A new law enabling the National Crime Agency and police to seize, freeze, and destroy crypto assets is now in effect in the UK. Under this law, police can seize crypto from suspects without needing to make an arrest first. Additionally, victims have the right to request the release of funds held in crypto accounts […]
Bitcoin News
Former Bitmex CEO Arthur Hayes: ETF Success’ Might ‘Destroy Bitcoin’
Arthur Hayes, former CEO of Bitmex and cryptocurrency market analyst, pondered about the success of an upcoming spot bitcoin ETF and its effect on the future of bitcoin. Hayes states that the popularity of these ETF derivatives might concentrate the custody of all the bitcoin in a few hands that won’t move it, forcing miners to capitulate due to a lack of activity in the blockchain.
Arthur Hayes Believes ETFs Might Cause the Demise of Bitcoin
Former Bitmex CEO Arthur Hayes believes that the success of an upcoming spot bitcoin ETF might endanger the existence of the Bitcoin network. In his most recent blog post, “Expression,” Hayes presents a hypothetical situation in which bitcoin is all in the hands of a few financial firms, like Blackrock.
If this happens, Hayes anticipates this will destroy bitcoin as a store of value, given that it is different from all of the assets traded in financial markets until now.
Hayes argued:
Bitcoin is the first monetary asset in human history that exists only if it moves. But if there was never another Bitcoin transaction between two entities, miners would be unable to afford the energy it costs to secure the network.
The result of this would be the shutdown of the whole Bitcoin network due to the starvation of miners who will receive fees only from bitcoin transactions after the subsidy ends circa 2140.
Hayes adds that this could happen if users come to value bitcoin as a financial asset more than a store of value, favoring the purchase of derivatives instead of the cryptocurrency. However, if bitcoin suffers this fate, Hayes anticipates the birth of a similar asset to allow people to transact in a non-state-owned financial system.
“Hopefully, the second time around, we will learn not to hand our private keys to the baldies,” he concluded.
What do you think about Hayes’ opinion on the success of a spot bitcoin ETF and its effect on bitcoin? Tell us in the comments section below.
Economist Jim Rickards States BRICS Currency Will Leverage Gold to ‘Destroy the Dollar’
Jim Rickards, economist and best-selling author, has explained the possible repercussions of issuing a BRICS bloc currency for the dollar. For Rickards, the “bric” (the name he gives to the BRICS currency) will be anchored (but not redeemable or backed) to a weight of gold and will be used for debasing the dollar by propping up commodity prices.
Jim Rickards Speculates BRICS Currency Will Be Anchored to a Weight of Gold
Jim Rickards, economist and best-selling author, has commented on his vision of a hypothetical BRICS (Brazil, Russia, India, China, and South Africa) bloc currency and how it could be leveraged to devalue the U.S. dollar.
To Rickards, the “bric” — the name he gives the BRICS currency — will be anchored to a determined weight in gold, but not backed by it. This is because the BRICS nations will free-ride on top of the gold markets without intervening to manage the bric-dollar peg.
This will also allow its price to go up as inflation and devaluation hit the U.S. dollar, ostensibly leading to the greenback’s destruction. On this, Rickards stated:
It’s a way to destroy the dollar. You don’t need dollars and you don’t need gold. You just need to be smart enough to anchor your currency to gold, and when dollar inflation starts to go up, your currency is going to be worth more because of how you pegged it, not to dollars, but how you pegged it to gold.
However, Rickards acknowledges that this might take years to happen.
Disrupting Supply Chains
Rickards stated that another way of turbocharging the debasement of the U.S. dollar would be to interfere with the supply chains of commodities in the world. He mentioned the end of the Black Sea grain deal between Russia and Ukraine as an example, stating that grain prices went up by 10% just after the announcement of the suspension.
On this, Rickards explained:
So, if I were a BRICS member, and I were Russia in particular, and I had this currency tied to gold, and I wanted my currency to be more valuable and your currency (U.S. dollar) less valuable, one of the ways to do that is mess with the supply chain and drive up the price of oil, gasoline, grain.
In January, Russian Foreign Minister Sergey Lavrov stated that the bloc would discuss an official currency this August. However, South Africa’s diplomat in charge of BRICS relations, Anil Sooklal, recently declared this topic was not on the agenda for the upcoming summit.
What do you think about Rickards’ thoughts on the hypothetical BRICS currency? Tell us in the comments section below.
De-Risking From China Will Destroy Western Economies, Think Tank Founder Warns
The founder of a German-based political and economic think tank has cautioned that attempts to de-risk from China “will only lead to the self-destruction of the economies of the West.” She stressed that de-risking policies would hurt their originators more than they could hurt China.
The Risks of De-Risking From China
The founder of the Schiller Institute, Helga Zepp-LaRouche, expressed concerns about the adverse consequences of Western countries’ efforts to de-risk from China in an interview with Global Times reporter Li Xuanmin, published on Monday. The Schiller Institute is a German-based political and economic think tank with stated members in 50 countries.
“The politicians pushing for ‘de-risking’ don’t seem to understand what every competent industrialist knows, that it is not possible to instantly replace China’s trade and investment partnership, since China offers very well-built infrastructure and a qualified labor force, which still has to take years to be built up in other countries,” she explained, cautioning:
So the ‘de-risking’ policy is prone to hurt its originators more than it could hurt China, as we have seen already with the blowback coming from the sanctioning policy.
The Schiller Institute founder was further asked whether the G7 countries could push their de-risking strategy with China. “The G7 countries will only do so at the expense of their own economies,” she replied, adding: “We have this year the 10th anniversary of the Belt and Road Initiative (BRI), and there are presently 151 countries and 30 major international organizations who are cooperating with China under the initiative, which has become one of the major locomotives of the world economy.”
She noted: “Extremely belatedly the G7 discovered this at their recent summit in Hiroshima, Japan, and they said: ‘Oh, we should talk more to the so-called ‘swing’ states, like Brazil, Indonesia, and India.’”
However, Zepp-LaRouche pointed out that the G7 “obviously overlooked that some of them are already members of the BRICS, and the other has reportedly also applied for membership in the BRICS.” The BRICS nations comprise Brazil, Russia, India, China, and South Africa. More than 19 countries have either applied to join the economic bloc or have expressed interest in joining.
Zepp-LaRouche concluded:
The attempt to ‘de-risk’ from China will only lead to the self-destruction of the economies of the West, and threatens to lead to the absolute sidelining of the European continent in terms of world history.
Last week, Treasury Secretary Janet Yellen told the House Financial Services Committee that ceasing trade with China would be “a big mistake” for the U.S. However, she emphasized: “De-risk? Yes. Decouple? Absolutely not.”
Zepp-LaRouche argued that “the ‘decoupling’ and the ‘de-risking’ push are just the same,” adding: “Behind it is the geopolitical intention to contain China’s economic rise by cutting it off from certain advanced technologies.” The think tank founder stressed: “But that train has left the station already, given the fact that China is leading the world in terms of numbers of patents, as well as key areas of science and technology, such as 5G technology.”
Do you agree with Zepp-LaRouche? Let us know in the comments section below.
Binance To Destroy $2 Billion Idle BUSD On The BNB Smart Chain (BSC)
Binance, the world’s largest cryptocurrency exchange by trading volume, will “destroy” billion BUSD which idle on the BNB Smart Chain (BSC), per a tweet on Feb. 22.
Burning Billion Of Idle BUSD On The BSC
BUSD is a stablecoin issued by Paxos on Ethereum under the Binance brand. The stablecoin is pegged to the USD and is backed by cash and cash reserves held in FDIC-insured banks in the United States and treasury bills.
Paxos is also regulated by the New York Department of Financial Services (NYDFS) and is now the third-largest stablecoin by circulating supply. As of Feb. 22, BUSD had a circulating collection of .4 billion and continues to play a critical role in Bitcoin and crypto trading, especially in centralized exchanges.
In crypto, stablecoins are channels through which users can convert fiat currencies into fungible tokens, enabling smooth trading of digital assets. Besides BUSD, there is USDT, which is the most liquid, and USDC.
Following this announcement, Binance plans to destroy billion of Wrapped BUSD on the BSC. Paxos only issues BUSD on Ethereum, the first smart contracting platform. However, considering the vast Binance ecosystem, the token can be bridged to the BSC and other chains, including Tron and Avalanche, where it exists as wrapped BUSD.
It is this derived version of BUSD on the BSC that Binance will burn.
Later today, #Binance will burn bn worth of idle BUSD on BNB Chain.
The same amount of BUSD on the Ethereum network, which was used as collateral, will then be released.
— Binance (@binance) February 22, 2023
In a tweet, the exchange said all burnt-wrapped BUSD would be redeemed on Ethereum and released to holders.
The State Of BUSD And Previous Collateral Criticism
According to data, most BUSD trading volumes are derived from centralized exchanges. Cryptocurrency exchanges, including Binance and KuCoin, listing BUSD have generated over .7 billion in trading volumes in the last 24 hours. Trackers show that CEX trading volumes stood at .6 billion, several folds higher than DEX volumes at around 6 million.
Early this year, it was reported by Wrapped BUSD wasn’t always backed by reserves, sometimes between 2020 and 2021, forcing holders to scramble, exiting the token on the BSC. However, a Binance representative said the error had been noted and the problem fixed. They pinned the issue to a “timing mismatch.”
Binance undertook a project to centralize the collateral in a single, dedicated wallet; this was completed on Jan. 4 so that users can see the 1:1 backing of PBUSD. Minting of PBUSD now only takes place after the collateral is added to the dedicated wallet.
Trackers on Feb. 22 show that wrapped BUSD is pegged with the USD.
Why The Ethereum Merge Could Destroy ETH’s Competitors
Ethereum could re-test its support zone as the general sentiment in the crypto market hints at further losses. The second crypto by market cap has been leading this current rally with Solana (SOL), Avalanche (AVAX), and other large cap cryptocurrencies.
Related Reading | Arthur Hayes’ Crystal Ball Predicts: Ethereum To 5 Digits
In the coming months, Ethereum could continue to dominate the market. According to some experts, such as former BitMEX CEO Arthur Hayes, ETH’s price could outshine its layer-1 competitors.
At the time of writing, ETH’s price trades at ,400 with a 2% loss in the last 24-hours.
ETH trends to the upside on the 4-hour chart. Source: ETHUSD Tradingview
Hayes’ support his bullish thesis for Ethereum on “The Merge”. The upcoming ETH 2.0 upgrade that will combine the network’s execution layer with its consensus layer.
This will consolidate ETH’s migration into a Proof-of-Stake consensus algorithm. In addition to Hayes, Bloomberg Intelligence Senior Commodity Analyst Mike McGlone believes the event will be bullish for ETH’s price.
The analyst believes ETH is about to “change the rules of the game”. The Merge will transform ETH into a unique financial asset with commodity, equity, and monetary traits.
Using a discounted cash-flow model on ETH, the analyst concluded that it’s currently undervalued. McGlone believe the cryptocurrency could break above ,000 with 110% upside potential.
As seen below, in a diagram explaining the discounted cash-flow model, the upcoming staking system for ETH will provide investors with several value-creation factors.
ETH will have more value creation factors after The Merge. Source: Bloomberg Intelligence
Ethereum About To Change The Game?
McGlone looked into ETH’s transaction fees since its inception in 2015. During this period, the second crypto by market cap has seen an increase in the price per transaction. This trend suggest acceleration in activity, demand for block space, more adoption, and value aggregated to the network.
Ethereum could maintain this trend well into 2035. At this time, the analyst expects it to reach a “decay to a terminal growth rate” after a 30% annual rise in transaction fees or cash flow until 2025. This calculations are “conservative, the expert said.
Related Reading | TA: Ethereum Gearing For Another Lift-Off, Why ETH Could Test ,750
In the long term, ETH could see as much as ,000 or a 219% increase to the upside. McGlone said the following highlighting ETH potential with the upcoming Merge:
Though any delays or bugs in the Merge could have a negative impact, the main risk to revaluation is sub-par aggregate transaction-fee growth. Once the next phase, Sharding, disaggregates the base chain into 64 individual “shards”, dramatically increasing Layer 1 blockspace, gas prices are expected to fall commensurately. Conversely, this will unlock the full potential of Layer 2 rollups, which can process an increasing number of transactions at almost zero cost.
The One Thing That Could Destroy Bitcoin Is Happening Today
There have been dozens of obituaries for Bitcoin over the asset’s short history. Despite constantly being proclaimed dead or projected to fall to zero, in theory, it cannot be stopped or killed.
However, the one thing that could actually destroy Bitcoin, is actually happening today. Although today’s event may not be powerful enough to put an end to the cryptocurrency, it does show demonstrate how realistic the scenario may be.
Is Bitcoin Really Unkillable?
Bitcoin was designed to be decentralized and fully autonomous, supported by a network of miners incentivized by that same network to keep it in operation. In theory, it cannot be stopped so long as the internet exists.
Even if an apocalypse that takes out the internet, Bitcoin may still be possible. This was potentially proven when BTC transactions were successfully sent over HAM radio last year.
Related Reading | Space Holds The Key to The Bitcoin (BTC) Moon Mission: Flipping Gold
The world is currently experiencing a pandemic, where people are forced to rely significantly more on digital solutions to everyday problems. Political and social unrest, coupled with unprecedented impact on mental health due to quarantine conditions, has erupted into protest and violence.
The only scenario that could make matters worse, would be if all forms of communication were disrupted. This bleak picture is something that Deutsche Bank recently warned would be the one black swan that could be more crushing than the current outbreak.
Solar Flare Taking Place Today Is Example Of Scenario Capable of Destroying Cryptocurrency
The only energy source powerful enough to completely knock out all forms of internet, radio communication, and infrastructure, would be the sun.
This scenario is exactly what Deutsche Bank says would make the pandemic look like a walk in the park. It is also about the only thing that can actually destroy Bitcoin.
What’s more frightening, however, is the fact that such an event is happening today.
That’s right – the one thing that could kill Bitcoin is taking place on Earth today, just as the sun sends a powerful solar storm hurdling our way.
NASA, NWS, and NOAA warn that this event of space weather could disrupt electrical generation systems, radio signals, satellite communications, and more.
Related Reading | Bloomberg Hilariously Lists Bitcoin As a Space Stock
This particular storm isn’t likely worthy of destroying the cryptocurrency for good, but these events are far more common than one would believe.
The last extreme electromagnetic blast from the sun took place in 1859. Wikipedia says if a storm of a similar magnitude hit the Earth today, it would cause “widespread electrical disruptions, blackouts, and damage due to extended outages of the electrical grid.” A solar flare of that size could be the one thing that puts an end to the crypto asset for good.
But within such destruction, there often lies beauty. Those who live in the mid-latitude area of the US, UK, and elsewhere may be able to view an electromagnetic aurora over the night sky.
If you can see that beauty, take it as a reminder of just how real such an end of days scenario for Bitcoin really is.
Bitcoin Solves This: Govt Money Printers Will Destroy Global Reserve Currencies
The current financial system as we know it is broken. If everything was ticking along as it should the central banks of the world wouldn’t have to start helping the private banks which have been acting with impunity with other people’s money. Bitcoin again is shaping up to be the answer, especially where the future of fiat is concerned.
The Printing Money Cycle
A recent report by Bridgewater Associates founder, Ray Dalio, explores the failings of the current financial system. Lenders are handing out money without consequence because they have a lot of it to give. This is largely because central banks are pushing it on to them and buying financial assets in their futile attempts to push economic activity and inflation up.
Dalio adds that prices of financial assets have increased but future expected returns have fallen as economic growth and inflation remains sluggish. Companies can sell dreams without clear profit plans because investors are flush with borrowed money. The system is clearly flawed.
My below piece “The World Has Gone Mad and the System is Broken” explains some of the crazy things that are happening, why they are happening and why I believe that they are unsustainable. I’d be interested in knowing what you think about them. https://t.co/daUdsw0XLy
— Ray Dalio (@RayDalio) November 5, 2019
The piece continues to add that large government deficits exist, and these will increase substantially, which will require huge amounts of more debt to be sold by governments. Increasing interest rates during an economic downturn is not an option so the central banks will print more money to buy up the debt. This process is likely to accelerate especially in the reserve currency countries namely the US, Europe and Japan.
He adds that at the same time pension and healthcare liability payments will be due but there will no longer be the money to cover them. Pension funds that have investments used to meet their obligation use assumed returns which will be way higher than the reality.
“Since there isn’t enough money to fund these pension and healthcare obligations, there will likely be an ugly battle to determine how much of the gap will be bridged by 1) cutting benefits, 2) raising taxes, and 3) printing money,”
The third option is the easiest path according to Dalio because there are no limitations made on the amounts of money that can be printed or the value of that money. The risk of this path is that it threatens the viability of the major world reserve currencies as viable stores of wealth.
This will ultimately increase the wealth gap as only the creditworthy will have access to borrow more money and those without will fall deeper into financial despair while the value of those reserve currencies will continue to plummet.
Bitcoin Solves This
Bitcoin, with a predetermined supply, immunity from central bank cash printers, and decentralization from any nation or political movement, makes it the perfect solution for this problem. In theory Bitcoin demand will increase as it becomes the world’s currency giving the control back to the people, not the banks.
Shapeshift CEO Erik Voorhees concurred;
“I don’t even need to say Bitcoin here… but it’s just so obviously the escape hatch for those paying attention. It is really tragic how many people willfully remain tied to fiat and government money systems,”
A massively flawed banking system and the 2008 financial crisis was the catalyst that spawned Bitcoin in the first place. Unfortunately at the moment it is still used as a vehicle for speculation but that paradigm is likely to shift as the financial system crumbles and fiat becomes worth less than the paper it has been printed on.
Image from Shutterstock
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Blockstream CEO Adam Back: How Bitcoin Sidechains Could Destroy Altcoins
Early cryptocurrency developer and British cryptography expert Adam Back has been speaking at the Transylvania Crypto Conference about Bitcoin sidechains. The basic premise is that this additional functionality could render many of the altcoins simply unnecessary.
Bitcoin Sidechains The Future
It has been five years today since the original whitepaper on Bitcoin sidechains was released. Back, who invented HashCash way before Bitcoin back in 1997, has been instrumental in cryptographic innovation and pioneered BTC Core development. His firm, Blockstream, provides the funding for the development of the predominant Bitcoin network client software.
The premise of sidechains as outlined in the paper was that users could move their BTC between multiple, completely different blockchains that could enable a wide range of new crypto features which have emerged in many of the current altcoins.
New functionality and features could all be built into Bitcoin by way of sidechains, theoretically rendering many of today’s altcoins redundant. According to Forbes, current sidechain technology comes with trade-offs in the areas of centralization and censorship resistance.
Back is bullish on the premise that a future Bitcoin could have such functionality. He clearly is not fond of the current state of the market which is packed with altcoins.
“In the history of altcoins, it seemed like there was a period where there were a huge number of them that had no features, and that played out. And then people started to need a new way to market them, so they added features. Some of them were real features, and some of them were stories to market.”
Speaking in a panel at the conference, Back added that a modular Bitcoin Core could enable developers to simply build on this as opposed to creating an entirely new blockchain and token.
“This financial incentive will remain, but it will have less credibility because if you have a very easy to use extension mechanism for Bitcoin and examples of extensions that do something simple that you can build on, there’s not really a good story about why you’re doing it somewhere else,”
He used the internet as an example stating that its development would be equally as messy if there were hundreds of forked copies of its underlying protocol, TCP/IP. He added that layer two protocols such as the Lightning Network could also make alternative payments processors appear pointless.
Not Exactly Decentralized
There are a number of current sidechains such as Blockstream’s Liquid but they are not entirely trustless. Back acknowledged this adding “Your risk with Bitcoin is that, ultimately, the coins are escrowed in some way – in a somewhat decentralized way,”
The current state of play is that altcoins do offer something different and trustless sidechains for Bitcoin are still a few years away.
Ripple’s token is a centralized enterprise level cross border banking platform and Ethereum offers a smart contract computer and decentralized finance platform – both totally different to Bitcoin. Even with sidechains for BTC it is very unlikely that the alternatives will simply disappear. They will need to evolve at the same pace or faster to survive.
Image from Shutterstock
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Dr Doom Claims Central Bank Digital Currencies Could Destroy Crypto
If central banks issue their own digital currencies, then it would destroy cryptocurrencies like Bitcoin, wrote Nouriel “Dr. Doom” Roubini in his latest column.
The article, titled “Why central bank digital currencies could destroy crypto,” saw the American economist building up his rants against the cryptocurrency space.
He had earlier called Bitcoin “a mother of all scams” in his testimony to the U.S. Congress, attracting criticism for his lack of knowledge about how the digital currency’s underlying technology works. This time, Roubini’s target was the crypto’s potential in central bank digital currencies (CBDC), which he expectedly ended up dismissing as “over-hyped.”
Dr. Doom attempted a psychological assault on the crypto community, calling them “crypto-fanatics” who were seizing on policymakers’ decision to launch CBDCs as proof of blockchain adoption.
“This is nonsense,” he frowned. “If anything, CBDCs would likely replace all private digital payment systems, regardless of whether they are connected to traditional bank accounts or crypto-currencies.”
Roubini explained that commercial banks were already holding central bank reserves as digital currencies and that the latter would not need to overhaul an already sound process to replace it with something like blockchain. He added by saying that CBDCs at most would allow individuals, corporations and non-bank financial institutions like payment services to make transactions directly through the central bank – without relying on private banks.
“By allowing an individual to make transactions through the central bank, CBDCs would upend this arrangement, alleviating the need for cash, traditional bank accounts, and even digital payment services,” Roubini added. “Better yet, CBDCs would not have to rely on public “permission-less,” “trustless” distributed ledgers like those underpinning crypto-currencies.”
Related Reading: “Dr Doom” Nouriel Roubini Calls Crypto a “Stinking Cesspool,” Fails to Grasp Its Value
CBDCs Are Anonymous
In his efforts to troll crypto assets, Roubini went on writing things that – after a certain point – literally stopped making sense.
Without ever explaining his stance, the Bitcoin-hater called cryptos unscalable, expensive, insecure, and centralized. It turned out to be an amusing moment for readers who just saw Roubing coming out in support of centralization, but preferred to criticize crypto assets for – allegedly – possessing the same feature.
Roubini also claimed that people use cryptos because they wish to be anonymous. Then he pitted CBDC as a challenger to crypto’s anonymity, stating that the former could also offer users the same.
“CBDC transactions could also be made anonymous, with access to account-holder information available, when necessary, only to law-enforcement authorities or regulators, as already happens with private banks.”
The comment left many things unanswered. For instance, what is Roubini’s perception of anonymity? Does he believe that having your financial information accessible to certain authorities guarantee anonymity? The economist could be right if his definition of anonymity is capped, but the crypto-sphere continues to believe that hiding not just identity, but also the transactions is real financial anonymity.
Fractional Reserves and Financial Crisis
For an economist whose wild guess about the 2008 financial crisis made him relevant overnight, understanding the true essence of crypto assets would be more difficult.
The fiat market is one of the most significant flawed systems ever, which is unable to read between demand and supply, and has repeatedly crashed the financial systems by manipulation and bad monetary policies. The global reserve system has shifted to one currency whose amount is unlimited and is in the hand of a few cronies.
All form of monopolies have turned corrupt and abusive lately. Roubini is among those who believe one crony should govern the entire financial system. Bitcoin, at the same time, is the first of many steps towards breaking down the financial monarchy and making it more democratic.
But Roubini won’t mention that. He refutes a technology that is just born and is still developing into something crucial – like the internet. Even a Nobel laureate like Warren Buffett was wrong about Google and Amazon tech stocks. All it takes is vision and belief – one at a time.
Let the trolls troll.
Featured image from Shutterstock.
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