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Technology

Nearly $1.5M in Ethereum Still Missing From Multichain Crypto Hack

After an exploit drained Multichain users of more than $3 million worth of cryptocurrency this week, a white-hat hacker has restored 322 Ethereum (about $900,000). However, up to $1.5 million in Ethereum is still missing. Multichain is a cross-chain router technology that connects users across thirty blockchains, including Bitcoin, Ethereum, and Terra.

Wrapped ETH (WETH), Peri Finance Token (PERI), Official Mars Token (OMT), Wrapped BNB (WBNB), Polygon (MATIC), and Avalanche appear to have been affected by this week’s critical vulnerability (AVAX).

Multichain said on Twitter on Monday that the issue had been “reported and addressed.”

More attackers came in after the disclosure and were still able to use the same vulnerability to exploit the protocol, with one hacker obtaining as much as $1.43 million.

Critical vulnerabilities are not only exploited by criminals for self-interested reasons in the crypto underworld; they also attract the attention of blockchain vigilantes known as “white hat” hackers, who exploit vulnerabilities in order to disclose them and collect a bounty.

A white hat was one of the attackers who targeted Multichain after Monday’s announcement.

The hacker sent an affected user 322 ETH (about $900,000) and kept 62 ETH ($173k) as a bounty.

The hacker also gave Multichain 52 ETH ($139,000) and kept about 12 ETH as a bounty.

However, 527 ETH, or little under $1.5 million, remains unaccounted for.

Multichain CEO and co-founder Zhaojun took to Twitter on Thursday to validate ZenGo wallet co-founder Tal Be’ery’s theory that the vulnerability was due to Multichain’s bridge contracts requiring a stop mechanism to prevent future fund losses.

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Business

Dogecoin Climbs 12% as Tesla Begins Accepting DOGE for Merchandise

Elon Musk, the CEO of Tesla, announced the news on Twitter on 14th January, noting that the company’s merchandise can now be purchased with Dogecoin. Following his announcement, the price of Dogecoin (DOGE) increased to a monthly high above $0.2. 

DOGE skyrocketed to 16 percent to an intraday high of $0.200369, before retracing to $0.192. However,  the price is already back to where it was last year when Musk first hinted at the integration.

“Tesla will make some merch buyable with Doge & see how it goes,” Musk said at the time.
The meme coin has gained for the fifth day in a row and is now up 23.8 percent in the last week. DOGE has also surpassed Avalanche (AVAX) to become the market’s 11th-largest cryptocurrency by market capitalization as a result of recent price activity.

Only a few goods are now available for purchase with DOGE at the Tesla store, including the Giga Texas Belt Buckle for 835 DOGE, a Cyberwhistle for 300 DOGE, and a kids Cybersquad for 12,020 DOGE.

Tesla began taking Bitcoin as payment for its electric automobiles last year. However, the pilot was canceled due to concerns about the leading cryptocurrency’s harmful environmental impact.


Elon Musk’s influence

Dubbed “The Dogefather” at one point, Musk has a lengthy history with the meme cryptocurrency. The Tesla CEO has long been a proponent of Dogecoin, advocating for its use as a payment method. Simultaneously, his rocket business, SpaceX, announced a Moon mission for 2022, with the payload totally funded by meme coins.

Musk claimed last year that Dogecoin could “hands down” beat Bitcoin, adding that he collaborated with Dogecoin creators to make the cryptocurrency cheaper and more energy-efficient.

Musk’s involvement has also benefited Dogecoin, with the billionaire’s repeated tweets driving the coin higher on several occasions.

Last month, the Tesla CEO declared his support for Dogecoin once more, saying he was “pro Doge” amid a heated Twitter battle triggered by Jack Dorsey over Web3.

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Business

Bitcoin, Ethereum, Other Top Coins See Terrible Start to 2022

Crypto investors have been disappointed by the start of the new year.

Only one of the top 20 cryptocurrencies by market capitalization has increased in value in the last seven days. Chainlink takes the prize, with a 20% gain at the time of writing, according to CoinMarketCap. In the new year, all other leading coins have lost double digit percentages.

Bitcoin, the market leader, has had one of the more mild drops last week. It’s down 13% in the last seven days, and it’s currently trading at roughly $41,000. Despite the downturn, the Bitcoin network struck a new peak last Sunday, when it’s hashrate reached 203.5 exahashes per second (EH/s), before plummeting a few days later.

The unit of measurement for the total computational power of miners on a blockchain is hashrate. Higher processing power means more network security, because it takes more computing power to hijack 51 percent of the network and violate the distributed ledger’s values.

Since July of last year, when the network’s hashrate was sunk by a state-wide mining crackdown in China, Bitcoin’s new and temporary hashrate record signified a 200 percent rise in power.

Many Chinese miners moved to Kazakhstan, and the network grew stronger than ever. However, social turmoil in Kazakhstan earlier this week forced authorities to shut down internet connections across the nation, reducing the network’s hashrate to around 172 EH/s at the time of writing.

The US Securities and Exchange Commission postponed a decision on whether to approve or reject the New York Digital Investment Group’s proposal for a Bitcoin spot ETF on Tuesday (NYDIG). This year’s date has been changed to March 16th. NYDIG’s application joins Bitwise and Grayscale’s plans on the SEC’s backburner.

Last week, Bitcoin reached yet another significant milestone. The world’s most popular cryptocurrency’s market share had dropped to 37.28 percent on Wednesday. The new figure represents Bitcoin’s lowest market dominance since 2018, yet it still implies that one currency controls more than a third of the market.

Also on Wednesday 5th January 2022, the Federal Reserve of the United States hinted that its decision to raise interest rates and stop creating money could be postponed until mid-March. In the 24 hours following the revelation, bitcoin lost 6% of its value and crypto’s worldwide market valuation declined 6%. Stock prices have also dropped by more than 3%.

Ethereum and altcoins fared little bit

While Chainlink is on the rise, other so-called cryptocurrencies are in steep decline. Despite NFT sales surging to start the new year, Ethereum is down 19 percent from last week and currently trades at $3,030. 

On Wednesday 5th January 2022, a group of analysts at investment firm JP Morgan said that Ethereum would face competition in the near future from other blockchains such as Avalanche, Solana, and Terra, which all provide more scalable services and lower gas rates than Ethereum. The Ethereum developers retaliated, claiming that the criticisms were overstated.

On the same day, crypto investment firm Electric Capital released research claiming that Polkadot, Avalanche, Solana, and Terra all experienced faster beginning growth in terms of active development than Ethereum when it was at a similar stage in its journey. It’s important to note that Ethereum grew up in a totally different market than its competitors.

Surprisingly, Solana, Avalanche, and Terra’s LUNA are among the worst performers this week, each losing more than 20% in seven days. Solana is presently trading at $134.50, down 23 percent in a week. Both Avalanche and LUNA have dropped by 29% to $80.27 and $63.69, respectively.

Although crypto has had a rough start to 2022, the excitement among crypto enthusiasts about what lies ahead has not dimmed.

Categories
Coins

What are Stablecoins and How do you use them?

When it comes to price volatility, cryptocurrencies have been regarded as exceptionally risky financial products from their beginning. Because of the dangers to vendors and merchants, this has resulted in price spikes and crashes, preventing cryptocurrencies from being used for common products and services in some circumstances.

Stablecoins are a solution to this problem. According to the hypothesis, creating a currency that is ‘pegged’ or linked to a regular fiat currency with a generally steady price, such as the US dollar, will prevent price volatility.

We’ll go through these in greater detail further down.

What is a Stablecoin?

Stablecoins are digital assets that promise to be backed by fiat currencies such as dollars, pounds, shekels, and rubles.

The concept is that, unlike cryptocurrencies like Bitcoin, the price of stablecoins remains constant regardless of whether fiat currency backs them.

Stablecoins are employed as a store of value or a unit of account, as well as in other applications where volatile cryptocurrencies aren’t ideal. To attain price stability, different stablecoins employ different methodologies; some are centralized, while others are decentralized.

Examples of Stablecoin

  1. Fiat collateralized stablecoins

These are cryptocurrencies that are tied to a national currency, such as Tether, which is 1:1 tied to the US Dollar. This is the simplest method for creating a stablecoin. Fiat currency must be deposited as collateral for a fiat-collateralized stablecoin to exist, as the name implies. The tokens are then issued at a 1:1 ratio against collateralized fiat cash.

This is a straightforward solution, but it necessitates regular auditing and the oversight of a financial custodian to ensure that the token remains completely collateralized. A downside to having the token is that it is centralized by a party.

  1. Crypto-collateralized stablecoins

A crypto-collateralized stablecoin has cryptocurrency locked up as collateral, similar to how a fiat-collateralized stablecoin has fiat tender as collateral.

The stablecoin requires a security pledge to compensate for the volatility of the collateralized cryptocurrency. This means that the currency will have a $2 USD pledge for every $1 USD stablecoin released, rather than a 1:1 ratio to the collateral crypto.

  1. Non-collateralized stablecoins

The Seigniorage Shares system is used by some stablecoins. The discrepancy between the value of money and the cost of printing it is known as seigniorage. Non-collateralized stablecoins use a mechanical algorithm to adjust supply volume as needed to keep their price stable.

The stablecoin will sell if the price falls below the tagged currency and will issue more tokens to the market if the value climbs above the pegged currency, thanks to smart contracts.

Stablecoins List

The Best Stablecoins

With all of this in mind, you might be wondering which stablecoins are the best.

While we can’t provide a definitive answer due to subjective factors, we can provide a list of the most well-known stablecoins. Because there are so many stablecoins out there, we’ve narrowed it down to the top six in terms of popularity and trading volume.

Fiat-backed stablecoins:

Tether – USDT

In today’s cryptocurrency industry, Tether is undoubtedly the most well-known stablecoin. Tether, which is ‘tethered’ to the US Dollar at a 1:1 ratio, is one of the most popular stablecoins, with cryptocurrency exchanges adopting the token as the go-to currency when direct USD transactions are not available. This could be due to a variety of circumstances, including country legislation. 

One of Tether’s main advantages is that it keeps its $1 USD value, allowing investors and traders to avoid paying exchange fees and transaction charges.

Tether offers a number of advantages, including the capacity to offer a token that is absolutely stable in relation to the US Dollar. However, detractors have raised concerns about the token’s centralization, transparency, and the unmet promise of an official audit.

TrueUSD – TUSD

TrueUSD is a fiat-collateralized cryptocurrency that has acquired more trust from critics than Tether, which has the distinction of being the first stablecoin to make its mark. Regular audits, properly backed collateral, and compliance with regulatory requirements for the USD-peg have earned the stablecoin a reputation for openness.

TrueUSD has formed connections with a number of banks and trusts in order to avoid Tether’s centralized position. TrueUSD has no way of accessing the cash due to the smart contracts in place, assuring complete decentralization.

Crypto-backed stablecoins:

MakerDAO

MakerDAO attempts to reduce price volatility by utilizing native Maker tokens and the Ethereum blockchain. MakerDAO uses Ethereum via a smart contract to collateralize the stablecoin, and the Ether collateral is gathered into a Pooled Ether (PETH), which allows the smart contract to generate MakerDAO’s DAI token and interest over time. The interest earned is known as the “stability fee,” which means that if customers wish to withdraw Ether from the contract, they must pay back the same amount of DAI.

Non-collateralized:

Basis

The ultimate goal of Basis is to turn the token into an index-offering, with the token’s value pegged to a variety of assets to assure its stability. In addition, the project hopes to maintain its supply by leveraging two other currencies. Token holders can exchange their tokens for bonds to earn interest on their investment over time, and Basecoin Shares are created when the stablecoin’s supply has to be increased.

Exchange backed stablecoins

Tokens for cryptocurrency exchanges are created and exist to support the cryptocurrency exchanges that they support. Exchange-driven stablecoins, such as the Gemini Dollar, provide Gemini users lower costs when trading using the exchange’s native token while maintaining the Gemini Dollar’s 1:1 USD ratio.

How are stablecoins used?

Stablecoins, like most digital assets, are primarily utilized as a store of value and a means of exchange. They provide traders with a temporary reprieve from market volatility when the market is falling, and they may also be used for yield-farming, lending, and liquidity provision in the rapidly emerging field of decentralized finance (DeFi).

Most traders and investors get their stablecoin exposure by buying them on exchange platforms, but it’s also possible to mint new stablecoins by providing the necessary collateral with the issuing corporation, such as US dollars with Tether or actual gold with CACHE go.

Advantages of Stablecoins

Stablecoins have been the subject of both pro and con arguments.

Stablecoin proponents say that these tokens serve as an excellent model for completing the important parts of what makes up a currency. This implies they serve as a medium of trade, a store of value, and a monetary unit. Furthermore, stablecoins combine the advantages of blockchain-based tender with the lack of volatility associated with cryptocurrencies.

Stablecoins could be the next step toward mainstream adoption in this situation, which would be advantageous to the cryptocurrency sector overall.

Disadvantages of Stablecoins

Investors require evidence that the coins are backed by reserves. In the case of Tether, this has never been proven, leading to speculation that the currency is unbacked and was created out of thin air.

Stablecoins are not always stable. Traders have poured money into the Gemini Dollar, which has climbed by a few pennies numerous times in the last year. Tether, which had earlier plunged to as low as $0.51 on certain exchanges, had ironically provided many of those investors’ funds. As a result, stablecoins might be thought of as relatively’ rather than totally stable, especially when compared to volatile assets like Bitcoin.

The future of Stablecoins

Investors are increasingly looking to stablecoins as a safer option to experiment with cryptocurrency now that the 2017 crypto mania is over. The supply of stablecoins increased by 94% in the first half of 2020, reaching $11 billion in June. The Office of the Comptroller of the Currency (OCC) in the United States authorized national banks and federal savings associations permission to retain reserves for stablecoin issuers in September 2020.

The idea of a digital dollar, a shadow currency that puts fiat onto the blockchain without jeopardizing its value, is becoming increasingly appealing as more well-known participants join the fray—for example, the Winklevoss twins, Circle, and Coinbase.

How to buy StableCoins

The majority of stablecoins are bought on cryptocurrency exchanges. They can be purchased in the same way as any other cryptocurrency. Just make sure the exchange you’re using supports the stablecoin you want to buy.

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Business

NFT Platform OpenSea hits Record high $3.5B in Monthly Ethereum Volume.

If you invested in NFTs this year, you are in luck. According to data from Dune Analytics,Open Sea recently recorded a monthly Ethereum trading volume that has surpassed $3.5 billion, setting a new all-time high.

With a few days left until the end of the month, OpenSea trade volume has already surpassed both the previous all-time high of $3.42 billion set in August of last year and the $3.24 billion in sales set in December of the previous year. 

NFTs are cryptographically unique digital tokens that serve as proof of ownership for a broader range of Tangible goods that may be stored digitally and have a variety of applications, including collectibles, music, films, art, and video games. The recent surge in activity on OpenSea coincided with the bigger crypto market remaining stagnant in recent weeks, with BTC down 7.5 percent since the beginning of the year. According to CoinGecko data, Ethereum, the second largest cryptocurrency by market cap, has dropped 14.6 percent in the last two weeks and is now trading at $3275.

Bored Ape Yacht Club, which boasted a slew of celebrity owners, is still the most popular NFT collection on OpenSea, with 14,306 ETH transferred in the last 24 hours. OpenSea launched a $300 million Series C fundraising round earlier this month, anchored by Coatue and Paradigm. The company’s current funding raised its valuation to $13.3 billion, and the fresh funds would be utilized to develop new products and grow the workforce.

With some new arrivals on the platform, the rivalry in the sector is heating up. LooksRare, a new NFT marketplace that opened earlier this month and has already exceeded OpenSea in terms of trading volumes, according to Dune Analytics. It’s unclear how this battle will play out in the long run, as early indications suggest LooksRare is engaging in wash trading to manipulate the platform’s token-based rewards system.

As previously reported, the non-fungible token marketplace platform OpenSea now has over 1 million active user wallets and continues to grow and impress in the new year, with adoption and trading metrics also increasing, and the NFT giant reached a new milestone in the number of active users on the platform, according to data from Dune analytics.

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Business

DeFi Alliance goes full DAO After Raising $50 million.

DeFi Alliance, a crypto business accelerator based in Chicago, has modified its organizational structure to become a decentralized autonomous organization. More than 300 individuals have contributed $50 million to the DAO, which will be used to assist Web3 startups.

In a blog post published on Thursday, the team explained the newly established AllianceDAO. The DeFi Alliance team described the DAO as a “digital startup nation” that was built by a collaborative community of founders from various crypto and non-crypto enterprises.

A DAO is a blockchain-based organization that uses smart contracts to implement encoded, automatic rules. DAOs are a new type of corporation that allows a community or group to organize themselves in a decentralized manner and make decisions using a token-based voting system.

DeFi Alliance, which was created by Imran Khan and Qiao Wang in early 2020, has accelerated 90 businesses, including some of the most commonly utilized DeFi projects on Ethereum, such as 0x, Alpha Finance, dYdX, Kyber, Olympus DAO, Paraswap, Ribbon Finance, Sushiswap, Synthetix, and Zerion, to mention a few.

Twitch co-founder Kevin Lin, Gemini founders Cameron and Tyler Winklevoss, OpenSea co-founder & CEO Devin Finzer, Terra founder Do Kwon, Aave founder Stani Kulechov, Circle founder & CEO Jeremy Allaire, and others were among the 300 contributors to AllianceDAO’s initial investment round.

In an incentivized DAO environment managed by all community members, AllianceDAO contributors will join as mentors of future Web3 firms. Web3 is the next generation of the decentralized Internet, and it runs on public blockchains such as Ethereum.

In the next months, AllianceDAO plans to provide a whitepaper with further information on its organizational structure and governance.

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Opinions

Bitcoin and Ethereum Are Heading for “Death Cross.” Should you care?

“Loss of life cross” is a technical term used in the inventory buying and selling industry. It denotes an unusual combination of the 50- and 200-day value averages. Although death crosses are never a good thing, crypto experts will be unconcerned. 

A “death cross” pricing event looms for the two largest cryptocurrencies and, without a significant rise, might occur later this week. The phrase “death cross” has a frightening ring to it, but should crypto investors be concerned?

To find out, Decrypt visited with some seasoned crypto traders. But first, let’s define what a dying cross actually is.

The term comes from the world of traditional stock investing, and it refers to a situation in which two moving averages—the 50-day and the 200-day—intersect. (Shifting averages describe the average closing value over a specific time period.)

In theory, the chart traces that characterize these averages should rarely or never meet. This is because the 200-day average not only includes the 50-day average, but also shows a four-fold longer trend. Any price spikes or dips that occur over the course of the 50-day period should be mostly smoothed out by the longer-term trend.

If the two traces cross, it signifies the value has gone so much up or down that the 50-day development on the value chart has crossed the 200-day development. A golden cross is formed when the 50-day line crosses the 200-day line in an upward direction. It is, however, a dying cross when it occurs on a downward descent.

The imminent dying cross events can be seen in the chart below, courtesy of Bloomberg. We’ve added a scarlet arrow to show where the 50- and 200-day averages for Ethereum are about to meet, and a blue arrow to show where the 50- and 200-day averages for Bitcoin are about to meet.

As you can see, the gap between the lines is narrower for Bitcoin, implying that the dying cross is more likely to happen first.

Is it true that if a dying cross occurs, the value of the asset in question–be it a token or an inventory–is doomed?

The appearance of a dying cross in the case of a traditional stock or the stock market as a whole is bad news, especially as similar events have historically preceded numerous major and prolonged downturns. And for other traders, the appearance of a dying cross serves as a signal to flee before things become much worse.

When it comes to Bitcoin, the story is a little different. While reaching a death cross isn’t a pleasant experience, the unique cryptocurrency has done so on several occasions in its 11-year history, the most recent in June of 2021. And, in any case, the one-of-a-kind cryptocurrency has turned out to be really great.

Analysts from two major crypto businesses, which control the price of Bitcoin and Ethereum in the billions of dollars, agreed.

“Merchants obviously observe staple technical indicators, with the 50, 100, and 200 [day moving averages] being key,” wrote a Genesis buying and selling desk employee in an email. “The ‘dying cross’ is on the radar, but it doesn’t appear to be a huge event.”

An employee at another large crypto firm, who did not want to be identified for compliance reasons, was similarly unconcerned.

“People make it out to be a huge, terrifying bearish event, but the last time it happened, the market bottomed out and was quickly pumped back up,” the analyst wrote in an email. “Equally, the market sank after touching $64k in June ’21, fueled by leverage. This time, the sell-off could be due to the Federal Reserve’s ambitions to reduce its balance sheet.”

Kyle Samani, the founder of Multicoin Capital and a long-time cryptocurrency trader, was particularly forthright.

“TA is garbage,” he remarked on Twitter, using the dealer abbreviation for “technical evaluation.”

Because all three participants have a vested interest in the value of crypto remaining healthy, skeptics may dismiss their comments as overly optimistic.

Nonetheless, the long-term value trend of both Bitcoin and Ethereum has moved steadily upward, despite several pops and crashes over time and despite their disastrous start in 2022—so another brush with a dying cross is unlikely to signal long-term catastrophe.

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Reviews

What is Ethereum 2.0?

The first phase of Ethereum 2.0 is now live. It’s been a long time coming, but it’s finally here. The multi-phased upgrade was released on December 1st 2020 to improve the Ethereum network’s scalability and security by making a number of infrastructure modifications, the most notable of which is the conversion from a Proof of Work (PoW) consensus method to a Proof of Stake (PoS) model.

The Ethereum blockchain has been upgraded to Ethereum 2.0, often known as Eth2 or “Serenity.” ETH 2.0 is the result of long-term planning in the Ethereum roadmap, aimed at enabling the network to process more transactions while increasing security and enhancing decentralization. This is a huge undertaking requiring great innovation and significant changes to create novel solutions that offer more benefits to the users.

Ethereum 2.0 was released in stages, with the first, known as the Beacon Chain, becoming online in 2020. The Beacon Chain adds native staking to the Ethereum blockchain, which is an important part of the network’s transition to a PoS consensus process. It’s a distinct blockchain from the Ethereum mainnet, as the name implies. This is designed to minimize the disruption of normal chain activities during these early stages of the transition.

The Merge is the second phase. It will merge the Beacon Chain with the Ethereum mainnet and is planned for the first or second quarter of this year. It will unlock the other functionalities of the Ethereum blockchain. It will enable transfers and withdrawals, cross-shard transfers, and the ability to build applications. The PoW mechanism will be retired in Phase 2 with Ethereum 1.0 data absorbed in ETH 2.0 public mainnet.

Shard Chains, the final step, is critical in scaling the Ethereum network. Instead of settling all transactions on a single blockchain, shard chains distribute them across 64 different chains. This also means that running an Ethereum node is significantly easier in terms of hardware because there is far less data that needs to be saved on a machine. 

Shard Chains are also expected this year too but the exact date is unknown.

Why is Ethereum important?
Despite the fact that the ETH 2.0 upgrade has been in the works for a long time, it could not have come at a better moment. Because of its smart contract features, Ethereum has become the most popular network for developing a wide range of dApps, from games to financial applications. The rising popularity and use of Ethereum have resulted in higher demand, which can cause the network to become overburdened. For example, the network has failed to keep up with the growing DeFi market, with transaction prices recently soaring. This has served as a timely reminder that Ethereum, in its current form, is unsustainable. ETH 2.0 will address these issues by significantly increasing network capacity, cutting transaction fees, and allowing for the development of more innovative solutions.

Following a number of postponements, the wider crypto world is looking forward to the launch of ETH 2.0. As a result, Ethereum developers are extremely cautious, and the launch has been postponed until the code has been thoroughly audited. As things stand, the Ethereum community will have to wait a long time for ETH 2.0 to be released. The wait is well worth it, given the enormity of this upgrade. Alternatively, good things come to those who wait, as the proverb says.

The security was taken into consideration when Ethereum 2.0 was developed. The majority of PoS networks have a small number of validators, resulting in a more centralized structure and lower network security. Ethereum 2.0 necessitates a minimum of 16,384 validators, making it far more decentralized and hence secure.

The Future for Ethereum 2.0

Ethereum’s Co-founder Vitalik Buterin has laid out a roadmap of how the next five to ten years could pan out for Ethereum 2.0. Over the last two years, he claims, there has been a “solid shift from ‘blue sky’ research, attempting to understand what is conceivable, to actual research and development, attempting to optimize certain primitives that we know are implementable and implementing them.”

According to Buterin, the majority of the difficulties are now “increasingly about development, and development’s piece of the pie will only continue to expand over time.” Buterin stated that before deploying shard chains, Ethereum 2.0 will need to rely on current scaling mechanisms such as ZK-rollups for at least two years.

Ethereum’s London hard fork and Ethereum Improvement Proposal 1559 (EIP-1559), which modifies how transaction fees function on the network, were released in August 2021. Users that perform a transaction on the Ethereum network pay a basic fee that is burned rather than being sent to Ethereum miners, lowering the quantity of ETH and putting deflationary pressure on the network.

The release of Ethereum 2.0 was just what the cryptocurrency needed, according to some.

“All problems will be answered once Ethereum has scalability via layer-2 tech or ETH 2.0,” mentioned Jamie Anson, CEO of Nifty Orchard and Organizer of Ethereum London. “The shooting gun will be activated.”

In other words, increased scalability leads to increased usage, which leads to increased demand. In theory, this should push the price of Ethereum to unprecedented heights.

Categories
Coins

Central Bank Digital Currency Explained.

CBDC stands for “Central Bank Digital Currency,” a new sort of currency being tested by governments all around the world. What distinguishes a CBDC from other currencies is that proponents believe it will be able to employ new payment technologies, such as a blockchain, to improve payment efficiency and reduce costs. These are electronic versions of a country’s fiat currency.

The International Monetary Fund (IMF) considers CBDCs to be a new form of money that are:

🤖 In a digital form

🏦 Issued by a country’s central bank

💵 Intended to serve as legal tender

CBDCs comparable to stablecoins, which are tethered to a fiat currency at a 1:1 ratio. However, private businesses manage stablecoins like Tether (USDT), which are backed by central bank-issued cash or cash equivalents. They keep these assets in order for their stablecoins to accurately reflect the value of fiat currencies.

The creation of this new sort of currency is still in its early stages. Most countries, such as the United States, are just getting started with the concept of a digital currency. A few forward-thinking countries, like China with its digital yuan and South Korea, have already completed a demonstration and are putting the technology to the test. However, a CBDC has yet to be used in a large-scale deployment. In Africa, Nigeria, Ghana, South Africa, and Kenya are leading the change.


Each country that is considering establishing a CBDC has its unique strategy. Several CBDCs are built on the same basic ideas and blockchain technology that underpin Bitcoin, the first cryptocurrency.

Blockchain technology allows multiple entities to keep a copy of a transaction history, allowing the history to be distributed rather than controlled by a single party.

Several countries have been reported to be experimenting with CBDCs based on the blockchain. Venezuela was a forerunner in this regard, establishing the petro, its own cryptocurrency, in 2018. However, the petro is beset with issues, and only a small percentage of Venezuelans utilize it.

Aside from Venezuela, China’s government is likely the most advanced in its efforts to establish a CBDC. It is already experimenting with a digital yuan in a number of cities. The Federal Reserve Bank of Boston is also experimenting with a digital dollar in collaboration with the prominent Massachusetts Institute of Technology (MIT).

How do CBDCs work?

Blockchain is sometimes mentioned as the underlying technology for CBDCs by states developing central bank digital currencies, but the central bank retains control over the ledgers. Cryptocurrencies, on the other hand, are decentralized and do not have a central authority.

CBDCs can be used in a variety of ways by state governments. CBDCs, on the other hand, tend to work on mobile wallets akin to Apple Pay or Google Wallet, based on early prototypes.

The central bank of the Bahamas, which fully implemented a CBDC in October 2020, issues Sand Dollars in the same way that it issues Bahamian dollars. It also keeps track of all the Sand Dollars in circulation.

The Future of CBDCs

More countries will launch fully-fledged CBDCs over the mid-term, with China leading the charge. China will roll out the digital yuan during the Beijing 2022 Winter Olympics in February. However, some U.S. Senators have urged a ban on American athletes “receiving or using digital yuan” during the tournament, fearing that it could be used to surveil those visiting China “on an unprecedented scale”.

Concerns about privacy are only going to get louder. Some CBDC proponents have argued that digital currencies are more private than privately issued stablecoins because “we have no commercial interest in storing, managing, or monetizing the data of users.” In June 2020, ECB executive board member Fabio Panetta argued that a digital euro would be more private than privately issued stablecoins because “we have no commercial interest in storing, managing, or monetizing the data of users.”

Others, on the other hand, have expressed worries about the privacy implications of CBDCs, because they allow states to keep a close eye on monetary flows on a macro level—and, more problematically, on an individual level. The digital yuan will have “limited anonymity,” according to Mu Changchun, director of the People’s Bank of China’s Digital Currency Research Institute, with minor payments connected to users’ phone numbers and larger transfers requiring more thorough KYC data.

Conservative senators in the United States have argued that China’s digital yuan may be used to “extend domestic surveillance activities” or even “impose party discipline” in the country. A CBDC, according to Congressman Tom Emmer (R-MN), would only be advantageous if it was “open, permissionless, and private.”

While many central banks see blockchains as bringing benefits such as efficiency gains, several central banks have expressed skepticism, arguing a blockchain-inspired CBDC does not bring enough benefits to justify creating and maintaining one.

Categories
Opinions

Crypto is Growing in Africa

Uganda is no stranger to crypto currencies; numerous young people have attempted to learn how to trade, and some have gone on to purchase and invest in various coins. The remainder of Africa, including Uganda, has quickly caught up to the Crypto currency frenzy. The best thing about Crypto currencies is that one only needs a smartphone and online connectivity to become part of the blockchain network.

In Africa, Bitcoin is the most popular and widely utilized cryptocurrency. Because most countries and governments around the world do not support cryptocurrencies, their use in Africa is still expanding. Despite the fact that some governments, such as Kenya, declared in 2015 that they do not engage in crypto trading, the Ripple coin and the most widely used Bitcoin are increasing in value while the Kenyan Shilling is losing value. 

Nigeria, with a population of over 200 million people, is the most populous country in Africa. The country was impacted heavily by the Covid-pandemic, as were many other countries. This resulted in a 20 percent increase in food prices while inflation decreased. Kenya, with a population of approximately 53 million people, has a similar inflation rate, though slightly lower than in 2019. These events will spur the growth of online commerce, which will be aided in part by crypto, such as the Atom cosmic currency.

Crypto’s minimal drawbacks when it comes to cross-border transfers make it an ideal alternative for investors who need to send money quickly from one side of the globe to the other. Crypto will become more popular in the future as a result of its ease of use and access, which only requires a mobile phone, app, and network connection. Because of innovations like M-Pesa in Kenya, Wave, and Mobile Money, Africans are already accustomed to making online payments.

Analysts predict that due to the ease of use and cost-effectiveness of cryptocurrencies when sending and receiving money, the digital currency will continue to rise unabated across Africa. Stablecoins are a type of cryptocurrency whose value is tied to a certain asset class. For example, a fiat currency such as the US dollar or gold. These stablecoins provide Africans with a new way to save money while dealing with their own country’s unpredictable currencies without having to worry about their investment depreciating. The currently modest cryptocurrency sector in Africa will grow in popularity in the future due to its several advantages over traditional banking systems.