Crypto Guides, Knowledge & Insights

UBS: Regulatory Crackdowns Could Pop 'Bubble-like' Crypto Markets

In brief　　Swiss bank UBS has warned investors about the risk of regulatory crackdowns popping “bubble-like” crypto markets.　　The bank has suggested that investors “stay clear” of digital assets such as Bitcoin in its recent note.　　Regulators around the world could eventually “pop bubble-like crypto markets,” making digital assets too risky and unsuitable for professional investors, according to a note sent by major Swiss bank UBS to its clients last week.　　“Regulators have demonstrated they can and will crack down on crypto. So we suggest investors stay clear, and build their portfolio around less risky assets,” said the note. “Weve long warned that shifting investor sentiment or regulatory crackdowns could pop bubble-like crypto markets.”　　Per Markets Insiders report published today, UBS‘s note cited a number of recent developments in the field of crypto regulation. Perhaps the most impactful one is China’s massive clampdown on Bitcoin mining and digital assets.　　In June, miners from Chinese provinces such as Sichuan, Yunnan, and Qinghai were forced to shut down their operations. Simultaneously, the countrys central bank prohibited payment platforms and banks from any cryptocurrency-related activities.　　In other countries, regulators and central bankers have voiced concerns about cryptocurrencies. In late May, the Bank of England governor Andrew Bailey stated that cryptocurrencies

2021-07-06Deep Dive

America’s First Legally Recognized DAO is Finally Here

The world finally has its first legal DAO, thanks to developments in the state of Wyoming.　　The American CryptoFED DAO, an organization dedicated to creating a monetary system resilient to fluctuations in value, received notice from the Wyoming Secretary of States office that its project had been officially recognized as a DAO in the United States.　　This is a major step for the project and decentralized governance initiatives. It shows that the U.S. is open to recognizing organizations with innovative structures, even if they lack a centralized hierarchy.　　Wyoming Becomes The First DAO-Friendly State in the US　　DAO is the acronym for decentralized autonomous organization. It is a way of organizing a community through the use of blockchain technology to make consensual decisions without a central body that regulates voting or is in charge of implementing projects. In a DAO, the community participates in decision making through various voting mechanisms previously encoded inside a smart contract, and the decisions that have the support of the majority of votes are executed.　　Generally, one person can cast several votes, so power tends to reside among those who concentrate the most wealth.　　Wyomings Secretary of State Edward Buchanan shared his congratulations to the DAO team and assured that Wyoming

2021-07-05Deep Dive

$7 million ‘liquidated’ after Bitcoin drops $1,000 in 30 minutes

Bitcoin fell $1,000 this morning in a sudden drop, taking along with the rest of the crypto and racking up $7 million in ‘liquidations,’ data from several sources shows.　　‘Liquidations,’ for the uninitiated, occur when leveraged positions are automatically closed out by exchanges/brokerages as a “safety mechanism.” Futures and margin traders—who borrow capital from exchanges (usually in multiples) to place bigger bets—put up a small collateral amount before placing a trade.　　The move followed a choppy weekend market, which saw the asset range between the $33,000 and $35,500 price zones. This morning, however, Bitcoin saw clear rejection at the $35,500 zone, dropping over $1,000 in just 30 minutes.　　As the below chart shows, buyers stepped in at the $34,000 level, causing the plunge to temporarily pause. Still, Bitcoin trades under its 34 period moving average—a tool used by traders to determine market trends using historic prices—at press time, indicating further downside for the next few hours.　　IMAGE: BTC/USD VIA TRADINGVIEW.　　Long traders pay the crypto price　　As such, the downward move saw other cryptocurrencies fall alongside Bitcoin, costing ‘long’ traders over $7 million. As per data analytics tool Bybt, over 89% of all futures traders were in ‘long’ positions (or betting on higher prices), losing over

2021-07-05Deep Dive

Five Untrustworthy Notions in Blockchains and Cryptocurrencies!

Smash hit as they are, digital currencies bear witness to mixed qualities. As such, when it comes to staying away from frauds, understanding facts and identifying concepts are of paramount importance. Five untrustworthy notions relating to blockchains and cryptocurrencies are introduced herein for your reference.　　1. Blockchains are equal to cryptocurrencies.　　Blockchains refer to a record-keeping technology storing data in blocks that are then chained together whereas Bitcoin is a kind of cryptocurrency. As a result, blockchains are not equivalent to bitcoins and vice versa.　　2. Blockchains are only applied to cryptocurrencies.　　Chains and coins are closely associated. However, Bitcoin only constitutes a part of the comprehensive role played by blockchains that includes Ethereum.　　3. The public dont have access to the operating information on blockchains.　　The record of the majority of activities on blockchains can be found as there is no skeleton in the closet about blockchains.　　4. Crypto transactions are anonymous.　　Movements of coins can be found in Bitcoin, a public ledger. Some so-called ‘partly anonymous’ digital assets are not anonymous.　　5. Tokens and coins are regarded as twins.　　The only role played by coins is representing values in blockchains, whereas tokens can involve more sophisticated assets, including property rights and communal facilities. Coins are usually used to

2021-07-05Deep Dive

How El Salvador Could Issue Digital Bond To Strengthen Bitcoin Law

Per a Bloomberg report, Canada-based company Blockstream will aid El Salvador in its effort to implement its Bitcoin Law. The company has proposed the national government issue digital bonds backed by U.S. dollars.　　If approved, the project would operate with a platform called Blockstream Amp. This product allows users to launch and manage digital assets and tokenized securities on the Liquid Network via an API. Thus, El Salvador could issue U.S. dollar bonds.　　Blockstream‘s Liquid Network is a sidechain-based settlement network that enables “more confidential Bitcoin transactions”. The company’s website claims that the transfers with this product can be settled within two minutes and its open to all companies.　　According to Blockstream Chief Strategy Officer Samson Mow, representatives from the company and El Salvadors government met to discuss the proposal. The government expressed interest in the project but is yet to decide.　　Mow highlighted those tokenized securities based on the Liquid Network have greater liquidity than traditional securities. This sidechain operates every day without restrictions and, Mow said, its more cost-efficient for the users.　　Besides tokenized securities, users can issue stablecoins. These digital assets supported by Blockstream Amp can be traded “freely within the network” with more privacy, speed, and additional security trading features.　　Bitcoin Law

2021-07-05Deep Dive

EY Launches Layer 2 Tools to Address High Ethereum Fees

Auditing firm Ernst & Young (EY) has released a zero-knowledge proof Layer 2 protocol in order to help with addressing rising transaction fees on Ethereum.　　The zero-knowledge proof (ZKP) protocol has been designed to enable private transfers of ERC-20 tokens in addition to improving overall efficiency.　　The project, known as Nightfall 3, combines zero-knowledge proofs with a new model for handling transaction verification. The combined protocol, known as a ZK-Optimistic Rollup, aggregates ZKP transactions into groups, called rollups.　　According to reports, EY teams have previously contributed ZKP protocols to the public domain.　　Optimistically Rolling　　Optimistic Rollups are one of a number of Layer 2 technologies that have been adopted this year. Instead of verifying each transaction, the network assumes that all of them are correct, making users intervene only if they see an incorrect transaction by submitting a “fraud proof.”　　Using ZK-Optimistic Rollups, the protocol can achieve a cost of approximately 8,200 gas per transaction, while also maintaining privacy, the blog post added.　　“This is almost one-eighth of the cost needed to make a conventional, public ERC20 token transfer.”　　It also reported that Nightfall 3 has been designed to reduce the learning curve required by developers to implement privacy. It provides them with a standardized application programming interface

2021-07-05Deep Dive

To change the art industry, NFTs must be more secure

A more secure nonfungible token infrastructure holds the key to disrupting the current art world.　　2021 has already seen a number of eye-catching milestones reached for the nascent nonfungible token (NFT) market, which has seen an increase in value of 2,100% from Q4 2020, with consumers spending over $2 billion. While headlines have been dominated by record-breaking sales, whats often overlooked is the growing demand from new investors. According to NonFungible, which tracks NFT transactions, there were 73,000 NFT buyers and 33,000 NFT sellers in Q1. Although these numbers may seem impressive, they are in fact relatively small compared to the global art market, which was valued at $64.7 billion in 2018, with the United States, China and the United Kingdom accounting for 84% of the global market.　　The traditional infrastructure for the art market, dominated by dealerships and auction houses, already seemed dated in an increasingly online and globalized world, where demand in emerging markets for this asset was only going to grow. People will probably look back on the COVID-19 pandemic as a catalyst for disrupting the existing art-market infrastructure. Meanwhile, the NFT market does provide a glimpse into how smart-contract technology can be applied to ensure third parties and

2021-07-05Deep Dive

The Favourite Coins of Each Generation

Each generation has investment quirks that have defined them in the years gone by.　　As cryptocurrencies advance in adoption, millennials lead the charge, closely followed by Gen Z.　　Gen Zers are more likely to invest in meme coins and NFTs than any other demographic.　　Boomers are the least likely demographic to invest in cryptocurrencies, but opinions seem to be gradually changing.　　Each generation has been defined by their various, individual behavioural trends, and investment choices clearly show the dichotomy in demographics. Boomers have always preferred traditional investment options, while young millennials and Gen Zers are increasingly leaning towards the fresher industry of cryptocurrencies.　　Among Gen Z memecoins have proven to be a favourite, while millennials are riding the Bitcoin wave, leading every demographic in Bitcoin purchases.　　Gen Z Just Cant Get Enough of Memecoins 　　As Gen Z comes of age, sociologists have taken an interest in the investment quirks that drive the demographic. In a recent study conducted by Gamblers Pick, it was revealed that Gen Z was far more likely to invest in memecoins, like Dogecoin and Shiba Inu, than any other demographic.　　The survey had 872 respondents and revealed that Gen Zs are also more likely to invest in digital collectibles and NFTs than any

2021-07-05Deep Dive

Stablecoin Wars: Why USDC Outperforms USDT

USDC has gained significant ground over Tethers USDC since the start of the year.　　USDC has risen by a stunning 1,820% since January while Tether records only a 200% gain.　　The disparity in gains is most evident on the Ethereum network with USDTs supply falling and USDC rising.　　The proposed launch of Compound Treasury and Coinbase‘s announcement of offering 4% interest on USDC are indicators of USDC’s future dominance.　　Stablecoins have become an integral part of the cryptocurrency space because of the utility that they offer users. Their indispensable nature has resulted in their meteoric rise in popularity that has led to their combined market capitalization to be well over $112 billion.　　At the top of the stablecoin ladder are Tether and USDC, battling one another for supremacy. Although Tether ranks as the larger of the duo, recent data suggests that USDC is turning the tide as it outperforms Tether in terms of growth trajectory in Ethereum and DeFi in general.　　USDCs Dominance　　At the start of 2021, there was only $1.3 billion worth of USDC in circulation. Fast forward six months to July and that figure has jumped to $25.15 billion. This staggering leap in market capitalization means an over 1,000% growth rate.　　In tracking the growth

2021-07-05Deep Dive

‘Owners of XRP and Ethereum are the most educated’

Trend cycles never remain constant. They keep evolving and get refined with time. As far as the crypto market is concerned, several narratives like “buy the dip” and “HODL” have translated themselves into cyclic trends and have garnered mass traction of late.　　A recent Bank of International Settlements (BIS) paper identified several emerging trends exhibited by the market and its participants. The first and most interesting trend highlighted was the change in HODLing patterns. Arguably, for any market to grow, existing investors need to be retained.　　IntoTheBlock‘s data weaved a complementing narrative. HODLers have, by and large, been outnumbering and dominating other participants like the cruisers and traders over the past few months. The report further claimed that crypto markets might stabilize with time, if HODLing becomes even more pervasive. What’s more, the BIS paper asserted,　　“Those who invested in cryptocurrencies in the past are likely to remain invested.”　　Next, the report contended that cryptocurrency ownership had nothing to do with the “distrust” in fiat currencies. They further emphasised that cryptos like Bitcoin did not pose any threat to traditional financial tools. The report noted,　　“Cryptocurrencies are not sought as an alternative to fiat currencies or regulated finance, bur are instead a niche digital speculation

2021-07-05Deep Dive

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