the Financial Ombudsman Service as these products are largely unregulated.

The story goes on

Cryptos have recently been empowered with institutional support. Several organizations, including MicroStrategy (MSTR), have invested billions of dollars in cryptocurrencies, and traditional financial firms like PayPal (PYPL) and Goldman Sachs (GS) have started managing the asset on behalf of customers.

“While things may seem calm to the inexperienced, behind the scenes activity is still strong,” said Paolo Ardoino, CTO at Bitfinex. “Options markets are buzzing while institutions test strategies.”

He added, “Bitcoin has become an integral part of some of the most diverse portfolios around the world. Long-term private investors ride the wave. The builders of Bitcoin keep building. The first Bitcoin upgrade in four years has been approved and will take effect in November. The developers are working in anticipation of the upgrade. The community continues to improve the global financial networks. “

However, according to a survey by Bank of America, 81% of fund managers say Bitcoin is still a bubble.

View: What are the risks of investing in cryptocurrency?

Continue Reading

Cryptocurrency

bitcoin price: Top cryptocurrency prices today: Ethereum, Polkadot, Uniswap down up to 6%

Published

on

NEW DELHI: Major cryptocurrencies traded lower on Friday as US regulators delayed Bitcoin ETF approval. This has clouded the sentiment of crypto investors. However, digital tokens pegged to dollars have shown signs of resilience. The majority of the top 10 digital tokens traded with cuts at 9:30 a.m. IST.

The Securities and Exchange Commission (SEC) said in a regulatory filing that it will seek public comments on a proposal to list Bitcoin ETFs with Cboe Global Markets Inc. It’s not the first time this year the SEC has delayed responding to crypto advocates.

Contrary to the views of the US Securities and Exchange Commission, the UK’s Financial Conduct Authority said more people are viewing crypto assets as a mainstream investment rather than “gambling” with ownership of bitcoin and similar cryptocurrencies in the UK this year rose to 2.3 million adults.

Regulators have repeatedly warned investors about the “speculative” nature of largely unregulated crypto assets, which have fallen between 40 and 50 percent since peaking in May. However, global securities index publisher MSCI is considering the introduction of indices for cryptocurrency investments, another step towards mainstream adoption for digital currencies.

“It was an eventful week for cryptos. Both BTC and ETH have been trading almost unchanged since the beginning of the week. We might see a small sell-off as sellers become more active. Polkadot remains under tremendous selling pressure The dollar-pegged cryptocurrency Tether, which is usually very stable, has risen slightly, “said Edul Patel, CEO and co-founder of Mudrex.

Bluechip venture capital funds, known for placing risky bets, like to invest in Indian crypto and blockchain startups, but say the uncertain political environment stands in their way.

Crypto shopping cart: Quick Glance (Source: coinmarketcap.com, as of 9:30 a.m., ACTUAL on 06/18/2021)

  • Bitcoin: $ 37,963.57, down 2.32 percent
  • Ethereum: $ 2,346.29, down 3.65 percent
  • Tether: $ 1.00, up 0.06 percent
  • Binance Coin: $ 354.07, down 0.99 percent
  • Cardano: $ 1.48, down 3.62 percent
  • Dogecoin: $ 0.3052, down 2.73 percent
  • XRP: $ 0.8415, down 1.84 percent
  • USD coin: $ 1, up 0.05 percent
  • Polkadot: $ 22.31, down 5.58 percent
  • Uniswap: $ 21.73, down 4.51 percent

Note: price change in the last 24 hours

Tech View from ZebPay Trade Desk

1inch was launched in 2019 with the aim of helping users find the best asset prices on decentralized exchanges. Within 2 years, 1inch has grown into one of the most widely used decentralized exchanges with over $ 290 million in their liquidity pool.

The 1 inch network is a collection of decentralized protocols with a DeFi aggregator and an Automated Market Making Protocol or AMM. Last December, 1inch launched its 1inch (1INCH) governance token, and the 1inch network was supposed to be managed by a decentralized autonomous organization (DAO).

ETMarkets.com

Tech-wise, 1inch has hit a ‘Morning Star’ pattern (Three Candle Trend Reversal Pattern) in the daily timeframe at the support level of $ 2.4 and is up nearly 56 percent, hitting the weekly high of $ 3.945.

However, the bulls failed to get a grip on the asset and failed to break the $ 4.00 resistance. As a result, the price has declined nearly 15.5 percent from its recent highs. To continue to bounce, 1inch needs to trade above $ 4 and close. The asset is currently trading at $ 3.319.

Main stages

Support: 2,442, $ 2.9

Resistance: $ 4, $ 5.4

The time is in UTC and the daily time frame is 12:00 PM – 12:00 PM UTC

(The views and recommendations in this section are the analysts’ own views and recommendations and do not represent those of ETMarkets.com. Please consult your financial advisor prior to entering into any position in any of the above assets.)

Continue Reading

Cryptocurrency

Bitcoin (BTC) flaws set stage for alternatives

Published

on

Bitcoin, the most famous cryptocurrency in the world, has some shortcomings – and that, according to a Cornell University professor, has led other digital currencies to develop more workable options.

It’s not as anonymous as people think, and “mining” bitcoin is bad for the environment, stressed economics professor Eswar Prasad. It doesn’t work well as a currency either, he told CNBC on Thursday.

One interesting aspect is that other cryptocurrencies have come up with solutions to address some of Bitcoin’s shortcomings, said Prasad, who was formerly head of the China division of the International Monetary Fund.

1. Mining is harmful to the environment

Bitcoin mining refers to the energy-intensive process required to produce new coins and ensure that the payment network is secure and verified.

The electricity used to validate transactions on the Bitcoin blockchain as well as the mining process is “certainly not good for the environment,” said Prasad.

Tesla CEO Elon Musk said last month that his electric car company is no longer accepting bitcoins as payment for environmental reasons, causing the price of bitcoin to drop 5% in minutes.

He has since made a U-turn, saying in a tweet on Sunday that Tesla will accept Bitcoin in transactions if it can confirm “reasonable” and “clean energy use by miners”.

Crypto miners use specially designed computers to solve complex mathematical equations that make a coin transaction effective. The miners are rewarded for their efforts by getting paid in the cryptocurrency.

However, the entire process of creating a bitcoin requires a lot of energy and, according to the Cambridge Bitcoin Electricity Consumption Index, can use more electricity than entire countries like Finland and Switzerland.

On the other hand, Ethereum – the second largest cryptocurrency sometimes seen as an alternative to Bitcoin – is developing a different mining method that uses less energy, as Prasad pointed out.

Read more about cryptocurrencies from CNBC Pro

It is called “Proof of Stake” and is the underlying mechanism for Ethereum, which activates so-called “validators” in the network if they can prove that they own ether or a “stake”.

Ultimately, it should eliminate the need for massive computing power to validate transactions, and the Ethereum Foundation claims it will use 99.95% less energy than before.

“This will be a lot less energy intensive and could offer many of the benefits that Bitcoin should offer. It could also make transactions a lot cheaper and faster, ”said Prasad.

It’s not there yet, however, he added.

2. Not so anonymous after all

Earlier this month, U.S. law enforcement officials announced they had recovered $ 2.3 million in Bitcoin paid to a cyber criminal group involved in the ransomware attack on the Colonial Pipeline in May.

The FBI said its agents were able to identify a virtual wallet that the hackers used to collect payments from the Colonial Pipeline.

“The main idea of ​​Bitcoin … was to provide pseudonymity,” said Prasad. “But it turns out that if you use Bitcoin a lot, and especially if you use Bitcoin to get real goods and services, it will eventually become possible to link your address or physical identity to your digital identity.”

What is interesting, he said, is that there are other cryptocurrencies trying to fix this and provide more anonymity. He named Monero and Zcash as examples.

Chris Ratcliffe / Bloomberg via Getty Images

“So Bitcoin has really started a search for a better alternative and people seem to be looking for a medium of exchange that doesn’t have to go through a trustworthy institution like the government or a commercial bank – but that’s not quite there yet “said Prasad.

3. Doesn’t work well as a currency

In theory, Bitcoin should provide an anonymous and efficient medium of exchange, but “it didn’t work in that regard,” said the economics professor.

Rather, it is “slow and awkward” to use Bitcoin to pay for goods and services, and the market is very volatile, Prasad said.

Bitcoin is prone to large fluctuations in volatility, as evidenced by the 30% decline in a single day over the past month.

“So you could take a bitcoin to a store and get a cup of coffee one day and a lavish meal with the same bitcoin the next. So that doesn’t work well for the medium of exchange, “he said.

Bitcoin has become a speculative asset for people who hope it will increase in value instead of using it as a means of payment, Prasad said.

– CNBC’s Sam Shead contributed to this report.

Continue Reading
Advertisement

Trending