Crypto

Amid the cryptocurrency debacle, it’s time to give the dollar its due

Published

3 years ago

May 26, 2022

Amid the cryptocurrency debacle, it’s time to give the dollar its due

The collapse of the TerraUSD stablecoin this month is reverberating all through the cryptocurrency world at a time when the market capitalization of Bitcoin and different digital currencies has fallen by about 65 % from a peak of $3 trillion in November.

Whereas heightened volatility is nothing new to the cryptocurrency market, the sudden plunge in Terra carries implications for the monetary system. The rationale: Stablecoins are thought-about integral elements of “DeFi” – decentralized finance – which are designed to guard buyers from the inherent volatility of cryptocurrencies.

Terra was designed to retain a price of $1 always, however it was de-pegged on Could 9, when Luna – a cryptocurrency that backed it – collapsed to almost zero. At its peak, Luna was price $40 billion and supported $18 billion of Terra.

The debacle has induced some commentators to query whether or not stablecoins may pose a menace to the monetary system. At this juncture, this appears unlikely contemplating that they’re solely a small fraction of U.S. monetary belongings.

Others favor elevated regulation of cryptocurrencies and disclosure necessities in order that purchasers could be protected towards fraud. For instance, stablecoins must disclose which belongings again them, the place they’re held and who owns them.

Nonetheless others would ban cryptocurrencies altogether. However as The Economist notes, “a draconian crackdown would put in danger the advantages that crypto ultimately guarantees.” They embody new monetary merchandise that bypass banks, improvements in property rights and the potential for a much less centralized monetary system.

Whereas these points can be debated for years to come back, it is a good time for buyers to overview the expertise of cryptocurrencies for the reason that inception of Bitcoin in 2008 and to glean classes from it.

As Michael del Castillo of Forbes observes, crypto’s historical past has been outlined by 5 resets — in 2014, 2016, 2018, 2020 and at the moment. He finds that “every reset not solely led to price-market will increase, in addition they cleared the way in which for speedy innovation.” Del Castillo believes the present reset could also be crucial take a look at.

One purpose for optimism by crypto fanatics is that Tether – the most important stablecoin that’s hosted on the Bitcoin and Ethereum blockchains and which claims to have ample greenback reserves – rapidly recovered close to its parity of $1 after briefly dropping to 95 cents. However a Barclays strategist has warned that it could possibly be weak if holders rush to promote it, and that this could have an excellent higher impression than Terra’s collapse.

My very own take is that the most important threat to the cryptocurrency market is aggressive financial tightening by the Federal Reserve. The rationale: The outstanding rise of cryptocurrencies has occurred nearly fully in an surroundings wherein rates of interest have been at or close to zero. The run-up in rates of interest this yr already is dampening demand for cryptocurrencies. The danger, furthermore, is that their costs may fall additional if the Fed raises charges by greater than what’s presently priced into markets.

Take into account, for instance, what would occur if yields on Treasuries have been to rise to 4 % to five % subsequent yr. Why would an investor want to carry a crypto asset that has no backing, yields nothing and is extremely unstable?

Second, the principle attraction of cryptocurrencies is for merchants (or gamblers) who consider they’ll make cash by profiting from their excessive volatility. However many individuals who personal crypto belongings don’t perceive how they’re created or the way to commerce them efficiently.

The problem for funding professionals is that there is no such thing as a strategy to compute the intrinsic worth of crypto belongings. Throughout an annual shareholder assembly, Warren Buffett remarked that he wouldn’t pay $25 for all of the bitcoins on the planet. In brief, cryptocurrencies finally are price what individuals are prepared to pay for them, however their value can change on a dime.

Third, claims that cryptocurrencies are inflation hedge as a result of their portions are constrained are unsubstantiated. They have been asserted throughout a interval of low inflation when there was no strategy to validate them. However since inflation took off within the second half of final yr, cryptocurrencies have all plummeted in worth.

Fourth, claims that cryptocurrencies will supplant the U.S. greenback are additionally far-fetched. Advocates akin to Jack Dorsey consider skeptics don’t perceive what makes cryptocurrencies fascinating. However they seem clueless about why the U.S. greenback has been the world’s premier forex all through the post-World Battle II period.

As I’ve famous in a earlier commentary, the U.S. was broadly seen as a secure haven after the conflict and there was a world scarcity of {dollars} within the Nineteen Fifties. The eurocurrency market took off within the early Nineteen Sixties when he U.S. authorities enacted the Curiosity Equalization Tax (IET) and the greenback more and more was used as a unit of account outdoors the U.S.

The principle problem to the greenback’s standing because the world’s key reserve forex occurred within the Seventies, when U.S. inflation surged and the Bretton Woods system of mounted trade charges gave strategy to versatile trade charges. Thereafter, the greenback weakened towards the important thing currencies, and the difficulty of whether or not the greenback may retain its standing was debated in official circles. The greenback then rebounded within the first half of the Nineteen Eighties when the Federal Reserve beneath Paul Volcker raised rates of interest to report ranges to rein in inflation.

Right now, because the Fed as soon as once more has acknowledged the urgency of bringing inflation beneath management, the U.S. greenback has risen to 20-year highs towards each the Euro and the Japanese yen. It has additionally been the perfect performing funding automobile this yr whereas monetary belongings and digital currencies have suffered steep declines.

In gentle of all that has occurred this yr, it’s time for essentially the most ardent crypto fanatics to lastly give the greenback its due.

Nicholas Sargen, Ph.D., is an financial advisor and is affiliated with Fort Washington Funding Advisors and the College of Virginia’s Darden College of Enterprise. He has authored three books, together with “Investing within the Trump Period: How Financial Insurance policies Affect Monetary Markets.”

Crypto

Blockchain Revolution: How Cryptocurrency is Transforming Global Logistics – theafricalogistics.com

Published

4 hours ago

December 22, 2024

Press Room

Blockchain Revolution: How Cryptocurrency is Transforming Global Logistics – theafricalogistics.com

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The global logistics industry is undergoing a seismic shift, driven by the integration of blockchain technology and cryptocurrency.

These innovations promise to enhance transparency, efficiency, and security across the supply chain. From tracking shipments to streamlining cross-border payments, the synergy between blockchain and cryptocurrency is setting new benchmarks for the logistics sector.

1. Blockchain’s Role in Logistics

Blockchain technology, essentially a decentralized ledger system, enables secure and transparent recording of transactions. For logistics, this translates into the ability to track goods in real-time, authenticate the origin of products, and mitigate fraud. Key benefits include:

Enhanced Traceability: Every transaction, from the manufacturing stage to delivery, is recorded on an immutable ledger. This ensures that stakeholders have a comprehensive view of the supply chain.
Reduced Paperwork: By digitizing documents such as bills of lading and certificates of origin, blockchain eliminates the inefficiencies of manual processes.
Improved Trust: Smart contracts, self-executing agreements coded on the blockchain, reduce disputes and enhance trust between parties.

2. Cryptocurrency in Cross-Border Transactions

Traditional cross-border payments in logistics are often marred by high fees, long processing times, and currency exchange risks. Cryptocurrencies, like Bitcoin and stablecoins, are addressing these challenges by:

Lowering Transaction Costs: Cryptocurrency transactions bypass intermediaries, significantly reducing fees.
Speeding Up Payments: Transactions settle in minutes, eliminating delays common with traditional banking systems.
Enhancing Financial Inclusion: For businesses in emerging markets, cryptocurrencies provide access to global trade without reliance on conventional banking infrastructure.

3. Use Cases Transforming the Sector

Several real-world applications highlight the impact of blockchain and cryptocurrency in logistics:

Walmart’s Blockchain Initiative: Walmart leverages blockchain to track the origin of produce, ensuring food safety and traceability within its supply chain.
Maersk’s TradeLens Platform: Developed in collaboration with IBM, TradeLens uses blockchain to digitize and streamline global shipping documentation, reducing inefficiencies.
Cryptocurrency-Powered Freight Payments: Startups like Slync.io enable shippers to pay carriers using digital currencies, enhancing payment speed and reliability.

4. Challenges to Adoption

Despite its potential, the adoption of blockchain and cryptocurrency in logistics is not without hurdles:

Regulatory Ambiguities: The legal status of cryptocurrencies varies across countries, complicating implementation.
Scalability Concerns: Processing thousands of transactions per second remains a challenge for blockchain networks.
Skill Gaps: The logistics workforce often lacks the technical expertise to deploy and manage blockchain systems.

5. The Road Ahead

The integration of blockchain and cryptocurrency in logistics is still in its nascent stages but holds immense promise.

Industry players are investing in pilot projects to explore scalability and operational viability. The convergence of these technologies with artificial intelligence and IoT will further revolutionize the sector, enabling predictive analytics, autonomous supply chains, and more.

Conclusion

Blockchain and cryptocurrency are not just buzzwords but transformative tools reshaping the logistics landscape.

By fostering transparency, reducing costs, and expediting processes, these technologies are addressing long-standing inefficiencies in the supply chain.

As adoption accelerates, businesses that embrace this revolution stand to gain a significant competitive edge in an increasingly digital and globalized economy.

Also Read

How cryptocurrency works: A step by step guide

Exploring the potential use cases of Pi Coins post-launch

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Crypto

My Top Cryptocurrency to Buy Right Now (Hint: It's Not Bitcoin) | The Motley Fool

Published

12 hours ago

December 22, 2024

Press Room

My Top Cryptocurrency to Buy Right Now (Hint: It's Not Bitcoin) | The Motley Fool

The performance of Bitcoin (BTC -0.53%) this year has been nothing short of extraordinary. It’s now up about 46% since the election on Nov. 5, and 146% year to date. Best of all, Bitcoin recently broke through the $100,000 price level to hit another all-time high just north of $108,000.

But what if I told you that there is another top cryptocurrency that is up more than 120% since the election, and 430% year to date? And that this cryptocurrency also just set a new all-time high? That cryptocurrency is Sui (SUI -3.69%), which now ranks 14th among all cryptocurrencies with a $13 billion market cap.

What is Sui and why haven’t I heard of it before?

If you’ve never heard of Sui, that’s understandable. The cryptocurrency only launched in May 2023, just as the market was emerging from the crypto winter of 2022. So, in many ways, its launch flew under the radar of investors. There were bigger issues to consider. The industry was still coping with the aftermath of the collapse and scandal of crypto exchange FTX in November 2022, and nobody was very interested in hearing about another new cryptocurrency launch.

But fast-forward to August 2024. That’s when 21Shares — the company that partnered with Cathie Wood’s Ark Invest on the launch of spot exchange-traded funds (ETFs) for Bitcoin and Ethereum (ETH -0.79%) — released a research report on Sui, detailing all of its unique characteristics. For example, it described how a new technical upgrade suddenly made Sui faster than any other top blockchain by a substantial margin. It pointed out how Sui was rapidly growing in terms of total value locked (TVL), which is a key metric showing the relative strength of a particular blockchain.

Image source: Getty Images.

The title of the report (“Is Sui a Solana (SOL -0.00%) Killer?”) was very provocative, at least for crypto investors. It suggested that Sui had the technological chops to take on Solana, which now ranks as the fifth-largest cryptocurrency. For several years now, Solana has been positioned as the next Ethereum, so Sui being tabbed as a potential Solana killer is a big deal. In fact, 21Shares suggested that there might be a $68 billion market opportunity for Sui if it was able to take on Solana and win.

How high can Sui go in 2025?

My primary concern right now with Sui is that it may be overheating. Just like Bitcoin, it is smashing through all-time high after all-time high. Right now, Sui is trading at about $4.50 after briefly testing the $5 price level. From the perspective of crypto traders, $5 presents the same psychological price barrier for Sui that $100,000 did for Bitcoin. It took Bitcoin a while to break through the $100,000 level, so Sui may not be able to break through the $5 price level by the end of this year.

But, in 2025, watch out. Just take a look at this comparison chart of Bitcoin and Sui since the presidential election. That leads me to think that the market is very bullish on Sui’s prospects under the Trump administration.

Bitcoin / U.S. dollar chart by TradingView

Moreover, consider the trading volume that Sui is now seeing on Coinbase Global (COIN 1.75%). Sui has become one of the 10 most popular cryptocurrencies on the platform in terms of 24-hour trading activity. Granted, the trading volume in Sui is nowhere near that of Bitcoin or Ethereum. But there’s more activity in Sui than in popular cryptocurrencies such as Chainlink, Litecoin, Cardano, Shiba Inu, and Avalanche.

Best of all, Sui has a major new product launch coming in 2025. It’s a $599 handheld gaming device that is currently available for pre-order online. If that product launch is a success, then it could be off to the races for Sui. It could easily double in price to hit the $10 price level.

This cryptocurrency could soar even higher if it ever realizes its full potential as the next Ethereum. Imagine if you had invested in Ethereum just 18 months after its launch. Most likely, you’d be a crypto millionaire by now. In December 2016, Ethereum was trading around $5, which is roughly where Sui is trading right now. Today, Ethereum trades for about $3,400.

That said, I can’t emphasize enough how speculative Sui is. It is still a baby in crypto terms. It has only been around for 18 months, and it can be difficult to get good data and reliable information about it. So, do your due diligence before investing in Sui, and keep your expectations in check. An investment opportunity like Ethereum might only come around once in a lifetime, so it’s asking a lot for it to happen with Sui as well.

Dominic Basulto has positions in Bitcoin, Ethereum, SUI, and Solana. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, Ethereum, SUI, and Solana. The Motley Fool has a disclosure policy.

Crypto

S. Korea, US conducting joint research to block NK cryptocurrency heists

Published

20 hours ago

December 22, 2024

Press Room

S. Korea, US conducting joint research to block NK cryptocurrency heists

A representation of Bitcoin and a price chart are seen in this October 2023 photo illustration. Reuters-Yonhap

South Korea and the United States are conducting joint research to strengthen protection against cryptocurrency heist attempts amid growing concerns of such attacks by North Korea-linked hackers, officials said Sunday.

Based on a recently signed technical annex between the South Korean government and the U.S. Department of Homeland Security, the two sides will jointly develop technologies to prevent cryptocurrency-targeted attacks and to track stolen assets, according to authorities and cybersecurity industry officials.

The science ministry plans to support such research through the Institute of Information & Communications Technology Planning & Evaluation until 2026.

The move comes as the price of bitcoin recently surged to $100,000 after the U.S. presidential election last month, raising concerns of increased attempts by hackers to steal virtual assets.

While the United States collaborates with other countries for cybersecurity research, it is known to have chosen South Korea for research on digital asset tracking technology as North Korea is seen as a key culprit behind cryptocurrency heists.

Under the program, South Korean and U.S. researchers, including those from Korea University and the RAND research institute, will focus on technologies to prevent and track hackers when they steal assets from a cryptocurrency exchange.

They will also focus on understanding how they convert or launder other financial assets they obtain into virtual assets through illegal ransomeware or other methods.

North Korea is known as a major player in cryptocurrency heists, with hackers linked to the country estimated to have stolen $1.34 billion worth of cryptocurrency across 47 incidents this year, according to Chainalysis, a blockchain analysis firm. (Yonhap)