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This author explains our obsession with cryptocurrency

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Frederick Kaufman’s money plot

Source: Other press

What is money Why do we need it?

These are some of the big questions that writer Frederick Kaufman explores in his book The Money Plot: A History of Currency’s Power to Enchant, Control, and Manipulate, published in the middle of the pandemic.

Kaufman, a journalism and English professor, is interested in what we project onto money, from our cravings for abundance and freedom to – most of all – security.

The book comes at a time when our most basic understanding of money is being challenged. (When I hear the word, I still imagine cash, not bitcoin. What do you imagine when you imagine bitcoin?)

One way to get an idea of ​​what’s coming next is to look back. And if you read Kaufman’s book tracing the history of money, you’ll see how Bitcoin isn’t all that different from the pearls that were used as currency 40,000 years ago.

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I recently interviewed Kaufman about his new book. (Disclosure: I was enrolled in one of his courses at the Craig Newmark Graduate School of Journalism at CUNY in 2017.)

The following exchange has been compressed and edited for the sake of clarity.

Annie Nova: How has money changed the most?

FK: Primitive money is very material: it’s a feather, it’s a pearl. Over time, it becomes very metaphorical – a coin, paper money. Finally, of course, there is very little material money in the world. Only about 5 to 10% of the money in the world is in any material form. And then you could say the endgame is cryptocurrency. It has all the properties of primitive money, it is our security, except that it has no material parallel.

Frederick Kaufmann

Photographer: Anthony Tafuro

AN: Why are we looking for money for security?

FK: In the Middle Ages, Christians begin to define the future and that will be the end of the world and the apocalypse. Everything counts on that. This turns the trading culture into that focus on expiration dates, and think of money: it’s all about expiration dates. It’s about when you get paid. It’s when your quarterly report is due. It’s all retirement planning. And of course a mortgage is based on when it expires? We insure the future and gain some control over it. That is the essence of what money is.

AN: But there is a cost, right? A mortgage is security, but also a 30-year term.

FK: It’s one of the ironies of money. We create this fiction and then we get caught by it.

AN: Is it a coincidence that we are so much more interested in cryptocurrencies during a pandemic?

FK: If you look back on the history of apocalyptic moments, people fly towards safety. And that’s money. Some people see their security blanket as gold, others as crypto. Some see it as cash. We are also seeing increased cash holdings during the pandemic. All of this points to the real essence of money: security, to ensure that we can maintain our status, to ensure that the narratives we have about ourselves can continue into the future.

Why are you using the money the way you are using it? It’s because you define a narrative of what you would like to be in the future.

AN: What if people’s stories are disturbed?

FK: If you really check, why do you have a retirement account? why do you work? Why are you using the money the way you are using it? It’s because you are defining a narrative about what you would like to be in the future, and if that gets cut off for lack of money, it’s traumatic. And we see this country going through an enormous period of trauma right now.

AN: What do cryptocurrencies have in common with the primitive forms of money you write about?

FK: Primitive money was more of a talisman than a store of value or a medium of exchange. The rings and pearls had magical powers to bring the wearer safely into whatever lay in front of them. Likewise, cryptos play the role of primitive amulets, especially those that have no value, like Dogecoin, but still promise luck. It is interesting that when Europeans first settled down, they forgot to bring enough money with them. So, much like those mining Bitcoin, they started making their own wampum.

AN: Why do you think there is so much skepticism about cryptocurrencies?

FK: Money is a story we all believe in. Wall Street told this story, trying to predict its end before the rest of us know the end. Of course, bankers get embarrassed when a new group of shamans and fortune tellers tell a new story with a new ending.

Cryptocurrency

Crypto retreats as bitcoin and ethereum lead mild sell-off

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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?

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Cryptocurrency

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

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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.)

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Cryptocurrency

Bitcoin (BTC) flaws set stage for alternatives

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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.

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