Stablecoins, DeFi “Will Challenge” Traditional Banks: BIS

Key Takeaways

  • Benoit Coeuré, the head of the BIS’ innovation hub, has called on central banks to act quickly in response to the rise of cryptocurrencies.
  • Coeuré warned that “stablecoins and DeFi will challenge banks’ models.”
  • The BIS is now more actively encouraging CBDC development by central banks.

The head of the Bank for International Settlments’ innovation hub has stated that “global stablecoins, DeFi platforms, and big tech firms will challenge banks’ models” in a speech delivered at the Eurofi Financial Forum. 

 

BIS Warns Central Banks of Stablecoins

Benoit Coeuré, head of the innovation hub at the Bank for International Settlements (BIS), has warned central banks that they must act quickly in response to the rise of cryptocurrencies and decentralized finance. 

Coeuré was invited to speak at the Eurofi Financial Forum, a European think tank dedicated to financial services. The event took place in Ljubljana Friday. 

In the speech, Coeuré called on central banks to step up their efforts to develop central bank currencies (CBDCs) in the face of competition from stablecoins and decentralized finance platforms. 

While acknowledging the difficulties of CBDC implementation, Coeuré also delivered a stark warning to central banks:

“Banks are worried about the implications of CBDCs for customer deposits. Central banks are mindful of these concerns and are working on answers… But make no mistake: global stablecoins, DeFi platforms, and big tech firms will challenge banks’ models regardless.”

Coeuré also outlined several goals for a potential CBDC, including privacy, security, and broad usability.

Today’s speech is not the first time the BIS has put forward proposals for CBDC development. In July, the BIS innovation hub, the International Monetary Fund (IMF), and the World Bank released a 34-page report outlining designs for a globally interoperable CBDC to rival existing stablecoins such as Tether (USDT) and USD Coin (USDC). 

However, it appears that central  banks are digging their heels in, as only 8% were considering stablecoins that could be used beyond domestic boundaries.

In the past, the BIS has expressed a negative view of cryptocurrencies, commenting that Bitcoin “has few redeeming public interest attributes,” citing its occasional use in criminal activities and environmental concerns. 

However, judging by the content of Coeuré’s latest speech, it seems the BIS is now more actively encouraging CBDC development. The BIS and other financial institutions have frequently stated fears that private stablecoins may develop as closed ecosystems or “walled gardens,” creating financial fragmentation and threatening monetary sovereignty. 

Disclaimer: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

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Stablecoins, DeFi "Will Challenge" Traditional Banks: BIS 1

What Is MEV? Ethereum’s Invisible Tax Explained

Key Takeaways

  • MEV stands for “Miner Extractable Value” or “Maximal Extractable Value.”
  • It refers to the extraction of value from Ethereum users by reordering, inserting, and censoring transactions within blocks.
  • MEV is one of Ethereum’s biggest issues, with more than $689 million extracted from users of the network year-to-date.

 

By leveraging their discretionary power to sequence transactions within blocks, miners can extract value from decentralized application users on Ethereum, greatly diminishing the user experience and threatening the stability of the network.

MEV, The Invisible Tax On Ethereum Users

MEV is an abbreviation of “Miner Extractable Value” or “Maximal Extractable Value.” It refers to profits that can be made by extracting value from Ethereum users by reordering, inserting or censoring transactions within blocks being produced. It typically affects DeFi users interacting with automated market makers and other apps. 

Interestingly, the problem of MEV in Ethereum was first identified in 2014—a year before Ethereum launched—by an analyst coder and long-time algorithmic trader operating under the pseudonym Pmcgoohan. 

Horrified by what happened in 2008 and the outfall of the global financial crisis, when Pmcgoohan first heard about Ethereum and the idea of a programmable blockchain promising distributed and equitable markets, he became enamored. To use his own words, it “blew his mind,” and he was “so excited about it,” but when he looked at Ethereum’s pre-Genesis draft documents, he was taken aback to find a critical flaw. Pcgoohan recognized that miners had total control of the transaction inclusion and ordering process, which meant that they could leverage this power to extract value from unsuspecting users of the protocol went it went live. 

While some instantly recognized the shortfalls of Ethereum’s proposed design, Pmcgoohan was, unfortunately, ahead of his time, and his warning fell largely on deaf ears. That is until, in 2019, a group of researchers highlighted the issue by publishing a paper called Flash Boys 2.0, where the “MEV” term was first coined to describe the problem Pmcgoohan had referenced years earlier.

Subsequently, Georgios Konstantopoulos’ and Dan Robinson’s Ethereum is a Dark Forest, and Samczsun’s Escaping the Dark Forest articles, published in Aug. and Sep. 2020 respectively, cemented MEV as a fundamental concept in crypto-economics and highlighted its importance as one of the most challenging and pressing issues the Ethereum research community faces today. 

These texts revealed that MEV was not merely a theoretical issue, but a real phenomenon already occurring at a significant scale with concerning consequences for Ethereum users.

Why MEV Occurs

In Ethereum, miners are responsible for selecting and aggregating transactions into blocks. Crucially, they have full autonomy in deciding which transactions from the mempool—an off-chain space where pending transactions await confirmation—they’ll include in the blocks they mine. 

As miners, validators, and sequencers optimize for profit, they tend to select and order transactions by the highest gas price or transaction fees. However, the protocol does not require transactions to be ordered according to fees. Miners can leverage their discretionary ability to reorder transactions to extract additional profits from users. This “irregular” stream of revenue is MEV. 

Although MEV is most frequently associated with miners, it is neither a Proof-of-Work nor an Ethereum-exclusive issue. Moreover, “miner extractable value” is a somewhat misleading term. In reality, the majority of MEV extraction today comes from so-called “searchers”—usually arbitrage traders and bot operators—actively seeking and identifying MEV opportunities on-chain and capturing them in different ways, whereas miners only indirectly profit from these traders’ transaction fees. MEV exists on all smart contract-enabled blockchains with a party responsible for transaction ordering, including validators in Proof-of-Stake-based systems like Ethereum 2.0 and rollup providers on Optimistic Rollups.

Understanding the MEV Game 

The best way to understand the MEV game is to look at it through the lens of the key players, including miners, searchers, users, decentralized applications, and protocol developers.

The miners or block producers are responsible for sequencing transactions and deciding which transactions to include in blocks and in what order. Miners can profit from the MEV game in two ways: first, by selling scarce block space to non-miner MEV extractors through so-called Priority Gas Auctions (PGA) in exchange for exorbitant transaction fees, and by capturing MEV directly through reordering, including, or censoring transactions to profit from on-chain liquidation or arbitrage opportunities for themselves.

MEV also involves the end-users, such as people taking out on-chain loans or trading on decentralized exchanges. Users are the most exploited party in this game as they emit some amount of value that can be captured by miners and non-miner MEV extractors.

Decentralized applications and protocol developers play an auxiliary role. The former create MEV opportunities through their design and the incentives they produce, while the latter establishes the game’s base rules such as giving block producers power to sequence transactions, which is what makes MEV possible. 

Finally, central to the MEV game are the searchers or the DeFi traders and bot operators who seek to identify MEV opportunities and capture them in different ways. The two primary ways searchers participate in the MEV game are by bidding exorbitant gas prices in on-chain PGAs to have their transactions strategically placed at specific positions within blocks by miners, and by expressing transaction ordering preferences to miners off-chain using novel MEV extraction tools like Flashbots.

The Searchers’ Typical MEV Extraction Process

Searchers start their MEV journey by monitoring the Ethereum blockchain using bots and automation tools for potential profit extraction opportunities.

When they spot an opportunity, searchers analyze the logic behind the trade, conceptualize the attack vector, and create a bundle—one or more transactions grouped and executed in the order they’re provided—designed to materialize its MEV extraction goal when mined. Searchers’ transaction bundles can refer to other users’ pending transactions in the mempool and target specific blocks for inclusion.

Once a bundle is created, a searcher will usually send it to a miner using off-chain networks like Flashbots’ MEV-Geth. This allows them to avoid the public transaction pool and express their transaction ordering preferences fast and risk-free (they save on gas fees when their transactions are rejected) directly to miners.

As searchers in aggregate submit a huge amount of bundles and block space is limited, miners auction their block space through a Flashbots Auction—an off-chain first-price sealed-bid auction where searchers can privately communicate their bid and granular transaction order preference directly to miners without paying for failed bids—and only include the most profitable transactions in their block. 

When a miner includes a searcher’s bundle or a transaction in their block, the MEV extraction process is complete. The searcher’s transaction gets confirmed on-chain and, if the MEV strategy was well-designed, the searcher would have extracted some amount of value from other traders on Ethereum.  

The Most Common Attacks

Front-Running

Front-running involves getting a transaction first in line in the execution queue ahead of a known pending transaction. In Ethereum, searchers run specialized front-running bots that scan the network for large orders on decentralized exchanges and submit competing transactions with higher gas fees to get them mined before the victim’s transaction. 

Sandwich Attacks

A sandwich attack is a variation of front-running whereby a predatory trader places two transactions, one before and another right after a pending victim transaction. Searchers typically use sandwich attacks to extract MEV from unsuspecting traders on decentralized exchanges by manipulating the price of an asset. For example, a trader can identify a token a victim is about to buy and make a trade to push the price up, then sell the token straight after the victim’s buy order has further increased the price. 

Back-Running

Back-running is the practice of getting a transaction ordered second in line or immediately after a known pending target transaction. Searchers typically employ back-running bots to monitor the mempool for new token pair listings or liquidity pools created on decentralized exchanges like Uniswap. When a bot finds a new token pair listing, it can place a transaction order immediately after the initial liquidity and buys as many tokens as possible, leaving only a small amount for other traders to buy later. The bot can then wait for the price to go up after other traders have purchased the tokens and sell at a higher price for a profit. 

Liquidations

Liquidators are searchers that specialize in extracting MEV through liquidations of over-collateralized loans on decentralized on-chain protocols like Compound, Maker, Aave, and dYdX. Liquidators run specialized bots to monitor the network for transactions presenting liquidation opportunities and act to either front-run or back-run transactions to be the first to liquidate a loan. Liquidators extract MEV from unsuspecting borrowers by liquidating their loans before they can repay the debt, then profit by selling the borrowers’ collateral.

Time-Bandit Attacks

Time-bandit attacks are a novel type of attack only miners can execute that retroactively reorganize blocks to capture MEV opportunities in previously mined blocks. When MEV is high enough compared to block rewards, it can be rational for miners to destabilize the consensus to capture MEV in older blocks. For example, suppose a miner with significant mining power spots a $20,000 arbitrage opportunity in block 100 that is three blocks deep. Instead of mining the latest block to earn a much smaller block reward, they may decide to re-mine block 100, as well as blocks 101 and 102, to capture the arbitrage opportunity and have a longer chain than the miner who originally mined the block.

How Bad Is MEV?

According to Flashbots’ data, which only measures the lower bound of total extracted MEV and tracks only eight DeFi protocols, more than $689 million has been extracted from unsuspecting users of the Ethereum network since Jan. 1, 2021.

In addition to scaling and attacks, MEV is one of the biggest issues Ethereum and similar smart contract blockchains face today. Pmcgoohan argued that MEV auctions would kill the Ethereum network. While Pmcgoohan takes a pessimistic view, the negative implications of MEV extraction are many and varied. The biggest one is that MEV represents an invisible tax that miners and searchers collect from users. Every dollar extracted through MEV is a dollar lost for users. Some would go as far as to describe it as theft. 

MEV also leads to network congestion and puts upward pressure on gas prices. The game theory involved generates a self-reinforcing loop of circular dependencies: arbitrage and liquidation opportunities create MEV opportunities, MEV-extracting bots compete for the opportunities via gas price bidding wars, and fee estimators use these bot-inflated gas prices as a reference, leading to users overpaying for transactions.

MEV also destabilizes Ethereum on a protocol level because it puts transaction finality and immutability to question. If MEV is bigger than the block rewards, miners are incentivized to destabilize consensus. If miners can reorder transactions in previous blocks for profit, the entire premise of blockchains as secure, predictable, and permissionless ledgers falls apart.

In light of the recent debate in the U.S. Senate on whether miners and validators should be defined as brokers, if these instances become commonplace, it will become increasingly more difficult to defend the role of miners as mere “passive and neutral transaction processors” on blockchain networks.

MEV erodes the usability, neutrality, transparency, decentralization, security of Ethereum today. It creates an environment where miners who are better at extracting MEV grow at the expense of honest ones, effectively skewing the core incentive structure at the heart of Ethereum’s security in the wrong direction.

Ethereum recently launched EIP-1559 and plans to move to Proof-of-Stake, but neither update will solve MEV. In fact, some MEV researchers worry that the upgrades may exacerbate the problem. 

While EIP-1559 is primarily designed to improve the predictability of transaction fees, the upgrade also features a fee burn function that negatively affects miners’ profitability, which, in turn, may lead miners to ramp up MEV extraction to compensate for the reward reduction. In response to EIP-1559, Ethermine—a mining pool accounting for roughly 20% of Ethereum’s hash power— has already introduced an MEV extraction program to redistribute the profits extracted through MEV between all miners in the pool.

Concerning the move to Proof-of-Stake, MEV extraction will work nearly the same way on Ethereum 2.0 as it currently does on Ethereum, except it will be done by validators instead of miners. Flashbots MEV researchers Alex Obadia and Taarush Vemulapalli believe that the introduction of MEV in validator rewards could be a “centralizing force,” and worry that “MEV could amplify oligopolistic dynamics in Ethereum 2.0 by enriching the entities with the most 32 ETH stakes faster than the ones with less (rich-get-richer dynamics).”

Is MEV Inevitable?

Some have concluded that MEV is inevitable. There are two schools of thought when it comes to this topic. The first school maintains that MEV is unavoidable, so the crypto community should try to alleviate the symptoms and subdue the negative externalities. The other school believes that the MEV problem is solvable, and hence the community should focus our efforts on trying to prevent it.

Flashbots, the leading research and development organization in the field, belongs to the first camp. It focuses on building tools such as MEV-Geth that “democratize access to MEV revenue and bring transparency to MEV.” In that regard, MEV-Geth is effectively a product offering Front-running as a Service (FaaS) to miners and MEV extractors. 

Proponents of the first school argue that, given the inevitability of MEV, FaaS is net beneficial because it eliminates negative externalities such as high transaction fees and network congestion while making up for the lost revenue from Ethereum’s EIP-1559 fee burning update. Thus, it indirectly funds Ethereum’s security as miners compete for MEV with higher hash power. 

On the other hand, some believe that FaaS is theft. Cornell University researchers have long advocated for an alternative solution, while computer science professor Edward Felten has claimed that MEV auctions increase centralization and exacerbate the problem for Ethereum users. Pmcgoohan also identifies with the second camp, arguing that MEV can be avoided. Critiquing Flashbots’ approach, Pmcgoohan suggests that MEV could be solved if the community builds “a consensus view of the mempool ordering transactions by time where it is discoverable.”

In the second camp, researchers are already gaining ground in minimizing or removing MEV by designing protocols that order transactions fairly. Current application-level solutions include ChainLink’s Fair Sequencing Service, Offchain Labs’ Aribtrum, and Automata Network’s Conveyor. While all of these protocols approach the MEV problem in varying ways, they depend on DeFi applications implementing them on a case-by-case basis. An ultimate, protocol-level panacea is yet to be found, let alone implemented.

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NASCAR Star Landon Cassill to Receive Salary in Crypto

Landon Cassill has partnered with crypto payments firm Voyager to receive his salary in crypto for the remainder of the 2021 NASCAR season. Most of his salary will be paid in Litecoin and Voyager tokens. 

NASCAR Driver Adopts Crypto 

Landon Cassill will receive his salary in cryptocurrencies.

The NASCAR driver has partnered with crypto payments company Voyager to receive his paychecks for the remainder of the 2021 season in digital assets. NASCAR announced the update on its website Thursday. 

Voyager is now a sponsor of the NASCAR driver and his team JD Motorsport. The firm will pay him entirely in cryptocurrencies, most of which will be Litecoin and Voyager tokens. 

Cassil is reportedly an avid cryptocurrency fan and a long-time user of Voyager’s crypto exchange and wallet.

Commenting on the partnership, Cassill said that “there is risk in holding cryptocurrency as there is with any stock or any investment,” but that he had “a good handle” on how to approach that risk. 

The CEO of Voyager and Cassill’s friend, Steve Ehrlich, added that the partnership would help crypto education and the growth of both brands.

NASCAR’s first connection with the cryptocurrency markets dates to 2014 when the Dogecoin community sponsored NASCAR driver Josh Wise.

Seven years later, the first “Bitcoin Car” ran the circuits of the Indianapolis 500, otherwise known as the Indy 500. It is one of the most popular motorsport events in America besides NASCAR. Ed Carpenter Racing fashioned the Bitcoin Car this year to spread awareness about Bitcoin. Strike CEO Jack Mallers sponsored the team. The black-and-orange car, driven by Reenus Veekar, finished eighth in the race.  

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Cryptoversity Online School for Cryptocurrencies Review

Cryptoversity Online School for Cryptocurrencies Review 2

We spend a lot of our lives chasing money in order to make a living and achieve our goals, but money is also a destructive force. Some might even call it bad. Cash, according to others, motivates criminals to cheat, steal, and even kill. Money is a source for both the best and worst elements of human endeavor.

Master, the exchange platforms to make crypto trading second nature. When you want to trade one crypto asset for another, whether it’s for the first time or the hundredth, you must use a cryptocurrency exchange. You might have already used one, but this course is here to make sure you’re on the right track.

They don’t want hype, intrigue, or clickbait because it wastes their time and gives little value. This course provides extraordinary quality videos with up to day information on crypto trading.

A trading setup is a specific set of circumstances to which we respond with a specific set of actions. These acts are repeatable and assist in the growth of our edge. This module will teach you how to set up a trade so that if the price does not go the way we want, we are out of the game.

You’ll also go into the theoretical side of trading setups, which focuses on the practical steps of placing and canceling orders that will activate and manage your trades. This module contains the following courses: If you haven’t studied the subject thoroughly, you’ll be surprised at how little you know about money, especially the dirty little secrets that aren’t widely known.

You are lucky to have been exposed to this information and to be one of the few people who learn the facts and have their eyes completely opened. Hidden secrets of money were distributed by Cryptoversity with the written permission of Dan Rubock, the film’s director and author.

Cryptoversity’s creator, Chris Coney, recognized an inherent ability to organize knowledge into coherent structures and then convey them to others in a digestible manner. While researching the crypto room, he discovered a major issue plaguing the industry: a shortage of high-quality crypto education.

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Cryptoversity Online School for Cryptocurrencies Review

Reddit to Expand Points With Ethereum Foundation

Key Takeaways

  • Reddit has announced plans to work with the Ethereum Foundation to scale up its points system.
  • Community Points were introduced to two subreddits in May 2020.
  • Blockchain initiatives are underway at other social media companies as well, including Facebook and Twitter.

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Social media site Reddit is partnering with the Ethereum Foundation to scale up its Community Points infrastructure.

Reddit Embraces Ethereum

Reddit says that through the partnership, it “will be increasing [its] commitment to blockchain, accelerating scaling and resources for the Ethereum ecosystem and bringing the value and independence of blockchain technology to millions of redditors.”

The company notes that its collaboration originated with its Scaling Bake-Off, which began in June 2020.

That effort sought to use blockchain to handle the site’s community points system. Twenty-two blockchain projects submitted proposals to the site.

Eventually, Ethereum-based points were introduced to two subreddits: r/CryptoCurrency and r/FortNiteBR. Points represent each user’s ownership in a community and serve as rewards.

Today’s announcement suggests that Community Points will be expanded across Reddit, and that the tools used to introduce these features will be open-sourced for the public. However, the company’s precise plans and its timeline are still unclear.

Aya Miyaguchi, executive director at the Ethereum Foundation, stated in a Reddit comment that the group is “excited to have an ongoing relationship with Reddit and more collaboration as we work together to improve Ethereum for the entire ecosystem.”

Blockchain and Social Media

Reddit is not the only social media platform embracing blockchain. Twitter is looking into building a decentralized social media standard called Bluesky. Meanwhile, the Facebook-backed Diem Association is planning to launch its stablecoin in the coming months.

Reddit says it also is in contact with a number of other blockchain projects. “We’ve been very impressed with the responses we’ve gotten from the scaling bake-off, and we’re in touch with a few teams to explore those options in more detail,” a site representative wrote.

The fact that blockchain is capable of supporting small transactions makes the technology ideal for social media sites, where points, credits, and monetary tips are often moved in small amounts.

At the time of writing this author held less than $50 of Bitcoin, Ethereum, and altcoins.

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Crypto payments set for mainstream via compliance

 

Mainstream interest for cryptocurrency is becoming ever-apparent as major online payment systems such as PayPal begin to offer support for digital currencies. While a revolutionary step for both the crypto and traditional finance spaces, meeting regulatory requirements is crucial in order for such companies to support cryptocurrencies.

This year, PayPal secured the first conditional cryptocurrency license from the New York State Department of Financial Services, allowing for the purchase of Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC).

On the surface, it would appear that PayPal has undergone the basic requirements to support digital currencies. However, what’s really notable is that to ensure delivery of its cryptocurrency service, PayPal, a company with a market capitalization valued at over $127.58 billion as of December 2019, chose to partner with Paxos, a regulated financial institution specializing in digital assets.

Bob Reid, CEO and co-founder of Everest, a fintech company providing regulatory compliance for financial institutions, told Cointelegraph that it’s impressive for a company as large as PayPal to have partnered with Paxos. “PayPal looked at implementing digital currencies and decided they needed to partner with a digital asset company in order to do so,” he said. Moving forward, Reid believes that PayPal will eventually need to partner with a cold-storage crypto custodian, adding:

“I think we will start seeing lots of traditional players like banks and major payment providers partner with crypto custodians. PayPal will be the first and then more banks and financial institutions will follow.”

As another example of the crypto and traditional sectors cooperating, Everest recently collaborated with BRI Remittance, a subsidiary of one of Indonesia’s largest banks, to provide users with a blockchain-based platform allowing Indonesians and Europeans to easily exchange value across international borders. Reid further shared that the company is now also working with the Bank of Papua New Guinea.

Companies are gaining regulatory support for crypto

Although it’s notable that PayPal has partnered with Paxos to ensure regulatory compliance for digital currencies, it’s also important to point out that smaller payment providers across the globe are following suit. However, these companies have a different method of ensuring regulatory compliance.

South Korean payment provider Danal Fintech — a subsidiary of Danal, one of the largest payment companies in South Korea — recently announced that its digital app Paycoin will integrate Icon’s (ICX) cryptocurrency. This will allow Paycoin users in Korea to pay using ICX at any of Danal’s 60,000 merchant partners, including major retailers like 7-Eleven, KFC and Domino’s Pizza.

Ted Hwang, CEO of Danal Fintech, told Cointelegraph that the subsidiary initially launched its Paycoin service in April 2019, becoming one of the first companies to utilize virtual assets for retail payments in Asia. Hwang shared that although Danal holds approximately 50% of the market share for mobile payments within Korea — equivalent to $5.5 billion per year — getting retail merchants to accept crypto has been difficult:

“There are several factors and issues, such as whether crypto is accepted as a legal payment method in that country, or whether a local micropayment license is required in order to provide such a service.”

In order to work around these challenges, Hwang explained that Danal Fintech has chosen to provide settlements in fiat currency to their partner merchants. “Local merchants and our local partners will receive settlements in legal tender through Danal, regardless of whether crypto is being used or not,” he said. Hwang further explained that this process is no different from existing payment solutions in terms of settlement, noting that this has helped address the regulatory hurdles faced in regions like Asia.

Interestingly, allowing retailers to accept crypto payments yet having settlements paid in fiat seems to be a preferable concept. Merrick Theobald, vice president of marketing at blockchain payments service provider BitPay, told Cointelegraph that although crypto payments are gaining traction, many businesses still prefer to deal solely in fiat. However, Theobald explained that many customers, employees, affiliates and contractors see the value in cryptocurrency, especially when it comes to payments, as there is a “growing demand for faster, easier, less expensive payment options.”

BitPay recently launched a service called BitPay Send to allow businesses to pay employees in cryptocurrency, and ensures that a business never has to buy, own or manage crypto themselves. But a company’s employees will still be able to receive payments in cryptocurrencies such as Bitcoin. “Businesses continue to deal in the fiat currency they feel most comfortable with while satisfying the crypto payment demand coming from their customers, employees, affiliates and more,” Theobald said.

In regards to regulations, Theobald shared that BitPay Send leverages a process identical to what the company uses for its payment service, which has already been processing close to 100,000 transactions per month this year. When using this service, regulatory and compliance reviews are performed on businesses and consumers in accordance with applicable laws. Since BitPay is headquartered in the United States, the company is also regulated by the Financial Crimes Enforcement Network.

Understanding regulations for new technologies utilizing crypto

It’s also interesting to point out that new technologies utilizing cryptocurrencies are being implemented and used by financial institutions. For example, Hong Kong-based fintech company XanPool has just launched a product called XanPay.

Jeffery Liu, CEO at XanPool, told Cointelegraph that XanPool is a customer-to-customer software that allows individuals to automate their financial transactions within their bank accounts, e-wallets and cryptocurrency wallets. “Users are also able to automate their cryptocurrency trading, and even earn profits from such transactions,” Liu said. He explained further that once users plug their financial infrastructures into XanPool, a network capable of routing and settling capital in a borderless manner is enabled.

According to Liu, XanPay is being used by various payment service providers and marketplaces in a white-label manner. He mentioned that XanPay’s parent company, XanPool, is currently pending licensing approval in various offshore jurisdictions for activities such as enabling e-wallets and payment systems.

 

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How Microstrategy CEO Turned “Scary” Bitcoin Investment Into More Than $250 Million

 

Key Takeaways

  • Saylor states that the economic crisis of 2020 caused hyperinflation of major assets.
  • “Bitcoin is about digital scarcity,” says Saylor.
  • He believes that cash is losing value at a pace far greater than the media reports.

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Michael Saylor, CEO of Microstrategy, recently made headlines for revealing that he personally owns $245 million worth of Bitcoin. His company’s stash is nearly double that. 

Under Saylor’s leadership, Microstrategy Recently increased its BTC holdings by $175 million to a whopping $425 million. 

But why the big bet? The pandemic, of course. 

More importantly, how this pandemic, and its economic fallout, has changed the world of money forever.

Stocks Are Now Hyperinflated. Cash Will Become Worthless

Saylor states that while the nominal rate of monetary inflation is zero, the pandemic caused hyperinflation of assets. This wasn’t reported in the news, however. 

Because central banks like the ECB and Federal Reserve have been increasing the money supply to stimulate the economy, the value of stocks and their companies has seen a major decoupling. 

“Every asset that represented the value of an entity was going up in value, while the actual value of the entity was going down,” explains Saylor. “The nominal inflation rate is zero, but the asset inflation rate is 15%.” 

The Microstrategy CEO pointed out that Apple stock has somehow doubled despite flat revenues. With rampant asset inflation and plummeting cash value, Saylor sought alternative assets to preserve his wealth.

At first, Saylor was skeptical of Bitcoin, saying it felt “scary.” 

However, he soon changed his mind, concluding that it was more efficient than gold or any other asset as a store of value. 

Saylor Has Invested Hundreds of Millions in Bitcoin

Since this realization, Saylor directed his company to buy $425 million worth of Bitcoin in total. He also personally holds over 17,000 BTC. 

The decision makes perfect sense, according to Sayler. 

He views money as a form of energy and Bitcoin as the most efficient way to channel that energy, especially now that the fiat supply is expanding rapidly. In his mind, the risk does not come with a broad bet on the crypto industry, but rather in choosing Bitcoin specifically.

“Bitcoin is about digital scarcity,” says Saylor. “If you don’t understand monetary energy, you don’t understand Bitcoin.” 

Saylor cut his teeth investing in valuable .com registrars, buying domains like “wisdom.com,” flipping them for a profit later. He views his confidence in the .com domain category as equivalent to choosing Bitcoin. 

Because Bitcoin is the dominant blockchain and has had ten years to mature, Saylor believes he has made the right decision, even if not everyone around him feels the same way. 

“There are people in the outside world that don’t agree with me,” says Saylor. “If they all agreed with me, I wouldn’t be able to buy Bitcoin. It would be too expensive.”

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How the US election may impact Bitcoin price

 

With Joe Biden poised to be the next president of the United States, Cointelegraph Consulting reflects on how traditional assets have responded to the election of a Democratic candidate. Historically, Democrats have been bullish for gold, as the common perception is that more unbacked money gets printed under Democratic leadership, further debasing the dollar. In the short term, Bitcoin (BTC) has already strongly benefited, increasing by 10% since election day so far.

The latest findings by Santiment, published in Cointelegraph Consulting’s biweekly newsletter, indicate that long-term Bitcoin holders’ average profits are sitting at a 14-month high, increasing the likelihood that they may exit the positions and take profit.

Market Value to Realised Value, or the MVRV ratio, is an indicator that tracks the​ average profit or loss​ of a certain group of holders in an effort to understand whether they are in a position to sell at a profit. Shortly after breaking $15,000 on Nov. 5, Bitcoin’s 30-day MVRV ratio — or the average ROI of all addresses that have acquired BTC in the past 30 days — shot up by 18.8%, indicating that short-term BTC holders were averaging close to 20% profit on their initial investment.

Other on-chain metrics show that Bitcoin whales have been accumulating BTC in the run-up to the latest push past $15,000. The collective balance of addresses holding 10 to 100 BTC hit a 6-month bottom on Sept. 20 before starting to bounce back, and has grown by 37,800 BTC since, implying renewed confidence in the asset.

 

Other news from around the legislative and enterprise blockchain world showed  one of China’s largest banks launching a new blockchain-based bond that uses tokenized certificates. In the U.S., the Securities and Exchange Commission is having a record year with more than $1.26 billion collected from unregistered ICOs in 2020.

Read the full newsletter edition here to get the entire scoop, complete with detailed charts and images.

Cointelegraph’s Market Insights Newsletter shares our knowledge on the fundamentals that move the digital asset market. With market intelligence from one of the industry’s leading analytics providers, Santiment, the newsletter dives into the latest data on social media sentiment, on-chain metrics and derivatives.

We also review the industry’s most important news, including mergers and acquisitions, changes in the regulatory landscape, and enterprise blockchain integrations. Sign up now to be the first to receive these insights. All past editions of Market Insights are also available on Cointelegraph.com.

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How Do You Send Ethereum To Someone? Smart Contract Addresses

If you plan to move a lot of ETH or ERC20 symbols, it is recommended that you send a small amount first to ensure that everything goes according to plan. When sending the entire ETH balance, select the “Send full balance” option to automatically calculate your gas from the sum. All transactions require Ethereum for natural gas transactions. We recommend that you have at least 0.01 ETH for 2-3 transactions. Share to <Share of ETH or ERC20 tokens not previously sent to or sent from the exchange did not show the next page> Error: Not selected

Regular Ethereum addresses look like contract addresses – “just” a line of numbers, but their behavior is very different. Enter the type of currency you want to send, the amount, and the address you want to send to. If you use MEWconnect or hard wallet, you must also confirm the transaction on the device. Step 2. Step 3. Check the hash of the transaction on Etherscan to make sure everything is normal. Open your wallet.

How to send a transaction

Once you have verified the transaction information, click Submit Ether to submit the money. If you do not see the token you want to send, you may need to add it as a custom token. Select the “Send transaction” button, or find this section from the “Send” category in the left menu. Decided not to send? Click the X in the upper right corner to close the window. Step 4. If you need to change the transaction information, e.g. recipient’s address or amount, select Return to return to the previous step. To monitor incoming and outgoing Ethereum transactions, visit the Ethereum tab in the navigation bar on the left side of your wallet.

How to send Bitcoin Ethereum COINBASE to BITTREX - English Version ...

The fee is higher to give the smart contract sufficient capacity to process transactions and carry out contract procedures, such as the distribution of ICO symbols. Unlike regular addresses, Ethereum checks smart contract addresses with code that allows custom contract behavior. Step 5. When you are ready to submit, click Continue to view the transaction information. All you need is a wallet, the Ethereum address to which you want to send money, and some Ethereum for refueling.

Do you want to send Ether?

Check out our article to learn more about gases. Your transaction has been published! Copy your transaction hash for mail. Click “Submit Transaction” and then confirm the transaction on the next screen. Do you want to send Ether? Follow the steps below to get started. Step 1. Sending a transaction with an unsatisfactory fee to a smart contract will cause the transaction to fail, so when you send assets to the smart contract, Exodus will automatically adjust the fee for you.

How to Send Ethereum from Smart Contract Addresses

How to send transactions in 1 minute Reading

MyEtherWallet (MEW) makes it easy for you to send transactions. Create a contract address from the account address and the account address then becomes the “master” in the contract. Click Submit and select Ether from the currencies drop-down menu.

Enter the amount you want to send. Regular addresses are usually used as pure storage for Ether, just like your bank account. Paste the recipient’s airspace address or scan the recipient’s QR code in the “To” field. Gas and gas limits are generated automatically based on power overload. Make sure you double-check the address you are sending to! We cannot restore funds sent to the wrong address.

Reference

>Exodus, How do I send or exchange an Ethereum

>How to Send Ethereum from Smart Contract Addresses

>How to Send a Transaction | MyEtherWallet Knowledge Base

>Sending Ether – Blockchain Support Center

 

The Best Ways To Buy Bitcoin to How To Use Bitcoin Exchanges

You should realize that not all web sites imparting to change Bitcoin are straightforward, so don’t simply click the first link for any buying and selling platform you notice. While there is more than one approach to shop for Bitcoin, the most commonplace and most reliable is on a Bitcoin alternate.

Vays The regulation query could be very complicated. I like to interrupt rules into parts. Regulation on those which can be soliciting money from different people, they’re managing money for humans, those who have some kind of control of different human beings’ cash — I believe that law on that ceases of the spectrum is horrible and needs to be definitely enforced. It me that there was no regulation on ICOs, and that human beings can solicit money from strangers and just disappear with it.

The regulation on the ones that are handling and taking your price could be very weak. On the alternative hand, the law on those who want to invest, the regulation on the ones that are looking to deliver their cash, that law is overbearing and needs to stop. The Know-Your-Customer, the cash laundering laws, I suppose they’re clearly terrible. I assume they stifle investment. I assume they kill funding.

It’s no longer the man that’s giving the cash that desires to be very well checked. It’s the man that’s collecting the money that wishes to be very well checked. I assume the government focuses manner an excessive amount of and regulates the customer instead of regulating the one that’s trying to take the money from the client. That’s my view on it. A lot of human beings think that I’m all approximately increasing regulation, which isn’t actual. I assume human beings need to be able to do something they need with their money.

In the eyes of the IRS, Bitcoin counts as personal property, so trendy transaction taxes practice. If you don’t live inside the U.S., make sure to test on your government’s tax rules concerning cryptocurrencies (all cryptocurrencies, including Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and so on. Fall beneath the identical tax guidelines)

There are many Bitcoin distinct exchanges everywhere in the world. All of those exchanges permit you to sell Bitcoin for other cryptocurrencies (altcoins) or authorities currencies (USD, EUR, GBP etc.) At the equal time, those Bitcoin exchanges can help you save your BTC with them, because of this that a load of preserving it secure is on them. Do be aware that incidents have occurred while exchanges were hacked or lost their clients’ BTC, so do your very own research while you’re seeking out a change that’s safe to keep your crypto assets. For the trendy listing of exchanges and buying and selling pairs for this cryptocurrency, click on our market pairs tab.

The Value of Bitcoin

In summary, Bitcoin works by ensuring that this shared ledger always tallies up, and that new Bitcoin transaction (Bob sends 2 BTC back to Alice. Go Alice!) are validated, recorded, and then added to the ledger in order. That is the heart of blockchain technology, where new “blocks of information” are added to the chain of blocks that already exist.

Ways I don’t believe that any other cryptocurrency is as decentralized is as stable and has a future like Bitcoin. I have confidence that my value in Bitcoin will be a lot more valuable five, 10, 20 years down the line. But if I hold dollar value in any other cryptocurrency, I’m expecting that value to trend towards zero over the next five to 10 years.

If you get hacked or fall victim to a scam and lose Bitcoin, you can’t correct the issue with anyone. There’s no service you can complain to and fix these errors. So before you start buying and trading Bitcoin, make sure you’re careful about all transactions.

If you’re primarily interested in Bitcoin as a trading investment, this may not apply to you. Just in case you ever want to spend your Bitcoin on something, though, you should know your limitations.

There is only 21 million Bitcoin out there. It makes a lot of sense to hold on to Bitcoin. You don’t want to hold on to dollars. Gold is this antiquated concept where people think that they’re holding on to some weird value of some sort. Maybe it’s good for jewelry and some electronics, but the real future is tied to these global, transparent, open, decentralized currencies. That’s where the future is going to lie. It’s going to avoid the politics that are associated with currencies today.

As more people create Bitcoin wallets, start using it for more and more things, Bitcoin will continue to rise in value. That’s just the way a marketplace works. That’s been the benefit of the dollar throughout all these last 50 years. The dollar has spread and that has made the dollar stronger versus other currencies.

Technically, it was probably 2010, but in 2001 or 2002 I met with this Korean guy who was a very successful businessman, and he said that about half of Korea was playing this massive multiplayer game, and I thought, “Well, that’s really interesting.” He said, “Yeah, I pay a guy to be my avatar when I’m at work in the game.” I thought, “Wow.”

In precis, Bitcoin works via making sure that this shared ledger always tallies up, and that new Bitcoin transaction (Bob sends 2 BTC returned to Alice. Go Alice!) are established, recorded after which introduced to the ledger so as. That is the coronary heart of blockchain technology, in which new “blocks of facts” are added to the chain of blocks that already exist.

Buying and selling an investment

Vays I don’t agree with that every other cryptocurrency is as decentralized, is as stable and has a destiny like Bitcoin. I believe that my cost in Bitcoin will be loads extra precious five, 10, 20 years down the line. But if I maintain a dollar fee in another cryptocurrency, I’m expecting that value to trend closer to 0 over the next five to ten years.

If you get hacked or fall sufferer to a scam and lose Bitcoin, you couldn’t accurate the issue with anybody. There’s no provider you could whinge to and attach those errors. So earlier than you begin buying and buying and selling Bitcoin, make certain you’re cautious about all transactions.

If you’re on the whole interested in Bitcoin as a buying and selling an investment, this may no longer follow to you. Just in case you ever want to spend your Bitcoin on something, even though, you must realize your barriers.

There are the simplest 21 million Bitcoin out there. It makes a number of feels to maintain directly to Bitcoin. You don’t want to preserve directly to dollars. Gold is that this antiquated concept wherein human beings suppose that they’re holding on to some weird price of a few types. Maybe it’s right for rings and a few electronics, however, the actual future is tied to these worldwide, transparent, open, decentralized currencies. That’s in which the future is going to lie. It’s going to keep away from the politics which are associated with currencies nowadays.

As extra humans create Bitcoin wallets, begin the usage of it for increasingly more things, Bitcoin will maintain to upward thrust at price. That’s simply the manner a marketplace works. That’s been the benefit of the greenback all through most of these final 50 years. The dollar has unfolded and that has made the dollar stronger versus other currencies.

Technically, it turned into in all likelihood 2010, but in 2001 or 2002 I met with this Korean guy who was a completely successful businessman, and he stated that about half of Korea become gambling this massive multiplayer recreation, and I thought, “Well, that’s genuinely thrilling.” He stated, “Yeah, I pay a guy to be my avatar when I’m at paintings in the game.” I thought, “Wow.”

 

Reference

 Buying Your First Bitcoin
Bitcoin price, charts, market cap, and other metrics | CoinMarketCap
Crypto Trader 

10 Things to Know Before Buying Your First Bitcoin 

Bitcoin price, charts, market cap, and other metrics 

Crypto Trader Tone Vays: ‘It’s Only Going to Be Bitcoin

Tim Draper on the Myth of Volatility