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Fixing Crypto’s Silos

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It’s an established truth the cryptocurrency sector is more fragmented than shattered glass. Industry devotees have long made the most of working piecemeal, accepting ever-increasing fragmentation as the price of a decentralized financial system. But what advancements might we achieve if we could stop paying it? 

At first glance, interoperability seems like a near-impossible goal. According to CoinMarketCap, over 8,000 unique cryptocurrencies currently exist – a 400% increase from two years ago. These numbers sound impressive at first, however, the veneer wears off once you consider the sheer inconvenience that variety poses.

Stephen Tse, is founder and CEO of Harmony.one. He was previously a researcher at Microsoft Research, a senior infrastructure engineer at Google and a principal engineer for search ranking at Apple. 

Decentralized applications (dapps) are limited by the constraints of their home blockchain. If a dapp is built on Ethereum, it can usually only enjoy the benefits provided by Ethereum (ex., smart contract functionality). Thus, for all of the advantages that diverse cryptocurrencies might present individually, users may struggle to take full advantage of the multiplicity because the blockchains are not interoperable

Here’s the issue – while career cryptocurrency traders may be willing to manually “hunt and peck” across fragmented cryptocurrency exchanges and blockchain apps for the features and services they want, it seems overly optimistic to think that the rising cohort of investors will be content with the status quo. Consider the push towards cryptocurrency normalization we saw in 2020. Three major fintech firms (Square, MicroStrategy and Mode) embraced bitcoin, and PayPal recently launched its own cryptocurrency trading service

As a result, the people we see entering the crypto market aren’t technology professors or developers, they’re ordinary consumers and investors who are accustomed to more streamlined and cohesive experiences.

“As new users enter the industry, I’ve seen a clear demand for ‘intermediaries’ that mirror the centralized financial entities consumers are used to, improved user experience, and greater liquidity, but I’ve also seen the control and holding of users funds: sacrificing ownership for access,” cryptocurrency expert Alexey Koloskov recently wrote for Forbes

If the crypto sector’s fragmentation remains unaddressed by those within it, Koloskov suggests, there is a risk that conventionally minded players will offer solutions that undermine the freedoms cryptocurrencies were invented to provide. 

Consumers are right to ask for interoperability. They need innovation, they need new interoperability tools.

The intervention of centralized powers is frustrating, both for its tacit erosion of trader freedom and because consumers are right to ask for interoperability. They need innovation, they need new interoperability tools – and if innovators who appreciate the philosophy that underpins blockchain can provide it, they stand to not only solve a major UX problem, but also redefine the capabilities of fintech as a whole.  

Consider the work that has already been done with trustless bridges as an example. 

For context, a trustless blockchain bridge is essentially a public blockchain network that allows two technologically different and economically sovereign chains to freely communicate with each other sans permissions. This connection allows for interoperability between two blockchains that would otherwise have no means to conduct mutual transactions or utilize the other’s chain-specific apps. 

Trustless, two-way bridges could provide game-changing fluidity across previously siloed chains, allowing newcomers and blockchain devotees alike unprecedented access and ease-of-use. Assuming future advancement, we can imagine a future version of the cryptocurrency sector, one that upholds interoperability without compromising its commitment to decentralization and individual autonomy.

Beyond enabling smoother transactions and a more cohesive and informed trading experience, such bridges facilitate greater usability. By linking two disparate cryptocurrencies by cross-chain bridges, users can enjoy the best of both, rather than having to pick one over the other. When using a cross-chain bridge between Ethereum and Cosmos, for example, a user could leverage Ethereum’s smart contract functionality and Cosmos’ scalability. 

Imagine that versatility multiplied out over a dozen blockchains. Imagine the functionality we could achieve if end-users and app developers could ultimately cherry-pick the features they wanted in their trading experience. 

We may not be to the point where such fluidity is possible yet, but there’s little doubt that such a reality waits on the horizon. Innovations like cross-chain bridges offer a glimpse of what the future of fintech and crypto could look like – what it might mean to introduce a truly decentralized financial system where consumers finally, truly, have the final say not only on trades, but on their trading experience.

See also: How One Firm Is Addressing the Interoperability Problem Posed by FATF’s ‘Travel Rule’

The blockchain fragmentation problem is significant and, in the absence of proper consolidation tools, expanding. The cryptocurrency sector needs to provide solutions that facilitate blockchain connections among all people and any economy. 

Our fragmented and siloed status quo will not work indefinitely. We have the technological means – and the market impetus – to seek interoperability without compromising on decentralization or consumer experience. By literally bridging the silos, we won’t just improve user experience, we’ll usher in a new era of financial innovation and creativity. 

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Source: https://www.coindesk.com/fixing-cryptos-silos

Blockchain

Tim Draper Handpicks Netflix as the Next Company to Purchase Bitcoin

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Popular venture capitalist and Bitcoin bull Timothy “Tim” Draper predicted that major online streaming platform Netflix could be the next company to join the bitcoin buying bandwagon.

Next Bitcoin Investor Could Be Netflix

Speaking in a recent episode of the Unstoppable Podcast, Tim Draper stated that Netflix could be the next in line to add bitcoin to its balance sheet. According to him, the company’s co-founder and co-CEO, Reed Hastings, makes Netflix a likely bitcoin investor. Draper buttressed his point, saying:

“I think Reed Hastings is a very innovative guy and has a lot of creative thinking and I think he still controls the reins at Netflix. And so I think that might be the next big one to fall.”

Meanwhile, the venture capitalist mentioned social media giant Facebook, as well as other major companies like Apple, and Google, as likely candidates to invest in bitcoin. However, Draper noted that the companies were instead trying to create a centralized currency of their own.

Draper also stated that if he was the chief financial officer (CFO) of any major organization, he would advise the company to allocate a portion of their portfolio to bitcoin. According to the BTC proponent, bitcoin served as a hedge against inflation.

Since Tesla’s billion-dollar bitcoin investment, there have been speculations about which company would emulate Tesla’s move. Increased institutional interest in bitcoin is largely responsible for BTC’s bullish momentum. Meanwhile, Firms like Microstrategy and Square recently added to their bitcoin holdings.

Amazon Likely to Accept Bitcoin as a Payment Method?

Apart from pitching Netflix as the next possible bitcoin investor, the venture capitalist stated that the retail giant Amazon could start accepting bitcoin. Adding that, people could use the flagship cryptocurrency to purchase products on Amazon.

Back in February, there were reports that Amazon was looking to introduce a new project that would enable customers to convert cash into digital currency. While the project would launch in Mexico, the company did not state what digital assets it would support, although there were speculations that the company may not use popular crypto-assets like BTC or ether.

While also speaking on bitcoin’s price target, Draper said:

“The current currency holdings around the world in dollars is about $100 trillion and bitcoin’s market cap is just reaching a trillion now. So there’s no reason it can’t go up a 100 fold. It’s not like it is going to completely replace the dollar. Although I think people are going to laugh when they are trying to buy things with dollars in the future.”

The venture capitalist made a prediction earlier in 2020 that the price of bitcoin would reach $250,000 by the end of 2022 or early in 2023.

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Source: https://cryptopotato.com/tim-draper-handpicks-netflix-as-the-next-company-to-purchase-bitcoin/

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Ripple is committed to San Francisco, says co-founder Chris Larsen

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In October last year, Ripple co-founder Chris Larsen said that the firm may consider relocating to other countries citing the lack of regulatory clarity in the United States. Since then, many have speculated where the firm’s new headquarters will be located. However, amid a lawsuit with SEC regarding an alleged illegal securities offering, and XRP’s dwindling price, Larsen made a new announcement recently that stated that the firm was here to stay. 

Speaking to The San Francisco Chronicle, co-founder said that Ripple’s global headquarter will remain in San Francisco. He added: 

We’re committed to the city. It’s got the most diversity, creativity…it’s got the critical mass.

Earlier, CEO of Ripple, Brad Garlinghouse, hinted at a possibility that Ripple could move out of the US, given its “lack” of a regulatory framework. He stressed that the country was “out of sync” and needed to implement a clear regulatory framework regarding crypto.

At the time, the CEO said that he was considering whether Ripple would benefit from relocating to a country where regulations were more clear. He admitted to being impressed by how the UK and other G20 nations including Singapore, Japan, and the UAE had “clear regulatory frameworks” that allowed for “healthy markets to develop.”

Meanwhile, another leading crypto firm in the neighborhood has decided to do away with its headquarters altogether. Coinbase CEO Brian Armstrong said that amid the firm’s work from home policies they choose not to have a base in San Francisco, but will continue to keep their offices open. Stating that the company is “decentralized” the CEO added:

As we’ve moved to a remote first environment, we realized that we no longer have a headquarters located in any one city.


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Source: https://ambcrypto.com/ripple-is-committed-to-san-francisco-says-co-founder-chris-larsen

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3 key Ethereum price metrics show pro traders are aiming for $2K ETH

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On Feb. 20, Ether (ETH) price rallied to a new high at $2,015 and this caused multiple indicators to display signs of excessive optimism. While the excitement could be easily justified by Ether’s  year-to-date 176% gain, these warning signs should not be ignored.

On of the primary driving factors of the current bullish sentiment is the launch of CME ETH futures and Grayscale Investments ETH Trust reaching $6.3 billion assets under management. The DeFi phenomenon also continues as there is currently more than $21 billion worth of Ether locked in DeFi.

Crypto Fear & Greed Index. Source: alternative.me

Currently, the Crypto Fear & Greed Index is at 93, indicating “Extreme Greed” according to its methodology. Many traders use the metric as a counter trading signal, meaning, the extreme fear level can be a sign that investors are bullish and a buying opportunity is present. In contrast, when investors are getting too greedy, it could be a sign that the market is due for a correction.

Unlike the excessively leveraged retail traders, the more experienced market makers and whales hs been skeptical of the never-ending rally in Ether. Regardless of the rationale for the price peak, the 36% price correction that followed was accelerated by large liquidations.

Ether futures contracts aggregate liquidations. Source: Bybt.com

The liquidation of $2 billion in long futures contracts from Feb. 19 to Feb. 23 represented 28% of the total open interest. Thus, one should expect significant deterioration in market sentiment, as depicted on the previous Fear & Greed indicator.

Surprisingly, none of that happened on the Ether derivatives markets, as both futures contracts premium (contango) and the options skew remained bullish.

The futures premium held very healthy levels

By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market.

The 3-month futures should usually trade with a 10% or higher premium versus regular spot exchanges. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is known as backwardation and indicates that the market is turning bearish.

OKEx 3-month ETH futures basis. Source: Skew.com

The above chart shows that the indicator peaked at 39% on Feb. 20 as Ether touched its all-time high. Nevertheless, it has kept above 16% during the entire correction down to $1,300. This data shows that professional traders remained confident in Ether’s price potential.

The options skew remained neutral-to-bullish

When analyzing options, the 25% delta skew is the single-most relevant gauge. This indicator compares similar call (buy) and put (sell) options side-by-side.

It will turn negative when the put options premium is higher than similar-risk call options. A negative skew translates to a higher cost of downside protection and indicating bullishness.

The opposite holds when market makers are bearish, causing the 25% delta skew indicator to gain positive ground.

ETH options 25% delta skew. Source: laevitas.ch

Over the past month, there hasn’t been a single incident of a sustainable positive delta skew. Therefore, there is no evidence that option traders demanded more significant premiums for downside protection.

This data is very encouraging, considering that Ethereum faced a heavy sell-off but the futures and options metrics discussed above held bullish levels during the downturn.

As Ether managed to recover quickly from its recent $1,300 dip, investors gained further confidence that the uptrend had not been broken.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Source: https://cointelegraph.com/news/3-key-ethereum-price-metrics-show-pro-traders-are-aiming-for-2k-eth

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