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Bank of England Governor Andrew Bailey issued a stark warning to those investing in cryptocurrencies: Buy them only if youre prepared to lose all your money.

In response to a question about financial stability, Bailey said the central bank was well positioned to respond to any threats that might arise. However, he objected to the use of the phrase cryptocurrency and took the opportunity to push back on their growing popularity.

Im afraid crypto and currency are two words that dont go together for me, he said at a press conference Thursday. They have no intrinsic value.

Bailey has long been dismissive of the assets, and his comments follow yet another period of speculative excesses for a market Nouriel Roubini once described as the mother of all bubbles.

While in the past, trillions of dollars in stimulus by governments and central banks might have triggered a rush into gold for the inflation-wary and risky stocks for the intrepid, a deluge of cash this time round is flooding into the crypto market. Its even pushed up the price of digital tokens previously considered a joke, like Dogecoin.

Read More: Crypto Mania Sends Doge Soaring, Crashes Robinhood Token Trading

The BOE last month said it would join forces with the U.K. Treasury to weigh the potential creation of its own central bank digital currency, joining authorities from China to Sweden exploring the next big step in the future of money. If approved, the U.K.s digital currency would exist alongside cash and bank deposits, rather than replacing them, they said.

Before it's here, it's on the Bloomberg Terminal.

Read more:
Bitcoin (BTC USD) Cryptocurrency Price: Bank of England Warns of Full Losses - Bloomberg

Marathon Digital Holdings (MARA) new mining pool has mined a bitcoin block that is fully compliant with U.S. regulations, meaning the company has started excluding transactions from entities it believes are sanctioned by the U.S. Department of Treasury or have been involved in dark web activity.

The Marathon OFAC pool, which was first announced in late March, refrains from processing transactions from those listed on the U.S. Department of Treasurys Specially Designated Nationals and Blocked Persons List (SDN) to stay compliant with U.S. regulatory standards, according to the company.

Marathon said it is addressing a concern among many large funds and corporations that have expressed interest in purchasing bitcoin by marketing its mined bitcoin as OFAC-compliant. Marathon spokesman Jason Assad confirmed that the firms first OFAC pool block censored some transactions, but didnt specify which ones.

By excluding transactions between nefarious actors, we can provide investors and regulators with the peace of mind that the bitcoin we produce is clean, ethical and compliant with regulatory standards, Marathon said in a statement.

It should be noted that Marathon is mining compliant blocks of its own volition and that nothing in the current U.S. regulatory or legal code explicitly mandates that practice for miners.

The company uses DMGs Walletscore blockchain surveillance software to filter transactions, Assad told CoinDesk. The blacklist is based on information provided by the U.S. Department of the Treasury and Office of Foreign Assets Control, databases of OFAC restricted cryptocurrency addresses, as well as other sources including the dark web, he said.

Iran, which is included on OFACs sanctions list, is a hotbed of bitcoin adoption, partly in response to the pressures sanctions place on its citizens. (Notably but unrelated, Irans government just said that only bitcoin produced in Iran is legal to trade.)

What are clean bitcoins?

The practice of censoring transactions, sanctioned or otherwise (put another way, excluding them from blocks because of the senders presumed identity), is a subject of heated debate within the Bitcoin community. Satoshi Nakamoto designed Bitcoin mining to facilitate permissionless and censorship resistant transfers of value, but initiatives like Marathons undermine that feature for no reason, critics say.

It is totally against the Bitcoin ethos as they are trying to make it a permissioned protocol instead of open for all, said Ben Carman, a Bitcoin Core and Suredbits developer.

He also said Marathons approach doesnt make sense. They are mining blocks that will not have the highest fee transactions, but (are) still on top of blocks with transactions they deem bad, giving them more security, he said.

Others also questioned the practicality of making a compliance claim.

Indeed, despite Marathons surveillance, transactions from a Russian dark web market, Hydra, were still processed in the clean block.

Further, shortly after Marathon blazoned the clean block on social media, bitcoiners from Iran and around the world began to send bitcoin to the address that received the Marathon clean block reward. The gesture was meant to display how easy it is to undermine Marathons initiative (and thus demonstrate how futile the chase is for clean coins).

Miners speaking to CoinDesk from other pools declined to go on the record about Marathon and its compliance push, but the sentiment was generally negative. One miner laughed at the notion, while another called it a manufactured issue.

The economics of a compliant bitcoin block

Marathon began directing its hashrate, or computer processing power, to the OFAC pool on May 1 and mined its first block on May 5, Bitcoin block 682170. That blocks transaction fee reward, 0.05 BTC (worth less than $3,000 at the time) is substantially less than the fees collected in the blocks before or after it (both of which were 0.31 BTC or ~$17,800). Block 682172 included 0.48 BTC for nearly $28,000.

BitMEX Researchs diagnosis notes that the block contained 0.00330944 BTC less transaction fees than expected. The block excluded a number of transactions that BitMEXs own hypothetical template would have included, which could indicate censorship, the post said.

Interestingly, it also included many transactions that BitMEXs model excluded because their fees were too low to be considered a priority. That could indicate out-of-band payments for the fee, BitMEX says, which are under-the-table payments that are not included in the payers transaction.

If Marathon is not receiving out-of-band fees, then so far its compliant blocks are netting significantly less in transaction fees. That portion of the block reward has become increasingly important for miner profits as bitcoins block subsidy has dwindled to its current rate of 6.25 BTC per block and demand for bitcoin has grown.

Marathons block occurred only a minute after the one before, which could explain the blocks lower fee reward and transaction count. Marathon, however, still used it to censor transactions that, for other miners, would have gone through.

Here is the original post:
Marathon Miners Have Started Censoring Bitcoin Transactions; Here's What That Means - CoinDesk

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Auto insurance company Metromile soon will let policyholders pay premiums with cryptocurrency and even receive claim payouts in this red-hot form of digital currency.

San Francisco-based Metromile, which offers pay-per-mile insurance, says that it will roll out cryptocurrency capabilities later this year. Metromile spokesperson Rick Chen says a launch date hasnt been set for the cryptocurrency program.

Metromile says it will be the first insurer to both accept premiums and pay claims in cryptocurrency. Policyholders will be able to pick either cryptocurrency or old-fashioned dollars for premium and claim transactions.

Pay-per-mile insurance is a form of auto insurance that can lower rates for folks who dont drive a lot. Monthly bills are calculated using a base rate plus a per-mile rate for the month.

Massachusetts-based Premier Shield Insurance, an insurance agency, says it lets policyholders pay auto, home and business insurance premiums and agency fees with Bitcoin, up to a limit of $5,000. But Premier Shields Bitcoin program does not apply to claim payouts.

Metromile launched this option to support the increasing demand for Bitcoin and cryptocurrency payments from our customers. Weve planned to support Bitcoin for years, but it wasnt until recently that the technology and consumer adoption of Bitcoin was widespread enough for us to offer this, Chen says.

Metromile says it will buy $10 million of Bitcoin in the second quarter of this year to pave the way for cryptocurrency transactions. In a news release, the company says it believes allowing cryptocurrency payments will support its commitment to fairer insurance and promote financial resilience for policyholders as cryptocurrency becomes mainstream and a more significant portion of consumers assets.

Bitcoin is the original cryptocurrency, a form of currency that people can buy, sell or exchange without the involvement of a bank. While Bitcoin is the best-known cryptocurrency, dating back to 2009, its now among more than 5,000 cryptocurrencies in circulation today. As of May 5, the global cryptocurrency market was valued at $2.4 trillion, according to CoinMarketCap.

In the news release, Metromile CEO Dan Preston says adding Bitcoin as a payment option is the next logical step for the digital insurance platform and its artificial intelligence-powered claims process. The company says it will collaborate with regulators to satisfy any concerns they have about Metromiles adoption of cryptocurrency.

Metromile currently offers coverage in eight states: Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington. At the end of 2020, Metromile had 92,635 auto insurance policies in force, according to Chen.

The company plans to launch a U.S. expansion in the second half of 2021. Chen says Metromile policies will be available nationwide by the end of 2022.

In a recent report, the National Association of Insurance Commissioners (NAIC) says no NAIC committees or groups have taken any action or established a position on cryptocurrencies. The association says its staff will continue to monitor the evolution of cryptocurrencies and address this topic further. . . .

Kyle Schmitt, vice president of insurance intelligence at market research company J.D. Power, believes insurance regulators generally hold a non-positive view of cryptocurrency due to its price swings.

Accepting payments in Bitcoin is easy enough if they are immediately converted to dollars upon receipt, Schmitt says, but premiums paid in Bitcoin could be highly volatile.

Bob Hunter, director of insurance at the nonprofit Consumer Federation of America, says his stance on insurers dabbling in cryptocurrency would likely mirror Warren Buffetts overall position on cryptocurrency. The billionaire investor has sharply criticized cryptocurrency as a risky, worthless asset.

I would, as a regulator, not accept Bitcoin as backup for the business, says Hunter, former insurance commissioner in Texas. If consenting adults want to pay each other in the stuff, Id allow that. But Id want something more soliddollarsto be there behind the business in case of emergency.

Such backup funding is known in insurance circles as surplus. Its the amount by which an insurers assets exceed its liabilities. Furthermore, Hunter believes any insurer that transacts in cryptocurrency should keep a tidy sum of cash in its reserves. Insurers are supposed to set aside a portion of premiums in their reserve funds to cover future possible claims.

Excerpt from:
Metromile Will Embrace Bitcoin For Insurance Premium And Claim Payments - Forbes

Bitcoin has beaten the stock market, but you might be shocked by how much.

It's been a wild ride for Bitcoin throughout its 11-year history, and that's been especially true over the past year. Not only did the COVID-19 pandemic drive Bitcoin's price lower initially, but it also seems to have helped accelerate investor interest in the leading cryptocurrency.

Here's a look at how Bitcoin has performed for investors over the past year and what has driven its performance.

I won't keep you in suspense. Bitcoin has increased in value by 612% over the past year, as of this writing. This means that a $1,000 investment in Bitcoin made one year ago would be worth just over $7,100 now.

During the same period, the S&P 500 index, which is generally considered to be the best gauge of overall stock market performance, has delivered a 50% total return. Several stocks have doubled and tripled over the past year as the market rewarded companies that benefited from the stay-at-home economy. But there are very few stocks that have delivered returns in the same ballpark as Bitcoin. So, it's fair to say that Bitcoin has been a big success as an investment over the past year for buy-and-hold investors.

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Obviously, we can't go through every positive Bitcoin news item that has happened over the past year. But there have been three big themes that seem to have driven Bitcoin higher.

Here's the billion-dollar question. If Bitcoin ultimately gains mainstream adoption as a currency or ends up becoming a mainstream store of value (digital gold), there's a solid case to be made that Bitcoin could ultimately rise to $500,000 or even more. On the other hand, if the mainstream-use case doesn't pan out, or if investor interest starts to fade, it could go the other way just as easily.

The bottom line is that no investment that can deliver 7x returns in a year is without significant volatility and risk. If you're looking to buy Bitcoin or other cryptocurrencies, make sure you know what you're getting into.

Read this article:
If You Bought $1,000 Worth of Bitcoin a Year Ago, Here's How Much You'd Have Today - The Motley Fool

While a vast majority of crypto enthusiasts around the globe seem to be gushing about Ether (ETH) at the moment and how its upcoming London hard fork stands to push the premier altcoins value even higher, reports have recently surfaced that suggest Bitcoins much-awaited Taproot upgrade will go live also sometime by the end of this year.

In this regard, many Bitcoin (BTC) mining pools seem to already be signaling their support for the activation and as per data available on Taproot.watch, a website designed by core Bitcoin developer Hampus Sjberg, Taproot signaling currently accounts for about 56% of BTCs total hashing power.

It should be mentioned that two of the largest Bitcoin mining pools by hash rate AntPool and F2Pool have been major proponents for this upgrade from the very beginning. Even other relatively large mining operators, such as Foundry USA and Slush Pool, have also expressed their support for the activation.

In its most basic sense, Taproot can be thought of as the latest step in Bitcoins evolutionary path because the upgrade seeks not only to enhance the overall usability of the network by making transactions cheaper, faster and easier to deploy but also eventually allow for the deployment of smart contracts.

Furthermore, Taproot also proposes significant privacy promises i.e., it seeks to make all transactions look the same to everyone except the transacting parties. This potential camouflage-based framework seems as though it has been inspired by security-centric crypto offerings available in the market today, thus potentially moving Bitcoin closer to some privacy-focused coins, at least from a design standpoint.

On the subject, Antoni Trenchev, co-founder and managing partner at crypto lending platform Nexo, told Cointelegraph that the proposed Taproot update is proof of Bitcoins decentralized nature and that the network is always looking to improve and grow. He also believes that the upgrade serves as a reminder to investors that, unlike gold, Bitcoin is a dynamic store of value in every sense, adding:

Joel Edgerton, chief operating officer of cryptocurrency exchange bitFlyer USA, told Cointelegraph that even though most in the crypto community seem to be focused on Bitcoins price action at the moment, what they are overlooking is the fact that BTCs underlying technology is what actually gives it its value, and Taproot is an important development, for several reasons:

In Edgertons view, Taproot demonstrates the Bitcoin communitys maturity and how everyone seems to have learned valuable lessons from the Bitcoin upgrade wars of 2017 i.e., it is of utmost importance to plan and implement upgrades via the use of a decentralized, community-based vote.

Back in 2017, Bitcoin underwent a hard-fork, resulting in the creation of a new cryptocurrency called Bitcoin Cash (BCH). Although the process was quite straightforward, the period leading up to the hard fork was full of strife, with many core community members clashing with one another.

On paper, Taproot is an elegant engineering solution that has been devised using proven cryptographic foundations that can help provide several evolutionary improvements to the Bitcoin protocol.

Lior Yaffe, CEO of blockchain software company firm Jelurida, pointed out to Cointelegraph that by combining Schnorr signatures and Merkelized Abstract Syntax Trees, or MAST, Taproot is able to convert the representation of complex Bitcoin transactions, such as multi-signature transactions and transactions used to set up a Lightning channel, to look just like a regular Bitcoin transaction when submitted on-chain.

In cryptography, a Schnorr signature is easily provably fair and is functionally superior to conventional logarithmic signatures, which are routinely faced with intractability-related issues. Similarly, MAST are unique digital offerings that allow for the deployment of various user-selected conditions that must be fulfilled in order for an encumbered number of Bitcoins to be spent.

Overall, this reduces storage and can indirectly lower fees for these transaction types. Also, in the long run, when its usage becomes widespread, Taproot may be able to significantly improve privacy for Lightning and multi-signature users. From an ecosystem perspective, I view Taproot as an all-in attempt by the Bitcoin devs and community to finally make the Lighting network a mainstream payment platform, Yaffe added.

Another aspect of the proposed upgrade worth considering is whether or not Taproot will have any major effect on Bitcoins future price action. In this regard, Edgerton does not see the activation having any sort of short-term impact on Bitcoins value. He does believe, however, that the under the hood changes that will come as a result of this update will make the Bitcoin network way more functional and competitive.

Yaffe believes that in the long term, improving Lightning network adoption i.e., by reducing transaction fees and settlement times will keep Bitcoin and its ecosystem as a relevant internet era payment method, adding further:

Lastly, Siddharth Menon, co-founder and chief operating officer of cryptocurrency exchange WazirX, told Cointelegraph that since 2010, the latest Taproot upgrade has been highly anticipated and stands to have a positive impact on the currency. Slowly but steadily, this network gets better every day, he added.

Per Bitcoins community consensus, the aforementioned Taproot activation will only be given the green light if 90% of all mined blocks include an activation signal within a difficulty adjustment window (2,016 blocks). More specifically, the consensus agreement needs to take place during one of the difficulty epochs between now and Aug. 11 so that the network upgrade can go ahead as planned in November.

As of May 7, a total of 327 signaling blocks have emerged in the current window, while miners responsible for 610 blocks have chosen not to include a signal bit. The no votes issued by these miners currently account for 30% of the 2,016 blocks in the current difficulty window. Some pools that have so far voted against the activation include big names such as Poolin, Binance Pool, BTC.com, viaBTC and HuobiBTC.

See the original post here:
Bitcoins upcoming Taproot upgrade and why it matters for the network - Cointelegraph