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The 2 Cryptocurrencies With the Best Chance to Succeed, According to a Crypto Skeptic

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For more than a century, the stock market has proven time and again that it is one of the greatest wealth creators on the planet. If you buy holdings in large companies and let your investment thesis play out over time, history has a very good chance of building wealth.

But in recent years, investors have chosen to be mesmerized by the jaw-dropping returns from cryptocurrencies instead. For example, a little over a decade ago, a single Bitcoin (CRYPTO: BTC) could have been bought for around 1 €. Later that year, the same token cost nearly $ 65,000.

While it’s not uncommon for retail investors to chase momentum games, I believe they are wrong about it – especially when it comes to cryptocurrencies. That’s because I’m a card-carrying crypto skeptic.

Image source: Getty Images.

The cryptocurrency space looks like a gigantic bubble

Why not love digital currencies? One of the bigger problems is their lack of acceptance and usefulness in the real world. Bitcoin, the largest digital currency in the world, has only been able to process around 300,000 transactions a day for years. In comparison, the national currency is Dogecoin (CRYPTO: DOGE), processes only 50,000 transactions a day on its blockchain. To put this in a certain context, the giants of payment processing Visa and MasterCard processed a total of 700 million daily transactions in 2018. Over the counter, cryptocurrency (pardon the pun) is practically useless.

The blockchain technology on which crypto is based poses another problem. Although the blockchain offers new ways to immutably and transparently store and access data, it has come across a damn Catch-22. No company is going to move from a proven infrastructure to something that has not been field tested on a large scale … and no large company wants to be that guinea pig to demonstrate that it works.

And don’t overlook the fact that some governments disagree with crypto competing with their central bank-backed currencies. A handful of countries have banned digital currencies entirely, with China recently banning banks and online payment companies from providing services to the crypto industry. China is the epicenter for bitcoin mining.

And of course, misinformation and manipulation are rampant throughout the crypto space. Tesla CEO Elon Musk has been whipping both Bitcoin and Dogecoin with a mix of tweets and memes for the past few months. Trust me, this is a sentence I never thought I’d write with a straight face. Tesla initially bought $ 1.5 billion worth of Bitcoin, with Musk enabling consumers to purchase electric vehicles using Bitcoin. But not long after that, Musk ended the program claiming that bitcoin mining was not environmentally friendly. Since then, he has changed his perceived loyalty to Dogecoin, which is possibly the largest pump-and-dump scheme in the crypto space.

And if that’s still not enough, keep in mind that every parabolic movement in history has at some point burst and returned to Earth.

Suffice it to say that there are many reasons that I would strongly recommend avoiding cryptocurrencies.

These digital currencies could be long-term winners

Even so, there are a very small number of cryptocurrencies that I believe could succeed over time. Please note that “might be successful” is not my recommendation to buy. I still firmly believe that crypto should be avoided. However, the following two digital currencies are notable for having the tools and differentiation to survive in the long run.

A close-up view of a silver Stellar Lumens coin with a rocket ship logo emblazoned on the coin.

Image source: Getty Images.

Stellar

I see two main focuses in the crypto space: the goal of improving financial payments and the desire to tackle anything in the non-financial area. When it comes to financial payments, the blockchain, which I, as a crypto skeptic, think is the most promising, is Stellar (CRYPTO: XLM).

Call me old-fashioned, but I believe if a blockchain network is to supplant the existing financial payments infrastructure, it should be far more efficient. As of today, payments from one country to another can take up to a full week to be validated and processed. On Stellar’s blockchain, the same payments can be validated and processed across borders in a matter of seconds, at a transaction fee that significantly undercuts many of its competitors. The more than 4 million Stellar account holders must hold a small amount of Lumens (the Stellar Coin) at all times to cover these nominal transaction fees. Overall, Stellar can do the round-trip cross-border conversion of 180+ fiat currencies to lumens and back to fiat faster than any other cryptocurrency.

Additionally, Stellar has claimed that it can process up to 3,000 transactions per second. Even if this turns out to be sky high and only a fraction of that efficiency, it would still blow Bitcoin’s transactions per second out of the water.

Stellar has support from IBM (NYSE: IBM), also. Although IBM’s craze for blockchain development has waned in recent years, IBM partnered with Stellar back in 2017 to create an international payments hub that would connect banks through Stellar’s blockchain.

Stellar is mostly off the radar right now, but I see it as the most long-term intrigue of the payments-driven network.

A person holding up a gold colored Ethereum coin with the logo printed on it.

Image source: Getty Images.

ether

On the other hand, the ultra-popular cryptocurrency ether (CRYPTO: ETH) offers the greatest potential outside of traditional finance applications, even if it is fascinating in the finance sector too. Let me remind you once again that this is not a recommendation to buy Ethereum here. I think the whole group is in a massive bubble that has already started to burst. But viewed as a whole, Ethereum has a history and technology that long-term investors can potentially outperform.

One of the biggest lures for Ethereum is the use of smart contracts. These are protocols that help review, facilitate, and enforce the negotiation of a contract. For example, a smart contract could help enforce a will. If a deceased wanted to mandate their grandchildren to receive a certain amount of money when they reach a certain age, a smart contract could take over the execution of these protocols. The best part is that smart contracts are transparent, immutable, and legally binding.

Another win for Ethereum is the buzz it is generating in the business community. The Enterprise Ethereum Alliance (EEA) has more than 200 members, some of which are branded companies. The goal of these companies is to promote the use of Ethereum’s blockchain. The EEA is essentially the best choice in the crypto space to break through blockchain technology’s catch-22.

Ethereum is also getting a lot of press for its role in decentralized finance, or DeFi. Without getting too technical, DeFi is a financially focused blockchain that uses smart contracts to bypass financial intermediaries who might otherwise refuse or slow down a transaction. While I am not denying that Ethereum will play a role in finance in the future, the differentiation of Ethereum is most evident in the non-financial arena.

If the dust clears after an expected implosion in crypto valuations, I believe Ethereum and Stellar will offer two of the most compelling property cases out there.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

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Former US Treasury Secretary Larry Summers: Cryptocurrency Will ‘Do Better Regulated’ – Regulation Bitcoin News

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Former US Treasury Secretary and World Bank chief economist Larry Summers says cryptocurrencies will be better regulated rather than treated as a libertarian paradise.

Larry Summers sees crypto benefiting from strong regulation

Lawrence Summers, who served as Treasury Secretary in the Clinton administration and director of the National Economic Council of the White House in the Obama administration, spoke about regulating cryptocurrencies in an interview with Bloomberg on Friday. Summers, a former chief economist at the World Bank, is currently President Emeritus of Harvard University.

He was asked why regulators around the world are “deeply skeptical” about cryptocurrencies. China, for example, is taking action against crypto activities. Summers began by stating that the word “crypto” implied a “desire for secrecy in relation to large financial sums” and stated:

When large sums of money happen in secret, there is a risk of money laundering, the risk of assisting various types of criminal activity, and the risk of innocent people being ripped off.

“The truth is, if we didn’t regulate flight safety, we wouldn’t have a viable aircraft industry,” he continued. “We wouldn’t have the transportation system we would have if we didn’t regulate car safety.”

He added that the blockchain-based payments industry “will be more solidly regulated rather than trying to be some kind of libertarian paradise,” noting:

I think the crypto community needs to recognize this and cooperate with governments, and when they do. I think this innovation can be one of the most important innovations of this time.

The former chief economist at the IMF pointed out that some people believe in the idea that cryptocurrency will be “some kind of libertarian paradise where we won’t be able to enforce banking rules like knowing your customers”. [KYC]where we can move money freely and avoid taxes. “

Summers said, “I think it’s a realization that all industries need to arrive with systemic importance,” added:

It’s not entirely dissimilar to the discussion about big tech companies. You need a regulatory framework. Not only do they need it to protect their consumers, they need it for their own protection.

He concluded by saying, “If we didn’t have a strong SEC, we wouldn’t have the New York Stock Exchange as the center of the world stock market,” and emphasized, “Even if people don’t like the rules of the time.”

What do you think of Larry Summers’ comments? Let us know in the comment section below.

Photo credit: Shutterstock, Pixabay, Wiki Commons

Disclaimer of Liability: This article is for informational purposes only. It is not a direct offer or solicitation to make an offer to buy or sell, or a recommendation or endorsement of any product, service, or company. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author are directly or indirectly responsible for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Coal to cryptocurrency: An answer to grid volatility?

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A Midwestern utility company is testing a new tool to cope with variability on the web: mining bitcoins.

St. Louis-based Ameren Missouri, the state’s largest utility company with 1.2 million customers, began mining cryptocurrency in April. When demand is low and electricity is cheap, computers in a 20-foot metal container on site at the Portage Des Sioux coal-fired power station in Ameren race to “mint” a digital coin by looping through complex mathematical calculations.

Ameren Missouri executives see the initiative as research and development rather than a speculative bet on Bitcoin, the price of which has fluctuated sharply this year. It is seen as a pilot project designed to help meet electricity demand with an intermittent energy supply as more and more wind and solar projects go online.

Electric utilities around the world are increasingly tied to the energy-hungry cryptocurrency industry. In the US, however, Ameren is unique among investor-owned utility companies as it is directly involved in mining bitcoins.

Critics argue that the industry is a lifeline for aging fossil fuel power plants at a time when the deepening climate crisis calls for a quick switch to carbon-free energy sources (Energywire, June 24). The fact that Ameren mines bitcoins on-site at a giant coal-fired power plant – one of four that encircle the St. Louis metropolitan area – will almost certainly be scrutinized.

Ameren Missouri, based in St. Louis, says the effort could help reduce its carbon footprint. The utility has to respond to more fluctuating wind and solar power on the regional grid and is looking for ways to avoid having its power plants ramp up and down to meet demand as this is inefficient and can increase emissions.

Warren Wood, vice president of regulatory and legislative affairs for the utility, likened it to using cruise control on the freeway to driving in stop-and-go traffic in the city.

“We have pretty dramatic load changes from minute to minute, sometimes from second to second,” Wood said in an interview. “We need something that can ramp up and down really quickly to be a really effective tool for balancing.”

He is quick to point out that the pilot is initially funded by the utility shareholders and is free to Missouri fee payers.

Ameren initially tried to include $ 8,000 in electricity bills for 309,000 kilowatt hours of bitcoin mining-related energy use in its fuel reimbursement formula, but withdrew the application to the Public Service Commission after the state’s consumer advocate had questioned him earlier this year.

“If Ameren Missouri wants to get into speculative commodities like virtual currencies, it should be done as an unregulated service where installment payers are not faced with their economics,” said Geoff Marke, chief economist for the Missouri Office of the Public Counsel, said on a file . “This endeavor goes beyond the scope of intended regulation of utility companies and, if allowed, creates a slippery slope that could ask fee payers to provide capital for virtually anything.”

However, executives said the initiative could benefit customers if the concept works. And they are encouraged after the first four months.

The pilot has also piqued the interest of Missouri’s top energy regulator, Public Services Commission Chairman Ryan Silvey, who said he was interested in convening a technical workshop on the matter before he even learned about the Ameren project.

Silvey, a former Republican senator, told E&E News that he has a personal interest in digital currency. And a recent piece of news about an aging hydropower dam in New York state being used to mine bitcoins made him think further about the potential of cryptocurrency as a network asset.

Silvey said it was appropriate for Ameren to take all risk of the project at this point as it has not been reviewed in front of the PSC and other parties. But Missouri law allows utility companies to run pilot programs and look for alternative sources of income that could be used to lower tariffs.

“When a company offers us a program that presents little or no risk for consumers to benefit from, I find it exciting,” said Silvey.

But can Bitcoin mining bring value to the web?

Joshua Rhodes, a research fellow at the Webber Energy Group at the University of Texas at Austin, has researched the impact of Bitcoin mining in Texas and changed his mind about the potential benefits. Texas has become a global hub for cryptocurrency mining after China announced a series of restrictions on digital currencies in May, some of which are aimed at curbing carbon emissions.

“I think that [miners] can add great value, especially how fast they can move up and down, ”said Rhodes. “They can move up and down faster than some traditional generators, which is of value … especially if they are able to monetize the crypto assets.”

According to Ameren, the mining operations at the Sioux plant initially only consume half a megawatt and, depending on grid conditions, can be started up within a minute and shut down again within 20 seconds.

“We talk for a minute or less to turn it on or off,” said Wood. “You really have a good mechanism to try to get a better balance of the grid between your generating resources and the load.”

Questions about coal

Bitcoin mining has been widely criticized for its enormous power consumption – more than 121 terawatt hours worldwide – an amount that exceeds the power consumption of countries like the Netherlands and Argentina, according to the Cambridge Center for Alternative Finance.

But industry defenders, including Twitter co-founder Jack Dorsey, claim that bitcoin mining can advance the energy transition and enable the development of renewable energy and energy storage by helping break down barriers to their disruption and lack of transmission are connected.

“Bitcoin miners as a flexible charging option could potentially help solve much of these disruption and congestion problems so that the grids can use significantly more renewable energy,” said Dorsey’s other company Square and shareholder Ark Invest in an April white paper.

Among the skeptics is Andy Knott, deputy regional director of the Sierra Club’s Beyond Coal campaign.

The Sierra Club recently began research into bitcoin mining and its impact on the power grid after news reports of bitcoin mining operations powered by coal waste, natural gas and nuclear power plants, Knott said.

These projects include a cryptocurrency miner in northwest Pennsylvania that plans to run its operations on waste coal.

“It clearly generates electricity demand, and what will it cover besides the existing electricity generation on the grid?” Said Knott.

However, Ameren officials said just because the pilot is physically housed at the Sioux plant doesn’t mean bitcoin mining is coal-tied. The aim of the project is initially to validate the concept.

Alex Rojas, director of distributed technologies at Ameren, said that because the mining operation is modular, it can be relocated to other locations on the utility’s grid, be it an underutilized substation or a wind or solar farm.

“Renewable energies that cannot be shipped, such as wind and solar energy, urgently need this capability,” he said. “Putting this technology in one place would be of great help.”

Rhodes didn’t reject the idea that mining bitcoins to balance electricity supply and demand can be a net benefit in terms of carbon emissions. But he said it depends on how this affects the shipping of different power plants.

“It can have a positive impact on emissions when operated properly,” he said. “It can also increase emissions when it doesn’t.”

Ameren’s executives did not specify how long the pilot would last or how its success would be defined.

However, Rojas, who leads Ameren’s research and development work, said the results so far are promising and he sees the potential to use bitcoin mining modules for grid balancing on the same scale as energy storage in California with 20 to 80 megawatts per location .

“Something similar could happen with that,” he said. “It’s that scalable.”

For now, the utility is content with keeping the project running unchanged.

So far, Ameren has mined about 20 “coins” and produces a new one about every 15 days.

The utility said it doesn’t care about the volatility of Bitcoin, which peaked above $ 63,000 in April and has hovered around $ 44,000 in recent weeks. That is still over 300% more than last year.

Rather, it sees the mining process itself as the primary value that is being created and bitcoins as a by-product.

“The goal is not to mine crypto,” said Wood. “It’s really running a data center that happens to be producing crypto.”

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US Senator Calls On SEC Chairman To Provide Regulatory Clarity On Cryptocurrencies – Regulation Bitcoin News

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A US senator has asked the chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, to provide clear guidance on cryptocurrency regulation. The Senator stated that in many enforcement actions, “the SEC has failed to identify the securities involved or the reasons for their status as securities, which would have provided much-needed public regulatory clarity.”

US Senator wants the SEC to provide clear guidelines on crypto regulation

Senator Pat Toomey, ranked member of the U.S. Senate Committee on Banking, Housing, and Urban Development, wrote a letter to SEC Chairman Gary Gensler on Friday regarding the regulation of cryptocurrencies.

His letter followed Gensler’s testimony before the Senate Banking Committee last week. Toomey began:

I’m writing to address the concerns I raised at the hearing about the need for regulatory clarity around emerging technologies such as cryptocurrencies, including stablecoins.

“In order for investors to benefit from a fair and competitive market, regulators must proactively provide rules on how to get to industry,” the Senator said that the SEC “has instead adopted a strategy of regulation through enforcement in this area.” To date, the commission has launched more than 75 enforcement actions against the crypto industry, fines and penalties totaling more than $ 2.5 billion against crypto companies and individuals.

At the Senate hearing, Gensler extolled “the SEC’s success in pursuing crypto-related enforcement measures.” Toomey noted, however, that “in many of these enforcement actions, the SEC failed to identify the securities involved or the reasons for their status as securities, which would have provided much-needed public regulatory clarity.”

SEC Commissioner Hester Peirce is also concerned about the SEC’s approach to crypto regulation. She criticized her own agency in August for taking an enforcement-oriented approach to crypto regulation.

The Senator from Pennsylvania noted that the SEC’s approach was tied to Gensler’s belief that “the likelihood is pretty slim” that a given cryptocurrency platform has no securities. For example, Gensler told Senator Elizabeth Warren at the hearing that the Nasdaq-listed crypto exchange Coinbase (Nasdaq: COIN) could have dozens of tokens, which could be securities.

Recently, Coinbase was forced to abandon its plan to launch a loan product after the SEC threatened legal action and the company alleged it had received no explanation from the regulator. In the meantime, the security guard is in an ongoing proceeding with Ripple Labs and its executives as to whether XRP is a security.

Senator Toomey emphasized:

The SEC has a responsibility to do more than just provide probabilistic estimates.

The Senator concluded his letter with a list of questions for Gensler to answer for additional guidance on crypto regulation.

What do you think of Senator Toomey asking SEC Chairman Gensler to provide clear guidance on crypto regulation? Let us know in the comment section below.

Photo credit: Shutterstock, Pixabay, Wiki Commons

Disclaimer of Liability: This article is for informational purposes only. It is not a direct offer or solicitation to make an offer to buy or sell, or a recommendation or endorsement of any product, service, or company. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author are directly or indirectly responsible for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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