Your Cryptocurrency Newsletter for December 19, 2020

If you are interested in cryptocurrencies, this newsletter is for you. [img]  [Learn more about RevenueStripe...](   [Learn more about RevenueStripe...]( [img]( [FeedBinary Newsletter]( [How The Top 5 Cryptocurrencies Fared in 2020]( Bitcoin hit a fresh all-time high of $23,000 on Thursday. Other cryptocurrencies have also seen significant gains this year. Various portals have different rankings for cryptocurrencies, but the top three remain roughly the same — Bitcoin, Ethereum and Ripple.Let’s take a look at major cryptocurrencies and how they have fared this year. Bitcoin ($426 billion): Bitcoin is the largest and oldest cryptocurrency. It was launched in 2009 based on a paper written by Satoshi Nakamoto, a somewhat mysterious individual. The cryptocurrency has soared from less than $50 in 2009 to almost $23,000 at present. That represents a CAGR of around 75% in 11 years, a speed unrivalled by any traditional asset like equity, real estate or gold. The record of bitcoin ownership and transactions is stored simultaneously in thousands of computers and hence cannot be altered by any central authority. This gives bitcoin and other cryptocurrencies their USP and they continue to attract adherents. Bitcoin’s first big surge came in 2017 when it jumped from around $1,000 at the start of the year to just below $20,000 in December, a leap of 20 times in just a year. The cryptocurrency crashed the following year to around $3,200 by December 2018. However, investor skepticism with loose monetary policies of central banks in 2020 has led to a rebound, with bitcoin soaring back to its all time high and breaking records, at around $23,000. Ethereum ($73 billion) Ethereum is seen more as a medium of exchange than a store of value by cryptocurrency users. It was launched on a concept proposed by Vitalik Buterin, a Russian-Canadian programmer with the vision of facilitating smart contracts or contracts written in code. These smart contracts have the potential to combine cryptocurrency with the instruments of conventional finance such as borrowing of money against interest. Ethereum has gone from less than a dollar in 2015 to its current price of $644 in just 5 years, a jump of 644%. From 1 December0, Ethereum started a transition in its structure from proof of work to proof of stake, basically a shift aimed at making transactions in it cheaper, faster and less electricity intensive. Ethereum has mirrored bitcoin in its price performance but remains well below its all time high of around $1,350 in January 2018. XRP or Ripple ($26 billion) XRP is the currency created by Ripple Inc, a US company in 2012. XRP was designed for payments and remittances and operates in a manner similar to SWIFT, the network for moving money between banks. However, professionals remain skeptical of XRP. “I don’t see much value in XRP which has an enormous supply of 100 billion tokens compared to 21 million for bitcoin. It is also centralised, unlike bitcoin which diminishes its appeal,” said Gaurav Dahake, CEO, Bitbns, a Bengaluru-based cryptocurrency exchange. Tether ($19 billion) USD tether or USDT is a cryptocurrency that tries to mirror the US dollar on a 1:1 basis. Tether is issued by Tether Ltd, a company owned by the operator of Bitfinex, a cryptocurrency exchange in 2014. The originator claims that it is backed up by hard reserves of US dollars held by it directly or loaned to its subsidiaries. There are tether cryptos pegged to the Euro and Chinese Yuan as well, but the USD variant is the most popular of these. It is primarily used as a USD substitute by cryptocurrency traders and investors and since it is pegged to the USD dollar, it trades at a price of around $1 rather than appreciating or depreciating in value. Litecoin ($7 billion) Litecoin is a Bitcoin spinoff launched by a Google engineer Charlie Lee in 2011 with the idea of speedier transactions than conventional bitcoin. It differs from bitcoin in some of its technical processes. Litecoin has risen from around $40 at the start of 2020 to $109 at present. Dahake took a cautious stance on the appeal of litecoin. “Litecoin was created as a faster bitcoin alternative but bitcoin isn’t used much for transactions anyway and hence litecoin hasn’t taken off,” he said. First time investors of cryptocurrency should invest in bitcoin rather than other cryptocurrencies, just as you would enter the stock market with bluechips rather than penny stocks. People have this misconception that they need to buy a whole Bitcoin. You can actually start with as little as Rs100 or lower,” said Arjun Vijay, co founder of the Chennai-based Giottus Cryptocurrency Exchange. [Read Full News]( The post [How The Top 5 Cryptocurrencies Fared in 2020]( first appeared on [Feed Binary](. [Read Full Story]( ------------------ You Might Like     [Learn more about RevenueStripe...]( ------------------ [2020: The Year Bitcoin Went Institutional]( A prominent but very private financial newsletter author noted to clients that while he had never previously written about bitcoin, it was correct to say that institutional capital had now started to arrive in scale and that it would be churlish to pick a fight with it. Demand for bitcoin would now outstrip supply. Bitcoin, he observed, would become an excellent metaphor for risk appetite in 2021 as a result. Less than a week later, Coindesk confirmed that UK-based asset manager Ruffer had accumulated some £550m of bitcoin since November, representing some 2.7 per cent of the firm’s AUM. Ruffer’s move is now being widely interpreted as the beginning of a major portfolio diversification trend into bitcoin. It seems institutional money can no longer afford to ignore it. And bitcoiners are understandably overjoyed.Price moves since certainly could be indicating some sort of pragmatic acceptance of bitcoin in investment circles. So have these institutions gone mad? Or are things genuinely different now? If they are, we think it all comes down to four key factors. 1. Bitcoin’s asset class status Whether critics like it or not, bitcoin’s status as an asset class is now much harder to dispute. Yes, the cryptocurrency remains relatively useless as a medium of exchange outside of the dark markets. But it’s no longer clear whether that really matters. Bitcoin’s value has instead become linked to something more profound: its incapacity to go to zero despite having no central point of support or guarantor. This, we would argue, is a function of two key elements: a) too much vested capital in the system to actually let it go to zero and b) enough shorts in the system to ensure short-covering at zero would inevitably be supportive. But it is also a function of another important phenomenon: the emergence of a competing tax authority to that of the state in the shape of the hacker. This is important because the longstanding economic argument against bitcoin as an effective store of value has always been that fiat money is ultimately stabilised by the state’s capacity to demand taxes in its own currency. As was noted by Dealbook in 2013, “money is inevitably a tool of the state” and “no private power can raise taxes or pass laws to unwind monetary excesses”. In 2020, however, that doesn’t seem quite right. Private “hackers” routinely raise revenue from stealing private information and then demanding cryptocurrency in return. The process is known as a ransom attack. It might not be legal. It might even be classified as extortion or theft. But to the mindset of those who oppose “big government” or claim that “tax is theft”, it doesn’t appear all that different. A more important consideration is which of these entities — the hacker or a government — is more effective at enforcing their form of “tax collection” upon the system. The government, naturally, has force, imprisonment and the law on its side. And yet, in recent decades, that hasn’t been quite enough to guarantee effective tax collection from many types of individuals or corporations. Hackers, at a minimum, seem at least comparably effective at extracting funds from rich individuals or multinational organisations. In many cases, they also appear less willing to negotiate or to cut deals. In an increasingly polarised world where a near majority of people don’t recognise the legitimacy of their governments, a bitcoin enthusiast might legitimately question what really constitutes legal extortion anyway? When established norms are in flux, everything becomes a matter of perspective and it would be irresponsible for fiduciary agents to bet on only one horse. 2. Bitcoin fought the law and the law won. For a long time, institutional investment in bitcoin was hampered by strict investment mandates and regulatory compliance. Now that bitcoin has been formally recognised by many regulators, and regulated accordingly, this issue is far less of an obstacle than it used to be. We used to argue that bitcoin’s submission to authority was indicative of the core system’s superiority. If bitcoin wanted to play with the big boys it would have to also play by the rules they were governed by, and in so doing give up on its status as a renegade system. But there may be an important counterpoint we failed to consider. In bowing to regulation bitcoin abandoned its key “censorship resistant” attributes, but it also paved the way for large scale institutional investment. And that arguably is more important than temporarily bowing to the rules of the land. As with ESG investing, once you command sizeable institutional money, you have the power to influence the rules themselves through the threat of divestment. In bitcoin’s case, that might include changing the rules to favour censorship resistant forms of money. If you consider institutional flows into bitcoin as a form of ideologically-motivated divestment from fiat you can see they’re worth paying attention to. 3. Bitcoin’s volatility is a useful metric When FT Alphaville’s Tracy Alloway (now at Bloomberg) first cottoned on to bitcoin on June 6, 2011 it was worth a piddly $8. At the time there was great disillusionment with the workings of the core financial system thanks to the global financial crisis. Yet, even then, most commentators viewed bitcoin as a libertarian pipe-dream that was unrealistic about the importance of the state in backing any formal currency system. By June 13, Tracy had stumbled across bitcoin’s other great weakness: its intrinsic volatility. In 2020, that volatility factor has not gone away and remains bitcoin’s biggest nemesis with respect to wider public adoption (especially as a form of money). But from a trading and asset perspective, there is some justification in embracing the idea that bitcoin’s volatility is also an important window into market forces that are otherwise being suppressed. Central banks, whether rightly or wrongly, have worked hard to eradicate volatility from the financial system at the cost of ballooning balance sheets and centralised support for specific asset classes. A decisive move by institutional money out of central bank systems and over to bitcoin stands to turn any related volatility into a measure of that suppression. They say don’t fight the Fed because it will always win thanks to its infinite arsenal of cheap money. The notion is based on the premise that cheap money is preferable to all else. But if you’re an institution looking for a healthy rate of return, your institutional objective is to protect investor capital against things such as negative interest rates. The fact institutions see bitcoin (in some ways the “hardest” of all currencies) as a mechanism to do that, is indicative of something important. The bigger question is how do they see bitcoin offering a return after the inevitable capital appreciation honeymoon they themselves trigger is over? The answer comes in the one thing that can’t be easily cultivated until bitcoin stops appreciating: a large and extensive debt capital market in which corporations can easily raise capital for real-world (not just digital) enterprise. The irony is it’s only once the price of bitcoin stabilises that such a market can truly develop. And even after it does, some might argue why would anyone borrow in bitcoin rather than much cheaper fiat? Bitcoiners might retort that similar questions used to be asked of the offshore eurodollar markets. They mushroomed in size from the 1960s onwards regardless. 4. Bitcoin has successfully defied scrutiny Scientists invite scrutiny because they know nothing is a better testament of success than having their inventions or discoveries defy continuous critique. Bitcoin may have started off as a belief system far removed from scientific method, but in a round about way it has in the last 12 years invited as much, if not more, scrutiny than even Donald J Trump. As much as critics may loathe to admit it, the fact the system is still standing (if not flourishing by some people’s measures) constitutes something important. Yes, bitcoin is yet to prove itself as more efficient or user-friendly than the conventional fiat money. But it is no longer possible to deny its overall resilience. And since resilience was always part of bitcoin’s raison d’être that’s an important win for the would-be challenger system. All the more so if you consider that institutional money feels it can no longer afford to ignore it. [Read Full News]( The post [2020: The Year Bitcoin Went Institutional]( first appeared on [Feed Binary](. [Read Full Story]( ------------------ You Might Like     [Learn more about RevenueStripe...]( ------------------ [Decentralized Finance Is on the Rise. What You Need to Know in 2021]( Few had heard much about decentralized finance (DeFi) in its early days in late 2017 and late 2019, beyond murmurs about Bitcoin and a mysterious new digital technology called blockchain. But a pandemic can change everything. Since May of this year, the total value locked (TVL)—the amount of any currency locked into tokens, the vehicle of holding and moving assets on blockchain, in smart contracts on a blockchain ecosystem—in decentralized finance projects rose a whopping 2,000 percent, according to DeFi Pulse. Many investors would be hard-pressed to find such an astronomical rise of any assets or expansion of any financial ecosystem, but DeFi app developers seemed to find success. So what’s the rage, and why does it matter going into the new year? What is DeFi? DeFi, many fintech leaders argue, is the world’s answer to the 2008 financial crisis. Thanks to poor decision making and a lack of proper financial regulation, legacy financial institutions brought the world’s economy to its knees in the most major financial crisis since the Great Depression. The knee-jerk reaction was to create an ecosystem dependent on every link in the chain, rather than centralized authorities—hence the term “decentralized finance.” The concept of blockchain, a decentralized ledger, was designed to ensure financial transactions would be transparent. Moreover, transaction approval would come from network individuals incentivized to approve them by solving complex mathematical equations or by network consensus voting.  the idea of operating a decentralized financial system on a decentralized ledger, independent of legacy institutions, grew into a thriving, albeit relatively small, ecosystem. Now, users can find financial services on the distributed ledger for loans, insurance, margin trading, exchanges, and yield farming (yielding rewards from staking digital assets on a network to help facilitate network liquidity). But there is still a way to go. Not enough consumers are comfortable with DeFi quite yet, because platform accessibility and blockchain tribalism remain a problem. Nevertheless, now the world is experiencing another economic crisis brought on by the COVID-19 pandemic, and DeFi is finally getting its day in the sun. E-wallets are leveling up For companies and individuals already active in the space, navigating the ecosystem remains impeded by technical limitations. In order to access certain markets and execute transactions on the blockchain—whether it’s borrowing or lending, staking assets in liquidity pools, or trading on an exchange—users need to own an e-wallet that’s properly connected to the ecosystem. E-wallets are the backbone of transactions on blockchain. Just as the digital assets they help transact and store, these wallets are secure, transparent, and easily accessible to users. At least, that’s the idea behind them, though there are various degrees of security and transparency. For DeFi to attract more users, the wallets must be compatible with multiple blockchains running financial dApps (decentralized apps that operate on a blockchain system). One of the first wallets, created by Ethereum and called “MyEtherWallet” (MEW), lacked a user-friendly interface and was challenging to grasp for people outside the hardcore crypto crowd. Since then, a number of blockchain developers have created alternative e-wallet solutions. Most recently, Spielworks, a blockchain gaming startup, reached an agreement with Equilibrium and DeFiBox to integrate its e-wallet “Wombat,” which is currently available on the Telos and EOS blockchain mainnet (a blockchain network that is fully developed, deployed, and operational). The Wombat wallet provides users with access to several DeFi platforms that offer token exchanges, yield farming, borrowing, and lending. Wombat recently also integrated with Bitfinex’s new EOS exchange, Eosfinex, as well as 8 other DeFi networks. Rather impressively, the wallet also offers free and fast account creation, automatic key backup, and free blockchain resources. Developments in blockchain wallets, such as Wombat’s, will be pivotal in the next few years in the growth of DeFi applications and the movement of users toward decentralized finance and away from traditional finance. While wallets are important, so are the underlying mechanisms to piece the entire ecosystem together, because one a DeFi ecosystem is not enough if confined to just one blockchain mainnet. Piecing it all together A house divided against itself cannot stand.” President Lincoln’s famous quote referred to the Civil War that ravaged the United States at the time, but his historically renowned words can apply very well to the blockchain community today. For DeFi to reach its maximum potential, as a decentralized ecosystem that doesn’t answer to a central authority, blockchain platforms must stand united and interoperate. Could anyone imagine if payment transfers between regular banks were not possible? How could an economy function? This is the sort of technical problem plaguing the DeFi world: Each blockchain platform has its own benefits, but each remains largely separated from the others in its own silo. The root of the problem is attitude, the other part is technical limitations. Ethereum and EOS are primary examples of this sort of rivalry, both of which have their own technical benefits for dApp developers. If the two ecosystems could be connected to one another, EOS-based and Ethereum-based developers alike, for example, could benefit from each other’s platform’s strengths. Users could also benefit, via financial opportunities without having to sacrifice shifting their base from one blockchain to another. [Read Full News]( The post [Decentralized Finance Is on the Rise. What You Need to Know in 2021]( first appeared on [Feed Binary](. [Read Full Story]( ------------------ You Might Like     [Learn more about RevenueStripe...]( ------------------ ------------------ Connect with TheFeedBinary on Facebook and Twitter [fb](  [tw]( ------------------ You received this email because you operate or create content for a website/service and based on your website it seemed like this could be important information to you and your users. 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