Digital currencies are a very mixed bag, and according to Meltem Demirors, the chief strategy officer at CoinShares, a digital dollar is not what crypto enthusiasts think it is. Unlike Bitcoin, Ethereum and other decentralized cryptocurrencies, a digital dollar would be effectively controlled by the government and would require users to connect their bank accounts to a platform that is owned and operated by the central bank.

By linking the central bank to users through a digital dollar, offering the convenience of a cashless society that can process and settle transactions instantaneously, Demirors argues in a tweetstorm posted on Thursday that the government would have a direct pipeline to personal and private financial data.

To all the crypto people obsessing over the recent news of a digital dollar its terrifying and is basically the opposite of what crypto is all about (systemic hedge, self-sovereign, etc) what theyre talking about is similar to what Sweden has done

Only 13% of people in Sweden use cash on a weekly basis. By contrast, 70% of Americans use cash on a weekly basis. Why the difference? Sweden has great connectivity infrastructure (broadband), small population (under 10M), and a legacy of adopting new technology.

Most Swedes are using a payment app called Swish to pay for things. its basically like Venmo, and allows free and instant transfers. All you need is a phone number. But you still need a bank account to connect it to. And to have a bank account, you need an identity.

Anyone who wants to be part of the digital economy has to:

a. link their national ID to their bank account b. link their bank account to their app c. link their app to their mobile number

So in those three steps, youve basically given the state access to your finances.

Despite being able to leverage technology to power fast transactions, Demirors argues that government-backed platforms with overarching access are trending more 1984 than brave new world.

Now who owns Swish? Why, a consortium of all of the Swedish banks. And what powers the back end of Swish? Why, a citizen identification solution called BankID and who owns BankID? Why, a consortium of all of the Swedish banks.

Last month, a proposal for a digital dollar made its way into an early draft of a relief bill introduced by House Democrats to send emergency funds swiftly to US residents via a digital wallet, mitigating the economic meltdown and soaring unemployment due to the coronavirus outbreak.

Although the measure was scrapped, the nomenclature was close enough to the verbiage used in Bitcoin and crypto circles where proponents are pushing for mainstream adoption of digital wallets and digital currencies that can operate without middlemen.

But Demirors clarifies that they are entirely different instruments with different objectives.

The digital dollar that is being touted has nothing to do with blockchains, cryptocurrencies, or anything remotely related. Its about linking your bank account directly to a federal agency so they can move 0s and 1s in their database.

And when you do that, you have basically completed the loop for the government, eliminating the need to go through intermediaries to get your data by tying what people need (economic relief) to what the government wants (access to your bank account). You kill two birds with one stone.

So yeah, thats kind of the opposite. We are entering an era of unprecedented government surveillance, all implemented in the name of emergency relief.

Featured Image: Shutterstock/Akira Kaelyn

Continued here:
CoinShares Strategist Meltem Demirors Issues Warning About Digital Dollar Its Everything Bitcoin Is Not - The Daily Hodl

Bitcoin (BTC) rose Thursday for the fourth straight session and briefly climbed above $7,000 for the first time in three weeks.

The bellwether cryptocurrency was up 2.5 percent to $6,821 as of 19:22 UTC (3:22 p.m. in New York.) Earlier, the price rallied as high as $7,236 before pulling back.

The four-day increase has helped bitcoin claw back some of its losses during the first three months of the year, when the spreading coronavirus and increasingly dire economic prospects sparked a flight for cash among investors in both traditional and digital-asset markets.

Joe DiPasquale, CEO of BitBull Capital, a San Francisco-based hedge fund specializing in cryptocurrencies, said he saw no clear driver of Thursday's move. Market signals show a growing conviction among bitcoin traders that prices won't fall below $6,000 in the short term, but rallies above $7,000 appear to be drawing in sellers, he said.

"You have so many people trying to swing trade on crypto," DiPasquale said in a phone interview.

Traditional financial markets were whipsawed again as Wall Street investors speculated that major oil producers including Saudi Arabia and Russia might agree on production cuts to help to stabilize prices. Oil jumped 22 percent to $24.77 a barrel, and the Standard & Poor's 500 Index rose 2.3 percent.

The S&P 500 is still down 22 percent for the year to date, while bitcoin has now trimmed its 2020 losses to just 5.5 percent.

DiPasquale said many bitcoin traders are looking ahead to May's expected "halving," when the supply of new units of the cryptocurrency issued by the underlying blockchain network is scheduled to drop by 50 percent. The once-every-four-years-event was coded into the 11-year-old bitcoin's original programming as a way of minimizing inflation.

The halving comes as the U.S. Federal Reserve is poised to inject an estimated $4 trillion of new liquidity into the global financial system to help stabilize markets, roughly equivalent to the total amount of money created on the central bank's balance sheet since its founding in 1913. Investors including Mike Novogratz, CEO of the cryptocurrency-focused investment firm Galaxy Digital, say such moves could "debase" the value of the dollar.

"That literally is a printing press," Novogratz told CNBC on Thursday. "I'm getting calls from real big investors we've never seen before, saying, `Tell me about this bitcoin.'"

Novogratz said he expects bitcoin's price to double within the next six months and potentially climb above its previous record near $20,000 by the end of the year.

Marc Hochstein contributed reporting.UPDATE (April 2, 21:00 UTC): An earlier version of this article misstated the date of the last time bitcoin traded above $7,000. It was March 12, not 11. The article has also been updated with new information.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

The rest is here:
Bitcoin Briefly Tops $7K as Traders Say Worst of 2020 Selloff May Have Passed - CoinDesk

Bitcoin investors have nervously watched markets over recent weeks, with some senior figures in the bitcoin community warning confidence has "evaporated."

The bitcoin price has swung wildly along with traditional markets since the coronavirus COVID-19 began spreading out of China, dropping to lows of under $4,000 per bitcoin from almost $10,000 in early March.

Now, despite bitcoin dropping by some 30% over the last 30-day period, survey results show bitcoin investors were upbeat at the beginning of the year, with most expecting the bitcoin price to soar to over $20,000 per bitcoin in 2020.

Bitcoin investors are confident bitcoin, by far the most valuable cryptocurrency, will see a fresh ... [+] all-time high this year--though most don't expect ethereum, the second most valuable digital token, to do so.

The average 2020 bitcoin price target cited by traders and investors was $22,866 per bitcoin, a survey of U.S.-based bitcoin and crypto exchange Kraken users showed, up on bitcoin's all-time high of around $20,000.

The bitcoin price has fallen by some $2,000 since the survey was carried out, hit hard by the broader market sell-off sparked by the spreading coronavirus.

Bitcoin sunk to lows of under $4,000 earlier this month before bouncing back to trade over $6,000 and remains highly volatile.

The U.S. Federal Reserve and central banks around the world have moved to pump unprecedented levels of freshly-printed cash into the system in response to the coronavirus crisis, with some senior bitcoin and cryptocurrency figures arguing this could result in a surge of interest in crypto.

"As we get used to talk about trillions, a modest $2 trillion market cap of bitcoin will put one bitcoin at $100,000," the chief executive of the world's largest bitcoin and crypto exchange Binanace, Changpeng Zhao, said viaTwitter, adding it's "not such a hard to imagine number now, right?"

Ahead of the bitcoin price plunge earlier this month, many of Kraken's biggest users expected the ... [+] bitcoin price to hit all-time highs later this year.

However, the outlook for altcoins was less rosy with only slight more than half (54%) of respondents expecting a so-called alt season this year.

Traders didn't see ethereum, the world's second most valuable cryptocurrency returning to its all-time highs this year, with an average price target of $810down from ethereum's all-time highs of over $1,000 in late 2017.

Elsewhere, bitcoin and crypto market sentiment was mixed. A majority (44%) of respondents saw the market as bullish, though 34% were undecided and 22% felt it was in bear market territory.

Bitcoin and crypto traders also failed to find common ground as to what will push the market forward this year.

"Adoption" was cited by 19% of respondents, while bitcoins upcoming halving was named by 15%. Political "conflict," "fear of missing out," and economic "crisis" were also popular responses.

Most bitcoin and cryptocurrency investors believe we're now in a bull market though there's little ... [+] agreement, with many seeing the current market as bearish and others undecided.

The survey, carried out in late January, polled some 400 so-called VIP Kraken users, with 41% of respondents describing themselves as "investors," 40% as "traders," and 15% as "institutions"the remainder was made up of "payment processors," "crypto exchanges" and "miners."

Meanwhile, nearly 50% of respondents said they expect the U.S. Security and Exchange Commission (SEC) to approve a bitcoin exchange-traded (ETF) fund this year.

Earlier this year, the SEC rejected an ETF application from New York-based asset management firm Wilshire Phoenix and options exchange NYSE Arca that wanted to mix bitcoin and short-term Treasuries.

The SEC has rejected many applications for a bitcoin ETF over recent years, meaning this latest ruling didn't come as a surprise, though comments accompanying the ruling suggested the SEC might not green light a bitcoin ETF for the foreseeable future.

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Crypto Traders See Bitcoin (But Not Ethereum) Surging To All-Time Highs In 2020Heres Why - Forbes

Depending on where you are in the world, you may be on week four, eight, or even thirteen of coronavirus quarantine; while video conferencing in pajama pants may be starting to feel a bit more normal, the world is keenly aware that the full effects and implications of the quarantine have not yet been felt, and will not be fully realized for monthsor even yearsto come.

Just as in much of the financial world, this is particularly true in the cryptocurrency sector. Every weekand, at times, every daythere is a new revelation of the effects of the spread of COVID-19 on various parts of the nascent industry.

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while massive fluctuations in crypto markets are perhaps the most visible part of these effects, there are many other consequences that are somewhat overlookednamely, the effects of coronavirus on the cryptocurrency mining industry.

This has been evidenced by major fluctuations in the hash rate of the Bitcoin network, which measures the amount of computing power that is being devoted to perform mining duties.

On the Bitcoin network, mining is the process by which transactions are confirmedcomputers are chosen by the network solve complex cryptographic equations, which results in transactions being added to the ledger. In exchange for their work, these computers are rewarded with Bitcoins.

The hash rate is an important indicator of the Bitcoin networks health: essentially, the greater the hash rate, the more secure the blockchain is; a higher hash rate means that it is more difficult for hackers to successfully alter the blockchain. A higher hash rate can also mean that transactions sent through the network are validated more quickly.

Therefore, a lower hash rate means slower transaction times: if we look at this from a short term perspective, it is inconvenient as creating the block now takes longer as a result, said Alex Batlin, ex-Blockchain Lead at BNY Mellon and current chief executive of custodial wallet specialist Trustology, to Finance Magnates. Suddenly, blocks that could be mined in 10 minutes now take 20-30 minutes, causing massive issues for the blockchain.

Additionally, some cryptocurrency analysts also believe that hash rate is an indicator of Bitcoins pricethat, though it may take several months, an increase in hash rate is an eventual indicator of an increase in price, and vice versa.

The spread of the coronavirus is already being blamed in part for a steep dive in the Bitcoin networks hash rate that took place throughout the month of March; the BTC hash rate reached its highest rate this year at 150 EH/s on March 5th before plummeting to 105.6 EH/s by March 15th, just 10 days latera 29 percent drop.

Then, on March 26th, the drop continued; i the hash rate dove as much as an additional 15.95 percent, resulting in a 45 percent decline since the peak in January. It has since shown some signs of recovery, but has not neared its higher levels earlier in the month.

The decline is, in part, being attributed to the spread of the coronavirus.

Case in point: a 10-K report that was was filed with the United States Securities and Exchange Commission late last month, Riot Blockchain, a cryptocurrency mining firm based in Castle Rock, Colorado, laid out several scenarios in which fallout from the coronaviruswhich has already begun to affect some of the companys operationscould seriously impair its business.

This is for several reasons: first, quarantined employees cannot perform all of the necessary duties to maintain business-as-usual: [] we have experienced and will experience disruptions to our business operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs, the report said.

The firm also pointed to possible issues with its supply chain: China has also limited the shipment of products in and out of its borders, which could negatively impact our ability to receive mining equipment from our China-based suppliers, he said.

Finally, Riot Blockchain said that because we have not been classified as an essential business in the jurisdictions that have decided that issue to date, there is a possibility that we may not be allowed to access our mine or offices.

All of this could result in shutdowns: if we are unable to effectively service our miners, our ability to mine bitcoin will be adversely affected as miners go offline, which would have an adverse effect on our business and the results of our operations.

Riot Blockchains 10-K report scenario is largely hypothetical, but there have been reports from other participants in the mining industry who have said that their operations have been impaired by the spread of the coronavirusthis is particularly true for miners in China, which is still home to the majority of Bitcoins hash power.

Indeed, in early February, PandaMiner, a mining firm based in China, told CoinDesk that quarantine controls had caused disruptions in business as usual: Abe Yang, the companys chief executive, said that not only us, [but] most miner makers have been affected by the outbreak since their factories are based in cities like Dongguan and Shenzhen in Guangdong province.

But quarantined workers and possible disruption in mining supply chains are not the only corona-related reasons that miners may be shutting off their equipment.

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Indeed, the price fallout from the Bitcoin network that has ensued as part of the widespread economic fallout over the last several weeks may have also caused a slowdown in mining: some of the decline in hash rate can be attributed to the possibility that larger mining rigs are also programmed to shut off once the price of Bitcoin passes through set lower limits, and return to full functionality once the price of Bitcoin recovers to a certain level.

However, while these programmatic price limits may have been responsible for some of the decline in hash rate throughout March, it doesnt seem as March 26ths hash rate drop was related to any price event on the Bitcoin networkthe price hovered around $6600 throughout the day, up from a monthly low of approximately $4200 the week prior.

However, the price movements in Bitcoin may have more dire implications for smaller- and medium-sized mining operations, who may have been forced to temporarily (or even permanently) close up shop.

Indeed, Ibrahim Alkurd, the chief executive of New Mine and Partner at Lavaliere Capital, told Finance Magnates that economies of scale play a big factor in mining farms.

The recent price drop in BTC caused smaller mining farms that have more expensive power and machine costs to unplug, he said. Although the bigger mining farms have seen smaller profits after the recent price crash, theyre still running profitably.

Alkurd added that the downward price movements that Bitcoin has experienced as a result of the coronavirus crisis are particularly grizzly because of the upcoming halvening or halving in May 2020, which will result in the mining reward for Bitcoin miners to be cut in half.

This will make it even harder for small farms to compete with the big players Alkurd said.

This could have other, more serious implications for the Bitcoin mining industry over the long term: I expect that we will see more centralisation of mining in the Bitcoin sphere with the May 2020 halving, he continued. The bar of entry to run a profitable mining farm is constantly being raised due to the reducing supply [of mining rewards] because of halving events.

Of course, there is quite a bit of evidence that hash power on the Bitcoin network is already highly centralized: earlier this year, blockchain research firm found that as of 27th January 2020, [five] mining entities controlled 49.9% of the hashrate of the bitcoin network.

Therefore, more centralization at this point could mean that the Bitcoin network is under greater security threats: Alex Batlin told Finance Magnates that in the long-term, lower hash rate increases the risk of a 51% attack on the network.

Its a point in time issue really at the moment, but the bigger issue is more systemic. BTC currently operates on a proof of work model [that requires] significant amounts of electricity and computational needs to operate, and is also very limited in the number of transactions it can process at the same time.

Other networks though are moving to a proof of stake model that doesnt require the massive computation, in terms of cost, power and people to operate. So, the question becomes: should BTC migrate to a proof of stake model like other networks, and will the halving of BTC perhaps force them to make the move? (Easier said than done, perhaps.)

On the other hand, Ibrahim Alkurd told Finance Magnates that although the decline in the price of Bitcoin meant that the profit margins for miners are smaller, it isnt anything out of the ordinary for this market and that theres no effect on the Bitcoin network in terms of security. This volatility in hash rate and price is completely normal for this market.

Experienced miners should factor these swings into their models and be ready to react to them, Alkurd explained, adding that Bitcoin actually performed better than the DOW and the S+P 500 by a considerable amount in Q1 2020.

While the long-term effects of coronavirus on the Bitcoin mining industry may be impossible to avoid, Alkurd says that there are some steps that mining companies may be able to take to abate the effects in the short-term.

For example, instead of in-person maintenance checks, utilize software to remotely monitor machines, Alkurd suggested, adding that adding cameras to mining farms can make remote monitoring easier.

If in-person checks are absolutely necessary, implement social distancing practices within the farms, he added. Companies can also reduce the number of staff in the [facility] at any one time. This can be done by altering the shifts of the workers.

Additionally, mining companies located in countries where the virus has not yet passed its peak can look at China and see what they did wrong and right, and learn from it.

Because of the way this virus has spread, we can use information from countries that have been impacted before us, so we can learn what to expect.

What are your thoughts on the possible short- and long-term effects of the coronavirus on the Bitcoin mining industry? Let us know in the comments below.

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Could Coronavirus Kill the Bitcoin Mining Industry? - Finance Magnates