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The US Congress is Split Over the Digital Dollar: A Plus for China’s Leadership in the CBDC

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Aug 02, 2021 at 12:29 // News

Several obstacles still stand in its way

As America tries to catch up in the development of the digital dollar, several obstacles still stand in its way. Congress remains divided on the issue, giving China even more of a chance to win.

Panicked, Congress meets to discuss CBDC

Americans are concerned about the speed at which other countries are moving forward with their digital currency projects. Even Nigeria and other African countries have achieved greater milestones than the superpower US. The fact that developing countries are at the forefront of Central Bank Digital Currency (CBDC) innovation is very worrying. China, which is also currently at the forefront, may soon introduce its digital yuan for public use.

That is why the Subcommittee on National Security, International Development and Monetary Policy Team met with renowned economists from academia and industry on July 27 to discuss America’s fate in terms of the CBDC revolution sweeping across continents.

However, at the hearing, titled “Promises and Perils of Central Bank Digital Currencies” China and its success with the digital yuan dominated the debate, with divergent opinions on countermeasures to limit Chinese sovereignty in CBDC innovation. Republicans and Democrats remain divided on the issue, which could lead to China retaining its leadership role in the competition for CBDCs.

Republican Congressman Patrick McHenry expressed particular concern about the potential threat digital dollars could pose to private payment companies in the U.S., while the U.S. Federal Reserve Chairman, Jerome Powell says “we’d rather get it right than make the first move.” On the contrary, the Democratic Party Congressman Jake Auchincloss wants the U.S. to catch up in order to preserve its economic power. 

capitol-570653_1920.jpg

The event featured five witnesses who also offered their advice to Congress. Mr. Yaya Fanusie of the Centre for a New American Security is helping the U.S. develop its CBDC to counter Chinese influence as soon as possible. 

Chinese monopoly

Although more than 60% of the world’s central banks are exploring CBDCs, China still takes the lead. Beijing has been testing its digital yuan in major Chinese cities and is preparing for a mass launch in 2022 Beijing Olympics to drive its internationalisation, but a domestic launch could happen at any time.

China, Hong Kong, Thailand and the United Arab Emirates are planning a cross-border CBDC pilot. It is predicted that at least 1 billion people will use the digital yuan by 2023, nearly three times the US population. If such a proliferation of digital yuan and the current confusion in the U.S. continues, China will undoubtedly remain the CBDC giant.

Although many countries are not yet sure if the CBDC concept will be successful, as it is an innovation, the U.S. is concerned that the dollar will lose its international popularity as a reserve currency should CBDCs catch on. While other countries are not really worried about the possibility of CBDCs failing and are moving full steam ahead, it is causing concern in America. America is still being held back by various opinions from experts and politicians and is still undecided on a CBDC.

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Source: https://coinidol.com/us-cbdc-congress-split/

Blockchain

Bitcoin, Ethereum will draw their market strength from this key aspect

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Bitcoin and Ethereum are currently surviving a bearish scare, with both assets just about holding a position above their immediate supports. For Bitcoin, the $41,000-level is establishing a strong bounceback range while Ethereum has managed to remain above $3000.

On the contrary, some altcoins have recorded strong recoveries, with Solana, Bitcoin Cash, and Uniswap hiking by more than 10% in one 24-hour window.

Now, these altcoins seemed to have the relative edge at press time. However, there are a couple of key metrics which may allow us to evaluate the actual strength of Bitcoin, Ethereum as the market goes forward.

How much importance should be given to utility?

Source: Sanbase

Over the past few years, market stability has been dependent on different aspects. During the bullish rally of 2017, investor sentiment was key and when major traders started to become bearish, the digital assets collapsed.

Then, it was constructive institutional inflows at the beginning of 2019. At the time, it was suggested that institutions can allow tokens such as BTC, ETH to hold higher price positions. The price fell in 2020, irrespective of rising interest.

However, one key idea missed by most speculators might be the utility side of things, which is presently one of the most important functionality. Gone are the days when astute marketing allowed assets such as TRON to climb into the top-10.

Now, according to Santiment, Bitcoin has hit a two-month high in terms of circulation. What’s more, if the chart is closely observed, the average BTC transferred has risen consistently over the month of September.

Source: Sanbase

Similarly, Ethereum hit a similar feat but its 1-day circulation index was at a 3-month high, indicative of high token utility and movement.

Ethereum’s price has dropped sharply over the course of the past few weeks, but circulation has remained high.

Bitcoin, Ethereum spaces have evolved

Now, to be fair, it is important to account for volatility and the fact the circulation isn’t as high as it was during May 2021. However, maintaining a development and transaction-intensive ecosystem, one which allows the price to be built on strong foundations, is eventually advantageous.

Now, with respect to the assets that have grown over the past few days, besides BCH, both Solana and Uniswap are extremely utilized tokens. While one is the native token of a major DEX, another asset is currently responsible for bringing better L2 solutions.

Likewise, for Bitcoin and Ethereum, higher utility and circulation should keep the asset relevant, and progressively exhibit significant recoveries over Q4 of 2021.

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Source: https://ambcrypto.com/bitcoin-ethereum-will-draw-their-market-strength-from-this-key-aspect

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Blockchain

Bitcoin has never been better, yes, but here’s why perspective is key

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Bitcoin is a volatile asset. We know that, but people who fear losing their investments always scream murder at the slightest fluctuation. While those exist, there are also those who keep calm and stay invested. And for them, their patience is paying off.

On a macro scale, this is the time for Bitcoin HODLers.

Bitcoin at its best…

… for long-term investors.

This week, the total supply existing on exchanges fell to 2.45 million BTC, levels last witnessed back in August 2018. This is a result of the consistent accumulation the market has been seeing since March 2020.

This macro-accumulation held its course over the 2020 and 2021 rallies and reached where it is today.

Bitcoin supply on exchanges | Sources: Glassnode – AMBCrypto

This consistent behavior of buying Bitcoin has led to outflows dominating exchanges. Periods of inflows were observed around July 2020’s local top and again during the May crash, but went back to indicate buying.

As a result, on average, 80k to 100k BTC have been bought out between July and September. 

Bitcoin exchange net position | Source: Glassnode

This kind of pattern can be expected only from a particular set of investors who remain mostly undeterred by the micro-fluctuations. Long-term holders have been continuously increasing their holdings.

And presently, their holdings have hit an all-time high of 80.5% of all circulating supply. Now, some sell-offs were seen around April as a result of profit-taking. This fueled a fall to the low peak of 67.7% this year.

However, it also underlined the bullishness of LTH as back in 2018, the same fell to 58% and around 54 – 56% back in 2014. 

Bitcoin LTH supply | Source: Glassnode

Why the bullishness though?

The bullishness that we observed from long-term holders this year can be attributed to 2 phenomena –

  1. Bitcoin’s new ATH on the charts
  2. Bitcoin’s overall increased adoption

A proof of the hike in adoption comes from the growth observed beyond Bitcoin itself, particularly, in Lightning Network’s stats. El Salvador’s adoption of Bitcoin might have served as a catalyst but Lightning Network has seen greater participation since way before.

The network capacity has increased by 170% since January this year, up by 22% this month alone, touching 2,904 BTC.

Bitcoin LN capacity | Source: Glassnode

This macro bullishness will probably continue as Bitcoin’s adoption is growing with every passing day. People remain in anticipation of the king coin going back to its ATH levels.

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Source: https://ambcrypto.com/bitcoin-has-never-been-better-yes-but-heres-why-perspective-is-key

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‘Bitcoin maxis’ like Solana, but is there sound logic to that

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Recent changes in cryptocurrency market dynamics have fueled the popularity of altcoins like Solana [SOL]. It recently became one of the most trending blockchain platforms around on the back of its surging price.

The cryptocurrency, in fact, had a 1-year ROI of over 4,200%, despite dropping by 34% since its peak in early September. Despite the latest hiccup in value, however, market observers believe the project has managed “winning over a significant number of Bitcoin Maxis or near-maxis.”

Ikigai Funds’ Travis Kling offered this observation on Twitter when he said,

“After talking to a bunch of folks over the last couple months, it’s pretty clear that SOL is successfully winning over a significant number of BTC Maxis or near-maxis, which have previously owned zero ETH or very little ETH.”

While the crypto-space is competitive, the tech-twist to the age-old saying – “competition of your competition is your ally” also holds true. Solana is not competing with Bitcoin. Instead, it is competing with Ethereum’s position in decentralized finance, NFTs, and smart contract offerings. Given the fact that transacting on Ethereum is still a pain for some users, Solana’s cheap and fast transactions provide a better alternative to many.

Solana’s DeFi projects recently crossed $3 billion, despite Ethereum hosting the maximum number of DeFi and NFT projects. While Bitcoin “maxis” are also opting-in for smart contracts, they prefer SOL over ETH, according to Kling.

Why? According to the exec,

“I think maxis look at ETH vs SOL and think –

Well as long as its not going to be all that decentralized, might as well have a smart contract platform that can actually handle enough throughput with cheap enough fees where it can really scale, instead getting choked up like ETH.”

However, not everyone agrees with Kling’s opinions. Many believe the decentralization narrative to be wrongly used by Kling, with another Twitter user @mikemcg0 noting that Ethereum is “more decentralized than BTC.” Anyone can run an Ethereum validator,” he said, “but only a select few oligopolies can mine BTC.”

Even so, Bitcoin mining has spread out even more after the recent China crackdown. Although the process is extensive in terms of effort, time, and money, according to another user, “anyone can” mine BTC “if they have the entrepreneurial mindset.”

Now, the latest outage faced by Solana did raise questions about the level of centralization. However, that has not really discouraged those who want to indulge in DeFi, NFTs, and smart contracts. As Solana forges new contracts with Hacken Foundation and Gate.io, others institutions like Osprey Funds and Grayscale are in a race to include Solana in their respective bouquet of products.

In fact, Osprey Funds has already registered Osprey Solana Trust with the SEC.

‘Ethereum killer’ or not, Solana is en route to gaining more interest from the booming crypto-market. Even turning so-called BTC maxis in the process.

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Source: https://ambcrypto.com/bitcoin-maxis-like-solana-but-is-there-sound-logic-to-that

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