As traders braced for classic volatility into the weekly close, Bitcoin looked decidedly unappetizing. At $39,500 on Bitstamp, the spot price at the time of writing would constitute the lowest weekly close since the week of March 7.
“Pretty obvious uptrend since mid-to-late January imo. If we have our 4th RED weekly close today could be bad though,” Twitter account CryptoBull commented in a discussion with popular analysts Johal Miles and Pentoshi.
Four red weekly candles in a row would be a rare event, the account added, noting its absence for the past two years on the weekly chart.
“Hasn’t happened since 6/2020. But after that happened we went to up to ATH,” it wrote.
Data from on-chain monitoring resource Material Indicators meanwhile showed thinning bids below spot price, which nonetheless continued to retest $40,000 resistance.
Binance order book data chart. Source: Material Indicators
France keeps markets on edge
Outside technical signals, attention focused on France Sunday as the Presidential elections came to a close.
With incumbent Emmanuel Macron expected to win a second term, warnings nonetheless painted a dire market reaction in the event that his rival, Marine Le Pen, won the presidency.
“It would be a terrible day for markets,” Ariane Hayate, fund manager at Edmond de Rothschild Asset Management, told Bloomberg.
“The first impact would be on the French 10-year bond yield that could go through the roof.”
As Cointelegraph reported, the European Union’s financial fragility has been brought to the fore as inflation soars and central bank balance sheet reductions have yet to kick in.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and throw in a few random zingers to keep them on their toes!
This week, our 6 Questions go to Lili Zhao, director of ecosystem growth at Neo — an open-source blockchain development platform.
The A to Z of Lili Zhao:
Authenticity — easier said than done
Blockchain advocate
Community — Neo has the best!
DAO — fascinating!
Economics — interests me much more now than when I was studying it at university
Falling — never afraid of it because I always bounce back
Game — life is a game, so let’s play
Hot — N3 is hot
Ideas — too many ideas, not enough focus
Job — growing the ecosystem of the Neo blockchain by profession and passion
Key — keep your private key safe
Love — may everyone be blessed with it
Minimalist — a chaotic minimalist wannabe
Neo — an open network for the smart economy
Open source — love it
Polaris — Neo hackathon, register now
Qi — breath, energy and flow
Raison d’etre — if you found it, tell me how?
Spicy food — can’t live without it for more than a week!
Twitter — @Lili_Zurich
Unique — all of us are
Vegetarian — 90% of the time, I am one
Wallet — get a NEO wallet on our website
X — do you have a word suggestion?
Yield — a stable NEO/GAS yield
Zurich-based, zest for life!
1 — Does it matter if we ever figure out who Satoshi really is or was? Why, or why not?
It doesn’t matter at all! The technology Satoshi created and its legacy has lived on and will continue to live on. One of the main appeals of the blockchain ecosystem is its community-driven spirit instead of being about personal glorification. Imagine if someone comes out and is indeed being confirmed as Satoshi Nakamoto. If that person deviates widely in terms of values and ethics from the ones envisioned by many, that may shatter some dreams and faith!
The anonymity of Satoshi has allowed people to have their own version of who they might or should be. The identity, or lack thereof, of Satoshi has been elevated into a Holy Grail that is to be pursued.
We say curiosity kills the cat — and in this case, curiosity may kill Bitcoin! Let Satoshi remain as a legendary myth, and let us honor their creation, Bitcoin, by advancing it to mass adoption.
2 — Which countries are doing the most to support blockchain, and which ones will be left behind?
There are quite a few countries that immediately come to people’s minds for those of us working in the blockchain space — namely, Switzerland, Singapore, El Salvador, Portugal, the United Arab Emirates — especially Dubai — and more. However, in my opinion, the country that is doing the most to support the adoption of blockchain technology is actually China. It may surprise some people, as China has been known to ban Bitcoin mining and crypto trading. Let me explain why.
China’s state-backed Blockchain-based Service Network is working on an interoperable blockchain infrastructure at both the national and international levels. As an open-source blockchain platform, Neo forms part of the permissionless blockchains from the international version of the BSN. The organization plans to support multiple future central bank digital currencies — an initiative in which China is the undisputed champion.
At the national level, the BSN is integrating Neo’s Jiuquan Chain for the large-scale issuance of NFTs, or distributed digital certificates — its alternative name as preferred by China. As stated by He Yifan, CEO of Red Date Technology — the BSN’s technology support provider — “NFTs in China will see annual output in the billions in the future.” The use of the term “digital certificate” indicates that the technology could be used to digitize any asset and automate any paper-based process with smart contracts.
The mass adoption of blockchain technology can only come when the underlying infrastructure is built with it from the ground up. This is because it is a replacement rather than an upgrade to the existing legacy technology.
China is leading this digital transformation in building blockchain infrastructure and launching large-scale mainstream use cases. This will greatly advance the whole industry globally and, in the long term, benefit everyone.
3 — Which is sillier: $500,000 Bitcoin or $0 Bitcoin? Why?
Bitcoin at $500,000 is sillier because Bitcoin at $0 is impossible!
Ten years ago, Bitcoin at $50,000 would have been thought of as silly. Today, it has become a norm, even though some question how sustainable it is. Bitcoin will never become zero because it has intrinsic value beyond its technological and monetary merits. In addition, it has become a domain of economics, philosophy and politics.
Value has been redefined in the smart economy underpinned by blockchain technology. The factors that make things valuable according to mainstream economic theories such as labor, costs of production, utility or even scarcity can no longer explain the rise of cryptocurrencies. Take the memecoin Dogecoin, for example: It has an infinite supply and ranks 12th on CoinMarketCap at the time of writing. Or is it because it has a God-like father figure advocate in Elon Musk?
Whatever the case, the point is that value has been fundamentally challenged. Anyone who envisages Bitcoin going down to zero is too attached to the traditional economic theories to recognize this paradigm shift. And silly can be the birthplace of innovation. So, be kind to silliness! (Silly emoticon here)
4 — What’s the most interesting place you’ve ever visited, and why?
I would say the Canggu surf beach in Bali is the most interesting place I have visited. It tops my list not because of the exotic nature but more the feelings it evoked in me while I surfed there — a sense of total freedom and flow! I am a rather spiritual person, so a place with only physical spectacles will delight or impress me; but to move me, it will need to evoke something deep.
However, despite my passion for surfing, I am actually pretty lousy at it. Haha! I do want to get better, but for me, it’s about the experience rather than being competitive. As someone who values experiences above all, this question is one that I hope I will have a different answer for every year.
5 — What talent do you lack but wish you had? How would you use it if you had it?
I wish I could sing so I could use this talent to make some cool songs that will make people happy or bring some positive impact to their life. Our thoughts and emotions are often suppressed because words are inadequate to capture them. When they are properly captured by the linguistically blessed, they are poetry.
However, when they are linguistically captured and also musically conveyed, they are like food and cocktails for the soul — both nourishing and tasty. A song with the right lyrics and melody can easily move me into a state of bliss, calm or melancholy.
Of course, there is also the possibility of becoming a commercial hit while doing what you love. Singing is one of the few talents that affords such an opportunity.
I would then tokenize all my songs on the Neo blockchain and receive and distribute royalty payments with full transparency. Here, the use case excites me more than being a commercial hit. I suppose I could already become a hit by singing now — people would pay for me to shut up!
6 — Who makes sense to you, and who makes no sense whatsoever?
When I was younger, I was much more opinionated and binary, so I could have given you a long list of who made sense and who didn’t! Now, I am wiser. At least that’s my sense of it. This may make no sense whatsoever to somebody who witnesses the silly things I still say and do at my not-so-tender age.
I am an existentialist. I believe that life has no inherent meaning apart from what each of us chooses to do that gives sense to it. There are three key qualities that I value and use to guide me in life: freedom (to do what I love), authenticity (to be who I am) and growth (a dynamic process evolving with new experiences).
I believe that everything that happens makes sense, even if it might appear senseless at the time of it happening. Navigating through nuance is the fundamental difference that separates us from artificial intelligence, which works best in binary.
A wish for the young, ambitious blockchain community:
No one would be asking for the elusive killer DApp if it were already here — it would be everywhere!
Loans based on cryptocurrencies have become a mainstay of the decentralized finance (DeFi) universe ever since the smart contract-based lending/borrowing platforms began offering the service to crypto users. The Ethereum network, the first blockchain that scaled the smart contract functionality, sees most of the total value locked (TVL) on DeFi protocols dominated by cryptocurrency lending platforms.
According to data from DeFi Pulse, the top 4 of 10 DeFi protocols are lending protocols that account for $37.04 billion in TVL, just 49% of TVL of the entire DeFi market on the Ethereum blockchain. Ethereum leads in terms of being the most utilized blockchain for the DeFi market and the TVL on the network. Maker and Aave are the biggest players here, with a TVL of $14.52 billion and $11.19 billion, respectively.
Even on other blockchain networks like Terra, Avalanche, Solana and BNB Chain, the adoption of cryptocurrency-based loans has been one of the main use cases of smart contracts in the world of DeFi. There are about 138 protocols that provide crypto loan-based services to users, amounting to a total TVL of $50.66 billion, according to DefiLlama. Apart from Aave and Maker, the other prominent players in this protocol category across blockchain networks are Compound, Anchor Protocol, Venus, JustLend, BENQI and Solend.
Johnny Lyu, the CEO of crypto exchange KuCoin, talked to Cointelegraph about the choice of blockchain networks for crypto lending. He said:
“I would say the ideal blockchain for loans and DeFi does not exist, as each has its own advantages. At the same time, the leadership of Ethereum is undeniable due to many factors.”
However, he didn’t negate the possibility of the emergence of a truly ideal blockchain for DeFi. Kiril Nikolov, DeFi strategist at Nexo — a cryptocurrency lending platform — seconded this view. He told Cointelegraph:
“The short answer is ‘no.’ Most blockchains are crypto lending-friendly. However, among the primary properties to watch for are liquidity and reliability, while a secondary determining factor might be network fees.”
Considering that the liquidity and reliability of the Ethereum platform are the highest right now due to it being the most utilized blockchain within DeFi, one could consider taking advantage of the same and making it the blockchain of choice.
Prominent players
To start with, a borrower needs to choose between the major lending protocols on the network such as Maker, Aave and Compound. While there are a plethora of crypto lending platforms, in this piece, the most prominent ones are considered for the sake of ease of explaining and relatability.
Cryptocurrency lending essentially enables users to borrow and lend digital assets in return for a fee or an interest. Borrowers need to deposit collateral that will instantly allow them to take a loan and use it for the objectives of their portfolio. You can take loans without any collateral, known as flash loans, on platforms like Aave. These loans need to be paid back within the same block transaction and are mainly a feature meant for developers due to the technical expertise required to execute them. Additionally, if the loaned amount is not returned plus the interest, the transaction is canceled even before it is validated.
Since crypto-based loans are completely automated and simple for the average retail investor and market participants, in general, they provide an easy way to earn annual percentage yields on the digital assets they are hodling or even accessing cheap credit lines.
One important aspect of collateralized loans is the loan to value (LTV) ratio. LTV ratio is the measurement of the loan balance in relation to the value of the collateral asset. Since cryptocurrencies are considered to be highly volatile assets, the ratio is usually on the lower end of the spectrum. Considering Aave’s current LTV for Maker (MKR) is 50%, it essentially means that you can borrow only 50% of the value as a loan in relation to the collateral deposited.
This concept exists to provide moving room for the value of your collateral in case it decreases. This results in a margin call where the user is asked to replenish the collateral. If you fail to do so and the value of the collateral falls below the value of your loan or another predefined value, your funds will be sold or transferred to the lender.
The extent of the impact of cryptocurrency-based loans reaches out of the DeFi market since it enables access to capital for individuals or entities without a credit check. This brings a mass population of people across the world that have a bad credit history or no credit history at all. Since lending and borrowing are all driven through smart contracts, there is no real age limit for the younger generation to get involved, which is traditionally not possible through a bank due to the lack of credit history.
The primary risk involved with crypto lending is smart contract risk since there is a smart contract in play managing the capital and collateral within each DeFi protocol. One way this risk can be mitigated is by robust testing processes implemented by the DeFi protocols deploying these assets.
The next risk you need to consider is the liquidity/liquidation risk. The liquidity threshold is a key factor here because it is defined as the percentage at which a loan is considered to be under-collateralized and thus leads to a margin call. The difference between LTV and liquidity threshold is the safety cushion for borrowers on these platforms.
For lenders, there is another additional risk related to impermanent loss. This risk is inherent to the automated market maker (AMM) protocol. This is the loss that you incur when you provide liquidity to a lending pool, and the underlying price of the deposited assets falls below the price at which they were deposited into the pool. However, this only occurs when the fees earned from the pool don’t compensate for this drop in price.
Nikolov pointed out another risk with DeFi lending platforms. He said that “Another one is bad collateral listing which could lead to disturbances of the entire platform. So, if you’re not willing to take these risks, we recommend borrowing from a platform like ours that guarantees you certain protections such as insured custody and over-collateralization.”
Additionally, cryptocurrency lending and borrowing platforms and users both are subject to regulatory risk. Lyu mentioned that the regulatory framework on this issue has not been fully formed in any major jurisdiction, and everything is changing right before our eyes. It is necessary to separate borrowers from each other — private borrowers and companies of borrowers.
Essentially, the risks highlighted makes it critical for you to exercise extreme caution when deploying your capital in crypto-based loans, either as a borrower or as a lender. Paolo Ardonio, the chief technology officer of crypto exchange Bitfinex, told Cointelegraph:
“It is important that those participating in crypto lending on DeFi platforms be mindful of the risks in what is still a nascent field in the digital token economy. We’ve seen a number of high-profile security breaches that have put the funds of both borrowers and lenders at risk. Unless funds are secured in cold storage, there will inevitably be vulnerabilities for hackers to exploit.”
Despite the risks mentioned, cryptocurrency-based lending is one of the most evolved spaces in DeFi markets and is still witnessing constant innovation and growth in technology. It is evident that the adoption of this DeFi category is the highest among the numerous others growing in the blockchain industry. The use of decentralized identity protocols could be integrated into these platforms for the verification of users to avoid the entry of scrupulous players.
Ardonio spoke further on the innovation expected in DeFi loans this year, stating, “I expect to see more innovation in crypto lending, particularly in terms of the use of digital tokens and assets as collateral in loans. We are even seeing nonfungible tokens being used as collateral in loans. This will be an emerging trend this year.”
If you’re into cryptocurrency or blockchain, there’s a good chance I don’t have to spell out the benefits of decentralization. You’re a first-generation user of a technology that will increasingly define the future of the internet, and you have front-row seats to the world premiere of Web3.
The internet’s use and control were always as centralized as we see now. In the early days, under the stewardship of the United States Department of Defense, the network needed not to rely on one core computer. What if a terrorist attack or missile strike took down the principal node? Individual network parts had to communicate without relying on a single computer to reduce vulnerability.
Later, the unincorporated Internet Engineering Task Force, which facilitated the development of all internet protocols, worked ceaselessly to prevent private companies or particular countries from controlling the network.
Today, centralized app nodes are controlled and operated by the planet’s richest organizations, collecting and storing billions of people’s data. Private companies control the user experience on apps and can incentivize and manipulate behavior. From a reliability standpoint, billions lose their primary means of communication when centralized nodes go down — as in recent incidents with Facebook, Instagram, WhatsApp and Messenger in October 2021.
We have also seen how little the tech behemoths think of our privacy when dollar signs appear in their eyes: They harvest and sell our data on an industrial scale. After 10-plus years of using people as advertisers’ products, Mark Zuckerberg has brazenly co-opted the metaverse. Google and Apple, meanwhile, continue their incessant mission to enter every corner of our lives.
We also know what happens when authoritarian governments come knocking on the doors of these centralized mega-warehouses of data, fed by our devices that function as a surveillance army. We’ve seen in Ukraine the awful, large-scale violence that can be excused or hidden when media and military power comes under authoritarian control. In some countries, the state has unprecedented access to every aspect of citizens’ behavior, monitoring everything from internet search history to minor social infractions. Systems that would horrify even George Orwell are only possible because of centralization.
Even in Silicon Valley, ensconced within Western notions of freedom and individuals’ rights, tech empires rarely choose a principled stance over a large, lucrative market. When centralized powers such as Moscow, Beijing or Istanbul ask for censorship and control, they usually get it. Fundamentally, we cannot trust the tech giants with the innermost details of our lives; the centralization of control over the internet is undermining or forestalling democracy everywhere.
Taking our power back
We should not be surprised that tech behemoths have become the natural enemies of decentralization: Centralization is a natural instinct for those in control. Until the advent of the internet and the blockchain, centralization often meant convenience and simplicity. In the Middle Ages, a distributed system of vassal lords meant the monarchy lacked control, and money seeped through the cracks of corruption.
With time and distance no longer problematic in the internet age, Big Tech’s drive toward centralization is less surprising. Can we be astonished by the horrific results of attention-grabbing algorithms, such as attempted genocides or political manipulation based on psychometric analysis of user data? Centralization has consequences.
Distributed ledger technology provides a practical alternative. Social media, messaging, streaming, searching and data-sharing on the blockchain can be fairer, more transparent and accessible, and less centralized. Conversely, this does not mean data has to be less private.
In XX Messenger’s case, which my team and I launched in January, XX Network nodes process anonymous messages worldwide, shredding metadata for recipients and timestamps. With XX, there is privacy and decentralization. Later, this new paradigm of communications and information-sharing makes a significant extension and reinvention of democracy possible.
There are moments in history when two separate events combine to tell a greater truth. In 2008, when Lehman Brothers Holdings Inc. crashed in the wake of the Great Recession, it seemed to be the death knell of centralized financial institutions, despite the economic pain it would herald. Then, little more than a month later, Satoshi Nakamoto published the Bitcoin (BTC) white paper, the revolutionary blueprint for modern peer-to-peer currency. There’s an important connection between these two momentous events, yet the words “Bitcoin,” “blockchain” and “cryptocurrency” draw eye-rolls from those who misunderstand centralization’s issues.
In the autumn of 2008 was the opportunity to begin telling a story: It is up to us — the cryptographers, privacy lovers, traders, developers, activists and converts — to carry the torch of decentralization and democracy. If there was ever a tale that deserved to be told, beginning to end, it is this one.
Join me in telling it.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
David Chaum is one of the earliest blockchain researchers and a world-renowned cryptographer and privacy advocate. Known as “The Godfather of Privacy,” Chaum first proposed a solution for protecting metadata with mix-cascade networks in 1979. In 1982, his dissertation at the University of California, Berkeley became the first known proposal of a blockchain protocol. Chaum developed eCash, the first digital currency, and made numerous contributions to secure voting systems in the 1990s. Today, Chaum is the founder of Elixxir, Praxxis and the XX Network, which combine his decades of research and contributions in cryptography and privacy to deliver state-of-the-art blockchain solutions.
Monero (XMR) price dropped by nearly 10% three days after establishing a week-to-date high around $290 on April 24. Nonetheless, several technical indicators suggest that the XMR/USD pair is poised to resume its uptrend over the next few months.
Falling wedge breakout underway
Notably, XMR’s price broke out of its “falling wedge” structure in late March. It continued its move upside in the later daily sessions, with rising volumes indicating bullish sentiment among Monero traders.
Traditional analysts consider falling wedges as bullish reversal patterns, i.e., the price first consolidates within a contracting, descending channel, followed by a strong bounce to the upside.
As a rule, the falling wedge’s breakout target comes to be near the level at length equal to the maximum distance between the pattern’s lower and upper trendline.
The XMR’s falling wedge is up to nearly $250-long. Meanwhile, the structure’s breakout point sits around $210. As a result of this, the Monero token’s upside target comes to be near $470, up more than 75% from today’s price.
Nevertheless, XMR still needs to close above $300, a psychological resistance level, to confirm its move toward the falling wedge target.
Monero hard fork ahead
XMR’s bullish outlook also appears in the months leading up to Monero’s hard fork.
Notably, Monero will undergo a tentative protocol upgrade in July, preceding a testnet deployment in May. The update aims to increase the ring size from 11 to 16 to ensure that XMR transactions have a larger anonymity set to make it harder to find the transaction source.
#Monero has a network upgrade (hardfork) on July 16th 2022 at block 2668888.
Privacy and performance will be improved!
The update includes: Ring sizes will increase from 11 to 16 View tags to speedup wallet/node sync Multisig fixes Bulletproof+ +more!#xmr$xmrpic.twitter.com/jZ5ouk1uqo
The hard fork announcement has appeared against the backdrop of rising demand for privacy coins amid geopolitical and economic turmoil.
Top 10 privacy coin performers in the last seven days. Source: Messari
Short-term correction risks
XMR’s strong fundamentals underpin its bullish wedge setup. Nonetheless, Monero is also at risk of retracement in the short-term.
XMR/USD daily price chart. Source: TradingView
XMR has corrected lower after testing $278 repeatedly as resistance in the last three days, raising the possibility that it could continue lower. This would present the next downside target appears near $227, coinciding with the 0.236 Fib line of the Fibonacci retracement graph, drawn from $493-swing high to $145-swing low.
Conversely, a decisive move above $278 could have XMR test $320 — the 0.5 Fib line — as its interim upside target.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
New York State Senator Kevin Thomas introduced a new bill amendment request to establish certain offenses related to rug pulls and other frauds related to virtual token distribution, misuse of private keys and hidden interests in crypto projects.
The bill drafted by Sen. Thomas, Senate Bill S8839, calls for defining, penalizing and criminalizing frauds specifically targeted at developers and projects that intend to dupe crypto investors.
A snippet of Senate Bill S8839. Source: nysenate.gov
Through the bill, Thomas seeks to provide prosecutors with a clear legal framework against crypto crimes that align with the spirit of the blockchain while combatting fraud. It calls for a law amendment that will imply rug pull charges on developers that sell “more than 10% of such tokens within five years from the date of last sale of such tokens.”
Private key fraud involves disclosing or misusing another person’s private keys without prior affirmative consent. The bill also seeks to charge developers with fraudulent failure to disclose interest in virtual tokens that don’t publicly disclose personal crypto holdings on the landing page of the primary website.
The bill wa under committee review to determine its eligibility for floor consideration at the time of writing.
Two members of the House of Representatives — California Representative Norma Torres and Arkansas Representative Rick Crawford — recently introduced legislation to mitigate financial risks tied to El Salvador adopting Bitcoin (BTC) as legal tender.
As Cointelegraph reported, the proposed legislation seeks to analyze the risks to El Salvador’s “cybersecurity, economic stability and democratic governance.” According to Torres:
“El Salvador is an independent democracy and we respect its right to self-govern, but the United States must have a plan in place to protect our financial systems from the risks of this decision.”
In her monthly Expert Take column, Selva Ozelli, an international tax attorney and CPA, covers the intersection between emerging technologies and sustainability, and provides the latest developments around taxes, AML/CFT regulations and legal issues affecting crypto and blockchain.
Germany has risen to the top spot of Coincub’s guide to the most crypto-friendly countries in Q1 2022. The European country allows its long-term domestic savings industry to utilize crypto investments, supported by its zero-tax policy on long-term capital gains from crypto, and its number of Bitcoin and Ethereum nodes is second only to the United States.
Blockchain adoption
In 2019, Germany was the first country to adopt a blockchain strategy to harness the technology’s potential for advancing digital transformation and to help make it an attractive hub for the development of blockchain, Web3 and metaverse applications in fintech, climate tech, business and govtech, including Germany’s digital identities project.
The German Savings Banks Association — a network of 400 savings banks in German-speaking countries — started developing fintech blockchain applications to enable customers to buy and sell cryptocurrencies. Various companies such as Volkswagen, About You, SAP, BrainBot and BigchainDB have been developing NFT, metaverse, Web3, govtech and crypto payment applications that are widely used in e-commerce to purchase goods. Jacopo Visetti, an adviser to C3 — a team of operators and investors who back companies working to reduce emissions — explained to me:
“C3 is a climate tech company developing advanced technological infrastructure allowing to bridge carbon credits from international standards to the blockchain by means of tokenization.”
To fund the development of these technologies, Roundhill Investments, an ETF sponsor focused on innovative thematic funds, launched the Roundhill Ball Metaverse UCITS ETF on the Deutsche Börse Xetra, describing it as Germany’s first metaverse exchange-traded fund. Furthermore, Germany’s Fund Location Act allows pension funds, insurance companies, family offices and corporate investment funds to allocate up to 20% of their assets in digital assets.
Crypto adoption
As of the end of 2021, approximately 2.6% of Germans have used cryptocurrency. And according to a recent report from KuCoin, 44% percent of Germans are motivated to invest in crypto.
German investors can get involved with crypto and blockchain via companies and platforms such as 1inch Exchange, Nuri, FinLab, Minespider, the NAGA Group, Tangany, Coindex, CryptoTax, Upvest, Fiona, Blocksize Capital, USDX Wallet, Bitbond and the Iota Foundation, or they can shop on Sugartrends using Dash. As Mark Mason, communications and business relations manager at Dash, explained to me:
“Dash is an alternative cryptocurrency that provides financial freedom without borders. It accelerates financial inclusion by allowing people to use their phones as bank accounts. It is decentralized, permissionless and censorship-resistant.”
Germany is among the top 10 countries for crypto mining and is home to the European Union’s largest mining company, Northern Data — which is powered almost entirely by renewable energy. Crypto mining is taxable as a business.
Startups
Numerous blockchain startups have settled in Germany’s crypto capital of Berlin, with fintech angel investor Christian Angermayer’s Apeiron Investment Group backing Berlin-based Denario and Penta, as well as Cologne-based Nextmarket and Frankfurt-based Northern Data.
Paycer, a Hamburg-based fintech startup company specializing in cryptocurrencies and decentralized finance, is developing a bridge protocol that will aggregate DeFi and cross-chain crypto services and combine them with traditional banking services.
Berlin-based fintech startup Forget Finance, on the other hand, focuses on motivating young people to save and invest in crypto using online coaching via a mix of AI bots and real financial experts.
Central bank digital currency
According to a survey from Deutsche Bundesbank, Germany’s central bank, the share of cash payments in point-of-sale transactions made by German consumers dropped from 74% in 2017 to 60% in 2020. Accordingly, Bundesbank has been working on distributed ledger technology asset settlements. Meanwhile, the European Central Bank is exploring creating a CBDC, dubbed the digital euro. Recent research commissioned by the ECB, based on discussions with panels of EU citizens, emphasizes security and universal acceptance as primary concerns.
Nonfungible tokens and the metaverse
The metaverse is the next wave of Web3, changing how we interact, socialize, work, play video games, fund charities, purchase and sell nonfungible tokens, and attend concerts, sports events and conferences. In 2017, the ZKM Center for Art and Media in Karlsruhe acquired a number of NFTs, well ahead of the craze of 2021, and it is now exhibiting works from its own collection and private lenders on the “ZKM Cube” — an outdoor, publicly viewable cube-shaped screen. Margit Rosen, head of the collection, archives and research department at the ZKM, shared the details with me in an interview.
Since the onset of the NFT craze, German sportswear company Adidas has teamed up with Bored Ape Yacht Club and with Prada for a charitable climate-focused NFT art project on the Polygon blockchain to raise awareness. Additionally, the German auto company Volkswagen has launched a successful interactive NFT ad campaign.
Brian Shuster, founder and CEO of Utherverse, explained to me: “Utherverse has been building and operating an online virtual world community where one can socialize in real time, attend events and start a business, since 2005. Utherverse has combined the best of the internet, gaming and virtual reality for the ultimate metaverse experience. For example, Secret City is a game developed by Utherverse Digital Inc., with 81% of its users in Germany. Having developed more than 100 patents and pending patents for core internet technologies and the metaverse, we are the undisputed leaders of metaverse architecture and VR economics. There’s a ton of noise out there relating to the metaverse, and frankly, most companies claiming to offer properties and token coins have dangerously underestimated the complexity of the task at hand. Almost every company that’s tried to make a metaverse work has failed. The third generation of Utherverse and its utility token is expected to be unveiled in Q2 of 2022.”
Germany is a member of Europol’s Joint Cybercrime Action Taskforce, which works to fight transnational cybercrime. According to a 2022 report from Europol:
“The use of this virtual currency for criminal activities and laundering of profits has grown over the past years in terms of volume and sophistication. […] The criminal use of cryptocurrency is no longer confined to cybercrime activities, but now relates to all types of crime that require the transmission of monetary value.”
After being tipped off, Germany’s Federal Criminal Police Office, or the Bundeskriminalamt, took down the servers of Hydra, the world’s largest illegal dark web marketplace. Hydra has facilitated over $5 billion in Bitcoin (BTC) transactions since launching. Germany’s move was followed by the U.S. Treasury Department issuing sanctions against Hydra in a coordinated international effort intended to “disrupt the proliferation of malicious cybercrime services, dangerous drugs, and other illegal offerings” available through the Russia-based site.
Gurvais Grigg, public sector chief technology officer at Chainalysis, told me: “The takedown of Hydra is notable not just because it was the largest darknet market in operation, but also because it offered money laundering services that enabled the conversion of cryptocurrency into Russian rubles.” He continued:
“Taken together with the sanctions against Garantex as well as Suex and Chatex last year, government agencies are clearly targeting cashout points that cybercriminals use for ransomware, darknet market sales, scamming and, potentially, sanctions evasion.”
Regulation of digital assets
Germany is one of the few countries in Europe that has started to regulate cryptocurrencies ahead of the European Union’s Markets in Crypto Assets, or MiCA, regulation. According to Robin Matzke, a lawyer and blockchain expert who advised the German Bundestag, Germany’s crypto custody regulation requires those who control private keys on behalf of others and serve the German market to receive a license from the Federal Financial Supervisory Authority, regardless of whether they hold other similar licenses within the EU.
The EU’s new Transfer of Funds Regulation also provides disclosure rules for “unhosted” wallets, or crypto wallets not managed by a custodian or centralized exchange. Lone Fønss Schrøder, CEO of the blockchain company Concordium, explained:
“The new draft regulations require significant changes in the way current cryptocurrency transfers are made. It may be a huge challenge for the decentralized crypto solutions that hold anonymity as a core value and are committed to peer-to-peer (P2P) and self-custody. Moreover, many projects could be held back by their community from changing their solutions.”
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Selva Ozelli, Esq., CPA, is an international tax attorney and certified public accountant who frequently writes about tax, legal and accounting issues for Tax Notes, Bloomberg BNA, other publications and the OECD.
Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.
Retail traders’ favorite cinema chain, AMC Theatres, updated its mobile app to support Dogecoin and Shiba Inu payments. United States-based customers using Apple or Android phones can both download the app and spend their highly volatile memecoins on movie tickets.
The firm first teased the idea back in January, after rolling out payment support for Bitcoin, Ether, Bitcoin Cash and Litecoin in November.
AMC is able to accept crypto payments via a partnership with BitPay, a Bitcoin payment service provider. It should be noted that merchants using BitPay don’t receive crypto payments outright. Instead, BitPay converts crypto payments into fiat before depositing it into the merchant’s account.
It was reported on Tuesday that $14 billion crypto exchange Blockchain.com is holding talks with banks regarding the launch of a potential initial public offering (IPO) this year.
Bloomberg’s unnamed sources stated that the talks were highly tentative and could change at any time (especially if those unnamed sources have been instructed by Blockchain.com to leak information to get a sense of public sentiment before revealing anything concrete).
If the firm manages to get through all the regulatory hurdles and go public via an IPO, it would join Coinbase as the only other U.S. crypto exchange to do so. Binance.US is also looking at a potential similar route in the future.
Speaking of the only U.S. crypto exchange to go public, Coinbase rolled out an early beta of its NFT marketplace for a select number of testers this week. At this stage, the early adopters of Coinbase NFT can create online profiles as well as buy and sell NFTs.
In a blog post on Tuesday, Coinbase vice president of product and ecosystem Sanchan Saxena hinted that Coinbase NFT would be a hybrid platform that takes elements from social media services and marketplaces such as OpenSea.
“While it is true that buying and selling NFTs is a big part of the ecosystem today, what we have learned by talking to many customers and creators is that there is more to it than just buying and selling,” said Saxena. “There is the community aspect of it.”
One of Germany’s banking giants, Commerzbank, revealed this week that it had applied for a crypto license, making it the first traditional financial institution in the country to do so.
A spokesperson told local media outlet Börsen-Zeitung that it had “applied for the crypto custody license in the first quarter of 2022.” The move would go a long way to mainstreaming crypto in the country, as the bank serves over 18 million customers and 70,000 institutional clients.
Any business looking to roll out crypto services in Germany must first seek approval from the Federal Financial Supervisory Authority, also known as BaFin.
Goldman Sachs is reportedly looking to secure an alliance with top derivatives exchange FTX, offering a strong show of faith in crypto in the banking sector.
According to the Financial Times, Goldman Sachs CEO David Solomon and FTX founder Sam Bankman-Fried met behind closed doors in March to discuss how a potential partnership could work for both firms.
The key areas of discussion were said to involve compliance in the U.S., with Goldman Sachs offering to help FTX navigate the murky waters of regulation, in addition to assisting with future funding rounds.
Winners and Losers
At the end of the week, Bitcoin (BTC) is at $39,628, Ether (ETH) at $2,957 and XRP at $0.71. The total market cap is at $1.85 trillion, according to CoinMarketCap.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are STEPN (GMT) at 40.66%, 0x (ZRX) at 22.40% and Decred (DCR) at 18.98%.
The top three altcoin losers of the week are Helium (HNT) at -12.74%, Convex Finance (CVX) at -10.82% and Maker (MKR) at -10.81%.
“I see Ethereum remaining as the dominant L1 for years to come, while Bitcoin retains its status as the primary store of value on the blockchain.”
Lynn Liss, co-founder and chief operating officer of Akoin
“It’s early days, but we are encouraged by what we’re seeing and confident that blockchain games will continue to gain traction if they are interesting and fun to play.”
Chris DeWolfe, co-founder of Myspace, CEO and co-founder of Jam City
“NO! There are already digital means of payment! So what is CBDC for? […] Even more surveillance, prevention of bank runs, addiction and the consequent enslavement of mankind? This does not prevent money laundering; this already exists on a large scale for the top 10,000 in many tax havens, e.g., [the] Cayman Islands, Macau, Dubai, etc.”
“One of the guiding principles of the blockchain is that it is a public ledger that’s shared and everyone with a little bit of computing power has access to it, [including] law enforcement. So the secret service hasn’t been doing anything that wasn’t the original intent of the blockchain. We’re just using the same tracking and tracing mechanisms that were intended.”
David Smith, assistant director of investigations for the United States Secret Service
“NFTs represent an opportunity for game developers to create games with player-owned economies; where the community of holders are both the early supporters of the game but also the main actors of its development and true stakeholders of its success.”
“It’s very improbable that all the countries would ban noncustodial wallets, or any other aspect of Bitcoin’s peer-to-peer network for that matter.”
Stepan Uherik, chief financial officer for SatoshiLabs
“My worldview pre-Bitcoin was pretty narrow. Life looked like school, work, retirement, death. Nowadays, I think slightly differently. The ultimate goal [now] might be better described as entrepreneurship and self-sovereignty.”
Bitcoin’s price took a dive below $40,000 on April 17, according to Cointelegraph’s BTC price index. The asset then proceeded to dip down to almost $38,500 the following day, followed by a subsequent move up past $41,000 during the same session. By Thursday, the asset had made its way up to around $43,000, although downward action followed on the same day, with the asset then falling down below $40,000.
Pseudonymous trader “Crypto Ed” posted a YouTube video on Monday talking about BTC price action. Looking back now, his expectations for the asset have proven pretty accurate. He expected $37,500 to serve as a bouncing point for BTC, followed by a potential run to $43,000 if the asset surpassed $40,000. He noted $43,000 as possibly just a local high, with the asset facing downward price pressure after that. The past week shows BTC moving pretty much in line with Crypto Ed’s comments.
He did, however, also mention that the next two weeks (from the date of his Monday video), approximately, could ultimately see BTC arrive at the $30,000 price level.
After credit-based stablecoin protocol Beanstalk Farms was hacked for around $76 million earlier this week, the team offered a bounty of 10% if the hacker returned the funds.
Bounty offerings to blackhat hackers are becoming a common method for DeFi platforms of late, as they seem to be the most viable way of getting the project’s funds back and up and running as fast as possible.
Notably, the project’s founders Benjamin Weintraub, Brendan Sanderson and Michael Montoya admitted during a podcast interview on Monday that the flaws in Beanstalk’s design “ultimately led to its undoing.”
Crypto wallet provider MetaMask warned the community of potential Apple iCloud phishing attacks that could become very costly.
The security issue is related to default device settings on Apple devices that see a user’s seed phrase or “password-encrypted MetaMask vault” stored on iCloud if the user has enabled automatic backups for their MetaMask application data.
MetaMask’s warning came in response to reports from an NFT collector who goes by “revive_dom” on Twitter, who stated that their entire wallet containing $650,000 worth of digital assets and NFTs was wiped via this specific security issue.
On Monday, the U.S. Cybersecurity and Infrastructure Security Agency (CISA) and Federal Bureau of Investigation (FBI) sent out an alert regarding North Korean state-sponsored cyber attacks.
The warning was made in response to the Ronin Bridge hack last month, which is believed to have been conducted by North Korean hackers. The FBI and CISA highlighted that hackers are specifically targeting DeFi protocols and play-to-earn games in particular, with spearphishing and malware being the methods of choice.
“These actors will likely continue exploiting vulnerabilities of cryptocurrency technology firms, gaming companies, and exchanges to generate and launder funds to support the North Korean regime,” the CISA wrote.
Crypto, like most other new tech praised upon its creation as apolitical or neutral, becomes political in the hands of the people who use it and regulate it.
Blue-chip NFTs is a popular buzzword one will find strewn across Twitter and various crypto media. The term, “blue chip,” is borrowed from traditional finance where stocks that are considered to be the well-established extension of corporations known for their quality, reliability and financial stability. But, exactly what are blue chip NFTs and how are they identified?
Nansen research analyst Louisa Choe, comments to Cointelegraph that since NFTs are still nascent “…it is sometimes challenging to apply this criteria since NFT as an asset class is still evolving.” The general consensus is that the much sought after blue chip is the asset with the least amount of volatility, meaning it sustains its value over time.
Let’s explore a few of the factors that play into determining whether or not a particular NFT project qualifies for blue-chip status.
Volume is only a piece of the puzzle
Collectively, NFT investors, like any trader, look at the total volume of sales and the total market cap of the collection. Typically, when an NFT collection reaches or exceeds the sought-after 10 Ether ($30,624) level, collectors consider it to have reached blue chip status. The total volume of sales is also another data point NFT traders turn to as a point of measure in determining whether the market is healthy.
While high volumes are desirable, are they sustainable and reflective of blue-chip status? Nansen updates their blue-chip index every 90 days, knowing that “the market is young and fickle.” As such, controversy is often sparked within the NFT market when a collection rockets to the moon with little end in sight.
On April 16, PROOF Collective launched its first proof of profile (PFP) collection, Moonbirds. The project literally skyrocketed to the moon and has already exceeded $220.8 million in total volume sales on OpenSea. Although the project has hardly been listed for a week, its explosive growth has left some NFT pundits speculating on its potential value and some believe it has already hit blue chip status.
Moonbirds all-time avg. sale price / volume. Source: OpenSea
However, there are pundits who disagree with the sentiment that volume is an indicator of blue-chip stats. Some NFT investors argue that it is difficult to assign this data point as a measure for such an illiquid asset and that the impression of a blue-chip NFT was that it could sustain its value in surviving a bear market.
Other NFT enthusiasts seem to lean on influencers and big-time players in the space in determining the assets they should fill their bags with.
Communities are more than the number of unique holders
It is important to note that blue-chip status is not defined by numbers alone, but the sentiment and dedication of the community.Trades can be replicated, but communities cannot. “Communities and thus, the network effect are definitely key drivers behind the success of an NFT project,” says Choe. Often, the first metric sought to determine the adoption of a project is the number of unique holders. Yet, even as a quantifiable metric, it isn’t the most valid.
Accounting for the number of unique holders simply means one is recording the number of wallets that have the particular asset. Since this is the case, one owner could own 1,000 assets and place each in their respective wallet, resulting in a measure of 1,000 unique holders when in actuality, there is just one.
However, NFT investors often list communities and the number of unique holders as a factor for why they consider an NFT to be blue-chip caliber. When assigning blue-chip status to an NFT and considering its community, Choe explains that “…NFT projects are seeking to build an entire ecosystem that generates value as opposed to concentrating on one utility.”
Originality Community Utility Monetary Value/social value Innovation Historical significance
Communities are more than just numbers since they represent individuals with varying levels of belief and convictions toward the project and within the ecosystem.
Part of Yuga Lab’s Bored Ape Yacht Club magic was that it was a bootstrapped community that executed what they had not anticipated. BAYC not only amassed over $1 billion in total volume, but gained the attention of global mass media in just under a year.
If volume and the number of unique holders becomes a static focal point for what is considered a blue-chip, then Moonbirds flipping other blue-chips in total volume would make it one by default. In fact, Moonbirds has already gained over 6,681 holders out of a collection of 10,000 NFTs and the most profitable former Moonbird holder made nearly $2 million by selling 45 MoonBirds. To date, some of the most profitable investors made over $450,000.
It is often said that an asset is worth what the market is willing to pay for it, and sometimes the market’s perception can pump or dump in regard to this valuation.
Oftentimes, market value and market capitalization are used interchangeably, making it dicey to evaluate the real value of an NFT. Market value is nuanced in that it provides a wider view in determining a project’s financial standing, but it also determines investors’ respective investment opportunities.
Interestingly, market value determines how much an investor is willing to pay for an asset, but market value is also heavily influenced by market perception and sentiment. For NFTs markets, volatile swings in sentiment can be seen in total sales volume, growth and members voting with their assets by selling them.
NFT markets are young and fickle because the largest blue chip so far, BAYC, has not even hit its anniversary. Yet it has proven its ability to sustain and grow in value over time.
Bored Ape Yacht Club all-time floor prices.Sources: NFT Price Floor
Liquidity in the sector often circulates from one project to another, which leads some assets to remain illiquid in the sense that they cannot be sold easily when desired. However, blue-chip NFTs may vary in price over time, but their value remains in that if placed for sale at or under floor value, they would be purchased quickly.
Market value is nuanced. It is not only compounded by the sentiment of the market and their perception of a particular product/brand, but also at the mercy of the macro cryptocurrency market. Therefore, it’s safe to assume that assets will take a dip and are risky. Despite the risk, many NFT collectors continue to put their money where their convictions lie, whether made blindly or more strategically in hopes of obtaining a blue-chip investment.
Rather than just price, volume history and brand equity, time seems to be a heavily weighted factor when it comes to determining whether an NFT has reached blue-chip status. This suggests that tracking the asset over time rather than focusing on momentary performance to justify a project’s present value.
NFT investors will have their opinions on what qualifies as a blue chip and it’s important to reiterate how nascent the market is. A better assessment process is to track quarterly total sales volume, buyer and seller ratios and the project roadmap or community developments as components of blue-chip status.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Falling in line with stocks, Bitcoin now faced the prospect of resistance cementing itself at the $40,000 mark, with traders showing their lack of confidence in a short-term rebound.
Data from on-chain analytics site Coinglass confirmed that funding rates across derivatives exchanges were firmly negative into the weekend, suggesting that the majority of market participants expected shorting to be a profitable next trade.
BTC funding rates chart. Source: Coinglass
For analyst Filbfilb, co-founder of trading suite Decentrader, the ratio of long to short positions was a furthe cause for concern.
“Bitcoin back on this crucial level here. Losing this -> $36K seems next,” Cointelegraph contributor Michaël van de Poppe added in a fresh Twitter update on the day.
BTC/USD circled $39,800 at the time of writing, having avoided a trip to take buy liquidity below $38,000 so far.
Cold feet among traders was meanwhile echoed in sentiment gauges, with the Crypto Fear & Greed Index heading back into the “extreme fear” zone on Saturday.
Crypto Fear & Greed Index (screenshot). Source: Alternative.me
DXY resistance sought for BTC trend break
Despite the lack of confidence, not everyone was interested in abandoning their faith in Bitcoin beyond the short term.
“Prepare yourself for the next runup. Historically speaking, this has been one of the best ranges for buying Bitcoin!” popular YouTuber Crypto Rover argued alongside a chart comparing Bitcoin price performance to the strength of the U.S. dollar.
U.S. dollar currency index (DXY) vs. BTC/USD annotated chart. Source: Crypto Rover/ Twitter
As Cointelegraph reported, the U.S. dollar currency index (DXY) is currently near two-year highs, and a reversal has historically given Bitcoin the fuel to crack long-term downtrends.
U.S. dollar currency index (DXY) 1-week candle chart. Source: TradingView
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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