Fiat Money
Rewind 2022: A crypto roundup of the year and stepping into 2023
Stepping into the year 2023, it’s time to pause and reflect on the accomplishments and struggles the global crypto community witnessed over the last 365 days. Starting from the very beginning of 2022, no investment strategy could help recover the falling portfolios across traditional and crypto ecosystems. January 2022 inherited a slightly collapsing market, wherein investments made on 2021 all-time high prices resulted in immediate losses. For many, especially the new entrants, falling crypto prices were perceived as an end game. But what went widely unnoticed was the community’s resilience and accomplishments against a global recession, orchestrated attacks and scams and an unforgiving bear market. As a result of falling prices, 2022 also inherited the 2021 hype around nonfun...
What is USD Coin (USDC), fiat-backed stablecoin explained
USDC offers instant payments, saves users from the cryptocurrency market’s price volatility and is audited by a regulated auditing firm, making it a transparent stablecoin. However, it does not offer price appreciation opportunities, and investors may incur high transaction and withdrawal fees while dealing with USDC. One of the key advantages of the USD Coin is the speed of the transaction. Usually, one must wait a long time to send and receive USD because institutions such as banks and their complex procedures slow down the processing of transactions. Nonetheless, USDC allows instant clearing and settlement of payments. In addition, stablecoins like USDC saves users from the price volatility of cryptocurrencies, as leading American financial institutions ensure that Circle&...
Hong Kong believes stablecoin volatility can spillover to traditional finance
The fall of crypto giants this year reignited questions about the stability of cryptocurrencies and their impact on fiat ecosystems. Hong Kong Monetary Authority (HKMA) assessed the situation and found that the instabilities of crypto assets, including asset-backed stablecoins, can potentially spill over to the traditional financial system. The HKMA assessment on asset-backed stablecoins pointed out the risks of liquidity mismatch, negatively impacting their stability during “fire-sale” events. A fire sale event relates to a momentary price fluctuation when investors can purchase stablecoins cheaper than their market price — a phenomenon noticed during the Terra (LUNA) crash. According to Hong Kong’s central bank, the interconnection of crypto assets has made the crypto ecosystem more vuln...
Binance CEO CZ begins working on Vitalik Buterin’s ‘safe CEX’ ideas
The collapse of numerous major crypto ecosystems in 2022 revealed the urgent need for revamping the way crypto exchanges operate. Ethereum co-founder Vitalik Buterin believed in exploring beyond “fiat” methods to ensure the stability of crypto exchanges, including technologies such as Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (zk-SNARKs). Following a discussion with angel investor Balaji Srinivasan and crypto exchanges such as Coinbase, Kraken and Binance, Buterin recommended options for the creation of cryptographic proofs of on-chain funds that can cover investor liabilities when required, also known as safe centralized exchanges (CEX). Having a safe CEX: proof of solvency and beyondhttps://t.co/AKEweYZfj2 Big thanks to @balajis and staff from @coinbas...
Crypto adoption via regulation: Setting rules for centralized exchanges
Centralized cryptocurrency exchanges have become the backbone of the nascent crypto ecosystem, making way for retail and institutional traders to trade cryptocurrencies despite a constant fear of government crackdowns and lack of support from policymakers. These crypto exchanges over the years have managed to put self-regulatory checks and implemented policies in line with the local financial regulations to grow despite the looming uncertainty. Cryptocurrency regulation continues to occupy mainstream debates and experts’ opinions, but despite public demand and requests from stakeholders of the nascent ecosystem, policymakers continue to overlook the rapidly growing sector that reached a market capitalization of $3 trillion at the peak of the bull run in 2021. Over the past five years...
Next few weeks are ‘critical’ for stock market and Bitcoin, analyst says
The stock market’s movements in the next few weeks will be critical for determining whether we are heading towards a short-term recession or a long term-one, according to forex trader and crypto analyst Alessio Rastani. During the October-December 2022 period, the analyst expects to see the S&P rallying. “If that bounces or rally fails and drops back down again, then very likely, we’re entering a long-term recession and something very close to similar to 2008”, said Rastani in the latest Cointelegraph interview. [embedded content] According to the analyst, such a recession could last until 2024 and would inevitably negatively impact the price of Bitcoin (BTC). Talking about the latest Pound sterling crisis, Rastani opined that its principal cause is the rally of...
What is the economic impact of cryptocurrencies?
Although the cryptocurrency market appears to grow in a positive feedback loop, that does not mean that (un)expected events may not impact the trajectory of the ecosystem as a whole. Although blockchain and cryptocurrencies are fundamentally meant as ‘trustless’ technologies, trust remains key there where humans interact with one another. The cryptocurrency market is not only impacted by the broader economy, but it may also generate profound effects by itself. Indeed, the Terra case shows that any entity — were it a single company, a venture capital firm or a project issuing an algorithmic stablecoin — can potentially set into motion or contribute to a “boom” or “bust” of the cryptocurrency ma...
Crypto’s adaptability, openness key to ideal monetary system, say BIS execs
Governments across the globe see central bank digital currencies (CBDC) as a means to improve the existing fiat ecosystem. Cryptocurrency’s technical prowess supported by the central bank’s underlying trust is key to enabling a rich monetary ecosystem, suggests an International Monetary Fund (IMF) publication. “Digital technologies promise a bright future for the monetary system,” reads the publication attributed to IMF deputy managing director Agustín Carstens and BIS executives Jon Frost and Hyun Song Shin. A BIS study from June revealed that cryptocurrencies outdo fiat ecosystems when it comes to achieving the high-level goals of a future monetary system. Some of the most significant flaws preventing present-day cryptocurrencies from mainstream adoption, pointed out by the BIS exe...
Is Bitcoin really a hedge against inflation?
While Bitcoin (BTC) has failed in countering this year’s rampant global inflation, it should still be considered as an inflation hedge, says Steven Lubka, the managing director of private consumers at Swan Bitcoin. According to Lubka, Bitcoin works well as a hedge against rising prices when inflation is caused by monetary expansion. It is less effective when inflation is caused by the disruption of the food supply and energy, which he sees as the leading cause of this year’s rampant inflation. [embedded content] “In a world where the price of goods is going up because there’s been a radical loss of abundance, Bitcoin isn’t going to protect investors from that,” Lubka said. He also points out that Bitcoin is a better hedge against inflat...
Is Bitcoin really a hedge against inflation?
While Bitcoin (BTC) has failed in countering this year’s rampant global inflation, it should still be considered as an inflation hedge, says Steven Lubka, the managing director of private consumers at Swan Bitcoin. According to Lubka, Bitcoin works well as a hedge against rising prices when inflation is caused by monetary expansion. It is less effective when inflation is caused by the disruption of the food supply and energy, which he sees as the leading cause of this year’s rampant inflation. [embedded content] “In a world where the price of goods is going up because there’s been a radical loss of abundance, Bitcoin isn’t going to protect investors from that,” Lubka said. He also points out that Bitcoin is a better hedge against inflat...
Binance-owned Trust Wallet adds buy option via Binance Connect
Trust Wallet, a major self-custodial cryptocurrency wallet owned by the Binance crypto exchange, has completed a significant integration to enable easier crypto purchases. The Trust Wallet platform has integrated Binance’s official fiat-to-crypto provider Binance Connect, allowing users to purchase more than 200 crypto assets directly from credit or debit cards, the firm announced to Cointelegraph on June 22. Trust Wallet’s new crypto buy option is designed to simplify the process of buying crypto, enabling verified Trust Wallet users to fund their wallet with more than 40 fiat currencies. In order to add funds on Trust Wallet via Binance Connect, users will need to proceed with the similar Know Your Customer (KYC) checks to those on Binance. “It will keep a similarly high standard and pro...
Tether aims to decrease commercial paper backing of USDT to zero
The major stablecoin company Tether is looking to eventually get rid of commercial paper backing for its U.S. dollar-based stablecoin Tether (USDT). Tether issued an official statement on Wednesday to deny reports alleging that Tether’s commercial paper portfolio is 85% backed by Chinese or Asian commercial papers and is being traded at a 30% discount. The stablecoin firm called such allegations “completely false,” reiterating that more than 47% of total USDT reserves are now the “United States Treasuries.” In its latest assurance opinion issued in May, Tether reported that commercial paper makes up less than 25% of USDT’s backing, amounting to around $21 billion as of March 31. USDT’s backing asset breakdown. Source: Tether’s assurance opinion released in May 2022 According to the latest ...
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