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PayPal special! Crypto plans revealed, Bitcoin’s reaction, critics circle: Hodler’s Digest, Oct. 19–25

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Coming every Sunday, 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.

Top Stories This Week

PayPal to offer crypto payments starting in 2021

When rumors started circulating in June that PayPal was planning to launch a crypto service, the fintech giant was tight-lipped.

But this week, PayPal was ready to show its hand, confirming that it will allow its 346 million active accounts to buy and sell cryptocurrencies.

It isn’t an exaggeration to say that this is a huge deal for the mainstream adoption of digital assets. This will introduce large numbers of everyday consumers to crypto for the first time.

Initially, PayPal will support Bitcoin, Ether, Bitcoin Cash and Litecoin. U.S. account owners are going to get this new functionality first, with “select international markets” to follow later.

No fees are going to be charged for conversions until the end of this year. However, merchants won’t be able to support crypto transactions until the first half of 2021.

Announcing the news, PayPal CEO Dan Schulman said digital currencies offer “clear advantages” when it comes to financial inclusion, payment speeds and enabling governments to distribute funds to citizens quickly.

Dan Schulman comments on plans

Bitcoin blasts through $13,000 following PayPal’s entrance into crypto

Unsurprisingly, PayPal’s big news served as dynamite for Bitcoin. The world’s biggest cryptocurrency smashed through $13,000 on Wednesday, gaining more than $1,000. That’s only the third time that BTC has hit this level since its record high in 2017.

All of this helps strengthen Bitcoin’s position. Even before the announcement, BTC had enjoyed a sustained period in five-figure territory after spending most of the past three months trading above $10,000.

Mati Greenspan, the founder of Quantum Economics, said the PayPal link was undeniable: “There’s no doubt in my mind that this bit of news is almost solely responsible for today’s extended gains.”

other cryptocurrencies that PayPal’s going to support also enjoyed chunky gains on Wednesday. ETH was up 8%, BCH surged 9%, and LTC rose by a whopping 15%.

And it wasn’t just the crypto industry that was going wild. In the aftermath of the news, PYPL’s share price hit a record high. Unfortunately, the uptick wasn’t enough to prevent Bitcoin’s market cap from overtaking PayPal’s on Thursday.

PayPal rumored to be eyeing acquisition of crypto custodian BitGo

Inevitably, attention now turns to what PayPal’s offering will look like, whether crypto exchanges need to be worried, and the company’s plans for the future.

We’re starting to get an idea of what to expect. PayPal has partnered with Paxos to deliver the service, and it has obtained a conditional cryptocurrency license from the New York State Department of Financial Services.

On Friday, reports from Bloomberg suggested that PayPal is looking to acquire a crypto asset custody firm, adding that the fintech giant is currently in talks with BitGo, which helps investors store digital assets securely.

However, that report added: “Talks could still fall apart and PayPal could opt to buy other targets.”

Meltem Demirors, the chief security officer of the crypto asset manager CoinShares, has predicted that PayPal will seek to launch a stablecoin “in the next six to 12 months.” This would be a sting in the tail for Facebook, given how PayPal left its embattled Libra project.

Not everyone in the crypto industry is thrilled about PayPal’s recent news

Yes, there has been enthusiasm over PayPal’s plans, with the analyst Willy Woo suggesting that the service could easily treble Bitcoin’s user base. But not everyone is cracking open the champagne.

People who buy crypto on PayPal won’t be able to withdraw it to a wallet off the platform, prompting critics to say it’s another case of “not your keys, not your coins.”

SatoshiLabs, the team behind the Trezor hardware wallet, wrote: “If millions of newcomers are onboarded to Bitcoin by PayPal, there could be a very serious information gap that jeopardizes their experience and undermines key principles of cryptocurrency.”

It is also concerned about how PayPal’s clout in electronic payments “will be interpreted as expertise in crypto.”

Given how Satoshi Nakamoto’s vision was to decentralize finance and remove middlemen, some crypto purists will also be horrified at PayPal wading into the space.

But there are other practicalities to worry about — and one of them is tax. Every sale of cryptocurrency becomes a taxable event, especially if it’s sold for more than it was bought for. It’s very possible that the implications of this could be lost on crypto noobs.

Meltme Demirors on the news

And in other news…

Of course, there was plenty of other news in the crypto and blockchain sector this week.

The Chicago Mercantile Exchange quietly overtook BitMEX to become the world’s second-biggest futures market — buoyed by rising institutional demand. All this came as the crypto fund manager Grayscale Investments increased its assets under management by $1 billion in the space of a week.

Data from Messari showed that daily transaction volumes on the Ethereum network are twice those of Bitcoin — putting the blockchain on track to process $1 trillion this year. And in news that’ll make exasperated DeFi users breathe a sigh of relief, a ConsenSys developer predicted that the Ethereum 2.0 beacon chain genesis will happen in the next six to eight weeks.

Speaking of DeFi, the funds locked in protocols surged by $1 billion as analysts predicted we could see a bull run following on from the U.S. election. Meanwhile, the U.S. acting comptroller of the currency predicted that DeFi could render the financial services offered by banks obsolete — just like email disrupted the postal service.

Winners and Losers

Top winners and losers of the week

At the end of the week, Bitcoin is at $12,994.86, Ether at $409.13 and XRP at $0.25. The total market cap is at $395,014,912,585.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Quant (47.26%), Reserve Rights (40.41%) and Ocean Protocol (33.23%). The top three altcoin losers of the week are Crypto.com Coin (18.81%), ABBC Coin (17.74%) and HedgeTrade (16.31%).

For more info on crypto prices, make sure to read Cointelegraph’s market analysis

Most Memorable Quotations

“There goes wBTC. The majority of wrapped Bitcoin is custodied by BitGo. PayPal is not a good actor in this space. Position accordingly.”

THORChain

“If millions of newcomers are onboarded to Bitcoin by PayPal, there could be a very serious information gap that jeopardizes their experience and undermines key principles of cryptocurrency.”

SatoshiLabs

“Crypto is about financial freedom. It’s modern money that anyone anywhere can truly control. While we’re excited to see a new audience gain access, a non-custodial approach limits opportunity to self-custody your crypto or transact freely.”

Peter Smith, Blockchain.com CEO

“This is definitely a bullish sign for Bitcoin and other cryptocurrencies. Crypto is all about trust, and PayPal has a very high level of trust with its users […] If the UI/UX of the service is done right, we will see millions of new users join each month.”

Alex Mashinsky, Celsius CEO 

Chamath Palihapitiya

“We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”

Dan Schulman, PayPal CEO

Prediction of the Week

Bitcoin price rise to $500,000 is inevitable, Winklevoss twins say

Unsurprisingly, the Winklevoss twins were brimming with enthusiasm in the wake of PayPal’s announcement.

Tyler Winklevoss tweeted: “PayPal is an important bridge between the mainland and the island of crypto. The diaspora from legacy finance is happening and this is the kind of infrastructure that will help make that happen. Soon there will b a flippening and crypto will b the mainland & fiat the island.”

This week, the twins doubled down on their prediction that Bitcoin will eventually hit $500,000, telling podcast host Peter McCormack that it’s a matter of when, not if.

“I would sort of contend that $500,000 Bitcoin is actually pretty conservative and the game hasn’t even really started,” Cameron noted.

FUD of the Week

First ransomware attack in 2020 election hits voting infrastructure in Georgia

A ransomware attack targeting the government systems of Georgia’s Hall County impacted key voting infrastructure, it has been revealed.

“Critical systems” within its networks were affected, and CNN says the incident may be the first ransomware attack in the 2020 election.

Officials said the county’s voter signature database and voting precinct map were heavily impacted by the hack but stressed that the voting process for citizens is unaffected.

Brett Callow, from the cybersecurity firm Emsisoft, told Cointelegraph: “There is a very real risk that they may shake voter confidence in the integrity of the vote, especially as confidence may already be quite low.”

OKEx’s lips remain sealed on its sudden crypto withdrawal freeze

There’s still no sign of OKEx’s cryptocurrency withdrawals returning to normal — nine days after they were suddenly suspended.

The ongoing suspension has been puzzling to many, but the exchange’s representatives maintain that the move was solely because one of the company’s private key holders has been cooperating with a Chinese public security bureau.

OKEx CEO Jay Hao has told Cointelegraph that the company is determined to reinstate withdrawals as soon as possible, adding: “We wholeheartedly apologize for this.”

Some users are starting to warn that their patience is wearing thin, expressing frustration at the lack of transparency surrounding what’s going on.

One tweeted: “Where is your CEO Jay Hao? He has to interact and give updated info frequently. When something happens with Binance, CZ tweets every hour.”

And another wrote: “It’s a bit weird one of the biggest exchanges in the world isn’t letting us withdraw money for so long.”

Filecoin creator denies strike allegations

The creator of the blockchain-based data storage platform Filecoin has dismissed allegations that miners of its token have gone on strike as “nonsense.”

Refuting the claims, Juan Benet claimed on Twitter: “What is happening is that miners are growing slower than before launch. This is in great part because the network is no longer subsidizing their pledge and fee costs — fees cost real money now, and miners need to match growth rate to token flow.”

It had been reported that five of the largest Filecoin miners turned off thousands of rigs to protest the blockchain’s economic model, which means that miners are required to stake FIL as collateral when producing a block. The problem is that many miners are apparently coming up short in the number of tokens needed.

Best Cointelegraph Features

Regulation will keep PayPal’s new crypto services from looking anything like crypto

Cointelegraph’s Kollen Post says that, for now, PayPal’s crypto payments are more about satisfying regulators than providing users with crypto capabilities.

How to build a crypto mining rig in 2020 to earn Bitcoin and Ether

Mining with home rigs is back, so Elena Perez takes a look at what those interested need to know to put together their own rig at home.

Frozen out? Bitcoin price correlation to other assets still undefined

Fidelity’s report claiming Bitcoin is a non-correlated asset has sparked discussion, but as Benjamin Pirus reports, not all agree with the assessment.

Source: https://cointelegraph.com/magazine/2020/10/25/paypal-bitcoin-plans-critics-hodlers-digest-oct-19-25

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The Changes Continue: Facebook’s Libra Has Been Rebranded To Diem

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  • Facebook shook the world last year after announcing plans to introduce a “single global digital currency” dubbed Libra. However, the social media giant’s efforts were quickly scalded by global regulators as the project received massive blowback.
  • Facebook didn’t give up on its idea. Instead, the company decided to rebrand its two main products. Firstly, the Calibra wallet became Novi, and today, Reuters reported that the Libra name had been changed to Diem (meaning ‘day’ in Latin.) 
  • Stuart Levey, CEO of the Geneva-based Diem Association behind the digital coin, confirmed that the name change comes as a direct consequence of the regulatory hurdles. He noted that “the original name was tied to an early iteration of the project that received a difficult reception from regulators. We have dramatically changed that proposition.”
  • The Diem currency would operate as a signal dollar-backed digital coin. Although Levey failed to specify the timing of the launch, recent reports suggested that it may arrive as early as January 2021. 
  • Levey further explained that the Novi team has already begun building a digital wallet that will eventually hold Diem coins. Apart from waiting for approval from Swiss regulators to launch, the Diem Network is also in talks with US federal and state watchdogs. However, Levey didn’t disclose the nature of those negotiations. 
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Source: https://cryptopotato.com/the-changes-continue-facebooks-libra-has-been-rebranded-to-diem/

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Coinbase Faciliated MicroStrategy’s $425M Bitcoin Purchase Without Moving The Market

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The leading US-based cryptocurrency exchange Coinbase assisted in MicroStrategy’s massive purchase of $425 million worth of BTC. The platform pledged to help other large firms diversify their portfolios with bitcoin in the future as well.

Coinbase Involved In MicroStrategy’s BTC Purchase

The NASDAQ-listed business intelligence firm made the news on two occasions earlier this year as it announced the total purchase of 38,250 bitcoins. At the time, this sizeable amount equaled about $425 million.

However, the entity that helped broker the deal remained unknown until today. The San Francisco-based crypto exchange Coinbase announced that it was “selected as the primary execution partner for MicroStrategy’s $425 million purchase of Bitcoin.”

The community speculated on how such a considerable amount didn’t move the markets as the price of BTC remained relatively still back then. Coinbase explained that this was the company’s intention in the first place:

“Using our advanced execution capabilities, leading crypto prime brokerage platform, and OTC desk, we were able to buy a significant amount of bitcoin on behalf of MicroStrategy and did so without moving the market.”

Furthermore, the exchange noted that its system takes a single large order and breaks it into many small pieces that are executed across multiple trading venues. This type of smart order routing reduces the trade’s impact on the market and assists in disguising the overall trade size.

This also helped MicroStrategy to get a better price for its BTC purchase as Coinbase’s trading team “achieved an average execution price that was less than the price at which the buying started.” The post highlighted that this strategy ultimately saved 1% (or about $4.25 million) for the NASDAQ-listed company.

More Large Companies To Come?

MicroStrategy’s purchase kicked off a wave of large companies and prominent individual investors who expressed willingness to get in bitcoin as well.

Jack Dorsey’s Square followed with a $50 million BTC allocation. More recently, the Wall Street giant Guggenheim Partners filed a document with the SEC to purchase about $500 million worth of bitcoin for one of its funds.

Coinbase asserted that more firms will look to BTC to hedge or diversify their excess cash. Consequently, the large US exchange will “look forward to helping more corporate companies and institutions looking to diversify their capital allocation strategies with crypto.”

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Source: https://cryptopotato.com/coinbase-faciliated-microstrategys-425m-bitcoin-purchase-without-moving-the-market/

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U.S. DoJ Extradites Key Member of Crypto Ponzi Scheme From Panama

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The U.S. Department of Justice (DoJ) has extradited a principal member of a fraudulent cryptocurrency mining and trading platform from Panama to the United States.

AirBit Club Co-founder to Face Criminal Charges in the U.S.

According to an announcement by the acting U.S. attorney for the Southern District of New York, Audrey Strauss, U.S. authorities were able to extradite Gutemberg Dos Santos, co-founder of crypto Ponzi scheme AirBit Club.

Dos Santos, who holds dual citizenship from Brazil and the United States, was extradited to the U.S. from Panama on Nov. 23, 2020. According to Strauss, Dos Santos’ repatriation was possible with the help of the Homeland Security Investigations (HSI).

As reported by CryptoPotato back in August, the U.S. authorities arrested five individuals who were involved in the AirBit Club scheme that fleeced unsuspecting victims of $20 million. Operators of the crypto Ponzi scheme ran false advertisements that promised users hyperbolic rewards from Bitcoin trading and mining.

However, the DoJ at the time alleged that the group only sought to live flamboyant lifestyles of victims’ funds. While spending money on luxury homes and cars, they reportedly made more moves to recruit more victims across the U.S and different other countries.

A statement from the DoJ document reads:

“The extradition of Dos Santos reflects the determination of agents from HSI New York’s El Dorado Financial Crimes Task Force to dismantle global criminal organizations, wherever the investigation takes us. Utilizing our broad authorities and network of law enforcement partners, HSI will continue to hunt those who allegedly prey upon innocent citizens for financial gain.”

Also, if Dos Santos is found guilty of the charges levied against him, the AirtBit Club co-founder could face between 20-30 years in prison.

Law Enforcement Fighting Crypto Crimes

Regulatory authorities globally continue to warn investors about fake crypto-related schemes that promise high returns. According to a recent report by CryptoPotato, Chinese authorities confiscated $4 billion worth of crypto tokens from PlusToken scammers.

PlusToken, which is one of the biggest cryptocurrency Ponzi schemes, promised users high returns, similar to other crypto fraudulent projects. The Chinese law enforcement began investigating the project after it shut down in 2019. In July, the police arrested 27 key members of the scam project, along with 82 other members.

Another major fraudulent crypto scheme, OneCoin, reportedly stole $4 billion from investors with its founder Ruja Ignatova also known as “Crypto Queen,” still at large. Meanwhile, Ruja’s brother Konstantin Ignatov has been arrested by the U.S. authorities since 2019 and could face a 90-year prison sentence.

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Source: https://cryptopotato.com/u-s-doj-extradites-key-member-of-crypto-ponzi-scheme-from-panama/

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