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Commentary: Will Bitcoin become mainstream currency in Singapore one day?

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SINGAPORE: We are seeing increased interest in Bitcoin and other cryptocurrencies as the price of Bitcoin rebounded and plummeted, seeing a nearly ten fold price increase over a period of a year.

Bitcoin is to date the highest rated or most expensive cryptocurrency in the world and has grown by 276 percent in the last year alone, far ahead of others such as ether used on the Ethereum network.

It peaked in April of that year before dropping to almost half its value in June. Singapore investors are also keeping an eye on Bitcoin and cryptocurrencies, with traditional institutions such as banks launching blockchain funds to give their wealthy investors the opportunity to invest in cryptocurrencies.

We even see traditional companies like Kopitiam in Funan announcing that they will accept cryptocurrencies like Bitcoin and Ethereum. According to Statista, there were eight Bitcoin ATMs in Singapore in January and about 51 companies that accept cryptocurrencies for payment.

BITCOIN AS A TRANSACTION CURRENCY

However, Bitcoin has several properties that make it unsuitable for use as a transactional currency.

Bitcoin’s volatility suggests that both consumers and merchants bear the exchange rate risk that arises from the need to change fiat currency to bitcoin.

For example, in 2010 we saw the first commercial transaction using bitcoin to buy a pair of pizzas for 10,000 bitcoins – what was about $ 40 at the time, would cost nearly $ 400 million today.

People use a smartphone app to pay bills with Bitcoin, shop for groceries, or get their hair cut, and make a direct online transfer to AFP / Stanley ESTRADA

The inefficiency of the blockchain with transactions that take hours or even days to be confirmed and the use of proof of work in Bitcoin mining also leads to excessive power consumption, leading to sustainability issues.

As a result, Bitcoin is unlikely to be widely used locally as a currency for transactions, although other forms of virtual currencies or stable coins with values ​​pegged to specific fiat currencies may find wider acceptance as a currency for transactions.

In addition, there is limited regulatory protection for cryptocurrency customers, which means that, unlike e-money stored on an EZ-Link card or bank account, cryptocurrency customers may lose the if the company goes bankrupt lose entire amount.

READ: Comment: Bitcoin is now legal tender in one country. Regret may soon follow

READ: Comment: Don’t trust the hype – Bitcoin will never be a smart investment

In this regard, the Monetary Authority of Singapore (MAS) has required cryptocurrency firms to provide clear and reasonable information to their customers, including merchants, so that all customers are aware of the risks.

Cryptocurrencies are neither legal tender nor securities. Instead, they are considered a commodity, just like trading cards that you can buy from vending machines or in shops. And as a good they can be used as a medium of exchange.

BITCOIN AS AN INVESTMENT

However, as high net worth investors are increasingly interested in adding cryptocurrencies to their investment portfolios, and mainstream banks such as DBS offer customers with cryptocurrencies as part of the portfolio investment opportunities, we will, given its increased availability with banks.

However, it should be noted that the size of the Singapore cryptocurrency market remains extremely small, according to MAS. Over the years the MAS has repeatedly issued consumer warnings to warn the public of the risks of trading or investing in cryptocurrencies.

A Bitcoin Automatic Machine (ATM) is seen in the Hong Lim Complex in Singapore

A Bitcoin Machine (ATM) can be seen in the Hong Lim Complex in Singapore on February 7, 2018. Picture from February 7, 2018. REUTERS / Dewey Sim

The prices of cryptocurrencies can be very volatile and are often speculative in nature. This is not surprising, since cryptocurrencies are factually and scientifically nothing more than bytes of data that sit on computers in networks.

They are not tied to a nation’s economy or economic fundamentals, and their value cannot be objectively measured or determined. Their values ​​are just what people think is worth, very much like trading cards and even fluctuate according to the tweets of billionaires like Elon Musk.

READ: Comment: Elon Musk Wakes Up To Bitcoin’s Environmental Impact

READ: Comment: Maybe Elon Musk should stop tweeting about Tesla

The massive, rapid increases in value are attractive to those hoping for quick gains – investors always hope they can buy at the bottom and sell at the top, especially since the cycles of rise and fall are frequent and rapid.

RULES AGAINST ABUSE

Not only does the MAS warn consumers about the speculative nature of many of these virtual assets, it also has rules to combat the misuse of cryptocurrencies to finance terrorism and the proliferation of weapons, as well as money laundering such as laundering drug revenues and the use of cryptocurrencies Combat ransom or other illegal payments received.

The ability to move or use cryptocurrencies quickly, relatively anonymously, and the cross-border nature of such transactions make them ideal mechanisms for money laundering.

In addition, cryptocurrency assets stolen from cryptocurrency companies with poor governance or cybersecurity measures can be laundered unnoticed either by other companies with equally poor governance or cybersecurity measures or by DeFi – decentralized financial systems – that have no intermediaries for transactions.

REGULATION FOR PROVIDERS

In Singapore, companies that offer trading in cryptocurrencies are regulated as providers of digital payment tokens under the Payment Services Act and must be licensed.

Likewise, companies that trade in cryptocurrencies or facilitate the transfer of cryptocurrencies or offer custodian bank services must be licensed and meet all requirements.

Crypto 03 cryptocurrency cryptocurrency bitcoin ethereum litecoin atm - file photo

A cryptocurrency ATM in The Arcade in Raffles Place Singapore (Photo: Jeremy Long)

Although the regulatory intent is to address money laundering and terrorist financing risks, the requirements on companies are quite high, which in turn can discourage companies from offering the services fully.

For example, a strict duty of care towards customers is required before every transaction, combined with constant and continuous monitoring.

READ: Comment: Cryptocurrency powers the underground economy of vice and crime

READ: Comment: Dogecoin and Why We Should Stop Taking Cryptocurrencies Seriously

In addition, the MAS has now been given the authority to quickly impose additional measures on cryptocurrency companies if necessary. All of this will put a damper on cryptocurrency providers and investors.

Overall, we believe Bitcoin is unlikely to go mainstream as a transaction currency. Cryptocurrencies that can become a currency that supports transactions should be stable and efficient – attributes not associated with Bitcoin.

Bitcoin could attract increasing interest from investors who have to deal with the inherent volatility, as Bitcoin is not tied to an underlying asset, but its value is highly dependent on investor expectations – which is why a tweet from Elon Musk is all too strong Lead to fluctuations in value.

Hannah Yee-Fen Lim is Associate Professor of Business Law at Nanyang Business School, NTU and one of 15 international legal experts appointed by the International Institute for the Unification of Private Law to draft new international model laws on cryptocurrencies and other digital assets. Boh Wai Fong is the assistant dean and professor of business informatics at Nanyang Business School, NTU.

In this episode of the Money Mind podcast, hear experts discuss the risks and rewards of decentralized finance:

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Cryptocurrency

Orlando residents launch cryptocurrency group to educate and give back to international communities

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From donations to food drives, there are many ways you can give back to communities in need but three Orlando residents are turning to digital tools to support low-income families in developing countries. Chris Delgado, Fabian Kumpusch and Vance Fundora share a vision of rebuilding and impacting communities around the world.”Where can our dollar literally go the furthest?” co-founder of ‘Crypto Impact’ Vance Fundora said. The answer led them to the way they grow their own personal finances – cryptocurrency which is a type of currency that uses digital files as money. The men recently launched their group ‘Crypto Impact’ where they’re traveling abroad to help communities in poverty. “You can literally send money to an individual in need through blockchain technology where banks are shut down and you can’t really wire money like we do here in the states and those countries don’t have a cell or Venmo type thing,” co -founder of ‘Crypto Impact’ Chris Delgado said. “Normally when people donate they’re donating to a bigger cause where they’re providing food for disaster relief,” Delgado said. “This where ‘Crypto Impact’ comes into play we’re delivering specific needs to individuals and we’re there on the ground.”When WESH 2 spoke with Delgado and Fundora, their third business partner was in Vietnam where he was connecting people with clothing, food and clean water. It’s the start of future international projects that will all be funded by digital coins.”It’s just a new industry and it’s a lot of opportunity across the board in terms of technology available,” Fundora said. Being on the ground with the people they’re giving back to is vital for the men so they can educate and raise awareness. “To show not only the beauty behind crypto and bring mass adoption, but also to give in other countries where you can’t necessarily bring in hundred, 200 or 300 hundred dollars but with crypto you can,” Delgado said. The friends have plans to travel and spread ‘Crypto Impact’ to other developing countries in the future.

From donations to food drives, there are many ways you can give back to communities in need but three Orlando residents are turning to digital tools to support low-income families in developing countries.

Chris Delgado, Fabian Kumpusch and Vance Fundora share a vision of rebuilding and impacting communities around the world.

“Where can our dollar literally go the furthest?” co-founder of ‘Crypto Impact’ Vance Fundora said.

The answer led them to the way they grow their own personal finances – cryptocurrency which is a type of currency that uses digital files as money.

The men recently launched their group ‘Crypto Impact’ where they’re traveling abroad to help communities in poverty.

“You can literally send money to an individual in need through blockchain technology where banks are shut down and you can’t really wire money like we do here in the states and those countries don’t have a cell or Venmo type thing,” co -founder of ‘Crypto Impact’ Chris Delgado said.

“Normally when people donate they’re donating to a bigger cause where they’re providing food for disaster relief,” Delgado said. “This where ‘Crypto Impact’ comes into play [because] we’re delivering specific needs to individuals and we’re there on the ground.”

When WESH 2 spoke with Delgado and Fundora, their third business partner was in Vietnam where he was connecting people with clothing, food and clean water.

It’s the start of future international projects that will all be funded by digital coins.

“It’s just a new industry and it’s a lot of opportunity across the board in terms of technology available,” Fundora said.

Being on the ground with the people they’re giving back to is vital for the men so they can educate and raise awareness.

“To show not only the beauty behind crypto and bring mass adoption, but also to give in other countries where you can’t necessarily bring in hundred, 200 or 300 hundred dollars but with crypto you can,” Delgado said.

The friends have plans to travel and spread ‘Crypto Impact’ to other developing countries in the future.

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Cryptocurrency

Bitcoin is ‘not immune’ from stock market volatility (Cryptocurrency:BTC-USD)

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MicroStockHub/E+ via Getty Images

Bitcoin (BTC-USD) has often been hyped as an inflation hedge or as an alternative investing class, an opportunity to diversify a portfolio. However, evidence continues to mount, especially in the recent market downturn, that crypto holds a high correlation with stocks (SP500).

This connection is evidenced by the fact that both bitcoin and equities grinded higher in the easy money era of 2020-2021, and now both are facing cyclical downturns as financial conditions tighten and liquidity dries up.

“The correlation between bitcoin and equity indices has remained high and will continue to do so unless bitcoin becomes widely used as a medium of payment – which looks unlikely to happen soon,” Morgan Stanley analyst Sheena Shah wrote in a note May 10.

For some context, the rolling 120-day correlation between the S&P 500 index (SP500) and bitcoin (BTC-USD) was recently standing at 0.60, the highest reading since the series began in 2011, Charles Schwab Chief Investment Strategist Liz Ann Sonders wrote in a Twitter post May 10. In other words, bitcoin’s price action resembles that of stocks and therefore risk assets. Take a look at the chart below to further grasp how bitcoin has fared Y/Y with the S&P 500 as well as S&P volatility, which is inversely correlated with the major stock index.

For a macro perspective, as central banks across the globe pivot to tighter monetary policy (some more aggressive than others) in an effort to dull widespread inflationary pressures, global money supply growth continues to decelerate from its peak in Feb. 2021, Shah noted, adding that bitcoin’s (BTC-USD) market cap growth topped a month later in March 2021, implying that global liquidity and bitcoin could share a connection.

Note that in 2020, speculative assets like bitcoin soared in price in the wake of extraordinary accommodative monetary/fiscal policy and surging money supply. Stifel recently predicted for bitcoin to reach as low as $15K as shrinking M2 money supply growth, a broad measure of money in circulation, “should sharply weaken Bitcoin.”

Looking at the BTC-stocks correlation from a different lens, retail investors used to be the dominant cryptocurrency trader around four years ago, but now “the largest proportion of daily crypto trading volumes is from crypto institutions, much of which comes from them trading with each other,” Shah explained.

This dynamic has contributed to bitcoin’s (BTC-USD) strong bond with equities since those institutions are sensitive to the availability of capital and therefore interest rates, she added.

Commentary: “We’ve definitely seen [bitcoin] trade more in line with stocks and more in line with the Nasdaq and tech stocks, in particular, over the last few quarters,” Coinbase (COIN) CFO Alesia Haas told CNBC’s Squawk Box in an interview May 12. “Lots of institutional money has come into crypto, and with the broader volatility that we’re seeing, we’ve seen strong correlations,” she added.

Take a look at SA contributor’s The Digital Trend’s bullish take on bitcoin.

Earlier this past week, (May 12) Bill Miller said he hasn’t sold any bitcoin.

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Cryptocurrency

Pros, cons of cryptocurrency mining in upstate New York

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Last month, the New York state Assembly voted to pass Democratic Assemblymember Anna Kelles’ two-year moratorium on new cryptocurrency mining. The idea behind the bill is to give the New York State Department of Environmental Conservation the time to conduct an environmental impact study of the practice.

The bill would prevent new permits from being issued for a very specific kind of cryptocurrency operation, known as carbon-base fueled, proof-of-work mining operations, that use behind-the-meter energy.

The bill still needs to pass in the state Senate and be signed by Gov. Kathy Hochul before it can become law.

The allure of cryptocurrency is that by using blockchain technology, financial transactions are instantaneous, secure and very difficult to trace. But there is a downside to proof-of-work mining: it takes enormous amounts of energy to run the thousands of computers used to “mine” coins.

This is why Assemblymember Kelles said her bill is so narrowly focused.

“This particular type of validation of cryptocurrencies is called proof-of-work, which is synonymous with cryptocurrency mining. There is no other kind of method that is called mining. It has been found across the globe to use phenomenal amounts of energy in comparison to other forms of validation such as proof-of-stake, for example,” Kelles told Capital Tonight.

Cryptocurrency “mining” isn’t mining in the usual sense of the word. It’s millions of computers competing with each other to validate transactions. The more computers a miner has, the greater the advantage — and the more energy used.

Upstate New York is attractive to cryptocurrency miners for a variety of reasons, including abundant clean air and water, relatively cool temperatures and cheap hydroelectric energy with which to power computers.

Upstate New York also has several old power plants that are ready-made to house these mining operations, some of which are being purchased by publicly-traded companies. These companies are re-purposing the power plants to make their own energy “behind the meter,” meaning it is produced and consumed on-site.

“We are a prime target,” Kelles said of upstate.

One of the largest cryptocurrency mining operations in upstate New York is Greenidge Generation, located on the shores of Seneca Lake in the Finger Lakes region. Critics, including Kelles, argue that the crypto-mining taking place at Greenidge is hurting the already established agritourism and wine industry there.

The Greenidge Generation bitcoin mining facility is in a former coal plant by Seneca Lake in Dresden. (AP Photo)

The assembly member also argues that cryptocurrency mining is not a big job creator.

“Mining itself is not a huge job creator because the computers, first of all, are doing all the work. But secondly, what’s really important, is that the algorithm they are running is very simple. It’s not like the algorithm for the Skype app… and therefore it doesn’t take a massive amount of engineering jobs…to maintain,” Kelles said.

“[Cryptocurrency mining] is a very small fraction of jobs compared to [agritourism],” Kelles said.

But cryptocurrency advocates, including Republican Assemblyman Robert Smullen, argue that New York is a world leader in financial services, so why shouldn’t the state lead when it comes to cryptocurrency as well?

Smullen also takes issue with Kelles’ characterization of the jobs created by such operations.

“These are good jobs because they’re electrical jobs, essentially, is what they are, and they’re running all of these facilities,” Smullen explained. “This is a new form of advanced manufacturing.”

Indeed, the union IBEW is a supporter of cryptocurrency mining.

As for Greenidge Generation in particular and its plan to expand from the 17,000 computers it has operating currently, Smullen isn’t concerned.

“[Greenidge] is probably one factory in one small part of one town so I don’t think it’s disrupting any agritourism brand for the beautiful area of ​​the Finger Lakes,” Smullen told Capital Tonight.

What the assemblyman is very concerned about is the possibility of a two-year moratorium on new cryptocurrency operations.

“In this industry, two years is literally light speed in the blink of an eye,” Smullen said. “This industry, financial technical things, they can go anywhere.”

The key, according to the assemblyman, is getting miners to come to New York, and then keeping them here.

“This is commerce that’s very important to the future of financial services industry. During the pandemic, we saw that jobs in New York City, many of them could be done from anywhere. My concern then and my concern now is that we’ve set up a regulatory environment in this state which positively incentivizes the financial services industry, which is going to evolve over time with technology to stay in New York state,” Smullen said.

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