Crypto

The crypto-skeptics’ voices are getting louder

Published

2 years ago

June 3, 2022

The crypto-skeptics’ voices are getting louder

Perhaps it was when the writer of the influential guide “Black Swan” mentioned bitcoin was value “precisely zero.”

Maybe it was the evaluation from a billionaire hedge-fund supervisor that cryptocurrencies are a “restricted provide of nothing.”

Or it may simply be a type of cultural shifts that occurs when one too many celebrities tries to persuade us of one thing.

Regardless of the turning level, a rising group is sounding dire warnings in regards to the risks of cryptocurrency funding. Name them the crypto-catastrophists — bloggers and billionaires, mathematicians and economists, computer-scientists and 2008-crisis prophets and, even, a 2000’s-era Hollywood character — who’ve all come collectively to unleash a warning to authorities and residents about cryptocurrency funding. And their voices have, slowly, begun to rise above crypto’s evangelist din.

“For a very long time it felt like only a few of us shouting from the rooftops,” mentioned Nicholas Weaver, a computer-security professional from the College of California at Berkeley, who has lengthy mounted each a monetary and moral case once more crypto funding. “However I believe there are extra of us now, and hopefully that may assist us be heard.”

On Wednesday, Weaver was one in every of 26 influential expertise personalities to direct these cries to Congress.

In a letter addressed to Senate Majority Chief Charles E. Schumer (D-N.Y.), Senate Minority Chief Mitch McConnell (R-Ky.), Home Speaker Nancy Pelosi (D-Calif.) and different congressional leaders, the group outlined what it described as doubtlessly grave risks of cryptocurrencies.

“The catastrophes and externalities associated to blockchain applied sciences and crypto-asset investments are neither remoted nor are they rising pains of a nascent expertise,” it mentioned. “They’re the inevitable outcomes of a expertise that isn’t constructed for function and can stay endlessly unsuitable as a basis for large-scale financial exercise.”

The missive — which was titled “Letter in Assist of Accountable Fintech Coverage” — didn’t spell out many coverage proposals. However it was clear the group needs dramatic strikes to rein in, if not outright get rid of, crypto investing.

“We have to act now to guard traders and the worldwide monetary market from the extreme dangers posed by crypto-assets,” it mentioned.

On Thursday, New York Legal professional Normal Letitia James (D) joined the skeptics, sending out an “investor alert” in regards to the basic nature of crypto dangers.

“Even well-known digital currencies from respected buying and selling platforms can nonetheless crash and traders can lose billions within the blink of an eye fixed,” she mentioned, citing conflicts of curiosity and restricted oversight. “Too usually, cryptocurrency investments create extra ache than acquire for traders. I urge New Yorkers to be cautious earlier than placing their hard-earned cash in dangerous cryptocurrency investments that may yield extra anxiousness than fortune.”

The alert goes additional than a warning James issued final yr, which centered extra sharply on specific crypto scams.

The catastrophists are, to make sure, nonetheless a shaggy group. Members have few formal ties to at least one different, participating primarily on social media — a pointy distinction to the coordination by adversaries like crypto platforms FTX and Coinbase, which type an trade that spent $5 million on lobbying efforts final yr.

However they will inject urgency into their plea, gathering rising followings with dramatic descriptions of worst-case situations. Many conventional economists should not outspoken, they are saying. And so it’s as much as them to take up the function of Jeremiah in Jerusalem, warning of a Babylonian reckoning for a society that has slouched into crypto sloth.

Apart from Weaver, the letter’s signatories embody Harvard cryptographer Bruce Schneier, Google engineer Kelsey Hightower, Netscape Navigator pioneer Jamie Zawinski, the England-based blogger and writer David Gerard, “The O.C.” actor Ben McKenzie and Molly White, the favored blogger and social media presence who was one in every of crypto’s earliest critics.

However the bigger group of catastrophists goes past the signatories and consists of a lot of finance-world veterans who helped foresee the 2008 subprime-mortgage disaster, together with the economist Nourel Roubini, the hedge-fund supervisor John Paulson and Nassim Taleb, the writer and mathematician who wrote the best-selling “Black Swan,” which posits that lots of the most impactful occasions of historical past had been unpredicted.

Whereas disparate of career, the catastrophists have come to very related conclusions in regards to the 2020s digital-coin funding craze. A crater is coming, they are saying. And it’s going to be large.

Many others in fact don’t agree. Mayors from Miami to New York are embracing crypto with vigor, whereas each forward-looking monetary corporations like Silvergate and blue-chip tech corporations like IBM have thrown in with it. A trillion-dollar market capitalization is just not going away anytime quickly, they are saying, nor ought to it.

However the catastrophists say the market’s dimension solely reinforces the stakes. They cite an absence of regulation, a product devoid of inherent worth or money circulation, a system whose solvency is determined by an ever-larger variety of new gamers and markets manipulated by a couple of monetary elites. All of that, they are saying, makes for a de facto Ponzi scheme that may solely crash.

“You have got extraordinarily shoddy merchants who’re making the most of an unregulated market, they usually wish to pores and skin you they usually wish to pores and skin you once more, after which they wish to pores and skin your pals, household and pension funds till finally there’s nothing left to pores and skin,” mentioned Gerard, a longtime monetary blogger and writer, providing a colourful model of the catastrophists’ message. “So I and others really feel like we have to arise and say one thing about it.”

It was a distant prehistoric time — all the way in which again in 2021 — when cryptocurrency gave the impression to be ascendant within the mainstream. A brand new Pew Analysis research had concluded that 16 p.c of People used or invested in crypto. Enterprise capital big Andreesen Horowitz was buzzing with a crypto fund. Jack Dorsey was telling Cardi B that bitcoin would exchange the greenback.

Shortly after, Larry David went viral with a Tremendous Bowl business that solely Luddites prevented crypto, whereas Matt Damon urged non-crypto traders had been cowards. All of a sudden that good couple on the block barbecue was tossing off phrases like “stablecoin.”

However a crash of Terra’s luna by greater than 95 p.c, a drop in bitcoin of 56 p.c off its all-time excessive and a continued hammering of their message appears to be tilting the narrative within the catastrophists’ course. The local weather now appears extra conducive to the group’s message than ever — perhaps.

“These voices are definitely getting louder,” mentioned Edward Balleisen, a Duke professor and historian of economic bubbles. “However the traditional factor in any bubble is there are going to be lots of people who wave it off and say ‘It’s only a correction’ so maintain going.”

He famous that the catastrophists should deal with beloved names sending folks the alternative message. “I imply, even with all these warnings you’re going to have Stephen Curry on TV within the NBA Finals this weekend telling folks how straightforward it’s to spend money on crypto,” referring to the Golden State Warriors star’s high-profile FTX advert.

After all, it’s under no circumstances resolved that crypto-catastrophists are proper, and a complete trade is based on the concept they’re not. Crypto executives level to an extended historical past of skepticism the place new expertise is anxious. Befuddlement characterised Net 1.0 within the mid-Nineties, they be aware, a place that now appears laughably out of contact.

To the skeptics, although, way more financial fundamentals are at play right here. They argue that the shortage of inherent worth makes crypto a “zero-sum” sport by which for each winner there’s a loser — akin to playing — as a substitute of shares, which not solely depend on underlying earnings to find out their worth however reward shareholders with dividends, buybacks and different advantages.

Removed from saying there are merely some scams inside crypto that should be rooted out — the frequent chorus of crypto executives — they argue the whole operation is constructed on sand.

“Investing in crypto is rather like what investing in [Bernie] Madoff’s fund within the Nineties would have been — if he had brazenly admitted, because the starting, that there was no portfolio, no inventory or choices buying and selling, not even a small money reserve,” says the pinned tweet of Jorge Stolfi, a Brazil-based laptop science professor, referring to the person who ran the biggest Ponzi scheme in historical past.

Stolfi, a signatory of Wednesday’s letter, is among the many most pointed of the crypto catastrophists. Stolfi didn’t reply to a request from The Washington Publish in search of remark. However shortly after the letter went out, he started selling it, retweeting the messages of a London software program engineer named Stephen Diehl. Diehl has develop into a social media star among the many catastrophist set, drawing some 60,000 followers along with his personal crypto-warnings. (After the letter went out he posted that “Crypto fraud is spiraling uncontrolled” and “regulators are paralyzed and individuals are getting damage left and proper.” He mentioned it fell to “us as residents and accountable engineers to assist repair the issue we created.”)

Stolfi’s tweet last month asking laptop scientists to name out the “dysfunctional cost system” and “technological fraud” round crypto kick-started the letter, which was organized among the many signatories with the enter of the liberal nonprofit People for Monetary Reform, an umbrella group advocating for extra banking regulation.

Particularly noteworthy has been the 2008 disaster prophets, who collectively type a refrain which will show more durable for some critical traders to disregard.

Paulson, who made billions shorting the housing market, instructed Bloomberg Information final August that crypto was “a restricted provide of nothing.” He added that cryptocurrencies, “no matter the place they’re buying and selling as we speak will finally show to be nugatory.”

Taleb goes a step additional, providing a mathematical postulate. Regardless of calling bitcoin the “first natural foreign money” as not too long ago as 2018, he now believes it ought to, mathematically talking, be value nothing.

“Any probabilistic evaluation means zero valuation,” Taleb mentioned in an electronic mail to The Publish.

His analysis paper builds the case probabilistically, the mathematical time period for extracting probability from chaos. Primarily it argues that since there isn’t any risk of dividends, buybacks or some other income to shareholders sooner or later, it should mathematically be value nothing now as a result of there isn’t any worth to construct into it in addition to subjective demand.

“Owing to the absence of any specific yield benefiting the holder of bitcoin, if we anticipate that at any level sooner or later the worth might be zero when miners are extinct, the expertise turns into out of date, or future generations get into different such ‘property’ and bitcoin loses its attraction for them, then the worth should be zero now,” he wrote. Gold, with its real-world makes use of, can be distinct from cryptocurrency on this regard, he mentioned.

Roubini, who appeared earlier than Congress in 2018 calling crypto the “Mom of All Scams and (Now Busted) Bubbles” has continued the drumbeat, saying one other bust is coming and might be even worse than the “crypto winter” that started in 2018.

The critics are additionally hopeful that environmental considerations would possibly sway public opinion. Creating bitcoin infamously consumes extra power yearly than Argentina because it makes use of huge quantities of computing energy to generate the calculations required to mine cash — a degree they are saying ought to resonate with anybody involved in regards to the atmosphere.

Even essentially the most dire crypto catastrophists say it’s unlikely, at the very least in the mean time, {that a} crash would carry a lot contagion to the broader economic system. The S&P 500 has a market cap of $40 trillion, dwarfing crypto’s $1 trillion. However they are saying that doesn’t imply People shouldn’t be on guard for such spillover.

“The largest concern is that if it does get into the mainstream economic system through retirement funds, it may begin bringing different issues within the system down with it, like with Constancy,” mentioned Gerard, noting that firm’s plan probably to enter impact later this yr that may enable members to allocate as a lot as 20 p.c of their 401(ok) to crypto. “That’s why we’ve got to cease it now.”

One other concern, he cited, could be a run on Tether, which if it’s not correctly backed by property, as some say, may domino into credit score markets, a risk that credit-ratings big Fitch has raised.

If a monetary shock wave is looming, it’s unclear how a lot these voices will assist head it off. Duke’s Balleisen notes that 2008 was crammed with folks warning a couple of housing bubble for at the very least 4 years earlier than the collapse, and it did little or no.

Then once more, he famous, “the massive distinction is that you’ve got many individuals in positions of affect now who bear in mind 2008, the place you didn’t have anybody in 2008 who remembered 1929.”

Lots of the crypto-catastrophists say they know authorities could be gradual to behave but additionally say plummeting worth may rein out there by itself. Previously, crypto sell-offs have been curbed as both bargain-seeking traders poured in or, as one College of Texas analysis paper argued, inside gamers coordinated purchases to control the market again to an look of well being.

However that may’t go on endlessly, the catastrophists say; past a sure level, it’s going to simply develop into a self-reinforcing plummet.

“I don’t suppose you want the federal government for the crypto house to primarily disappear — folks dropping some huge cash will do this too,” Weaver mentioned. “Sadly that’s a really painful approach for it to occur.”

Crypto

HKEX to launch HKEX Virtual Asset Index Series

Published

3 hours ago

October 28, 2024

Press Room

HKEX to launch HKEX Virtual Asset Index Series

Hong Kong Exchanges and Clearing Limited (HKEX) today announced the launch of the HKEX Virtual Asset Index Series, offering a reliable benchmark for a fast-emerging asset class that supports Hong Kong’s development as Asia’s leading digital assets hub.

The Index Series, which will go live on 15 November 2024, provides investors with transparent and reliable benchmarks for Bitcoin and Ether pricing in the Asian time zone. It seeks to provide a single reference price for virtual assets, where these assets are often traded at different prices across global exchanges.

HKEX Chief Executive Officer, Bonnie Y Chan, said:

“We are delighted to introduce the HKEX Virtual Asset Index Series to meet the region’s growing demand for this fast-emerging asset class. By offering transparent and reliable real-time benchmarks, we seek to enable investors to make informed investment decisions, which will in turn support the development of the virtual asset ecosystem and reinforce Hong Kong’s role as an international financial centre.”

The Index Series will consist of the Reference Index for Bitcoin and Ether, respectively, as well as the Reference Rate for Bitcoin and Ether.

The Reference Index is a 24-hour volume weighted reference spot price of Bitcoin or Ether, using prices aggregated from top-rated virtual asset exchanges, calculated in real-time and denominated in US dollars. Meanwhile, the Reference Rate is designed for the settlement of financial products, calculated daily at 4:00 pm Hong Kong time.

The Index Series, which will be the first EU Benchmarks Regulation (BMR)-compliant virtual asset index series developed in Hong Kong, will be administered and calculated by CCData, a UK-registered benchmark administrator and virtual asset data and index provider.

Crypto

A cryptocurrency analyst predicts an explosive December

Published

12 hours ago

October 27, 2024

Press Room

A cryptocurrency analyst predicts an explosive December

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Aptos (APT) Poised for Gains as Altcoin Season Approaches

Aptos (APT) is trading between $9.50 and $10.60, showing potential for growth. The coin has surged 25.52% over the past month, indicating strong momentum. The Relative Strength Index is at 42.84, hinting that APT may be oversold and ready for an upward move. The first resistance level is $11; breaching this could push the price to the next hurdle at $12. Support stands firm at $9.02, suggesting limited downside. The Stochastic indicator at 26.01 also points toward a possible rally. With the crypto market gearing up for an anticipated bull run and altcoin season, Aptos could be set for significant gains.

Celestia (TIA) Set for Surge Amid Bullish Crypto Market Sentiment

Celestia (TIA) is showing strong signs of potential growth. Trading between $5.61 and $6.55, it has gained 11.204% over the past month. With both the 10-day and 100-day simple moving averages around $5.85, the price demonstrates stability and readiness for an upward move. The Relative Strength Index at 58.35 indicates room for growth before hitting overbought territory. The nearest resistance is at $7.01; surpassing this could propel TIA toward the second resistance at $7.95, offering potential gains of over 30%. The positive MACD level supports the bullish momentum. As altcoin season approaches, Celestia may be poised for a significant breakout.

Ondo (ONDO) Nears Breakout as Altcoin Season Approaches

Ondo (ONDO) is showing strength, trading between $0.74 and $0.88, above its 10-day moving average of $0.74. Over the past month, it has climbed by more than 8%, indicating growing momentum. The coin is nearing its resistance level at $0.93. A break above could see it target the next resistance at $1.06, representing a significant gain. The RSI is below 50, suggesting there’s room for upward movement before reaching overbought levels. The MACD is slightly negative but could turn positive with continued price increase. With supportive technical indicators and the altcoin season approaching, ONDO may be poised for a substantial rally.

Quant (QNT) Eyes Breakout Amid Altcoin Bull Run Hopes

Quant is trading between $64.67 and $69.27, close to its 100-day moving average of $65.49. Despite a monthly drop of 13.80%, it’s stabilizing near support at $62.13. The RSI at 45.46 suggests it’s not overbought, hinting at potential upward movement. A push above the resistance at $71.33 could see it reaching $75.93, offering a possible gain of around 10%. With the anticipated altcoin season, Quant may reverse its six-month slide of 42.09%. Traders are watching for signals like a bullish MACD crossover to confirm an uptrend. The coin’s current position might be a springboard for growth in the coming weeks.

Conclusion

Although APT, TIA, ONDO, and QNT may have less short-term potential, ZircuitDEX stands out by offering 500X capital efficiency with lightning-fast transactions and zero slippage. The ZDEX Token presale at a 70% discount presents a chance for 500% returns upon launch, with benefits like early access to new meme coins and governance rights.

*This article was paid for. Cryptonomist did not write the article or test the platform.

Crypto

What Is Ripple (XRP)?

Published

24 hours ago

October 27, 2024

Press Room

Ripple’s payment network and XRP cryptocurrency offer an alternative to traditional banking … [+] infrastructure for cross-border transactions.

NurPhoto via Getty Images

Ripple is a digital payment network and protocol launched in 2012 by Chris Larsen and Jed McCaleb. The network uses XRP as its native cryptocurrency to enable fast, low-cost international money transfers and currency exchanges. Ripple focuses on serving banks and financial institutions by replacing traditional cross-border payment systems like SWIFT.

XRP sets itself apart from other cryptocurrencies through its unique consensus mechanism and business model. While most cryptocurrencies use mining to validate transactions, XRP coins were pre-mined at launch, with 100 billion tokens created. Ripple Labs holds about 48 billion XRP in escrow, releasing up to 1 billion tokens monthly to control supply and maintain price stability.

How Does Ripple (XRP) Work?

The Ripple network processes transactions through the Ripple Protocol Consensus Algorithm, which validates transactions by having designated servers compare transaction records until they reach a supermajority agreement. This approach allows XRP to process transactions in 3-5 seconds and handle up to 1,500 transactions per second, making it significantly faster than traditional blockchain networks.

When banks use Ripple for cross-border payments, they can either use XRP as a bridge currency or leverage Ripple’s messaging system to optimize their existing currency transfers. For example, if Bank A wants to send dollars to Bank B in euros, the network can automatically find the cheapest path, whether through direct currency exchange or using XRP as an intermediate step. This flexibility allows banks to reduce their transaction costs while maintaining control over their operations.

Key Features Of Ripple

Ripple’s architecture brings three main advantages to global transactions: speed, cost-effectiveness and scalability. These features make it a compelling alternative to traditional banking systems and other cryptocurrencies, particularly for financial institutions handling large volumes of cross-border payments.

Speed And Efficiency

Ripple processes transactions in 3-5 seconds through its consensus mechanism, compared to Bitcoin’s 10-minute block time or traditional banking systems that can take days. This speed comes from XRP’s unique validation process that doesn’t require mining. The network can settle over 1,500 transactions per second, making it practical for banks’ real-time payment needs.

Low Transaction Costs

XRP transactions cost about 0.00001 XRP (a fraction of a cent), significantly lower than Bitcoin’s fees or traditional wire transfer costs that can reach $25-50. Banks using RippleNet for cross-border payments can cut operational costs by up to 60%, eliminating the need for pre-funding nostro accounts in destination countries.

Scalability

The XRP Ledger can process 1,500 transactions per second continuously and has potential to scale up to 50,000 TPS through optimization. Unlike blockchain networks that grow larger with each transaction, Ripple’s ledger remains efficient by pruning older transactions while maintaining their cryptographic integrity. This design prevents network congestion and keeps performance consistent even as usage grows.

Pros And Cons Of Ripple (XRP)

RippleNet and XRP showcase specific technical features, operational capabilities and limitations in the blockchain payment infrastructure. Let’s examine the key aspects of this technology.

Pros Of XRP

Real financial institutions use RippleNet for cross-border payments. This proves the technology’s real-world utility and adoption.
XRP transactions use minimal energy compared to Bitcoin and Ethereum. The network consumes as much energy annually as 50 U.S. households.
RippleNet reduces banks’ operational costs by eliminating intermediary fees and pre-funding requirements in foreign accounts. Banks can save up to 60% on international transfer costs.

Cons of XRP

Ripple Labs’ ongoing SEC lawsuit creates regulatory uncertainty around XRP’s status as a security. This limits XRP trading options in the U.S. and affects its price stability.
Ripple Labs controls about 48 billion XRP in escrow. This central control over such a large portion of tokens contradicts cryptocurrencies’ decentralization principles.
Most banks on RippleNet use Ripple’s technology without XRP tokens. This limits XRP’s utility and potential demand from institutional adoption.

How Can Ripple Be Used?

RippleNet serves as a payment network for financial institutions, while XRP functions as a bridge currency for cross-border transactions. Users can send XRP directly to other wallet addresses for near-instant settlements or trade it on cryptocurrency exchanges. The XRP Ledger also supports custom tokens and smart contracts for building decentralized applications.

Companies and developers can build payment solutions on the XRP Ledger using its open-source protocol. The network enables features like payment streaming, escrow mechanisms and multi-signature wallets. These tools allow businesses to create automated payment systems, set up recurring transfers or develop new financial products.

Where Do You Buy Ripple (XRP)?

Major cryptocurrency exchanges like Binance, Kraken and Bitstamp offer XRP trading pairs against other cryptocurrencies and fiat currencies. Users need to create an account, complete identity verification and deposit funds to start trading.

To store XRP, users can choose between software wallets like XUMM, hardware wallets such as Ledger or Trezor, or keep tokens on exchanges. Each wallet requires a minimum deposit of 10 XRP to activate the address and maintain the network’s stability.

Ripple’s Risks And Challenges

The SEC lawsuit against Ripple Labs questions whether XRP sales constituted unregistered securities offerings. This legal battle created uncertainty around XRP’s regulatory status and limited its availability in the U.S. market. The outcome could affect how digital assets are classified and regulated.

Competition from other blockchain payment solutions and central bank digital currencies challenges Ripple’s market position. SWIFT’s new payment system improvements and emerging blockchain networks offer alternative solutions for cross-border transfers.

The concentrated ownership of XRP tokens by Ripple Labs raises concerns about centralization and price stability. Monthly releases from the escrow system can affect market supply, while adoption levels among RippleNet members impact long-term token utility.

Ripple’s Future

Ripple Labs continues expanding RippleNet’s reach through partnerships with banks and financial institutions worldwide. The company focuses on emerging markets like Asia and Latin America, where traditional banking infrastructure lacks efficiency. These regions present growth opportunities for faster, cheaper cross-border payments.

The development of central bank digital currencies (CBDCs) opens new possibilities for Ripple’s technology. The XRP Ledger provides a ready-made infrastructure for CBDC deployment and interoperability. Several central banks explore the platform for potential CBDC pilots and implementations.

Ripple’s push into tokenization and smart contracts aims to diversify its use cases beyond payments. The company develops features for NFTs, DeFi applications and institutional asset trading on the XRP Ledger, expanding the network’s capabilities in the digital asset ecosystem.

Bottom Line

Ripple’s payment network and XRP cryptocurrency offer an alternative to traditional banking infrastructure for cross-border transactions. The technology combines speed, low costs and scalability with growing institutional adoption.

RippleNet faces regulatory challenges and competition but continues evolving through new partnerships, CBDC initiatives and expanded blockchain features. The platform’s success depends on regulatory clarity, institutional adoption and its ability to maintain technical advantages in the digital payments space.

Frequently Asked Questions (FAQs)

What is the difference between Ripple and Bitcoin?

Bitcoin operates as a decentralized peer-to-peer payment system, while Ripple focuses on providing payment solutions for financial institutions. XRP transactions confirm in seconds and cost less than Bitcoin due to its consensus mechanism, which doesn’t require mining.

Is XRP a good investment?

Past performance does not predict future results, and cryptocurrency markets involve substantial risks. Research XRP’s technology, use cases and regulatory situation before making any financial decisions.

What are the risks of investing in cryptocurrency?

Cryptocurrencies experience high price volatility and face regulatory uncertainties. Users should consider potential cybersecurity threats, market manipulation risks and the possibility of complete loss of capital.

How can I get started with Ripple (XRP)?

Create an account on a cryptocurrency exchange that lists XRP, complete identity verification and transfer funds to purchase tokens. Set up a secure wallet to store your XRP and maintain proper security practices.