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A New Era of Crypto: Digital Switchover 2.0

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As cryptocurrencies begin to cement themselves into the wider financial system thanks to growing interest from previously wary institutional investors and blockchain technology’s increasing integration into our everyday lives, the way is being gradually paved for a world where all money and financial products are digital. The driving force behind the ultimate shift will undoubtedly be decentralised finance (DeFi), which is slowly but surely making the transition from conceptual technology to commercial use. Stablecoins will certainly play a pivotal role in this space as their inherent stability make them far more suited for such applications. Indeed, apart from private projects like Tether and Paxos, global central banks are all working overtime to roll out their own CBDCs (Central Bank Digital Currencies) in order to meet popular demand for low-volatility cryptocurrencies. With 2021 touted as the year of DeFi, we can expect to see even more integration of this technology. That can only be good news for the cryptocurrency whose architecture makes it all possible: Ethereum.

So, what is DeFi anyway?

DeFi just stands for decentralised finance. It basically does what it says on the tin. It takes away the need for intermediaries in a range of financial transactions and agreements. Using the same blockchain technology central to cryptocurrencies, two parties can enter an agreement with a virtually unlimited number of variables and stipulations. There’s no need for a third-party enforcer or middleman as the technology itself creates a smart contract that’s essentially self-fulfilling. For example, imagine you want to agree to pay someone 5 ETH if they perform a certain task for you. Your 5 ETH will be earmarked, and as soon as the other party delivers on their end of the bargain, the money will be immediately paid to them over the blockchain. This means both parties have total peace of mind that the other will make good on their promise and, best of all, there are no hefty fees to pay for this security. The potential applications go way beyond simple sale/purchase contracts, though, ranging all the way from personal loans to lease-hire agreements, crowdfunding and even prediction markets.

The role of Ethereum

The Ethereum blockchain and DeFi go hand in hand. Indeed, it’s hard to imagine how DeFi could have developed without it. This is because the Ethereum network is inherently easier to use and lends itself to creating other types of decentralised applications beyond standard transactions. In fact, the number two digital currency’s creator Vitalik Buterin alluded to such uses as early as 2013 in his original Ethereum white paper. As we’ve already touched upon, the smart contract architecture makes this all possible. It’s hoped that the advent of Ethereum 2.0 will improve the scalability of such applications, with a view to popularising them even further. With a sharp uptick predicted in DeFi this year, we can also expect newer applications to be more user-friendly than earlier versions that primarily focused on the tech side and neglected the UI/UX aspect. Despite the crucial role the Ethereum network plays for DeFi, it’s also worth noting that other platforms like Polkadot are similarly well-suited to host DeFi solutions, a trend that may just start to emerge before 2021 is out.

What does this mean for prices?

If we compare ETH with BTC, we see that the original cryptocurrency has lost over 40% from recent highs, while Ethereum has only declined a shade over 35%. And though the current correction may likely only be short-lived, this difference in the extent of losses is statistically significant. Many analysts attribute this to Ethereum’s integral role in DeFi applications. Looking at the three-month ETH chart below (taken from the StormGain crypto trading platform), we can see a period of consolidation signaling that a break back to the upside is likely:

As we can see, since the initial correction in late May, Ethereum is seeing both higher troughs as well as peaks, which would suggest that a new uptrend is establishing itself. This is likely attributable to ETH’s utility beyond its use as a cryptocurrency. With the launch of the Ethereum 2.0 network, DeFi applications will be even more easily scalable, driving demand for the native » Read more

” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin and thus pushing prices up further.

If we look at the same time frame for major DeFi » Read more

” href=”https://www.newsbtc.com/dictionary/altcoin/” data-wpel-link=”internal”>altcoin Polkadot, we see a similar pattern emerge:

Once again, the asset is clearly readying itself for another charge as a nascent uptrend can be seen beginning in late May. As with most altcoins, the potential upside is much higher for Polkadot as it enjoys significantly higher volatility due to its more niche status compared to ETH. While this means it can be harder to find brokers that offer it, one reliable, low-commission platform that supports both Ethereum and Polkadot is StormGain. Of course, this kind of investment is only for those with a larger appetite for risk, but the potential rewards are certainly very lucrative.

But where do stablecoins come in?

Stablecoins play an absolutely pivotal role in cryptocurrency trading as low volatility coins that can be used as an effective store of value for both profits made and money that you would like to invest once a suitable opportunity presents itself. However, apart from that, they are absolutely indispensable when it comes to DeFi. Legacy cryptocurrencies are great ways to make money trading and investing, but the same intense volatility that makes them so lucrative means they’re highly unsuitable for traditional deferred financial operations like long-term loans and delayed payments. Think about it: people don’t want to be expecting to receive $10,000 (2.5 ETH in May this year) in 2 months’ time only to end up with $6,300 (the current value of 2.5 ETH). That’s why stablecoins will be central to mitigating the concerns of more risk-averse users as the industry develops. For instance, as a forward-thinking cryptocurrency broker, StormGain offers its clients highly attractive interest (up to 12% APR) on any digital deposits held on its platform. This could represent a very lucrative investment prospect for anybody who would like to get into digital currencies but is worried about the huge price swings common in this asset class.

We’ve only just begun

Whatever you think about cryptocurrencies, there’s no longer any denying that they’ll be an inevitable part of our day-to-day lives in the future. For most of us, this is likely to take the form of DeFi technology and stablecoins/CBDCs. It might seem a bit daunting at first, but the advantages in terms of lower finance and transaction costs will make us wonder how we ever managed before. Meanwhile, it would be a wise decision to get some experience using stablecoins, either as part of an active crypto trading and investing programme or as a low-risk, interest-earning holding with a broker like StormGain offering attractive deposit schemes for users. The new age of finance is coming, with DeFi and stablecoins at the very heart of it. So get to grips with them now, and you’ll be ideally placed to reap all the benefits of this paradigm shift when it eventually comes!

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.newsbtc.com/news/company/a-new-era-of-crypto-digital-switchover-2-0/

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Thailand SEC Bans Meme Coins, Fan Tokens, NFTs

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Local exchanges in Thailand had been given a deadline until July 11 to submit their new rules for listing tokens that complies with the new guidelines from the Thailand Securities and Exchange Commission (SEC).

“The Securities and Exchange Commission (SEC) Board has approved the new rules that prohibit digital asset exchanges from providing services in relation to utility tokens and certain types of cryptocurrencies. The rules also specify that the exchanges set a requirement to be imposed in the event that digital tokens issued by their own exchange or related persons are listed on the exchange. In this regard, the token issuer who fails to comply with the white paper and relevant rules in substance could risk having such tokens delisted from the exchange. This new regulatory guideline aims to enhance protection of digital asset traders’ interest.”

The Thai SEC also added that listing rules prohibits local exchanges from providing services that have these following characteristics:

(1) Meme Token – having or no clear objective or substance or underlying, and whose price runs on social media trends.

(2) Fan token: tokenized by the fame of influencers.

(3) Non-Fungible Token (NFT): a digital creation to declare ownership or grant of right in an object or specific right. It is unique and not interchangeable with digital tokens of the same category and type at the equal amount.

(4) Digital tokens which are utilized in blockchain transactions and issued by digital asset exchanges or related persons.

Along with this move is their previous announcement of regulating Decentralize Finance (DeFi) projects in the country, including the issuance of digital tokens.

In the previous announcement, liquidity provider tokens, governance tokens, or tokens issued to those transacting in DeFi projects “must be licensed and must abide by the specified rules”.

The new regulation stipulates crypto exchanges, digital-asset brokerages, digital asset-dealers, private fund managers and investment advisors must be licensed by the Ministry of Finance.

Thai SEC states that, “For traders, it is best to study the DeFi project before getting involved in both technical and security aspects.” They also added that traders “should check whether the service provider is a digital-asset business that is licensed and regulated by the SEC or other regulatory agencies under law.”

This article is published on BitPinas: Thailand SEC Bans Meme Coins, Fan Tokens, NFTs

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Source: https://bitpinas.com/regulation/thailand-sec-ban-meme-tokens/

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After Bitcoin U-Turn, Nigeria Plans To Launch Central Bank Currency This Year

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According to Reuters, the Central Bank of Nigeria (CBN) plans to launch a digital currency pilot as soon as the end of this year.

Last month, the CBN Governor, Godwin Emefiele, made a U-turn on Bitcoin and other cryptocurrencies by saying he will “allow” them. Previously, the CBN had sought to restrict the cryptocurrency sector by imposing regulatory sanctions on monetary businesses that serviced cryptocurrency exchanges.

In a turn of fortunes, it now looks as though Nigerian officials are embracing blockchain technology. All the same, in what may well turn into a showdown between private and public cryptocurrencies in the future, arguments against central bank offerings remain as pertinent as ever.

The Nigerian Central Bank Digital Currency Has Been Years In The Making

Despite Nigeria’s purported aversion to fintech, it’s emerged that the central bank has been working on a digital currency for the past two years.

The CBN Director of Information Technology, Rakiya Mohammed, echoed what many other countries have mentioned in the past. That is, Nigeria will not be left behind in the technological revolution.

“We’re all aware that about 80% of central banks in the world exploring the possibility of issuing central bank digital currency, and Nigeria cannot be left behind.”

One of the reasons given for the CBN’s previous anti-Bitcoin position was a need to protect its citizens. In 2018, the CBN said that there is no legal redress if things go wrong in an unregulated market. There was also the usual spiel of links to illicit activity such as money laundering and terrorist financing.

Mohammed sells the idea of a central bank digital currency on it bringing financial inclusion and having the backing of the Nigerian government.

“If you have a central bank digital currency that is backed by the government, then people can make transactions online without fear of any default.”

Is This The End For Privacy?

As previously mentioned by billionaire investor Ray Dalio, governments will do all they can to maintain monopoly control of their money, even if that means outlawing the competition.

“every country treasures its monopoly on controlling the supply and demand. They don’t want other monies to be operating or competing, because things can get out of control.”

Anthony Pompliano rubbished this idea saying governments cannot ban Bitcoin. But he concedes that a scenario of coordinated global action could make life difficult for Bitcoin users.

And as cryptocurrencies continue to make their mark in the world of finance, regulators and policymakers may soon be forced to show their hand on the matter.

Unlike private cryptocurrencies, which operate on decentralized networks, central bank digital currencies would be issued and controlled by a central bank. This enables them, and by extension national governments, to track every transaction in their economies.

Liberal commentators view this situation as a significant blow to privacy. What’s more, as noted with several U.K banks refusing crypto transactions recently, central digital currencies have the potential to bring about a dystopian future in which transactions deemed “against the state” also get refused.

Source: https://bitcoinist.com/after-bitcoin-u-turn-nigeria-plans-to-launch-central-bank-currency-this-year/?utm_source=rss&utm_medium=rss&utm_campaign=after-bitcoin-u-turn-nigeria-plans-to-launch-central-bank-currency-this-year

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Why this is a ‘tremendously positive’ thing to have happened to Bitcoin

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China may no longer be the hub of Bitcoin’s mining activity it once was, as several bitcoin mining farms in the country were shut down by its government, in the last few months. As of yesterday, 26 mining farms in the Sichuan province lost power following orders from the local government to terminate their power supply

Most Bitcoin mining farms relied mainly on the three Chinese provinces of Sichuan, Xinjiang, and Inner Mongolia, for powering their mining activities. Sichuan is known for its abundant supply of cost-effective hydroelectric power generated by vast dams.

With the Chinese government’s inhibitory stance on mining farms, the Bitcoin community is afraid of its adverse impact on Bitcoin’s prices and hash rate. Following the most recent shutting down of the Sichuan mining farms, the hash rate had dropped by nearly 17 percent, even though it later recovered.

This may not be a cause for worry, however, according to analyst and partner at Castle Island Ventures, Nic Carter. In April, when the mines in the Xinjian province were shut down, Carter had discussed his thoughts on this on a Twitter thread. He had emphasized that this was not a big concern.

In a more recent discussion on this topic on a YouTube video, Carter spoke about the ban on the Sichuan mining farms and provided a larger perspective on China’s policy and its impact on Bitcoin. Further, he debunked the idea regarding the ‘linear relationship’ between hash power and security. According to him, Bitcoin’s security was intact and would remain so, even if the hash rate were to drop by 50 percent, especially if the drop is a temporary one.

Another noteworthy development was that due to China’s actions several mining operations were beginning to move to other regions of the world.

In his video, Carter too discussed this phenomenon and added that this may just be what Bitcoin needs. He said,

“…it’s tremendously positive, both from the ecological narrative perspective and then from the perspective of eliminating this outside risk factor of a state-level attack on bitcoin … so it’s a tremendous turning point, and in my view a huge opportunity, both for individual miners and for the bitcoin community to reset these narratives which have been used against bitcoin.”


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Source: https://ambcrypto.com/why-this-is-a-tremendously-positive-thing-to-have-happened-to-bitcoin

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