Cloud Hosting

2023-03-21 11:33:37 ET

Cryptocurrency is not an old industry. Bitcoin kicked off the industry as we know it when Satoshi Nakamoto mined the Genesis block on January 3rd 2009, as the world reeled from one of the worst financial crashes in recent memory.

Only three years later, XRP was launched, a decentralised asset built for payments. Today, it remains one of the most well-known and biggest cryptocurrencies, currently sitting in sixth place with a market cap of close to $20 billion.

And yet, so many are still confused as to what XRP does, as well as the distinction to Ripple, the company behind it. This week on the Invezz podcast, I interviewed Brendan Berry, Payment Products Lead at Ripple, to get into the weeds of what exactly XRP is, what Ripple is, and the distinction between the two, as well as what they both do.

We covered a bunch of topics. One of these was the issues with conventional banking a particularly pertinent topic given the startling events in the sector over the last couple of weeks.

But we focused mainly on payments. Ive criticised the process behind bank transfers, and I put to Brendan my curiosity around what feels like a total lack of innovation in the digital age from banks. I asked him about fees and lag times and why these were taking days for cross-border payments.

Of course, this is a big reason why XRP exists. We talked about the ins and outs of this, as well as a subsection within the area of payments: remittances. When I visited El Salvador last summer, I was fascinated by this area but the data shows that the pickup hasnt happened yet. I wanted to get Brendans take on this and how XRP can contribute in this area.

We also discussed the future of crypto, including what Brendan believes will be a streamlining of the front-end experience of a lot of transactions within the space.

Another topic we touched on was whether the recent banking turmoil would push people further into crypto, and what this could mean for the industry, and XRP, going forward.

All in all, it was a wide-ranging discussion centred on payments and what role XRP could have in this world.

Link:

VIDEO: What is XRP and what does it do? What is Ripple? - InvestorsObserver

The Bitcoin market continued to flourish amidst the global banking crisis, which analysts indicate is in the early stages. With United States officials reportedly studying ways to let the Federal Deposit Insurance Corporation (FDIC) temporarily insure deposits beyond the current $250,000 cap on most accounts without getting approval from Congress, confidence in Bitcoin is expected to rise exponentially. Notably, the United States Federal government is working to prevent further bank insolvency.

Moreover, recent bank insolvency has been compared to the pre-2008 Lehman Brothers bankruptcy after being in operation for 158 years. The results of the 2008 financial crisis brought forth the Bitcoin digital asset by Satoshi Nakamoto, which will now be experiencing its first major global recession.

Having been tested for the past fourteen years, Bitcoin is expected to shield ordinary people from impending financial implosion. Moreover, Bitcoin is hard printed to 21 million units despite the increasing global demand.

The Bitcoin market has held $28k for the past few days, despite the altcoin industry remaining generally calm. According to our latest crypto market data, Bitcoin price is up over 26 percent in the last 14 days. Having remained above the 200 WMA in the past three days, analysts are getting more confident the effects of the weekly death cross will fade off over time.

Moreover, the Bitcoin fundamental aspects have been outweighing the technical outlook. Notably, the 2-Year Treasury yield has dropped over 4 percent, the most significant 5-day decline in yields since the October 1987 crash. With more calls for the Fed to tighten its monetary policies, including a cut on tomorrows interest rate, Bitcoin price could rally to $30k.

The Bitcoin market has led the recent crypto rally, with cash inflow to altcoins largely reduced. The ETH/BTC chart is a clear testimony that altcoins are yet to register gains. Analysts expect the altcoin season to happen after a rebound on the ETH/BTC four-hour chart.

Nonetheless, the Bitcoin market has recorded cash outflow as reported by on-chain analytics firm CoinShares. According to the report, Bitcoin funds saw massive outflow last week despite the inflow outweighing the outflows YDT.

Bitcoin, being the largest digital asset, was the primary focus, seeing outflows totaling US$244m last week. Short-bitcoin also saw outflows totaling US$1.2m, although it is now the investment product with the largest inflows year-to-date of US$49m, CoinShares noted.

No spam, no lies, only insights. You can unsubscribe at any time.

The spike in outflows is coupled with increased Bitcoin miners profit-taking since the asset hit $28k.

Crypto News Flash does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to cryptocurrencies. Crypto News Flash is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned.

Read more here:

Bitcoin eyes $30,000 ahead of the Fed meeting on Tuesday that ... - Crypto News Flash

What is a deflationary cryptocurrency?

Although cryptocurrencies are often promoted as investment opportunities, their primary purpose was originally to serve as an alternative form of currency. Considering this narrative, the rules of supply and demand apply to cryptocurrencies as to fiat currencies.

An undergraduate economics student might say the basics of money, economy and market forces is balancing supply and demand. How much of an asset is in circulation versus the demand how many people want that particular asset helps decide its price. This equation between supply and demand underlies the fundamentals of all economies and also applies to cryptocurrencies.

Deflationary cryptocurrency is one where the value of the crypto increases due to a reduction or stagnation in supply. This ensures that the coins market value is attractive for more people to invest in and can be used as a store of value. While deflationary cryptocurrencies look more attractive, not all are designed that way.

Many well-known cryptocurrencies are not deflationary. In addition, there is often no supply limit to them. Some are disinflationary because inflation gradually reduces over time due to its tokenomics. Bitcoin (BTC), for instance, wont be deflationary until all 21 million coins have been mined. Ether (ETH) was not deflationary until the Merge happened in September 2022.

Related: Inflationary vs. deflationary cryptocurrencies, Explained

Developers of tokens create deflationary mechanisms during the design of the economic model behind the token. The economic model tokenomics can be fundamental to how stakeholders add and accrue value in a Web3 ecosystem.

The supply and demand dynamics of a token are decided at the level of development. Deflationary characteristics like burn mechanisms are decided as the economic model underlying the token is being developed. This can be a point-in-time process like with Bitcoin or an evolving mechanism like with Ethereum.

When creating Bitcoin, Satoshi Nakamoto ensured there would only be a finite supply of 21 million. Once 21 million Bitcoin are mined, no new BTC can be created. This limited supply has helped the narrative that Bitcoin is a true store of value compared with fiat currencies that increase supply due to central bank monetary policies.

In contrast, Ethereum had an inflationary supply at its inception. Ether supply was increasing at an annual rate of 4.5%. However, after the Ethereum Merge that saw it move from proof-of-work to proof-of-stake, it is now a non-inflationary asset due to its burn rate. The number of Ether burned in maintaining the network activity is more than the amount of Ether entering circulation.

Implementing the EIP-1559 protocol has altered the economic nature of the Ethereum token by incorporating the burning of a fraction of the gas fees per transaction. As a result, some experts argue that Ethereum has become more deflationary than Bitcoin.

As deflationary tokens are considered a better store of value, new tokens created for both protocol and application tiers may be designed to be deflationary.

Investments in deflationary cryptocurrencies can yield growth and returns for investors. But being deflationary alone may not be a criterion to be identified as a better investment.

Due to their supply cap, deflationary tokens are typically perceived as more valuable by holders and investors. This was also demonstrated by the rise of nonfungible tokens (NFTs), where the rarity of the NFTs often decided the prices. Limited supply driving prices higher was also true with the Ethereum Name Service (ENS), where some three-digit ENS names were sold for even more than 100 ETH.

Ethereum may not necessarily be classified as a better asset after it became deflationary. Ethereum has a rich ecosystem that drives transactions on the chain, and as more Ether gets burned in the process, it causes deflation. An unused Ethereum blockchain wouldnt be able to achieve this economic feat.

The underlying chain fundamentals must remain strong for Ethereum to thrive as an investment. A chain with strong fundamentals typically has a developer ecosystem to create many applications that users widely adopt. As users flock to these applications, developers are encouraged to continue innovating.

The resulting network effect would make Ethereum deflationary, making it a more attractive investment asset.

Centralized regulatory organizations typically govern the inflation of asset prices in traditional capital markets. Is that the same in Web3? Who ensures fair play?

In the United States, the Federal Reserve (the Fed) assumes the responsibility of maintaining inflation at reasonable levels by implementing tools such as altering interest rates, bond-buying programs and money printing. This obligation is typically similar across most other nations. In Web3, inflation is controlled by the protocols monetary policy, which is determined by the community through decentralized governance.

Deflationary mechanisms are interwoven into the tokenomics while creating the ecosystem. Where tokens have an unlimited supply, as the token ecosystem matures, there would be more opportunities for burn. Therefore, the organization managing the token must proactively identify these opportunities and embed them into the tokenomics to reduce the supply.

The Ethereum Merge is a fine example of how the Ethereum supply and demand was tweaked to make it deflationary. Such significant tokenomics changes are typically proposed, approved and executed by a decentralized autonomous organization (DAO) that governs the token and the platform behind it.

These tokenomics changes are then embedded into smart contracts as the rules of the ecosystem. Smart contracts drive the new business rules and the economic model of the ecosystem. As a result, DAOs could play a significant role in ensuring efficient and effective governance of the tokens.

Since decentralization is one of the tenets of the blockchain world, an economic system not controlled by the founding teams, investors, venture capitalists and whales is crucial to delivering sustainable tokenomics based on sound business models.

Read more:

Ethereum as a deflationary asset, explained - Cointelegraph

Signature Bank is again in the news a week after the New York State Department of Financial Services (NYDFS) shut down the bank in order to prevent a domino effect from Silicon Valley Bank's implosion last March 9.

The NYDFS initially shut down the bank as part of a preventive measure in order to protect depositors and ensure that customers get their deposits back. The next step was the United States Federal Deposit Insurance Corporation (FDIC) announcement yesterday March 19 that Signature Bank's deposits and loans will be taken over by Michigan-based Flagstar Bank. The agreement will see $38.4 billion worth of deposits and $12.9 billion in loans taken over by Flagstar.

This seems to be part of a bigger plan to combat the banking crisis that seems to be looming over the United States and prevent its further escalation. It might be recalled that a recent economic analysis on the Silicon Valley Bank (SVB) collapse said that as much as 186 banks in the US are at risk of insolvency. The Federal Reserve then announced a swap line network with the central banks of Japan, England, Canada, Switzerland, as well as the European Central Bank. How this all might unfold is still up for speculation. SVB's collapse caused a ripple effect in the crypto industry, while in the traditional financial sector, this effect was most notable in Switzerland, with the impact felt on Credit Suisse.

As for whether cryptocurrency deposits will be affected, the FDIC has clarified that the deal does not include Signature's digital asset deposits. Previously, the agency has also stated that the decision for Signature's closure was not in any way related to cryptocurrency. But it should be noted that Signature, as well as SVB and Silvergate were among the top banks providing services to the crypto sector. Whatever the FDIC's motives are for Signature's closure and whether it will eventually include crypto deposits or not, the whole debacle just might point to a more optimistic view of cryptocurrency as an alternative to the traditional banking system, helmed as it is by the United States.

The relationship between banking regulation and crypto firms has been a subject of contention for some time now. Fiduciary policies have often been at odds with the decentralization and freedom that cryptocurrencies promise. While many crypto firms have sought to distance themselves from traditional banks, others have increasingly embraced banking services, leading to accusations of a "sellout" within the crypto community.

Historically, there has been an antagonistic relationship between crypto and banks, dating back to the inception of Bitcoin. Satoshi Nakamoto, the pseudonymous creator of Bitcoin, inscribed a message on the genesis block, referencing the UK Chancellor's bailout for banks: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."

This message itself underscores the distrust of centralized financial institutions and the need for a decentralized alternative. As more crypto firms partner with banks or even become part of the banking system themselves, there is a growing concern that the original vision of cryptocurrencies is being compromised. By aligning with banks, these firms risk undermining the very principles that made cryptocurrencies attractive in the first place: decentralization, financial autonomy, and resistance to censorship.

On the other hand, proponents of these partnerships argue that the integration of crypto services into the traditional financial sector is necessary for mass adoption and mainstream acceptance. They maintain that a balance can be struck between the regulatory demands of banking authorities and the unique features of cryptocurrencies.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. Opinions stated herein are solely of the author's, and hence do not represent or reflect CryptoDaily's position on the matter. The author has no stakes in any of the digital assets and securities mentioned, and does not have any significant hold of own any cryptocurrency or token discussed.

Visit link:

Flagstar to Take Over Signature Bank's Deposits - Crypto Daily