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Category Archives: Cryptocurrency
Posted: October 8, 2019 at 4:45 pm
It's a make-or-break moment for bitcoin ETFs.
The Securities and Exchange Commission has set an Oct. 13 deadline for approving a bitcoin-based exchange-traded fund from Bitwise Investments, a move that could mark a meaningful milestone in bitcoin's long-term growth story.
The digital currency has been volatile this year, falling by over 20% in one week in late September to its lowest level since July amid increasing skepticism and uncertainty. Bitcoin hit its 2019 high of over $11,000 in June, according to cryptocurrency exchange Bitstamp.
Interestingly, bitcoin is still 2019's best-performing asset, up almost 123% for the year.
That volatility isn't stopping Matt Hougan, managing director and global head of research at Bitwise, from being optimistic about the prospects for his firm's bitcoin ETF, which, if approved, would trade as the Bitwise Bitcoin ETF Trust.
"We're closer than we've ever been before to getting a bitcoin ETF approved," Hougan, former CEO of Inside ETFs, said Monday on CNBC's "ETF Edge."
"Sometime before Monday, the SEC has to give its decision: yes or no. They have no more ways to postpone it at this point," Hougan said. "We will hear clearly between now and Monday what they think, and then, depending on what we hear, we'll go forward from there. But it should be a very exciting week."
The road to bitcoin ETF approval has been a long one. The Facebook-famous Winklevoss twins first filed for a bitcoin ETF in 2013, launching a yearslong fight for approval with the SEC that ended in disappointment.
It's also come with a few casualties. In January, a government shutdown threw a wrench in many issuers' plans, with Cboe Global Markets withdrawing its application for a bitcoin-based ETF. In mid-September, VanEck and SolidX followed suit, pulling their proposal for a bitcoin-based ETF from SEC consideration.
But in the last few years, the outlook for Bitwise's proposal has improved significantly, Hougan said.
"The evolution of the bitcoin market over the last two years is from night to day," he said Monday, adding that some of the SEC's chief concerns about approving a bitcoin ETF mainly custody and proper regulation are starting to get resolved.
"Two years ago, there were no regulated, insured custodians in the bitcoin market. Today, ... there are big names like Fidelity and CoinBase [with] hundreds of millions of dollars of insurance from firms like Lloyd's of London," he said. "Two years ago, there were no regulated crypto exchanges. Now, six of the 10 big crypto exchanges are regulated by the New York Department of State with market surveillance technologies in place. And, most importantly, two years ago, it was a one-sided, inefficient market. Today, we have $200-plus million in volume and regulated futures every day."
Now, bitcoin is "among the most efficient institutional markets in the world" because of its narrow spreads and the involvement of major market makers like Jane Street Capital and Susquehanna, Hougan said.
All of those factors could bring Wall Street one step closer to welcoming the first-ever bitcoin ETF, a long-awaited event that would open up the crypto space to many more buyers, Hougan said.
"The opportunity that's taking place in bitcoin, crypto and blockchain today is one of the most exciting wealth-generation opportunities in the world," he said. "The problem is while big institutions have safe, secure ways to buy bitcoin today in private funds that are available only to the ultra-high-net-worth people, regular investors don't have a safe way."
A bitcoin ETF would change that layout entirely, the research pro said.
"What the bitcoin ETF would allow everyday investors to do is have safe, simple, secure access to the wealth generation taking place in bitcoin and crypto. It would let financial advisors give it to their clients easily instead of them going rogue," Hougan said. "It's just trying to solve that problem of simple, secure access to what is emerging as a very important technology and a very important asset class in the market."
Bitcoin was up by about 5% by Monday's stock market close, according to Bitstamp.
Read more from the original source:
'We're closer than we've ever been' to bitcoin ETF approval, says Bitwise head of research - CNBC
Posted: at 4:45 pm
Over the past few years, cryptocurrencies such as Bitcoin have been the subject of much debate among regulators around the world. While a few critics of the technology have long held the position that cryptocurrency cannot compete with fiat currencies due to their decentralized and distributed nature, many are now realizing its sheer potential in use-cases such as cross-border trade and global financial inclusion. Governments are no exception to this, with many now suggesting, and even already developing, state-backed digital currencies to compete with the likes of Bitcoin.
Governments Take a Positive Stance on Cryptocurrencies
China famously termed initial coin offerings illegal in September 2017 and proceeded to clamp down on cryptocurrency exchanges operating in the region. Prior to the ban, the Chinese Yuan accounted for almost 90% of global cryptocurrency trades. In 2018, however, The Peoples Bank of China (PBOC) announced that the Yuan was being used in a mere 1% of Bitcoin transactions. Since then, however, several rumors surrounding the PBOCs plan to launch a state-backed digital currency have emerged. The central bank digital currency (CBDC) will likely be backed by the Chinese renminbi fiat currency and may even replace notes and coins in the future.
Countries like Japan, France, and Portugal, on the other hand, have made cryptocurrency trading much more attractive and accessible to the general public. Japan, for one, was the first nation to allow cryptocurrency to be used as a payment method and has since regulated the ecosystem to curb rampant fraud and hacks at various exchanges operating in the region. France and Portugal, meanwhile, have announced that crypto-to-crypto trades will not trigger a taxable event. The latters government has even exempted cryptocurrency from capital gains taxation.
Banks Embrace Blockchain, Tokenized Future
Even at the institutional level, banks, hedge fund management firms, and individual investors have reversed their cynical approach to the cryptocurrency market and are now actively embracing the technology.
On several occasions, JPMorgan Chase CEO, Jamie Dimon, claimed that cryptocurrencies, including Bitcoin, were fraudulent schemes that would eventually blow up. Dimon even went as far as stating that he would personally fire any JPMorgan trader who was trading Bitcoin. A few short months later, however, Dimon backpedaled in an interview with Fox Business, stating that he regretted making those comments and that he was aware of the potential implications of blockchain technology and the cryptocurrency ecosystem.
In 2019, JPMorgan Chase announced that it was developing its own digital currency called JPM Coin. Each token will reportedly be pegged to the value of one US dollar. In its JPM Coin announcement post, the bank echoed Dimons sentiment by stating, We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated.
Bitcoin: A Hedge Against Geopolitical Turbulence
Individual traders that typically deal with stocks, precious metals, and other traditional asset classes have also taken a keen interest in the crypto market. American investor, Anthony Pompliano, has repeatedly voiced support for Bitcoin, stating that 100% exposure to fiat assets is a bad idea due to the risk of hyperinflation or central bank failure. Given that countries like Greece, Zimbabwe, and Venezuela have experienced significant financial turmoil over the past few years alone, many believe that Bitcoin serves as the perfect diversification tool.
Due to the US-China trade war, many institutional investors are moving their funds away from the stock market into more stable asset classes. Founder and CEO of Digital Currency Group, Barry Silbert, said, Its certainly interesting that that price [of Bitcoin] started its acceleration, moving up and to the right, when the trade discussions broke down.
Adoption and interest in the cryptocurrency market has also been sparked by decentralized applications like Alluva that offer the ability to participate in the digital currency ecosystem without any investment. Alluva, for one, is building the worlds largest analyst network by incentivizing individual investors for accurately predicting the price potential of various cryptoassets, and providing institutional investors the data they need to boost transparency in investment within the sector.
As the cryptocurrency and blockchain ecosystem continues to grow, it remains to be seen if the next ten years will be just as influential and positive as the past. One thing is certain, however - governments and institutions have finally realized the true potential of decentralization.
Disclaimer: This article has been Produced on behalf of Alluva by Times internets Brandwire team.
Posted: at 4:45 pm
Dont expect American tech powerhouse Apple to launch a cryptocurrency any time soon or ever for that matter.
Well, at least not while the companys chief executive officer Tim Cook is at the helm. The CEO noted in a new interview with French financial newspaper Les chos that he believes states, and not private entities like firms, should remain societys monetary masters.
Asked by the publication whether Apple was planning to launch its own money, Cook said No, adding:
I seriously think money needs to stay in the hands of nation states. I am not comfortable with the idea of a private group creating a competing money. A private enterprise doesnt have to strive for power like this. Money, like national defense, needs to remain the domain of nation states, its at the heart of their mission. We elect our representatives to undertake government responsibilities. Businesses or private groups are not elected, they dont have to enter this field.
Thats open and shut as far as sentiment goes, and many people in mainstream circles would agree with Cooks positions here. Could his thinking evolve on money in the coming years? Of course. But theres no debating where Cook currently stands on the matter.
To be sure, reasonable people can disagree on monetary subjects. Yet there is no question that with the advance of top cryptocurrencies like bitcoin and ether combined with Facebooks major Libra splash that money, what it is and what it can be, is now a matter that the largest organizations are increasingly taking positions on.
At Apple the buck stops with Tim Cook as far as the companys wider strategies go, so when he says money should remain in the realm of states, its a bright flashing signal that Apple isnt making its own rendition of the Libra for the foreseeable future.
Still, it appears the tech giant is keeping its ears to the ground where the possibilities cryptocurrencies are concerned, at least according to comments made by Apple Pay vice president Jennifer Bailey in September.When interviewed by CNN at a private event in San Francisco on September 5th, Bailey said:
Were watching cryptocurrency We think its interesting. We think it has interesting long-term potential, but were primarily focused on what consumers are using today.
The payments arm of the massive company, Apple Pay made waves earlier this year when it unveiled the Apple Card, a fee-less titanium debit card that users could link to their Apple Pay accounts.
Some saw the new product as a potential challenge to traditional banks. Yet combined with Cooks latest remarks, it seems that banks and not money itself marks the limit of what Apple is willing to shakeup right now.
Again, though, the company isnt totally burying its head regarding the possibilities around cryptocurrencies.
If you look at QR code payment solutions, if you look at the long-term potential of cryptocurrency, I think youll continue to see that change over time, Bailey told CNN.
Apple may not have to shakeup the money game itself if the central banking system of the United States does so first.
Theres nothing concrete on that front at the moment. But American lawmakers did notably send Federal Reserve Chairman Jerome Powell a series of questions this week that centered around any plans the Fed might have digitizing the dollar as a cryptocurrency.
While some Americans currently use cryptocurrency for speculative purposes, usage of digital assets may well increasingly align with that of paper money in the future, the congressmen said.
How Chairman Powell will respond remains to be seen, but it does look like the tides are steadily changing regardless.
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Have at It, Libra: Theres No Apple Cryptocurrency on the Horizon - Blockonomi
Cryptocurrency firm slapped with cease-and-desist after impersonating registered financial adviser – The Next Web
Posted: at 4:45 pm
Missouri-based cryptocurrency companyMavixbtc Limited has been handed a cease-and-desist order for allegedly misleading investors.
The company, based in St.Louis, misled the public through its website, which falsely claimed to be registered with the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Maxixbtc promised investors returns of up to 55 percent in as little as six days.
If this wasnt enough, the company also used the registration number of a legitimately registered investment adviser who had nothing to do with and no knowledge of Mavixbtc.
According to its website, Mavixbtc was founded in 2008 by Mavis Ann Lehr, a subsidiary of Benjamin F. Edwards & Company, Inc. a broker-dealer with over 2,136 financial professionals registered nationwide.
Securities Commissioner David M. Minnick said:The novelty and promise of quick profits by investing in cryptocurrencies can be enticing to investors.
But there are significant, real risks associated with these non-traditional investments, and scam artists are hard at work trying to defraud investors. Always check with our office before you invest, he added.
Want more Hard Fork?Join usin Amsterdam on October 15-17 to discuss blockchain and cryptocurrency with leading experts.
Published October 3, 2019 13:30 UTC
Posted: at 4:45 pm
Global exchanges are begging the UKs Financial Conduct Authority (FCA) not to ban the sale of cryptocurrency-based derivatives.
The World Federation of Exchanges said today that there is a need to find a balance between innovation and keeping consumers protected, Reuters reports. But it doesnt think banning cryptocurrency-based investment products is the right answer.
The WFE recognizes the volatility identified by the FCA in its consultation report and is supportive of ensuring that proper consumer protection is put in place as a priority for any new and relatively untested product on the market, the WFE said in a statement.
Earlier this year, the FCA proposed a blanket ban on cryptocurrency-related investment products in an attempt to protect retail investors.
In July, the FCA said thatcryptocurrency-based derivatives and exchange traded notes, were ill-suited to retail consumers who cannot reliably assess the value and risks.
Heres the thing, exchanges that are part of the WFE are regulated, and so, investors are protected. The issue lies with the unregulated exchanges offering cryptocurrency derivatives.
By banning these products, it immediately makes the act of selling them unlawful and in theory should protect investors. But even the regulated exchanges will be affected if this happens.
At the moment, the FCAs proposed ban is under consultation, meaning industry bodies have the opportunity to give their feedback.
According to Reuters, the FCA will announce the final rule changes in early 2020.
Want more Hard Fork?Join usin Amsterdam on October 15-17 to discuss blockchain and cryptocurrency with leading experts.
Published October 7, 2019 14:27 UTC
Posted: at 4:45 pm
We have made a selection of 7 top cryptocurrency traders to follow on Twitter.
Whether youve been inside the cryptocurrency space for a longer time, or youve just decided to start looking around, this selection will be interesting for everyone. Weve made a fine selection of very credible, solid and established names, combined with some highly-skilled next generation traders. Be sure to check them all out and give them a well-deserved follow!
Murad is a very reputable cryptocurrency trader from the Adaptive Capital fund, a cryptocurrency fund that is actively trading cryptocurrencies. As a renowned name in the Crypto Twitter world, Murad is best known for his charts, but he also often shines a very interesting light on cryptocurrency debates and regularly brings newsworthy information.
Formerly known as @crypToBanger, PaTo has been a notorious Crypto Twitter trader for quite some time. PaTo is mostly famous for his elegant high time frame macro charts, often accompanied by flashy graphics and his sigNatuRe WriTing stYle.
But dont be fooled by his flashy appearance, PaTo really knows his trading and often spots wonderful buying opportunities and hidden small-cap gems.
YoungTilopa will be a new name to many traders out there. Fortunately, the amount of followers doesnt say much about your trading skills and YoungTilopa is the living proof. Tilopa has very clean charts and often accompanies them with a very interesting order book analysis. Definitely someone to keep an eye on and a very interesting one to follow.
Follow @BeInCrypto on Stocktwits for the lastest trading news!
FilbFilb might just be the most productive trader of the lot. Not only does he tweet on a very consistent basis, but filbfilb also has a very active Telegram channel, where he further elaborates on his trades and ideas. As a bonus, filbfilb also gives out a weekly report/newsletter for free. His charts are a great way to help get a grasp of what is going on with the markets.
NebraskanGooner is a cryptocurrency entrepreneur and highly-skilled short term trader/scalper. Being on the Glassnode Trade Advisory Board, he also often shares very interesting on-chain metrics with his followers. With 32k followers, hes already made quite a name for himself, but he definitely deserves a lot more.
We couldnt make this list without mentioning CryptoCred. For anyone trading cryptocurrencies, whether youre a beginner or an experienced trader, CryptoCred has great content for you. With several trading guides and immensely valuable trading videos, hes probably the go-to for every cryptocurrency trader that wants to learn something new. Apart from this, he also tweets very interesting charts, instantly helping you to understand current price action.
D4rkEnergY is another highly-skilled cryptocurrency trader that made a name for himself on Tradingview, where his excellent charting used to earn him a spot among the All-Time top-ranked traders. His Twitter timeline is filled with interesting charts and great trading set-ups.
D4rkEnergY is also currently leading a very profitable cryptocurrency signals trading group, called Aedge. All his trade signals are well-documented and available for everyone to see.
BeInCrypto is the first fully transparent cryptocurrency news and trading platform no hidden, unlabelled sponsored articles masquerading as real news. We bring you high-quality content and are on top of things to bring you breaking news before anyone else. If you havent done so before, have a look around on our website and make sure to follow us on Twitter!
Images are courtesy of Shutterstock, Twitter.
Posted: at 4:45 pm
Cryptocurrency buying and selling got a boost with the recent decision by Starbucks to accept cryptocurrencies as payment for food and drink which only adds to the pressure for more businesses to do the same.
Its not an easy decision to make, especially for anyone without strong instincts for digital technology; and there are risks as well as advantages.
Cryptocurrencies are a digital invention, an asset created, held and traded entirely online without any underpinning by Governments. They are not a fiat currency, one issued by a Government with all the security, regulation and visibility that implies. Quite the reverse. Cryptos exist because people have willed them into being and find them useful enough to value accordingly. Furthermore, they rarely come up for air to be converted into real money, so our collective experience of them is low.
Their value is also volatile, swerving alarmingly from dizzying highs to uncomfortable lows since Bitcoin, the first and most famous, arrived just over 10 years ago.
There is also an invisibility to crypto that can be unsettling, with some iterations turning out to be more risky than others.
But there are solid commercial benefits. Crypto allows for instant, borderless payments. This can be an advantage for businesses that trade globally and particularly those with an e-commerce platform.
They are also not bound by a single countrys exchange rate or even location, making it easy for companies entering a global market to accept payments from anywhere in the world. In addition, they avoid banking transaction charges.
And there is the marketing edge. The very fact of accepting crypto communicates something dynamic and engaged about a business; and being able to offer several payment options, including this one, helps secure trade as well as to stand apart from rivals.
There are certainly plenty of cryptos out there, but Bitcoin and Ethereum are the most well-known and understood. This make them arguably the most sensible to work with, at least initially, if you take the plunge.
It is perfectly possible to set up digital wallets and accept crypto payments directly. But that means also accepting all the associated risk and technical know-how required.
Few businesses will want to get that involved in the infrastructure associated with holding the coins, let alone working out what they are worth at the crucial moment an invoice is raised. Fortunately, there are now a number of large, well-regarded exchanges. These essentially absorb the risk of accepting digital payments and make the necessary transfers, including translating the crypto into the fiat amount billed.
BitPay, for example, is a payment processing provider that will convert a traditional fiat currency fee into a Bitcoin equivalent as soon as it is issued.
That Bitcoin price is then fixed for 15 minutes before being automatically renewed using the same process. This is necessary because of the value fluctuations.
The invoicing firm then receives its payment electronically through BitPay, but as fiat money.
The advantage for the invoicing business from using a reputable exchange is reduced risk and the likelihood of prompt payments, particularly as clients respond to the 15 minute conversion windows. And for some, who bought Bitcoins when they were cheaper that current prices, there is the prospect of goods or services costing them far less to actually pay for. A win-win.
Although paying for services by crypto may seem something of a niche currently, it is hard to think that will remain the case for much longer, especially as the world moves to paperless transactions in fiat currencies.
Issues around risk are also likely to diminish. Governments are fully engaging with the highly complex task of trying to regulate an essentially invisible, stateless currency; and with regulation will come oversight and a reassuring legitimacy. In fact, something to bank on.
Jon Wedge is a financial services partner at accountancy firm and business advisers BKL.
Further reading: The cryptocurrency investors guide
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Cryptocurrency buying and selling and how it works - What Investment
How Adoption Of Cryptocurrency Stablecoins Can Open Access To The 1.7 Billion Unbanked and Poor – Forbes
Posted: at 4:45 pm
Public retail adoption of stablecoins might occur more rapidly in countries without a strong banking infrastructure.
The 2017 Global Findex database, launched with funding from the Bill and Melinda Gates foundation, points to advances in digital technology that are key to achieving the World Bank goal of universal financial access.
Stablecoin initiatives are developing at a rapid pace.Adoption of stablecoin, a form of collateralized cryptocurrency pegged to a stable fiat currency like the yen or dollar are being debated by central banks.This is a good signregulators are discussing how blockchain style coins can become mainstream payment options.However in developed economies where the banking sector is more established, regulators are still cautious of risks.
While the basic use-case for the mass adoption of stablecoin is as a potential fiat-currency replacement, how those coins are implemented is hotly debated.Coins collateralized by traditional currency, like the euro, United States dollar or the pound can be structured in different ways.
Based on the European Central Bank (ECB) paper In Search For Stability In Crypto-Assets: Are Stablecoins The Solution? (August 2019), stablecoin adoption, particularly in well-regulated countries, for example counties in the European Union, would need definitive rules governing the accountability of the issuer, decentralization responsibilities, and clear guidelines for what underpins the value of the asset before widespread implementation can occur. Last months statement by the French finance minister regarding the intention to block Libra development in France makes it clear that stablecoin adoption has challenges.
At the same time institutions like the Financial Markets Authority (AMF), part of the French financial regulatory system, announced in July 2019 plans to create a voluntary regulatory framework for crypto firms.
While Libra may face an adoption risk among European nations, it seems clear that coin development will continue.
Recently the president of the ECB said in a letter, dated September 26, 2019, that it is exploring the potential of crypto assets and assessing their impact to monetary policy and retail implications.In the letter the ECB president, Mario Draghi, said that new stablecoin arrangements (such as Libra) backed by large technology companies could have potential for widespread adoption.
However in the same letter a number of concerns were cited where stablecoin initiatives were untested and gave rise to a host of risks and issues.
For proponents of stablecoin adoption, central bank media coverage combined with Facebooks determination to create Libra suggest collateralized coins will have a future, especially in retail payments, sometime in the coming years.
But where can stablecoin trading and exchange find a foothold as a true monetary option in the short term?
Potential adoption can have a competitive advantage in countries where currency volatility, compounded by a poorly regulated banking system or nonexistent financial infrastructure, is the norm.Stablecoin trading can provide access to banking with less volatility, compared to economies where the financial system is viewed with a lack of trust. Venezuela is a good example.
The 2017 Global Findex database, lunched with funding from Bill and Melinda Gates foundation, points to advances in digital technology are key to achieving the World Bank goal of universal financial access. The same report highlights that 1.7 billion people lack a bank account.Stablecoin can become a path for the unbanked to create a stable store of monetary value and exchange. If access to digital technology increases across all nations, the implication for the unbanked and poor may well be widespread crypto adoption over local and less resilient financial systems.
An adoption strategy to watch is where stablecoins can offer an alternative to hyperinflation, offer price stability and financial access to the public.
Here is the original post:
How Adoption Of Cryptocurrency Stablecoins Can Open Access To The 1.7 Billion Unbanked and Poor - Forbes
Posted: October 2, 2019 at 8:46 am
(Photo by S3studio/Getty Images)
Throughout the history of cryptocurrencies, altcoins have had a lot of trouble competing with Bitcoin, which is basically the gold standard of the market. In terms of everything from network effects to brand recognition, there is still simply no real threat to Bitcoin's position at this time.
That said, Ethereum briefly passed Bitcoin in one key area last week: total daily USD-denominated transaction fees. In fact, Ethereum miners collected more in fees than Bitcoin miners on this past Saturday and Sunday too, according to Coin Metrics.
Additionally, while it's been a rough September for the Bitcoin price, Ether is in the green (just barely) this month, and the cryptocurrency recently enjoyed one of its best 24-hour Bitcoin-denominated price moves ever recorded.
Increased Usage Means Higher Fees
In cryptocurrency networks, transaction throughput is limited in order to preserve decentralization. If the network is processing too many transactions per second, the users' ability to run their own full nodes and check that no one is cheating will be harmed. Since the whole point of using a public blockchain is to gain properties like censorship resistance and trust minimization, avoiding centralization is key.
Due to the limitations placed on capacity, cryptocurrencies like Bitcoin and Ethereum see higher transaction fees when the networks become congested. This is exactly what has happend with Ethereum over the past month, as total daily USD-denominated transaction fees hit levels not seen in over a year.
So, what has caused the recent spike in Ethereum transaction fees? It appears the blame can be placed on a Ponzi scheme-esque game called FairWin, which also has a critical vulnerability in its associated contract on the Ethereum blockchain. According to on-chain crypto market analytics firm Glassnode, FairWin has recently been consuming up to half of the gas spent on the Ethereum network at any given time.
The spike in FairWin's popularity, according to Etherscan, correlates almost perfectly with the increase in total fees seen on the Ethereum network this month, according to Coin Metrics.
Total USD-denominated transaction fees per day for the Bitcoin and Ethereum networks.
What Does This Mean for Ethereum's Future?
The total value of all the transaction fees paid on a cryptocurrency network every day is a key metric to watch because it illustrates the level of demand for that particular blockchain. If people are willing to pay relatively high fees to use a particular blockchain, they must be getting some sort of utility out of it.
Additionally, fees are intended to eventually replace the creation of new Bitcoin as the incentive for miners to secure the network. Things will likely work differently for Ethereum, as the Ether token is expected to be issued on a perpetual basis, which means a never-ending block subsidy. This is effectively a trade-off of dilution of the current Ether supply in exchange for a higher level of network security.
In terms of their possible effect on the Ether price, it's unclear if fees are an important metric to watch. While total fees can be a useful indicator of the amount of real activity on a cryptocurrency network and provide a greater incentive for miners or stakers to secure the network, this data point doesn't necessarily have much to do with the native token of the network.
This point is especially true when it comes to Ethereum, as that blockchain is often used to issue and transfer non-native tokens.
At the end of the day, it does not seem clear that a popular Ponzi scheme game or the movement of something like Tether USD means people should be buying and holding Ether over the long term. And as Castle Island Ventures Partner Nic Carter recently explained, a cryptocurrency increases in value when users decide to hold the asset for long periods of time rather than utilize it as a sort of appcoin.
It is perhaps the market's realization of this point that was behind Ether's 85% drop against Bitcoin since the peak of the hype around the altcoin becoming the largest cryptocurrency (measured by market cap) back in June 2017.
Update: This article has been updated to note that, according to Glassnode, up to half of the gas recently spent on the Ethereum network was for FairWin. This differs from the 33% number included in the original version of this article.
Will Facebook’s Libra Overtake Bitcoin Cryptocurrency And The Ethereum Blockchain? How Will It Work? – Forbes
Posted: at 8:46 am
Trust is the fundamental element in business transactions. It is what keeps economies and societies functioning. Throughout history, we have managed to build complex institutions from legislative, judicial, law enforcement to banks and various financial institutions to enable trust in commercial transactions. We also invented tools such as fiat money, bonds, stocks and contracts to guarantee the successful execution of business transactions.
And then came Bitcoin and its blockchain technology that allowed two parties to exchange value with trust without legislative institutions, fiat money, banks or contracts. It is, simply, a revolutionary technology. This is probably why blockchain was hyped as the next generation of the internet that will create the programmable economy.
(Full disclosure: I own bitcoins and have a small investment in Facebook.)
Despite the many successful implementations of blockchain, it has not been as transformational and didnt generate the much-hyped benefits.
One reason is that blockchains are implemented as disconnected solutions with no foundational protocols such as TCP/IP, HTTP and HTML that created the internet revolution. Additionally, no single blockchain network emerged as the dominant one that would offer a multitude of business services to produce the desired transformational benefits.
Enter Facebooks Libra cryptocurrency and blockchain.
On June 18th, Facebook announced the Libra blockchain and cryptocurrency, which raised many questions: What is Libra and how will it work? Is it a cryptocurrency? Is it a blockchain? Will it overtake Bitcoin and Ethereum? Will consumers trust it? What is its potential? Whats in it for Facebook? And will Libra become the unifying and transformational blockchain that everyone was hoping for?
The Libra whitepaper holds some answers to the above questions, including how it will be governed. Libra will be launched by the Libra Association, which is an independent, nonprofit membership organization, headquartered in Geneva, Switzerland. Libra will be governed and controlled by this association and will be independent of Facebook. It is currently composed of 28 organizations.
The key difference between Libra and Bitcoin is the permissionless versus permissioned blockchain. Simply put, a permissionless blockchain implies that anyone with the right hardware infrastructure can apply the mining protocols and participate in validating transactions and in becoming a validating node on the Bitcoin network. Currently, Bitcoin has over 9,500 nodes, which enabled it to withstand the test of time and produce an immutable, distributed and secure ledger.
In contrast, Libra is going to be a permissioned blockchain that is centralized where its consensus mechanism, software and governance are controlled by Libra Association members who are the only ones permitted to validate transactions. At launch, the Libra blockchain will have 100 permissioned organizations. Visa, Mastercard, Uber, Vodafone and Spotify are among the founding companies of the Libra Association.
So, is Libra a cryptocurrency with a blockchain like bitcoin?
Well, Libra applies many of the same building blocks and concepts as Bitcoin. It uses a blockchain, cryptography, digital wallets, anonymous accounts, smart contracts and the gas concept with a new programming language called "Move." This makes Libra more like Ethereum than Bitcoin.
Libra will be implemented as a stable cryptocurrency by pegging it to a basket of low volatility assets such as the dollar, euro, yen and bonds, and through creating the Libra Reserve. This reserve allows the 100-node consortium to mint and destroy Libras as needed and based on demand. So, when customers buy Libra coins using dollars, those dollars are put into the reserve that is then invested in low volatility assets. This fund concept is missing from Bitcoin and Ethereum, which leads to their price swings and speculations and makes Libra a powerful contender to Bitcoin, Ethereum and other cryptos.
Libra is also being architected with some advantages over traditional cryptocurrencies. It will consume far less electricity than Bitcoin and is touted to have a higher throughput of 1,000 transactions per second (TPS) compared to bitcoins seven TPS and Ethereums 15 TPS.
It also promises to make sending money across the globe as easy as texting and will have very low fees compared to close to 5% of the transaction value of international wire transfers.
Furthermore, Libra has the potential of helping many of the 1.7 billion unbanked to enter the global financial system. It could trigger a wave of innovation in financial services as much as the internet did for online services. These are some remarkably important advantages for Libra that could possibly offer the transformation that has been expected from blockchain and cryptocurrencies.
With Facebooks 2.4 billion users across the globe, Libra has the potential of transcending governments and central banks and possibly becoming an international digital currency. If Facebooks users adopt Libra to shop, transfer money and transact, it could make Facebook one of the most powerful financial institutions in the world. That would herald a consumer revolution but could also make financial systems less stable and reduce governments economic sovereignty, writes The Economist.
Its clear that Facebooks Libra has legs but also some serious challenges. Aside from the technological challenges of delivering the Libra network with the advertised throughput, security and smart contracts, there are questions on whether a 100-node blockchain network can be immune to global outages and to denial of service attacks.
In addition, how will a 100-node permissioned blockchain move into a permissionless one within the planned five years, and maintain the promised 1,000 TPSs? Will consumers accept it as a slower alternative to credit card processing that is at some 1,700 TPS? Finally, it is not clear when Libra will be available and how will it be rolled out.
But, more importantly, Facebook needs the blessing of governments across the globe and the trust of its customers. These are two enormous obstacles that Facebook would need to overcome. It is by this fundamental trust from governments and from consumers that would define the future of Libra and possibly of Facebook. So, can Facebook address these two trust problems and use Libra to solve its own low level of trust from consumers and governments?