Category Archives: Cryptocurrency
Opinion | Investing in Cryptocurrency Is No Better Than Gambling – Barron’s
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In mid-April I picked my 15-year-old daughter and her friend up from school and took them to Barnes & Noble. The friend found out that I do stocks for a living and immediately asked me about crypto. What cryptocurrency should I buy, she asked.
Ill tell you about the advice I gave her in a bit. But not long after I got three calls in one day from my wifes side of the familyfrom my sister-in-law (a pharmacist) and my wifes cousins (both are barbers). They were all asking me about crypto. You dont ask my advice on which number to put your chips on when you play roulette in Las Vegas, I told them. Cryptocurrencies fall into the same category.
No matter what asset class you are discussing, it feels a bit toppy when people far removed from investing start asking you for advice about it, all at once.
I feel like an old curmudgeon writing this. I know I dont get it. Crypto lovers look at me as if I am defending silent movies and treating talkies as unwelcome, short-term imposters. Curmudgeon I am.
When we discuss crypto, we need to separate blockchain technology from the so-called currencies. Though I have yet to see a mainstream application of blockchain, I get a feeling they are coming. That said, just because a technology is useful, has a lot of applications, and is widely accepted doesnt automatically mean that you can use it to create a genuine currency.
Here is an example. Venmo, which is owned by PayPal, is a very useful technology that many Americans use weekly or even daily. The benefits of widespread usage of Venmo, however, accrue to PayPals shareholders and dont lead to appreciation of the U.S. dollar or whatever other currency it transacts in.
When we talk about cryptocurrencies we have to make clear which one. Many consider Bitcoin their lord and savior. However, there are thousands of these currencies out there, with many more on the way.
Until recently Bitcoin looked like a clear winner. Even Elon Musk was touting it, and Tesla bought $1.5 billion worth. Then Musk also shared with us his love of Dogecoina literal joke of a currencyand it exploded in price. A few weeks later Musk realized that Bitcoin is a Beanie Baby that runs on coal, as Bill Maher put it. Because of Bitcoins decentralized nature, solving useless math problems to mine more coins consumes more electricity than Argentina. Musk announced that until Bitcoin starts consuming less energy, Tesla will not be accepting it as a payment for cars. If you are an ESG-oriented pension and dont want to own Exxon (evil Big Oil), I want to see how you justify owning Bitcoin. If you adjust for CO2 production in relation to societal utility, Bitcoin is arguably worse for the environment than internal combustion engine cars (at least cars get you places). For the energy cost of processing one Bitcoin, Visa can process 810,000 transactions, about 370 times faster.
One of the biggest assets the U.S. government has in its arsenal is the dollar being the worlds reserve currency. Control over our currency gives politicians the ability to make promises and not keep them, by constantly running budget deficits and printing and borrowing money to pay for these promises. We are able to run trillion-dollar deficits because the U.S. government has a dollar-printing press. Washington will not give it up without a fight. Weve started wars over less.
Cryptocurrencies are a clear and present danger to the U.S. dollar. There is a high probability that the U.S. government will outlaw the use of cryptos as currencies. Sounds far-fetched? The U.S. government did it with gold in 1933. India is threatening to ban Bitcoin. South Korea is clamping down.
I am sympathetic to some cryptocurrency investors, especially after seeing what we are doing with our fiat currency. But for many people they are just speculative vehicles. My wifes relatives pay little attention to the balance sheets of the U.S. government or the Fed. They are interested in bitcoin for one reason only: It is going up. Cryptos present these unique opportunities for people to pour their life savings into bits and bytes on far-away servers with a hope that theyll magically turn their lives into paradise on the beach.
When you go to the casino, youre not cashing out your life savings and borrowing from your mother-in-law, unless you are a compulsive gambler. The casino doesnt try to masquerade as a place where you invest. If you have an ounce of common sense, you know you are in a casino, a place where people gamble. The air is pumped in, you hear the unending ring of slot machines, and you cant readily find an exit. A reasonable person will only take as much money to Vegas as he can afford to lose.
Cryptocurrencies are a different beast. You buy them on platforms that resemble your brokerage account, where (hopefully) you invest. Youre not gambling with casino chips, you are buying currencies. Suddenly, crypto is competing not with your Vegas purse but with your 401(k). This domain confusion is dangerous. My advice on crypto has been consistent: Gamble with as much money as you can afford to lose. But remember, even when you are winning especially when you are winning you are not investing, you are gambling. Approach it as a trip to Las Vegas, not a visit to your 401(k).
Now to the advice I gave my daughters young friend. You are too young to gamble, I told her. If youd like to invest, you have to accept that its not a get-rich-fast but a get-rich-slow activity. Once she heard slow, I think she lost interest in whatever advice I had to offer. Luckily, we arrived at Barnes & Noble, so she did not have to go on listening to this curmudgeon. You dont either.
Vitaliy Katsenelson is the CEO of Investment Management Associates.
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Opinion | Investing in Cryptocurrency Is No Better Than Gambling - Barron's
What’s really behind the bitcoin decline and why it could take the cryptocurrency as low as $20000 – CNBC
People enjoy themselves at the Bitcoin 2021 Convention, a crypto-currency conference held at the Mana Convention Center in Wynwood on June 04, 2021 in Miami, Florida.
Joe Raedle | Getty Images
The price of bitcoin fell about 10% Tuesday to around $32,000 and is on pace for its third straight day of losses, bringing most other cryptocurrency prices down with it. It's down 50% from its April all-time high.
Many are speculating the price moved on news that U.S. officials recovered most of the ransom paid to the Colonial Pipeline hackers.
Analysts, however, say it's more likely the movement is part of wider consolidation coming off highs from a month ago. In other words, the technical breakdown in the charts is driving the action and technical analysts see a possible bottom as low as $20,000 from here.
Dave Keller from Sierra Alpha Research said in a market video update to clients that $30,000 is the support level to watch, and that bitcoin is a market in a clear downtrend.
"Movement in any given day can be filled with noise and short-term action," he said, but the chart "has transitioned from an uptrend phase to a downtrend phase," citing lower highs, lower lows, breaking down through moving averages and breaking down through traditional support levels.
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What's really behind the bitcoin decline and why it could take the cryptocurrency as low as $20000 - CNBC
Inside the world of rising cryptocurrency and DeFi scams – Moneycontrol.com
Ambiguous market regulations, the anonymity of identities, financial transactions, and a rallying, rapidly expanding cryptocurrency market- all of it makes for a heady concoction for both new and experienced investors alike to participate in the cryptocurrency market. But what's hard to miss is that this space is teeming with fraudsters and scamsters as well, looking to profit off the unaware, inexperienced crypto enthusiasts. And given the wild west of cryptocurrency and its novelty, with bitcoin swinging extraordinarily between $8,900 to touching a high of $64,863 this year, the rise of the scamming industry here is not surprising.
Scams on the rise
A global blockchain analytics firm, CipherTrace, estimated that the fraudsters have globally earned somewhere around $432 million between January- April this year.
A recent report by FTC (Federal Trade Commission) stated that around 7,000 U.S. consumers reported losing more than $80 million on various cryptocurrency scams between October 2020 and March 2021, with an average of $1,900 per transaction.
It is hard to miss the sharp, steep rise in both the volume and frequency of such transactions. Comparing this time period with the same last year, the scam reports have risen by as much as 12%. This takes the amount lost to around 1,000% more, as compared to last year.
And it's not just the United States that has seen this trend. Australia has also seen a steady spiral in the number of crypto-related scams. A recent report by the Australian Competition and Consumer Commission, titled Targeting scams: report of the ACCC on scam activity 2020, also pointed out that bitcoin payment frauds ranked second only to the age-old technique of bank transfers. Investors lost around $26.5 million in 1,985 transactions over the last year.
It is interesting to see the myriad ways scamsters are employing to dupe people. From impersonating cryptocurrency influencers like Musk to luring a new love into investing in an amazing crypto opportunity, the creativity is indeed fascinating.
Some of them take it a step further by creating now-defunct cryptocurrencies, or in some cases, an entire exchange. The most recent in the line is the now-defunct LUB Token, which was based on Telegram. The currency offered a daily return of 10% if its press releases and now-gone website is to be believed.
And for those who want a genuine shot at the legitimacy of their fraud, the Korean fraud exchange, BitKRX is a handy case study. Uncovered in 2017, the exchange vanished when investors tried to access their funds. It was found that 99% of its transaction volume was fabricated.
Another area where frauds and scams are burgeoning is the upcoming, relatively nascent area of DeFi or Decentralised Finance. DeFi takes blockchain technology and utilizes its applications in various financial services like insurance, lending, and more.
DeFi is known to offer a higher yield on crypto-assets as compared to other conventional means. But, this also makes it extremely vulnerable to sudden vanishing and absconding post-raising funds for a project.
Between January-April 2021, DeFi scamsters raked in almost $83.4 million. Looking at the broader picture, almost 55% of all major cryptocurrency scams were DeFi hacks. That means out of a total theft amount of $432 million, $240 million can solely be attributed to DeFi.
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Inside the world of rising cryptocurrency and DeFi scams - Moneycontrol.com
Cryptocurrency industry lobbies Washington for ‘regulatory clarity’ | TheHill – The Hill
The cryptocurrency industry is increasing its lobbying presence in Washington as it attempts to ease concerns from Congress and regulators about digital currencys volatility, environmental impact and role in recent high-profile ransomware attacks.
As the Biden administration explores making changes to regulations governing cryptocurrency, the industry is hiring former government officials and ex-lawmakers with extensive knowledge of the regulatory process.
President BidenJoe BidenHouse Judiciary Democrats call on DOJ to reverse decision on Trump defense Democratic super PAC targets Youngkin over voting rights Harris dubs first foreign trip a success amid criticism over border MORE is expected to discuss cryptocurrencys role in ransomware attacks at this weeks Group of Seven (G-7) meeting, Treasury Secretary Janet YellenJanet Louise YellenThe Hill's Morning Report - Presented by Facebook - Democrats' agenda in limbo as Senate returns Ireland, loved by Biden, is obstacle to tax deal Biden administration seeks to thread needle on inflation MORE has proposed rules requiring increased reporting of cryptocurrency ownership and IRS Commissioner Charles Rettig told a Senate panel Tuesday that the agency needs more authority from Congress to track digital transactions.
But industry lobbyists say theyre not bracing for a crackdown on cryptocurrency or the blockchain technology powering it. Instead, theyre hopeful they can help the administration craft new regulations and garner support in Congress for bipartisan legislation favored by the industry.
The explosive growth of the crypto industry must be matched by nimble, responsive, pro-growth laws and regulations, which do not get achieved without sustained engagement with members of Congress, regulatory agencies, and members of the administration, said Kristin Smith, executive director of the Blockchain Association.
Industry lobbyists are asking IRS officials to clarify how various cryptocurrencies are taxed. Theyre also proposing guidelines to officials at the Securities and Exchange Commission (SEC) detailing how cryptocurrency companies can introduce new products to the market without violating securities laws.
Cryptocurrency advocates have already made inroads with lawmakers. In April, the House passed the Eliminate Barriers to Innovation Act by voice vote. The measure, which the Senate has yet to take up, would establish a working group to decide how regulators define digital assets.
The fast-growing cryptocurrency industry is now pushing the U.S. to provide what it calls regulatory clarity, particularly after last years SEC lawsuit against Ripple Labs for selling its XRP token set off alarm bells. The regulator alleged the cryptocurrency was a security, not a commodity like some other tokens. Ripple Labs CEO Brad Garlinghouse bemoaned that the U.S. lacks a single national regulatory framework governing cryptocurrency.
Ripple Labs responded by spending $260,000 on lobbying in the first quarter of 2021, up from $100,000 during the same period last year. In February, Ripple Labs hired a lobbying firm run by former Rep. Michael Conaway (R-Texas), who in 2020 introduced a bill to regulate digital commodity exchanges that was backed by the cryptocurrency industry.
Last month, cryptocurrency exchange platform Coinbase hired Faryar Shirzad, a former George W. Bush administration official and longtime head of government affairs for Goldman Sachs, to run its lobbying team. Coinbase increased its lobbying spending by 60 percent year-over-year through the first three months of 2021.
Coinbase, along with Fidelity, Twitter CEO Jack Dorseys firm Square and cryptocurrency company Paradigm, launched a new lobbying group in April. The Crypto Council for Innovation (CCI) aims to counter criticism of cryptocurrency in Washington.
We are focused on separating fact from perception in the crypto space through government and, more broadly, education resources, which is critical to helping regulators understand cryptos ability to spur economic growth, said Fred Ehrsam, co-founder of Paradigm.
One of CCIs core principles is to work closely with policymakers to correct misinformation on cryptocurrency and discuss our common ground creating more financial opportunities for people around the world.
The industry is also getting help from former regulatory officials.
Brian Brooks, who briefly served as acting comptroller of the currency under former President TrumpDonald TrumpJack Ciattarelli wins GOP primary in New Jersey governor's race House Judiciary Democrats call on DOJ to reverse decision on Trump defense Democratic super PAC targets Youngkin over voting rights MORE, took over as CEO of the cryptocurrency exchange Binance in May. During his stint in the Trump administration, Brooks released guidance allowing banks to use cryptocurrency, providing a huge boost to the industry. In March, Binance hired former Senate Finance Committee Chairman Max BaucusMax Sieben BaucusBottom line Bottom line Bottom line MORE (D-Mont.) as a government relations adviser.
Jay Clayton, SEC chairman during the Trump administration, now provides regulatory advice to One River Asset Management, an investment firm with a large digital currency portfolio.
J. Christopher Giancarlo, head of the Commodity Futures Trading Commission (CFTC) under Trump, joined the board of crypto bank BlockFi in April. Giancarlo also launched a think tank advocating for the U.S. to launch its own digital currency.
Melissa Netram, who served as chief innovation officer at the CFTC primarily during the Trump administration, joined financial services advisory firm FS Vector last month. The company reported lobbying on issues related to blockchain policy for Facebook, which aims to launch its own digital currency. It also lobbied for Ripple Labs and Square.
Cryptocurrency advocates are stressing the increased popularity of digital currency and its potential for economic growth. Cryptocurrency has a market cap of more than $1.5 trillion as of this week, according to CoinMarketCap. Thats down from a peak of around $2.5 trillion in May, underscoring what many see as a sign of the industrys volatility.
Industry lobbyists expressed concern that the recent ransomware attacks could impact the way lawmakers approach regulating cryptocurrency. Colonial Pipeline paid a hacking group $4.4 million in bitcoin to regain access to its network last month. The Justice Department said Monday it recovered $2.3 million worth of those payments but called cryptocurrency a massive enabler of ransomware incidents.
A report from blockchain analysis firm Chainalysis found that $350 million in cryptocurrency flowed from ransomware attacks last year, a 311 percent increase over 2019. Cryptocurrency advocates point to the reports finding that less than 1 percent of cryptocurrency transaction volume was linked to criminal activity.
The ransomware incidents are going to be an issue, said one lobbyist who represents cryptocurrency interests. But the fact is that these attacks were happening long before cryptocurrency was invented.
Sens. Roy BluntRoy Dean BluntBipartisan group prepping infrastructure plan as White House talks lag The Hill's Morning Report - Presented by Facebook - Biden, Harris take US goals abroad Senate Republican: 'You really have to treat Russia like it's virtually a criminal enterprise' MORE (R-Mo.) and Mark WarnerMark Robert WarnerMcAuliffe looms large as Virginia Democrats pick governor nominee Senate passes bill to provide payments to 'Havana syndrome' victims Sunday shows - Infrastructure dominates MORE (D-Va.) criticized the anonymity of cryptocurrency and suggested Congress should better regulate digital assets in interviews with NBCs Meet the Press on Sunday.
We have a lot of cash requirements in our country, but we havent figured out in the country or in the world how to trace cryptocurrency, Blunt said. Weve got to do a better job here.
Democrats such as Sen. Elizabeth WarrenElizabeth WarrenAs organized religion declines, is conspiracy the new religion of Republicans? Progressives relish return to in-person events Why do we need a filibuster rule? Just look at today's political divisions MORE (Mass.) have criticized cryptocurrencies such as bitcoin for leading to an increase in emissions. Others have highlighted the wild swings in the price of digital currencies, with Senate Banking Committee Chairman Sherrod BrownSherrod Campbell BrownBiden 'allies' painting him into a corner J.D. Vance emerges as wild card in Ohio GOP Senate primary McConnell returns as Senate 'grim reaper' MORE (D-Ohio) urging regulators to take a hard line on cryptocurrency.
But with increased hiring and ramped up lobbying, cryptocurrency firms are counting on their allies in Congress to lead the legislative response. Members of the Congressional Blockchain Caucus are working with the industry on new legislation to regulate cryptocurrency and clarify its tax status.
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Cryptocurrency industry lobbies Washington for 'regulatory clarity' | TheHill - The Hill
Interactive Brokers to Offer Cryptocurrency Trading by Summer’s End – ThinkAdvisor
What You Need to Know
Interactive Brokers, one of the first brokerages to offer no-fee trading and the trading of fractional shares, will start trading cryptocurrencies on its platform by the end of the summer, according to Chairman and CEO Thomas Peterffy.
Customers certainly are asking for [crypto trading] and we expect to be ready to offer it to them by the end of the summer, Peterffy said Wednesday at the Piper Sandler Global Exchange & FinTech Conference, according to CNBC.
The online brokerage currently offers trading in Bitcoin futures as do TD Ameritrade, Kraken and several other crypto-focused firms.
When it launches cryptocurrency trading, Interactive Brokers will be competing against Robinhood, whose platform has had problems with Dogecoin and Ether trading, and, primarily, Coinbase Global, the worlds largest cryptocurrency exchange, which went public in mid-April. Coinbases stock price has since been falling almost steadily since its initial public offering and is now roughly 40% below its inaugural price.
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Interactive Brokers to Offer Cryptocurrency Trading by Summer's End - ThinkAdvisor
Bitcoin selloff: Will the cryptocurrency drop to $20,000? – Business Today
The latest selloff in Bitocoin has brought the cryptocurrency closer to the levels seen in May. This has led to questions on how low the cryptocurrency can fall, with some analysts predicting $20,000 levels.
Bitcoin has dropped about 7 per cent this week, and was trading at about $34,200 on Wednesday. Further weakness in the cryptocurrency can lead to a fall to $20,000, as per some of the analysts.
Bitcoin is dangerously approaching $30,000 level and a break of $30,000 could see a tremendous amount of momentum selling, Bloomberg quoted Oanda Corp Senior Market Analyst Edward Moya as saying.
If the cryptocurrency drops further from its current levels, it can possibly fall to $20,000 levels, as per Evercore ISI Technical Strategist Rich Ross and Tallbacken Capital Advisors' Michael Purves, the news agency said.
Tesla CEO Elon Musk calling cryptocurrencies "energy-intensive" and not environment friendly led to a rout in the digital currencies last month. Besides, Musk's announcement that Tesla will no longer accept Bitcoins, and China's action on the crypto front also led to the fall in cryptocurrencies.
Also read: Cabinet approves allotment of 5 MHz spectrum to Indian Railways to boost security
China proscribed financial institutions and payment companies from providing services related to cryptocurrency transactions and warned investors against speculative crypto trading.
US Federal Reserve chief Jerome Powell also turned up the heat on cryptocurrencies last month, saying they pose risks to financial stability, and indicated that greater regulation of the increasingly popular electronic currency may be warranted.
However, not everyone is bearish on Bitcoin, with many confident about the long-term outlook.
On Wednesday, El Salvador became the first country in the world to officially grant legal tender status to Bitcoin. Meanwhile, US-based MicroStrategy Inc, a major bitcoin corporate backer, on Tuesday said it was offering $500 million in bonds, and the proceeds will be used to buy Bitcoins.
Irrespective of Bitcoin value, industry experts recommend building a long term portfolio by investing in cryptocurrencies in a disciplined manner via SIP, like in mutual funds.
Also read: Cryptocurrency market crashes! Is it time to sell Bitcoin?
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Bitcoin selloff: Will the cryptocurrency drop to $20,000? - Business Today
Cryptocurrency Prices Today on June 7: Bitcoin, ether, dogecoin and more – Moneycontrol.com
Most cryptocurrencies were trading in the green today as the overall market capitalisation of all tokens jumped 1.54 percent over the previous day to $1.66 trillion.
June 07, 2021 / 07:54 AM IST
Most cryptocurrencies were trading in the green today, June 7, as the overall market capitalisation of all tokens jumped 1.54 percent over the previous day to$1.66 trillion. In line with the general trend, the largest cryptocurrency, bitcoin was trading in the positive territory, up 1.2 percent at36,633.75, at the time of writing this copy.
The total crypto market volume over the last 24 hours is $79.70 billion, whichis a 22.07 percent decrease over the previous day, while the volume of all stable coins is now $61.40 billion, which is 77.04 percent of the total crypto market 24-hour volume.
Meanwhile, in a shift, Google announced slight modification to its advertising policy and said it will begin accepting ads of cryptocurrency exchanges and digital wallets targeting consumers in the United States on its platform from August 3.
A blog post by the search giant says the new rules apply only to wallets in the US, although they will apply to advertisements globally.The tech giant said it will update its financial products and services policy in August.
To take advantage of Googles new policy, crypto wallets will have to be registered with the FinCEN and federal or state-chartered banks. Adding: All prior Cryptocurrency Exchange certifications will be revoked on August 3, 2021. Advertisers must request new Cryptocurrency Exchanges and Wallets certification with Google when the application form is published on July 8, 2021.
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Cryptocurrency Prices Today on June 7: Bitcoin, ether, dogecoin and more - Moneycontrol.com
Tough regulations are coming for the cryptocurrency sector – Verdict
Tough regulations are to be expected in the cryptocurrency market, as countries will restrict access in order to guarantee the adoption and success of their own digital currencies.
The cryptocurrency market which is currently valued at $1.7tn and has 106 million users worldwide, according to a report conducted by Crypto.com has been used by many investors for speculative investments that would supposedly earn them rapid capital gain due to the assets highly volatile nature. In order to execute their trades, investors rely on cryptocurrency exchange platforms such as Binance and Coinbase. But in recent months, these platforms have been dealt some blows.
In May 2021, China banned any financial institutions from performing cryptocurrency transactions. And in the UK, retail banks suspended any transactions towards exchange platforms out of fear of financial crimes. These recent restrictions on crypto exchanges and the cryptocurrency market in general are a sign of tougher restrictions to be expected in the future.
Last month, UK banks such as Barclays, Monzo, and Starling Bank decided to temporarily suspend payments toward crypto exchange platforms due to a growing number of suspicious transactions. These restrictions are meant to be lifted as soon as the banks introduce better checks and verifications on crypto exchange payments.
Along with the popularity that the cryptocurrency sector has gained in recent years, banks reported increasing rates of financial crime related to cryptocurrency transactions. According to a report from Action Fraud, 63m was stolen through fake online investments, and approximately 44.7% of those scams were related to cryptocurrencies investments.
Despite the Financial Conduct Authoritys (FCA) initiative to have all cryptoasset firms registered by July 2021, only five companies are fully registered, and the FCA just announced that it will extend its registration process to March 2022. This means that most crypto exchanges in the UK are operating without FCA rules and thus dont have any obligation to monitor or report any transactions that would be in violation of anti-money laundering rules.
Until they are fully regulated, it is up to banks and financial institutions to find solutions to reduce their risk exposure to any forms of financial crime through crypto exchanges.
The cryptocurrency sector needs an international framework that regulates it. This could be introduced to restrict its usage in all countries. At the moment, countries have a disjointed approach to regulating this sector if they are even regulating it at all.
Some countries such as Japan passed regulations in favor of cryptocurrencies, recognizing them as legal property, and the sector is under the entire supervision of the Financial Services Agency. Other countries like India are looking to ban this sector; in March 2021, the Indian government was due to introduce a digital currency bill that would have made cryptocurrencies illegal in the country.
China is furthering its restrictions by prohibiting financial institutions from engaging in related transactions. The decision to restrict or ban the use of cryptocurrencies by countries is an attempt to limit the influence that the sector can have on the world economy, as they wouldnt want to surrender the control of their economy to a decentralized currency.
In the UK, the Bank of England released a discussion paper in which it explains that stablecoins should expected the same regulations as fiat currencies, in this report it also mentions it is exploring the potential introduction of its own digital currency, the Britcoin. And in the case of China, the country is hoping to guarantee the success of its own digital currency, which is currently being trialed in several of its cities.
The growing cryptocurrency sector needs to be regulated to protect users from online scams and prevent it from being used in crime such as money laundering.
In the UK, until the FCA is able to regulate cryptocurrency firms, traditional banks will have to find solutions to protect their customers from online fraud associated with cryptocurrency transactions or, more likely, refuse to deal in cryptocurrency for retail customers.
The growing popularity of cryptocurrency is perceived as a danger to central banks, as they are concerned about the impact that a volatile decentralized currency can have on their economy. By restricting the adoption of cryptocurrency, central banks can try to transition to their own digital currencies the regulations we see will likely be highly restrictive to accomplish this.Related Report Download the full report from GlobalData's Report StoreGet the Report
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Tough regulations are coming for the cryptocurrency sector - Verdict
Proof-of-space cryptocurrency Chia triggers HDD sales boom in Europe – The Register
The launch of the cryptocurrency Chia has caused demand for hard disk drives in the European market to blow up, according to research firm Context.
Figures for April released by the analyst show just under 200,000 enterprise-grade nearline storage drives of 10TB capacity and above were sold to end users across the region, representing 240 per cent growth compared with the same month in 2020.
Meanwhile, NAS consumer-grade HDDs saw around 250,000 units sold, a year-on-year increase of 167 per cent.
Finally, surveillance disk drives sales were just shy of 200,000 units, up 116 per cent. These pieces of kit "should be used in surveillance but there has been no specific event in surveillance to cause that growth," senior enterprise analyst Gurvan Meyer told The Reg.
The explosive growth in drives across the market was best explained by the launch of cryptocurrency Chia, which relies on proof of space, as opposed to proof of work employed by Bitcoin and other cryptocurrencies.
"For sure it is Chia," Meyer told The Register. He said economies opening up and cloud providers beefing up their infrastrucure has als played a lesser role.
"It has taken everybody by surprise following the launch of Chia. Even Western Digital and Seagate were not expecting high demand like this." He said he expects the effect on the market to be long-lasting.
Cryptocurrencies, especially Bitcoin, have been criticised for relying on proof-of-computational work, which sucks up a phenomenal amount of electricity and skews the market for GPUs.
The alternative proposed in the Chia model relies on proof of space, in which the user sets aside a dedicated amount of storage on their computers and the software allocates a unique number to each section of that space.
When the currency network needs to validate a new transaction, it selects one of these unique numbers at random and the computer the segment belongs to then validates the transaction. The idea is that rather than using computing power in a race, it employs a lottery system.
Context said the model made Chia not only greener than proof-of-work systems in terms of power consumption, but also more accessible as most users have unused storage space on their devices.
Chia launched in May after BitTorrent protocol author Bram Cohen founded the network in 2017.
"Proof of space is a relatively new consensus mechanism but any number of new currencies could also choose to use it," Meyer said. "Should the method gain popularity, the demand for storage could increase even further."
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Proof-of-space cryptocurrency Chia triggers HDD sales boom in Europe - The Register
Visa And The Cryptocurrency Opportunity: Inside The Card Networks Digital Currency Plans – Forbes
Visa has broad plans for digital currency, as the payments industry begins to embrace the ... [+] opportunities in cryptocurrency.
Its been brewing for some time, but 2021 is finally seeing established payment companies take the opportunities of cryptocurrency seriously, and among those leading the pack is Visa V .
An industry that was previously plagued by volatility and speculation is beginning to see its enterprise-friendly side blossoming, and according to the card network, the opportunities are abundant.
The world of digital currencies and crypto has moved and evolved quite significantly since the 2009 launch of Bitcoin, explains Nikola Plecas, head of new payment flows,Visa Consulting and Analytics, Europe at Visa.
Visa's strategy is to be a network of networks and really be able to originate and terminate new payment flows outside of card rails. We have made tremendous push into these new flows over the last couple of years with products such as B2B Connect, Visa Direct, Push to Pay and digital currencies naturally fall into that category.
However, this doesnt mean that the worlds most famous cryptocurrency Bitcoin features heavily in the card networks plans. Instead, Visa characterises the industry as made up of two distinct groups: conventional, untethered cryptocurrencies and fiat currency-backed digital currencies, often known as stablecoins, which are attracting greater interest from institutional and government organizations despite currently a smaller part of the overall market.
The former is seen by the company as a tradeable asset with limited industry potential CEO Alfred Kelly described it as digital gold in the companys Q2 2021 earnings call. However, the latter is where Visa sees significant potential for payments.
We see these as having the potential to be used by consumers and merchants in the same way as existing fiat currencies are, says Plecas. And when it comes to areas of opportunity, there are many for organizations such as ours.
While many use the terms cryptocurrency and digital currency interchangeably, Visa has chosen to characterize the area it is focusing on the stablecoin side of the industry as digital currencies.
Visas digital currency efforts currently fall into five areas. Some of these are well-established and already contributing to the companys revenue growth, while others are in the early stages and are unlikely to make a meaningful impact on Visas top line in the near future. However, they together represent a long-term view of the market.
The first is perhaps the most obvious: making it easy for consumers to buy cryptocurrencies, which has involved working with wallets and exchanges drive acceptance. This area earned a mention in Visas most recent earnings call as being the second biggest contributor of growth in its card-not-present excluding travel segment the biggest growth was the surge in ecommerce.
Second is a natural progression from the first: enabling cryptocurrency to be cashed out to fiat.
We want to make sure that you as a consumer, once you exit your cryptocurrency positions in exchanges and wallets can cash onto a Visa credential and then start spending at any of our 70 million-plus merchant endpoints, says Plecas.
While those two are in full swing, a newer development is the third pillar, which is the use of digital currency APIs to enable banks and neobanks to add cryptocurrency options for their clients. This is in the early stages, with US neobank First Boulevard becoming the pilot customer earlier this year, however Plecas highlights that Visa is looking to extend to other markets and regions with the product.
We quickly realized that there's potential to be the next gen of neobanks, he explains. They're also doing a lot of their treasury operations, paying vendors and employees already in stablecoins.
In order to do this, the company needed to enable customers to stay within their ecosystem when they also settled their obligations with Visa, which is where pillar four, settlement in stablecoins comes in. This has seen Visa settle its first transaction in a stablecoin, US dollar-tethered USDC, this year.
Settling in USDC is very similar to settling in USD, he explains.
What we've done is an upgrade of existing treasury infrastructure operations to be able to receive these assets, because actually receiving them is now done through public blockchain rails. And as time evolves, we want to support other stablecoins.
The final pillar, however, is the most long-term: central bank digital currencies (CBDCs). According to the Bank for International Settlements, 86% of the worlds central banks are now considering the launch of CBDCs of one form or another, with more than one in ten currently engaged in pilots.
CBDCs have a variety of benefits, including the potential to better reach the underbanked, and Visa argues that their implementation will require public-private partnerships.
That way, they will be integrated in the right way into the existing payments' ecosystem, says Plecas.
At Visa, we want to make sure that our products and services are acting as a bridge between our existing clients and the new clients and blockchain rails involved with digital currencies.
Visa's areas of focus as it moves into cryptocurrency
While much of this is focused on the consumer side of cryptocurrency and digital currencies, Visa also sees significant potential in B2B payments.
B2B is an area of high growth, high importance and high interest to all of Visa. And we see that digital currencies can supplement and compliment some of the existing solutions that we have in the space, says Plecas.
However, while digital currencies can impact the B2B space, and in some cases are already doing so, broader institutional adoption is likely to take time.
Nevertheless, in areas with poor infrastructure, the potential of CBDCs in particular is strong for B2B.
In some countries the infrastructure is just not there yet, and for these types of countries and regions, digital currencies can complement what we already have.
One of the areas that is often raised in digital currency discussions is cross-border payments, with many citing potential speed and cost benefits. However, Plecas stresses that while there is potential, it is not a simple clean fix.
The cross-border space is highly complex, and it has a large number of actors who are trying to solve for consumer experience in terms of end user price and time efficiency, he says.
It's not easy to solve for this, even if you're trying new technologies that would give you some advantages theoretically with this aspect.
However, he says Visa sees particular opportunities in global marketplaces that bring together buyers and sellers from different currencies.
In those instances, potentially digital currencies can help them reach some of these markets in a more time and cost efficient way.
Read more here:
Visa And The Cryptocurrency Opportunity: Inside The Card Networks Digital Currency Plans - Forbes