Crypto Guides, Knowledge & Insights

Analyzing the Bitcoin mining industry panorama following BTC’s price drop

Crypto markets have experienced highly volatile months, even by crypto‘s standards. The year began with rising inflation shortly followed by the Russian and Ukraine war, causing Bitcoin’s price to retrace significantly from the $50k level at which it stood by the end of 2021. This recent series of events have impacted the mining industry in a negative way.　　The industry has grown tremendously boosting competition and elevating hash rate to sustained levels not seen before. These low prices has affected the mining industry profitability and as a consequence miner reserves have decreased, likely to cover companies day to day costs. Furthermore, we will explore Chinas crackdown on mining long term effects by analyzing the current Hash Rate Distribution.　　Quick refresher — the hash rate is the aggregate power contributed by miners to secure a proof of work blockchain. This computing power is used to solve cryptographic algorithms (SHA-256 in Bitcoin‘s case) to process transactions and reach consensus in proof of work blockchains. This indicator serves to measure how strong a network’s security is, since the greater the hash rate the more difficult it becomes for an attacker to try to overtake 51% of the mining control.　　As can be seen above, Bitcoins hash

2022-03-13Deep Dive

Limiting Proof-of-Work Crypto Back on the Table as EU Parliament Prepares Virtual Currencies Vote

The latest draft of the European Unions (EU) proposed legislative framework for governing virtual currencies, Markets in Crypto Assets (MiCA), still contains a provision that could limit the use of proof-of-work cryptocurrencies.　　Proof-of-work is the energy-intensive consensus mechanism that underlies popular cryptocurrencies like bitcoin and ether. The computing process has come under heavy scrutiny from lawmakers in the EU over energy concerns.　　A previous draft of the MiCA framework contained a strongly worded provision that proposed a prohibition of crypto services that rely on environmentally unsustainable consensus mechanisms starting in January 2025. But the provision was later scrapped following industry backlash.　　The EU parliamentarian in charge of the MiCA legislative framework, Dr. Stefan Berger, said at the time that the paragraph in question had been removed, but that a final decision had not yet been made.　　One version of the new draft, reviewed by CoinDesk, has a similar provision though significantly toned down from the original. It says that crypto assets “shall be subject to minimum environmental sustainability standards with respect to their consensus mechanism used for validating transactions, before being issued, offered or admitted to trading in the Union.”　　If a proof-of-work consensus mechanism is operating on a small scale, it is exempt from

2022-03-13Deep Dive

All Bitcoin ATMs in UK to shut down as FCA deems them “illegal”

Bitcoin ATMs first appeared in 2014 and their popularity increased greatly throughout 2020 and 2021. Their popularity attracted swindlers as well as the UK governments negative attention.　　The UK hasnt been particularly welcoming towards crypto or its ATMs. Even before crypto ATMs became popular, the UK released a notice in 2019 including ATMs under the Anti Money Laundering (AML) requirements, as well as all crypto exchanges.　　AML requirements held its subjects responsible for conveying a KYC process by collecting users names, official IDs, dates of birth and residential addresses.　　According to FCA, there are no cryptoasset firms operating in the UK, offering ATM services, that are compliant with the AML. A recent post from FCA states:　　“None of the cryptoasset firms registered with us have been approved to offer crypto ATM services, meaning that any of them operating in the UK are doing so illegally and consumers should not be using them.”　　The post continues with FCAs warning about shutting all illegal ATM machines down:　　“We are concerned about crypto ATM machines operating in the UK and will therefore be contacting the operators instructing that the machines be shut down or face further action.”　　The FCA also published a list of unregistered crypto firms, to inform their

2022-03-13Deep Dive

Yuga Labs Obtains Cryptopunks and Meebits Brands, Gives Commercial Rights to NFT Holders

Bored Ape Creators Yuga Labs Acquires Cryptopunks and Meebits Collections From Larva Labs　　Last year and during the course of 2022, non-fungible tokens (NFTs) have seemingly become a mainstay within the crypto industry. One of the teams behind the fifth-largest NFT collection, in terms of all-time sales volume, Bored Ape Yacht Club, announced the acquisition of the IP tied to two other popular NFT collections. The two collections happen to be the Larva Labs issued Cryptopunks and Meebits collections.　　From the official Yuga Labs Twitter account the team tweeted:　　Some big news to share today: Yuga has acquired the CryptoPunks and Meebits collections from Larva Labs, and the first thing were doing is giving full commercial rights to the NFT holders. Just like we did for BAYC and MAYC owners.‘What’s Good for Punks Is Good for Apes‘　　While BAYC is the fifth-largest NFT project by all-time sales volume (ATSV), dappradar.com NFT collection stats indicate Meebits holds the top ATSV record today with $7.54 billion in ATSV. Meebits’ sister project Cryptopunks is below the collection with $2.65 billion in ATSV, in comparison to BAYC‘s ATSV which is $1.41 billion. Yuga’s Mutant Ape Yacht Club (MAYC) is the ninth-largest in terms of ATSV with $895.53 million

2022-03-13Deep Dive

Upcoming AML Regulations in Estonia to Affect Cryptocurrency Industry

Government of Estonia Creates Stricter Regulatory Environment for Crypto Businesses　　Estonia, whose banking sector has in the past been implicated in the processing of billions for suspicious Russian clients, is now taking steps to close the loopholes that could allow Russia, its elites, and allied Belarus to evade sanctions imposed over the invasion of Ukraine.　　Next Tuesday, the country‘s amended Money Laundering and Terrorist Financing Prevention Act will enter into force, introducing stringent standards. Crypto companies are going to bear the brunt of Estonia’s war against dirty money, Politico notes in a report.　　The update will make the Estonian regulatory regime for platforms operating with digital assets even stricter than the upcoming EU rules. The framework adopted in 2017 was considered too loose as it allowed hundreds of businesses, many based elsewhere, to obtain licensing from Estonia.　　Speaking to the publication, Minister of Finance Keit Pentus-Rosimannus insisted that Estonia welcomes innovation but emphasized that it will not tolerate financial crime and will uphold the prevention of money laundering as a priority. He further commented:　　Supervision was simply not possible. But the risk was ours because they operated with an Estonian license. That was one thing that was changed with the law.　　Authorities in Estonia intend to

2022-03-13Deep Dive

Real-World Use Cases for Smart Contracts and dApps

Introduction: What Are Smart Contracts？　　Smart contracts are one of the key components of many blockchain-based ecosystems, and an especially important element of many application-focused blockchains like Ethereum. These digital contracts are trustless, autonomous, decentralized, and transparent — and are usually irreversible and unmodifiable once deployed. Smart contract advantages include reducing — or even removing — the need for intermediaries and contract enforcement in an agreement or transaction. Thats because with a smart contract, the code defines the mechanisms of the transaction and is the final arbiter of the terms. For this reason, smart contracts have become the building blocks of an entire ecosystem of decentralized applications (dApps) and represent a major focal point of blockchain development in general.　　A solitary smart contract can only be used for one transaction type: If something happens, then something else happens. However, most dApps work by bundling smart contracts together to enable a sophisticated, synergistic set of functionalities. There are thousands of dApps across various blockchain networks, including finance, gaming, exchanges, and media — and they can all utilize smart contracts in different ways and to different ends. Examples of smart contract applications include financial purposes like trading, investing, lending, and borrowing. They can be

2022-03-11Deep Dive

Can crypto help Russia avoid sanctions?

According to an analysis by Robert A. Schwinger, in the case of North Korea and Venezuela, the entities involved in using cryptocurrencies to avoid sanctions were seriously charged for their actions. The paper also finds specific laws and rules directed against methods that help countries avoid sanctions. In some of the cases where an entity has been seen violating sanction programs, regulators have imposed civil liability against such crimes.　　For example, BitPay was fined US$507,000 in February 2021, and BitMEX founders recently pleaded guilty to violating the U.S. Bank Secrecy Act and agreed to pay a fine of US$10 million.　　In addition to keeping an eye on the crypto transactions, U.S. lawmakers have guidelines in place that require crypto service providers to take necessary security measures to ensure they dont help facilitate deals with prohibited entities. Any violation could lead to both civil and criminal penalties.　　Laws are in place if Russia tries to circumvent sanctions via cryptocurrencies. But more importantly, tools are available for companies to put in alert for any transactions “intersecting with sanctioned entities,” said Caroline Malcolm, head of international policy at Chainalysis, a blockchain analytics firm.　　But, we still left the part where the government and citizens could use privacy

2022-03-11Deep Dive

USDC Inflow Spikes Up Will It Act As Dry Powder For New Bitcoin Rally?

On-chain data shows the USDC exchange inflow has spiked up. Historically, stablecoins have provided dry powder for kicking off new Bitcoin rallies.　　USDC Exchange Inflow Sharply Rose To High Values Recently　　As explained by an analyst in a CryptoQuant post, almost one billion USDC has flowed into exchanges recently. Past pattern suggests this may lead to uptrend for Bitcoin.　　The “USD Coin exchange inflow” is an indicator that measures the total amount of the stablecoin entering wallets of all exchanges within a given period.　　When the value of this indicator moves up, it means investors are depositing a higher amount of coins at the moment. Usually, holders transfer stablecoins to exchanges for converting them into a volatile crypto, like Bitcoin. They may also withdraw the coins to fiat.　　Investors use stablecoins like USDC when they want to exit volatile markets and hold on until prices are favorable enough for re-entering them. This implies that high stablecoin exchange inflows may show that prices are once again good for re-entry.　　here is a chart that shows the trend in the USD Coin exchange inflows over the past year:　　Source: CryptoQuant　　As you can see in the above graph, the USDC inflow has spiked up over the past few weeks. These

2022-03-11Deep Dive

Is cryptocurrency a workaround for sanctions against Russia?

Russia‘s plan to invade Ukraine hasn’t only gotten a show of dissent from the world but also brought in economic sanctions that could harm the Russian economy.　　European Commission President Ursula von der Leyen and French President Emmanuel Macron were among the first few who announced they would inflict “maximum impact on the Russian economy and political elite.” Then came Japan, Australia, New Zealand — all condemning Russias military actions.　　The United States and the United Kingdom also unveiled plans to counter the actions of Russian President Vladimir Putin. Payment service providers like Visa, Mastercard and PayPal have announced the suspension of operations in Russia.　　So far, the economic sanctions have already had a serious impact on the Russian ruble, which sank to record lows and is currently trading at 134.5 to the U.S. dollar. Russia‘s MOEX index, the ruble-denominated benchmark for the nation’s stock market, also took a major hit and is trading at one of its lowest levels, with many of the stocks on the list in free fall.　　But, the important questions here are: what are these sanctions that have the power to damage a countrys currency and even its stock market, and can a country use cryptocurrency to lessen the

2022-03-11Deep Dive

Michael Saylor Praises Bitcoin’s Scarcity Says Gold Is A Commodity

CEO of MicroStrategy Michael Saylor remains one of the most vocal supporters of bitcoin. Countless times in the past, Saylor has always lauded the benefits of the digital asset, which he says is the best investment. His convictions are shared by his firm which remains the publicly traded company with the largest bitcoin holdings in the world. Now, once again, Saylor has spoken out in favor of the cryptocurrency, effectively snubbing its competitors while hes at it.　　Bitcoin Is The Only Scarce Asset　　Bitcoins scarcity has often been one of the strongest arguments for the value of the cryptocurrency. According to the code, there can only be 21 million bitcoins mined, meaning that once this supply is mined, there are no more bitcoins coming into circulation. More BTC cannot be created, making it one of the most scarce assets in the entire globe.　　With bitcoins growth, it has fast become a rival for other top investment assets in the space. One of those assets is gold. Bitcoin which is referred to as digital gold has outperformed its physical rival over the course of the last few years, putting them in fierce competition with each other. However, according to Saylor, only one of these

2022-03-11Deep Dive

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