What happened

Harmony's (CRYPTO:ONE) One token is surging again today. The cryptocurrency's price was up roughly 13% over the last 24 hours of trading as of 6 p.m. ET, and it was up more than 33% earlier in the day.

There's been a general rally for a section of tokens that are tied to blockchains that are connected to a service rather than just serving as a currency, and Harmony's One token is participating in the rally. The token's price is also climbing thanks to recent updates announced by the network's development team.

Image source: Getty Images.

Harmony allows data to be easily moved across separate blockchains, including Ethereum, Binance, and several other chains. Applications can be built on the Harmony blockchain, and users pay the cost of carrying out functions with the One token.

Harmony published a message on Twitter on Nov. 22 announcing that its blockchain was now able to serve more than four times as much user activity thanks to a new update. The news sent the One token higher, and momentum has continued into Tuesday's trading. Harmony also published an update on its bridge project with Bitcoin in a tweet today, announcing that it was working with its contracted auditing company on fine-tuning, and that the auditing firm would be evaluating additional solutions on the project.

Harmony's token is up roughly 27% over the last seven days of trading. The One token now has a market capitalization of roughly $3.5 billion, making it the 53rd-largest cryptocurrency by market capitalization.

Harmony continues to look like a high-risk investment, but it's possible that its cryptocurrency will climb significantly above current prices if the network's blockchain winds up being the foundation for popular applications. With interest heating up in metaverses and decentralized finance applications built on blockchains, there could be increasing demand that works to drive One's token price higher.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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The first time the Harvard law professor Lawrence Lessig told computer scientists they were the unwitting regulators of the digital age about 20 years ago he made a coder cry. I am not a politician. Im a programmer, Mr. Lessig recalls her protesting, horrified by the idea.

Now, the notion that code is law from Mr. Lessigs 1999 book Code and Other Laws of Cyberspace does not shock young engineers or lawyers, the professor says. To digital natives it is obvious that technology dictates behavior with rules that are not value neutral.

Big tech companies have reluctantly admitted the same, with Meta, the social media company formerly known as Facebook, going as far as establishing a courtlike board of experts to evaluate decisions dictated in part by programming. And one relatively young sector of tech the cryptocurrency industry has embraced the concept of code as law wholeheartedly, with some companies explicitly arguing that code can be a better arbitrator than traditional regulators.

Many crypto fans are betting on a future where we bank, create, play, work and trade on platforms with code running the show, and in the booming decentralized finance (DeFi) sector, automated smart contracts that are programmed in advance to respond to specific sets of conditions already handle billions of dollars in transactions daily, with no need for human intervention, at least theoretically.

Users put their full faith in programming. No one shares personal information. Code does it all and is supposed to be the whole of the law. Theres no human judgment. Theres no human error. Theres no processes. Everything works instantly and autonomously, said Robert Leshner, who founded the DeFi money market protocol Compound, in an interview in August.

But while the idea of a perfectly neutral, self-patrolling system is appealing, high-profile mishaps have cast doubt on the idea that code is a sufficient form of regulation on its own or that it is immune to human mistakes and manipulation.

A smart contract executes automatically when certain conditions are met. So if there is a bug in the system, a user might be able to trigger an unearned transfer all while technically following the law of code. This is what allowed a $600 million theft this summer from the Poly Network, which lets users transfer cryptocurrencies across blockchain networks. The thieves are believed to have taken advantage of a flaw in the code to override smart contract instructions and trigger massive transfers, essentially tricking the automation into operating as if the proper conditions for a transfer were met.

If you can tell a smart contract to give me all your money and it does, is it even theft? the computer scientist Nicholas Weaver of the University of California, Berkeley wrote about the theft. Unlike old-school agreements, Weaver wrote, ambiguities with smart contracts cannot be resolved in the courts and automated deals are irreversible so developers must resort to begging when things go awry.

After the $600 million theft, the Poly Network tweeted a request that began, Dear Hacker, asking them to return the funds and calling the act a major economic crime. Ultimately, most of the money was returned, talk about law enforcement stopped and the hackers said they wanted to show the code was flawed to protect the network.

Similarly, a software upgrade in Compound in September resulted in $90 million being erroneously issued to users. Mr. Leshner said recipients who didnt return the crypto would be reported to tax authorities, prompting outcry from his community for undermining claims that these programs cannot technically comply with traditional regulatory requirements to identify users. The request also undermined claims that DeFi has no need for oversight from traditional regulators when a problem arose, Mr. Leshner cited government authority.

For now, DeFi platforms operate in a regulatory gray space, subject to the law of private coders who claim no control over the organizations governing programs. Platforms and apps built for blockchain networks are often formed under a new kind of business structure known as a Decentralized Autonomous Organization, or DAO, ostensibly democratically governed by a community of users who vote with crypto tokens.

But there are always people behind the code, as disasters have shown.

That its all code and no humans is simply not true. In cases of urgency, this is when you see where power lies, said Thibault Schrepel, who teaches law at Amsterdam University and created the computational antitrust project at the Stanford University CodeX Center for Legal Informatics.

The reason no one wants to claim control of decentralized programs is because it limits liability with no one in control, there is no one to punish for problems and nowhere to implement the law, Mr. Schrepel explained. But the idea that code alone is sufficient, is wrong, he said. And if the blockchain community uses code to evade regulation, Mr. Schrepel argues, this will only hamper innovation.

He is part of a generation of techno-lawyers who want to bridge the gaps between code and law. Ideally, he said, code and law could work together. Smart contracts on the blockchain could be used by businesses to collude or to enhance competition, so regulators could analyze code and software programming, cooperating with core developers of decentralized systems. Similarly, policymakers could start translating traditional notions of risk mitigation into code for decentralized finance programs, thinking about the equivalent of reserve requirements that banks have into parameters for programs.

Im not going to say its easy to advance our thinking, said Chris Giancarlo of the law firm Willkie Farr & Gallagher, a former chair of the Commodity Futures Trading Commission and author of CryptoDad: The Fight for the Future of Money. Still, he asks, Shouldnt we try to rethink our approach to regulation to achieve the same policy goals, but in a different way?

Mr. Lessig agrees. We need a more sophisticated approach, with technologists and lawyers sitting next to behavioral psychologists and economists, all defining parameters to code social values into programs so that private interests dont replace them with their own. Were facing an existential threat to our democracy and we dont have 20 years to wait.

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For Cryptocurrency, the Challenge Is to Balance Code and Law - The New York Times

The ongoing technological revolution has meant that digital money one manifestation of which are cryptocurrencies is upon us. The microeconomic trade-offs are well-known and have been argued. Digital currencies have the potential to spur financial innovation, increase efficiencies through faster and cheaper payments and augment financial inclusion. Conversely, concerns around safety (cyber attacks and fraud), financial integrity (money laundering and evasion of capital controls) and energy usage (outsized energy needs to mine cryptos) are also well-documented. Further, to the extent that privately-issued cryptos currently serve largely as speculative assets, the need for updating consumer protection and regulatory frameworks is also clear.

But even as the micro debate rages, there is much less appreciation of the macro consequences of privately-issued cryptocurrencies. What happens if, over time, cryptos evolve from speculative assets to become viable mediums of exchange? What would this imply for the conduct of monetary, fiscal and exchange rate policies? This piece attempts to put the macro pieces together.

For starters, how would monetary policy be impacted if a private digital currency was competing with fiat currencies? Think of this as dollarisation by another name, but with a crucial difference as enumerated below. Latin America is replete with economies becoming dollarised. As domestic nationals lost faith in their own currency as a store of value, they shifted into and began transacting in US dollars for the security and stability it accorded. What this did was to render domestic monetary policy ineffective, because domestic central banks cannot set interest rates and inject liquidity in a foreign currency. The greater the substitution into US dollars, the lower the potency of monetary policy. In effect, these economies were importing the monetary policy of the US Fed.

Widespread adoption of privately issued digital currencies as a medium of exchange will have much the same impact. The larger the monetary base they cannibalise, the less potent will be domestic monetary policy in responding to business cycle needs and external shocks.

But what are the prospects for widespread adoption of cryptocurrencies as a medium of exchange? The intellectual case for Bitcoin stemmed from the fear of debasement of fiat currencies through an unprecedented expansion of G3 central bank balance sheets after the global financial crisis. Its founders, therefore, preempted fears of debasement by fixing Bitcoins aggregate supply, in the hope it would evolve into a viable alternative medium of exchange. But precisely because aggregate supply is inelastic, demand shocks result in outsized price volatility. This, in turn, renders Bitcoin an inappropriate medium of exchange. Instead, its morphed into a speculative asset.

To get around this problem, Stablecoins have been introduced, whose value is pegged to a fiat currency by maintaining equivalent reserves (think of a currency board exchange rate regime). By providing much greater price stability, these Stablecoins hope to serve as viable mediums of exchange, and have proliferated rapidly in recent years. Does this pose a grave risk to monetary policy? Much will depend on the degree of currency substitution.

As the IMF points out, if cryptos are only used for niche purposes narrow cross-country transfers and remittances which are then quickly converted back into local fiat currencies, the implications for monetary policy will be contained.

Instead, what central bankers and policymakers fear is a more existential challenge to the global monetary system. In a 2019 paper, Brunnermeir, James and Landau raise the prospect of mega tech companies running global e-commerce or social networking platforms issuing their own digital currencies to their global customer base that serves both as a unit of account and a medium of exchange on their platforms. Given the self-reinforcing network externalities involved, adoption would be rapid as digital currencies are bundled with other data and services. We would then have the prospect of digital currencies being transacted on large scales actively competing with fiat currencies.

Brunnermeir et al. posit global economic activity could eventually be re-organised into digital currency areas (DCAs) that run across national boundaries, characterised by their own digital currency and unit of account issued by the network owner, with the size of these DCAs dwarfing national economies.

How would this threaten monetary policy? If these privately issued Global Stablecoins are tied to a fiat currency, the owners of these networks still would not necessarily run independent monetary policy (think currency board again). But if these currencies gain credibility and acceptance over time, there will be every incentive for network owners to break free from fiat currencies pegs to generate monetary discretion.

Once that happens, all bets are off with private network owners effectively running independent monetary policy. From the perspective of a local economy, think of this as dollarisation except that monetary policy is being ceded not to the Fed, but as the IMF warns to a profit-maximising network owner, who may not have any incentive to use monetary policy to smooth shocks or issue emergency liquidity when needed. The fate of economies to respond to shocks, at least in part, would be in the hands of private firms. This would present an existential threat to monetary policy as we know it.

What about fiscal policy? The implications are more straightforward. The greater the substitution into digital currencies the more the loss of seigniorage revenues to governments from the monopoly issuance of fiat currency. Separately, fiscal revenues can also be adversely impacted by the increased tax evasion opportunities that crypto-currencies can facilitate.

To the extent that increased substitution into cryptos reduces the efficacy of monetary policy, the onus on fiscal policy to respond to economic shocks will commensurately rise. This could create challenges in a post-Covid world. The pandemic has left a legacy of elevated public debt around the world. Fiscal policy, especially in emerging markets, will have the least space to act when it is most needed.

Finally, what are the implications for the Rupee? To the extent that cryptos are mined abroad, demand for them whether for transactions or speculative purposes will be akin to capital outflows. In turn, if cryptos begin to get mined onshore, they will induce capital inflows. These dynamics will increase capital account volatility and, to the extent that these cross-border flows circumvent capital flow measures, they de facto increase capital account convertibility, accentuating the policy trilemma that emerging markets confront.

This will also directly impact the currency market. As the 2021 Global Financial Stability Report underscores, there must exist a triangular arbitrage between, say, the local Rupee-Bitcoin market, the Dollar-Bitcoin markets and the Rupee-Dollar market. Consequently, changes in the Rupee-Bitcoin markets will inevitably spill over into the Rupee-Dollar markets for markets to clear.

All told, the macro implications of widespread crypto adoption are complex and interlinked. For now, there is justifiable angst about growing household attraction for cryptos as speculative assets, with its attendant regulatory implications. But the true macro challenge will emerge and compound if and when unbacked private digital currencies are seen as viable mediums of exchange. Thats what policy must anticipate and prepare for.

This column first appeared in the print edition on November 19, 2021 under the title Brace up for cryptocurrency.The writer is Chief India Economist at J.P. Morgan. Views are personal

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The monetary, fiscal challenges of cryptocurrency - The Indian Express

Prices of popular cryptocurrencies including Bitcoin and Ether fell further on Wednesday. (Photo: Reuters)

Cryptocurrency prices fell further over the past 24 hours due to continued profit booking by investors.

Bitcoin, the worlds largest cryptocurrency, slipped below $60,000 on Tuesday for the first time in two weeks. The popular cryptocurrency was trading at $59,602 or 1.73 per cent lower than its price 24 hours ago at 12 pm.

The market capitalisation of Bitcoin reduced to $1.12 trillion and the 24-hour trading volume stood at $2.31 billion. Analysts tracking the cryptocurrency market could not identify any particular news that led to the recent decline, but said it could be due to profit booking by investors.

Crypto highlights | Check yesterday's price

Ether also fell sharply today as it was trading at $4,174 or 3.28 per cent below its value 24 hours ago. Its market capitalisation fell below $500 billion and the trading volume over the past 24 hours was $1.75 billion, indicating a rise in profit booking.

Other smaller cryptocurrencies also fell sharply over the past 24 hours due to increased volatility, triggered by investors who looked to make the most of the recent rally in the crypto market.

Commenting on the cryptocurrency market momentum, Edul Patel, CEO and Co-founder of Mudrex, a global algorithm based crypto investment platform, said, The past 24 hours have remained massively volatile for the cryptocurrency spectrum.

Most of the top cryptocurrencies saw heavy profit booking. Bitcoin dropped towards $58,000, and then rebounded higher, he added.

Over the coming 24 hours markets are expected to remain volatile with $57,000 being a strong support for Bitcoin.

Cryptocurrency

Price (US Dollar)

24-hour change

Market cap

Volume (24 Hours)

Bitcoin

59,588.95

-1.86%

$1.12 trillion

$2.31 billion

Ether

4,173.34

-3.76%

$490.11 billion

$1.75 billion

Dogecoin

0.235275

-5.03%

$31.06 billion

$1.94 billion

Litecoin

224.31

-8.92%

$15.47 billion

$235.25 million

XRP

1.08

-3.93%

$108.07 billion

$4.39 billion

Cardano

1.83

-5.68%

$60.08 billion

$388.29 million

DISCLAIMER: The cryptocurrency prices have been updated as of 012:20 pm and will change as the day progresses. The list is intended to give a rough idea regarding popular cryptocurrency trends and will be updated daily.

Click here for IndiaToday.ins complete coverage of the coronavirus pandemic.

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Cryptocurrency prices today: Bitcoin falls below $60,000 for 1st time in 2 weeks, analysts blame profit booking - India Today

Avalanche's cryptocurrency token price has skyrocketed more than 3,300% this year. Key Points

Avalanche(CRYPTO:AVAX) is up big in today's trading despite bearish pressure impacting the broader cryptocurrency space. The token was up roughly 13% over the previous 24-hour period as of 4 p.m. ET.

Ava Labs CEO and Avalanche founder Emin Gun Sirer announced a new partnership with consulting and financial advisory firm Deloitte on Nov. 16 that will involve building disaster relief software platforms on the Avalanche blockchain. It was the latest sign that the blockchain network and its Avax token are seeing rapidly strong adoption and investment.

Image source: Getty Images.

Emin Gun Sirer's announcement that Ava Labs is working with Deloitte and using Avalanche to improve the security, speed, and accuracy of Federal Emergency Management Agency (FEMA) funding has helped spur big gains for the network's cryptocurrency. The Close As You Go platform is built on the Avalanche blockchain and will provide government officials with a secure, low-cost system that will hopefully minimize fraud and waste thanks to improved transparency.The Avax token is now up roughly 26% over the last seven days of trading.

Avalanche is a competitor to Ethereum. It provides a blockchain network for building decentralized finance (DeFi) applications. Users spend its Avax tokens in order to facilitate services and transactions. Deloitte is a major provider of financial advisory and consulting services, and the company opting to build projects on Avalanche is a promising sign. If more major projects continue to be built on the Avalanche blockchain, that should work to drive the price of the Avax token higher.

Avalanche now has a market capitalization of roughly $23.7 billion, and it ranks as the twelfth-largest cryptocurrency by market cap.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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