Crypto Guides, Knowledge & Insights

IRS Looking Into Ways to Monitor Activity Within Crypto Wallets

The Internal Revenue Service (IRS) Digital Forensic team is looking into cracking tools for crypto wallets to “tame the cybersecurity research into measured, repeatable, consistent digital forensics processes.”　　As the population of the United States becomes more and more enamored with trading and purchasing goods with cryptocurrencies, the IRS is looking into ways to monitor activity within wallets. In order to keep themselves ahead of the game, the IRS has issued an official request for information (RFI) into cracking crypto wallets.　　Most traders use crypto wallets to store their digital assets but also to add a layer of security. Crypto wallets use private keys to access funds separate from the broker making the actual transactions.　　As one might expect, some are using blockchain to hide illegal or illicit activities. When the IRS Criminal Division has to look into the financial records of certain people, however, they are hitting a wall when trying to see information from seized crypto wallets. In an official request for information posted to SAM.gov, the Treasury Department and IRS state that:　　“Though a few known cyber penetration testers have published vulnerabilities on specific devices, the process of decrypting the hardware devices to gain access to the wallets has been challenging.

2021-05-25Deep Dive

Crypto’s Next Move Is Completely Dependent on the Stock Market, Says Barry Silbert

As cryptocurrencies continue to experience massive volatility, Barry Silbert, founder, and CEO of Digital Currency Group (DCG), the parent company of Grayscale and other crypto firms, believes that the next move of the asset class will be determined by what happens in the stock market in the coming weeks.　　“Where the crypto market goes from here is completely dependent on the stock market over the next couple weeks,” Silbert tweeted today.　　Silberts latest statement follows an earlier post on Twitter where he described the current crypto market meltdown as being healthy.　　Reacting to the recent market crash, Silbert stated that many crypto traders had become long-term investors, which he considers to be healthy.　　Crypto s stringent measures toward cryptocurrencies have been instrumental in the current market dip, Elon Musk, the CEO and founder of popular electric car manufacturer Tesla, has continued to swing the prices of cryptos via his series of tweets in the past week.　　Part of Musk‘s shot at the asset includes his sudden concern about the carbon footprint of Bitcoin’s mining operation, prompting him to announce that Tesla will reverse its February decision to accept Bitcoin payments for its cars.　　Partial Recovery　　Stocks and cryptocurrencies are gradually recovering from last weeks massive downtrend. Dow

2021-05-25Deep Dive

How PARSIQ Is Changing The Appeal Of Blockchain Technology?

The future of blockchain technology will heavily hinge on how this technology evolves. Creating more complex products and services will require constant interaction with off-chain applications and devices. PARSIQ envisions a world in which blockchains can operate without the majority of technical requirements.　　What PARSIQ Aims To Achieve　　The evolution of blockchain technology has proven attractive, although there is always room for further improvements. PARSIQ, founded in 2018, is a project created by blockchain engineers with ample expertise in the field. Having the ability to connect blockchain activity to applications that are not on a blockchain is the next frontier to explore. However, that is easier said than done as there is no active “bridge” between the blockchain and the real world.　　By using the PARSIQ platform, anyone can build and deploy blockchain to off-chain connections. An appealing opportunity, particularly for those who may not possess the necessary coding skills. Lowering the barriers to entry is an essential first step toward attracting more people excited to experiment with this technology.　　Unlike traditional ecosystems, PARSIQ aims to remove the need for hosting nodes or infrastructure. Additionally, the team wants to remove the need for spending funds and development resources. Instead, the system is convenient to

2021-05-25Deep Dive

RSK is Bitcoin’s Fastest Growing Layer, Not Liquid nor Lightning

Since the resolution of the Bitcoin (BTC) block size limit debate in 2017, there has been a general consensus that Bitcoin is likely to scale via a multi-layer protocol stack rather than stuffing every transaction onto the base blockchain.　　These secondary network layers, such as the Liquid sidechain and the Lightning Network, are often referred to as layer-two networks due to the different tradeoffs made with these systems in the areas of security, efficiency, and decentralization, in addition to the fact that they effectively use the base Bitcoin blockchain as a settlement network.　　There has been plenty of hype around the Lightning Network as a solution for lower-value, bitcoin-denominated payments that retain many of the permissionless and low-trust properties of the Bitcoin blockchain over the past few years, and the Liquid sidechain has also achieved notable levels of adoption when it comes to the amount of bitcoin that has been pegged into the network.　　However, it turns out that a third layer-two Bitcoin protocol, known as RSK, is now growing faster than both Liquid and the Lightning Network.　　What is RSK？　　RSK is a Bitcoin sidechain that is compatible with the Ethereum Virtual Machine (EVM). This means that any smart contract built for Ethereum (ETH)

2021-05-25Deep Dive

What does this new milestone mean for what’s next for Cardano?

With a market capitalization of $43.91 billion, Cardano, at press time, was ranked the fourth-largest cryptocurrency on CoinMarketCap. What‘s more, ADA’s investors were recording nearly 600% returns year-to-date. However, one can argue that such an uptick in value has been a result of its efforts to make the ecosystem more independent and sustainable.　　Cardano approaches Alonzo hard fork　　In mid-2020, Cardanos Shelley upgrade went live and it helped in achieving decentralization of the network consensus. This meant that a majority of the nodes on the network would be run by the community and not by any centralized entity. In fact, the next step up on the Cardano roadmap, Goguen, will be bringing new functionalities to the blockchain. This will be carried out through a series of hard forks. Recently, in March 2021, the team added support for native assets with the Mary hard fork.　　With the ecosystem updating consistently, the Cardano ecosystem has been seeing a new wave of users entering the space. The volatility of the crypto-space has definitely given momentum to the adoption of the altcoin, but the next hard fork, Alonzo, may spur even more interest. The update will allow developers to build smart contracts on the Cardano blockchain –

2021-05-25Deep Dive

DeFi Can 'Transform Global Finance': Wharton

The Wharton School of the University of Pennsylvania has released a report titled “DeFi Beyond the Hype,” produced by the Wharton Blockchain and Digital Asset Project in collaboration with the World Economic Forum.　　According to the famed business school, the DeFi industry has the potential to transform global finance. To date, however, it has yet to fulfill the hype.　　“DeFi has the potential to transform global finance, but activity to date has concentrated on speculation, leverage, and yield generation among the existing community of digital asset holders,” the report said, adding that the novel industry is exposed to many risks.　　The state of DeFi according to Wharton　　DeFi Pulse, a data platform tracking the growth of DeFi, indicates that there is more than $54 billion locked into the sector. This figure was just under $1 billion last year.　　DeFi Pulse Total Value Locked (TVL) over the past year. Source: DeFi Pulse.　　Amidst the growing industry, the Wharton report claims there are six chief uses within the sector: stablecoins, decentralized exchanges (DEXs), credit, derivatives, insurance, asset management, and “auxiliary services,” including wallets and oracles.　　Some of the chief benefits of the sector—according to the report—include reduced friction and transaction costs for the trading and distribution of financial assets.

2021-05-25Deep Dive

Federal Reserve Governor Pushes for Central Bank Digital Currency

After Federal Reserve Chairman Jerome Powell stated that the central bank was in no rush to issue a central bank digital currency (CBDC), Fed Governor Lael Brainard says they are in fact stepping up research into a CBDC.　　Governor of the Federal Reserve Brainard has begun to press harder for a digital dollar after chairman Jerome Powell stated the Fed was in no rush to roll out a CBDC. In a speech on Monday, Brainard said that a central bank-backed cryptocurrency could provide numerous benefits to all parties involved.　　Providing financial services to the nearly 20% of “underbanked” American citizens is one of the major advantages Brainard spoke about in a crypto conference this morning. Brainard also cited the safety of a federally backed system, along with the evolution of efficiency and cross-border payments. This would ease the stress of transactions between people in different countries considerably.　　A shift to contactless payments　　While Brainard underlined the importance of continuing with caution, she believes the covid-19 epidemic increased the need for a system that would give access for a wide range of individuals to regulated digital money. An example of this would be the many citizens who did not receive their relief payments, due to

2021-05-25Deep Dive

Billionaire Hedge Fund Manager Ray Dalio Reveals He Holds Bitcoin

Ray Dalio, billionaire hedge fund manager during his interview at Consensus revealed that he holds Bitcoin on his portfolio. During his conversation, Dalio revealed that he would prefer Bitcoin over bond in an inflationary scenario. He said,　　“Personally, Id rather have bitcoin than a bond” and added, “I hold some Bitcoin”　　Dalio changed his stance on the top cryptocurrency like many others towards the end of December last year and since then has been quite bullish about it. Earlier the billionaire had criticized Bitcoin for its volatility and claimed its high price fluctuation would not make it suitable either as a form of payment or store of value.　　“Personally, Id rather have bitcoin than a bond” in an inflationary scenario, @RayDalio said during a conversation with @mikejcasey at #Consensus2021.　　Watch his full remarks by registering for our virtual event: https://t.co/PJg71S61Ru pic.twitter.com/qH4YUtfhI3　　— CoinDesk (@CoinDesk) May 24, 2021　　Dalio even during his criticism days was open to suggestions and has said earlier that he is ready to listen to the other side and understand why they think that he is wrong in his assessment. However, now seems he has put a lot of thought behind Bitcoin and has studied its socio-economic impact. During the interview, he added

2021-05-25Deep Dive

Goldman Sachs Calls Crypto A ‘New Asset Class’, Marking Major Shift In Tone

Slowly but surely, renowned investment banks are creeping toward the reluctant acceptance that bitcoin is, in fact, a thing that is here to stay. A top executive at Wall Street megabank Goldman Sachs is now indicating that crypto is a “new asset class” and an “investable asset”.　　It‘s quite interesting to see a stalwart investment bank passing such a judgment on a financial tool specifically developed to render Wall Street banks worthless. Moreover, it represents a remarkable shift in Goldman Sachs’ tone after asserting that cryptocurrencies are not an asset class in May last year.　　In a new report, Goldman Sachs‘ global head of digital assets Mathew McDermott, observed that while bitcoin has its own risks because it’s still a new technology, the cryptocurrency is “now considered an investable asset”. McDermott further explained:　　“It doesn‘t behave as one would intuitively expect relative to other assets given the analogy to digital gold; to date, it’s tended to be more aligned with risk-on assets. But clients and beyond are largely treating it as a new asset class, which is notable — its not often that we get to witness the emergence of a new asset class.”　　Today, the bitcoin price remains mired in a devastating market

2021-05-25Deep Dive

German bank that went nearly bankrupt in 2019 says Bitcoin is ‘wishful thinking’

Last weeks crypto market meltdown has proved yet again that “the value of Bitcoin is entirely based on wishful thinking,” according to a research note recently published by Deutsche Bank analysts.　　Bitcoin, trendy or tacky？　　In the paper, titled “Bitcoin: Trendy is the Last Stage Before Tacky,” the banks experts compared cryptocurrencies to fleeting fashion trends and pointed out that a couple of “negative” tweets from Elon Musk combined with yet another crackdown on Bitcoin in China were enough to tank the whole market last week.　　“What‘s true for glamour and style might also be true for Bitcoin. Just as a ’fashion faux pas‘ can happen suddenly, we just received the proof that digital currencies can also quickly become passé,” wrote Deutsche Bank’s macro strategist Marion Labouré, adding, “All it took for the cryptocurrency to fall out of style was one tweet and a Chinese government statement.”　　Namely, on May 12, Musk announced that Tesla is suspending Bitcoin payments for its cars—just a couple of months after initially adding support for them—citing environmental concerns. And last week, Chinas government announced another wave of crackdowns on the crypto industry and Bitcoin mining.　　“Those few words caused Bitcoins value to plummet from nearly $60,000 in the days

2021-05-25Deep Dive

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