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Bitcoin favored over ether among traders in thin liquidity – Blockworks

October 16, 2023 | Author: admin

As bitcoin (BTC) solidifies its dominance over its main rival ether (ETH), traders are showing a clear preference, despite the crypto market witnessing its most prolonged liquidity crisis in years.

Data from market intelligence firms Glassnode and K33 show the crisis, echoing patterns seen during the 2014-15 and 2018-19 bear markets, has persisted for over 535 days.

One significant date for market observers is on Friday when the US Securities and Exchange Commission is poised to make its decision to appeal the recent Grayscale court ruling linked to its spot BTC ETF application.

An absence of an SEC appeal could spark a market reaction, though its longevity remains in question, K33 said in a recent note.

Bitcoins continued appeal seems rooted in its role as digital gold in risk-averse scenarios and rising anticipation surrounding the potential rollout of spot bitcoin ETFs, the market intelligence firm added.

Elsewhere, derivatives markets are revealing subtle shifts.

CMEs next month premium and BTC perpetuals offshore funding rates have both seen an uptick, suggesting cautious optimism, K33 alluded.

However, with offshore funding rates still lingering below the neutral mark and continued outflows from BTC ETFs, the market, despite its optimism, seems hesitant to expect further price rises, K33 said.

Even as ether trails behind, bitcoins steadfast position as traders preferred digital asset highlights its impressive year-long trajectory, boasting a rise of over 63% this year. The worlds second-largest digital asset, meanwhile, is up just half that amount at 30% to $1,560, Blockworks data shows.

Analysis points to the Realized Cap data which underscores the dormant nature of coins transferred on-chain suggesting very few coins transferred on-chain are being used to take profit or minimize losses, Glassnode said in a blog post on Monday.

Liquidity continues to dry up across the digital assets as network settlement, Exchange interaction and capital flows reside at cycle lows, heavily underscoring the current acute apathy experienced by the market, it said.

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Bitcoin price could hit $750K to $1M by 2026 Arthur Hayes – Cointelegraph

October 16, 2023 | Author: admin

Love him or hate him, when Arthur Hayes speaks, people listen.

Last week, as a guest on Impact Theory with Tom Bilyeu, Hayes made the case for why he believes Bitcoin (BTC) price will hit $750,000 to $1 million by 2026.

Hayes said:

Hayes cites the nearly predictable response of the United States government rushing in to intervene in every economic crisis with a bail-out as a key catalyst behind the structural problems in the U.S. economy.

He explained that this essentially creates an endless cycle of central bank printing, which leads to inflation and prevents the economy from going through natural market cycles of growth and correction.

Lets take a quick look at a few of the catalysts that Hayes believes will back Bitcoins move into six-figure territory.

According to Hayes, mounting government debt, a large amount that needs to be rolled over and diminishing productivity can only be addressed with money printing. While monetary expansion does lead to bull markets, the consequence tends to be high inflation.

Hayes expects a massive top at some point in 2026, followed by a great depression-like situation by the end of the decade.

When asked about future contributors to inflation, Hayes zoned in on the $7.75 trillion in U.S. debt that must be rolled over by 2026 and the yield curve inversion in U.S. bonds.

Traditionally, China, Japan and other nations were the main buyers of U.S. debt, but this is not the case anymore a change that Hayes believes will exacerbate the situation in the states.

According to Hayes, the U.S. banking system is functionally insolvent because the regulators made the rules in such a way that it was profitable from an accounting perspective, not an economic perspective, to essentially take in deposits and buy low-yielding Treasurys, and they could do it with almost infinite leverage and a few basis points differing in the change of the price, and everyone makes a lot of money and gets a big bonus.

The largest concern expressed by Hayes is that at a structural level, the U.S. banking system cannot buy more debt because it cannot afford to because it is structurally insolvent. The Federal Reserve has committed to doing quantitative tightening, so its not accumulating more Treasurys.

Hayes explained that the market is digesting this, and the nuance here is that despite high rates on U.S. Treasurys, gold prices remain high and certain market participants who previously were treasury buyers are disinterested.

Currently, banks struggle to attract deposits, and the difficulty of matching their deposit rates to the current rates available in the market creates revenue and debt management stress at a level that could become critical to the function of the entire banking system. Like many cryptocurrency advocates, Hayes believes that its in times like this that a certain cohort of investors begins to look at different investment options, including Bitcoin.

Despite what appears to be a generally dismal outlook on the global and U.S. economy, Hayes still expects Bitcoin price to outperform, placing a target estimate in the $750,000 to $1 million range by the end of 2026.

Hayes expects Bitcoin to continue:

Coming into 2024, Hayes said either a financial crisis will push rates closer to 0%, or the government will keep raising rates, but not as fast as governments spend money and people continue looking for better returns elsewhere.

The eventual approval of a spot Bitcoin exchange-traded fund in the U.S., Europe and perhaps Hong Kong, plus the halving event, could push the price to a new all-time high at $70,000 in June or July of 2024. Regaining the all-time high by the end of 2024 is when the real fun starts and the real bull market starts, and Bitcoin enters the 750,0000 to $1 million on the upside.

When asked whether the estimated price level would stick, Hayes agreed that a 70% to 90% drawdown would occur in BTC price, just like it has after each bull market.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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Bitcoin price could hit $750K to $1M by 2026 Arthur Hayes - Cointelegraph

More than MiCA: EU’s Governing of Smart Contracts Will Need Even … – CCN.com

October 16, 2023 | Author: admin

Is the EU considering new DeFi regulations? | Credit: Shutterstock

When the EU passed the Markets in Crypto Assets (MiCA) legislation earlier this year, it was a major milestone in the regulation of cryptocurrencies. Although MiCA covers a lot, it doesnt cover everything, as huge swathes of the DeFi space remain unaffected by the new rules.

As the EU considers its next move post-MiCA, early signs point toward smart contracts and their role in decentralized finance being the next regulatory frontier.

In one sense, the Markets in Crypto Assets (MiCA) regulation is a sweeping piece of legislation that covers most major cryptocurrencies and the businesses that deal with them. But at the same time, it has little to say on other associated technologies, such as DeFi protocols.

Looking ahead, the EU has already signaled its intention to bring more of the crypto sector within its regulatory perimeter.

For instance, in a research paper published on Wednesday, October 11, the European Securities and Markets Authority (ESMA) delves into the world of Ethereum smart contracts and what they could mean for the European markets.

Pointing out that the prevalence of smart contracts has steadily increased despite the fluctuations in the price of ETH, the ESMA argued that they pose a number of consumer and financial stability risks.

On the consumer front, the regulator takes issue with the high prevalence of pseudonymous developers in the DeFi space.

Unlike regulated entities, DeFi platforms governed by smart contracts are often built and deployed without their creators ever disclosing their identities. Over the years, this tradition of secrecy has allowed malicious DeFi developers to get away with numerous rug pulls and scams.

In terms of financial stability, the ESMA cautioned that smart contracts composability and the stacked nature of many DeFi protocols create dependencies among protocols. In turn, this leads to the risk of contagion, whereby the failure of a single protocol could trigger a domino effect leading to a larger financial crisis.

These risks are yet to receive adequate attention from supervisors and regulators, the authority noted.

As DeFi grows and its linkages with traditional finance broaden, it is becoming increasingly important for authorities to assess these risks, the report added.

Ultimately, regulation can never keep up with the pace of innovation. With new technologies being developed all the time, lawmakers will always be one step behind.

And while the Congressional impasse that has thus far frozen all attempts to pass MiCA equivalent regulation in the US has been damaging to the American crypto sector, rushing through legislation that isnt fit for purpose wouldnt serve the EU well either.

However, the ESMAs latest publication shows that EU regulators have, at the very least, identified the DeFi sector as a strong candidate for their next big legislative push.

Already, the European Data Act proposed in March is the first piece of EU legislation that attempts to define a smart contract. Going forward, research like the ESMAs will lay the groundwork for potential DeFi regulation in the future.

Suggesting potential policy initiatives the EU could take, the ESMA cited the European Commissions call for a public observatory of DeFi activity operated by a public authority. Such an authority could carry out investigations and issue opinions and public warnings about specific DeFi protocols, the report noted.

To create a new regulator, the EU would need to achieve broad consensus among member states, and the necessary legislation could take years to formulate. But with the DeFi sector growing by the day and becoming ever more entwined with the world of traditional finance, leaving it unchecked would run counter to the EUs established regulatory model.

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How Blockchain Technology Is Being Used To Transform The … – BanklessTimes

October 16, 2023 | Author: admin

Blockchain technology might offhandedly be associated with cryptocurrency. However, as a decentralized digital record keeper, blockchain technology has the potential to revolutionize the insurance industry, spanning several markets with a handful of applications.

Blockchain technology is poised to change the insurance industry's future, primarily as it relates to smart contracts and claims processing.

In the health insurance industry alone, administrative services account for up to 30% of annual costs. Administrative waste is a critical burden across the insurance industry.

Companies using blockchain technology can reduce overhead costs, customer service delays, and customer turnover by offering controlled access via self-executing programs.

A client sets up a smart blockchain contract to execute a payout on a claim meeting key parameters. Personnel aren't required to the same extent to complete the contract or follow up with self-executing programs.

Now, insurance companies don't need to staff as many adjusters or administrative personnel to field phone calls, emails, and facilitate visits to confirm a valid claim.

Insurance claims processing can take anywhere from a few days to several months to process, depending on the complexity of the claim. For example, Progressive says the average wait time for most types of car insurance claims is several weeks.

Contracts between insurers and insured could be stored on a blockchain with specific transactions programmed to execute automatically after parameters have been met.

In the event of a travel delay, damage to a primary residence, or a car accident, insurance automatically refunds a client who submits a digital claim.

Clients don't need to wait to receive a payout several weeks or months after the fact.

According to the FBI, insurance fraud costs $40 billion per year, not including health insurance claims. This significantly harms insurance overhead and necessitates increased security measures and personnel to monitor for fraudulent activity.

Blockchain technology could be used to set up a digital history related to fraud data shared over a network between insurers.

Confidential and anonymous, insurance providers can, for example, review a database of insurance claims for any history of fraud associated with individual clients or companies.

Blockchain platforms are enabling the insurance industry to safely collect, store, and share data. a blockchain functions as a shared database that stores information via cryptography. These platforms are most commonly used as a ledger, and they are decentralized, which means there's not a single group or individual in control, but rather all users can control a given blockchain. This has the potential to allow several forms of information to be stored on the same blockchain in a digital fashion and accessed by those who need it.

The health insurance industry is relying on blockchain platforms to improve security and accuracy for medical data, which can be stored and accessed by several healthcare providers and customers in a confidential and secured environment.

Medicalchain has begun integrating a blockchain-based platform to store and share medical records in a confidential space accessible across any network. Such steps are pivotal in:

Reducing overhead administrative costs and administrative waste,

Making it easier for customers to submit claims,

Enabling the tracking of essential medical information,

Sharing data across several health care providers.

Blue Cross Blue Shield (BCBS) has already begun implementing digital solutions via blockchain technology with a separate partnership via Coalesce Health Alliance. The company has begun streamlining data exchanges among BCBS partners with confidential blockchain technology.

In addition to securely storing data, blockchain technology in the form of smart contracts is helping to streamline the claims process, particularly where car insurance and homeowners insurance are concerned.

Smart contracts are self-executing, which means they can be programmed to initiate specific actions based on the fulfillment of predefined conditions.

Where insurance companies are concerned, smart contracts can reduce the cost and time associated with processing claims by automating the claims process. For example, in the event of a car accident, a smart contract could automatically process the rate of refund on a claim and release it to the policyholder once predefined parameters have taken place.

A blockchain has the potential to store information like:

Photos

Police reports

Accident reports

Receipts

Inventory lists

Once stored on the blockchain, set information can be shared with approved parties, reducing fraud by verifying authenticity, and expediting the amount of time it takes to access information and settle a claim.

Insurwave has begun integrating a blockchain platform for its claims process with great success.

Overall, blockchain technology gives clients control over their insurance data and provides a centralized location that is not owned by a single insurance provider or company. This offers opportunities to safely and securely store data. Tangentially, smart contracts can function in conjunction with blockchain platforms to enable self-executing contracts that expedite the claims process.

Capitalizing on this new technology will transform the insurance industry by reducing administrative costs, providing faster claims processing times, and increasing security and fraud management.

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On-Chain Tracker Notices Major Difference Between Bitcoin And … – NewsBTC

October 16, 2023 | Author: admin

As earlier reported, Bitcoin holders have steadily held on to their coins in the past few months. Bitcoin whales, in particular, seem to be doubling despite the current uncertainty in Bitcoins future projection. Long-term holders add an average of 50,000 BTC to their wallets every month, as indicated by the HODLer Net Position Change indicator provided by Glassnode.

On the other hand, whales of Ethereum, the second largest crypto in the world, appear to be on a different trajectory. On-chain data has shown that while Bitcoin whales hoard their coins, Ethereum whales appear to be dumping their holdings in recent years.

Bitcoin whales, meaning the largest holders with 1000 BTC or greater, have been steadily accumulating more BTC since 2018, according to data from on-chain analytics firms. However, there have been sell-offs, either through extended bear markets or during profit-taking after a strong bullish uptrend.

A research analyst for Cryptoslate named James Straten posted on social media that Ethereum whales with more than 1,000 ETH have been selling since the same period. While sharing a Glassnode chart, he shared a correlation between the whales of the blockchains.

On-chain data shows ETH whales have offloaded 20 million ETH since 2022, with 12 million ETH being sold off this year alone.

The story these on-chain metrics tell provides insight into the prevailing mood among large crypto holders of different blockchains.

Although the amount of ETH held by whales might indicate they have sold or moved their funds to other cryptocurrencies, a better possibility is that these whales transferred their ETH into Ethereum smart contracts. Since Ethereum version 2.0 kickstarted its journey in December 2020, the number of tokens in the staking protocol has grown significantly.

ETH 2.0 requires validators to stake 32 ETH in its deposit contract to validate transactions on the Ethereum blockchain. At the moment, the contract now has 31.2 million ETH worth $48.6 billion locked. This seems consistent with on-chain data, which shows that the percentage of supply tied in smart contracts overtook the supply in addresses holding 1000+ ETH in late 2020.

Crypto research analyst Andr Dragosch shared this correlation on social media platform X. The correlation buttresses that the Glassnode data doesnt consider the ETH tied in smart contracts for its whale supply metric.

With a domination of 17.8% over the whole cryptocurrency market, the Ethereum blockchain continues to solidify its position as the undisputed leader of smart contracts. Unlike Bitcoin whales, bullish ETH whales are not just HODLing but employing techniques to maximize their crypto gains.

At the time of writing, ETH is trading at $1,557. However, a recently failed bullish pattern formation could send the price of ETH falling below $1,000.

Cover image from Unsplash, chart from Tradingview

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IOTA to Have One More Stablecoin: What is USPlus? – U.Today

October 16, 2023 | Author: admin

Vladislav Sopov

DeFi ecosystem of veteran blockchain network IOTA keeps gaining traction as Fluent Finance announces launch of USPLUS stablecoin

With the new integration, users of USPLus will be able to redeem their stablecoins on new blockchains. This is one of the first on-chain stablecoin releases for IOTA and its associated smart contracts platform Shimmer.

Fluent Finance, a decentralized finance platform, announced yesterday, Oct. 13, 2023, that it was set to roll out smart contracts on IOTA and Shimmer blockchains. The release of the USPlus stablecoin, a USD-pegged cryptocurrency backed by fiat, is the primary goal of its integration.

Platform representatives stressed that the launch on the IOTA ecosystem is of paramount importance for Fluent Finance's vision and massive adoption of its stablecoin product:

Fluent is pleased to be (...) joining forces with a robust community of bright innovators

Also, the team expressed excitement about the features of IOTA as a technical platform, including its innovative design of blockchain consensus and Tangle's gasless digital ID functionality.

Fluent Finance appreciated the role of the Tangle community in "getting the wheels turning" during the procedure of USPlus deployment.

USPlus, a USD-pegged stablecoin by Fluent Finance, can be obtained on the Bitrue centralized exchange as well as on Ethereum-, Celo-, and Arbitrum-based versions of the Uniswap v3 decentralized exchange platform and DeFi on XDC Network, an Ethereum (ETH) fork.

As covered by U.Today previously, last September, Shimmer launched an EVM-compatible smart contracts platform for dApps.

The team of Fluent Finance is considering further collaborating with the IOTA blockchain and its community.

The product is focused on building deposit tokens, stable-valued, regulatory-compliant digital assets interoperable with core banking systems. Through the solutions by Fluent Finance, banks will be able to issue their own digital currencies and interact with government-backed CBDCs.

Its USPlus stablecoin's 1:1 peg to U.S. dollar can be tracked via banking APIs for the maximum level of transparency in Web3.

About the author

Vladislav Sopov

Blockchain Analyst & Writer with scientific background. 6+ years in IT-analytics, 3+ years in blockchain.

Worked in independent analysis as well as in start-ups (Swap.online, Monoreto, Attic Lab etc.)

Coinbases security team has fought crypto hackers for a decade: Heres what has to change – Fortune

October 16, 2023 | Author: admin

Philip Martin is an impressive guy. A veteran of the U.S. Army, where he spent years working on counterintelligence, he did stints at Amazon and Palantir before coming to Coinbase to lead its security operations. So his views on the crypto industrys horrendous hacking problems carry considerable weight.

I caught up with Martin last week, and asked him how the industry beset by hackers since the very beginning has evolved when it comes to security. He noted that, while fundamental principles remain the same, the rise of smart contracts has made the job considerably harder.

Today, we have these massive, immutable, interrelated smart contracts that are storing tens of billions of dollars. I equate it to whipping back to 1970 and asking a dev to write secure codethey would fail miserably, Martin observed. He added that, because building and accessing smart contracts is extremely easy, it has meant many core code libraries have gaping security holes.

Martin said it doesnt have to be this way, but many in the industry lack the incentives to build with security in mind. Coinbase, which has a strong track record on cyber defense, is trying to set an example with its new Base blockchainbuilding an open-source monitoring tool called Pessimism onto the chain itself. More broadly, Martin said, he hopes the crypto industry will imitate Microsoft, which famously switched to a security-by-design approach with the launch of Windows 7 in 2009.

The crypto industry may have no choice if it wants to grow and be taken seriously. I wrote recently about an embarrassing incident where a custody firm, ironically named Fortress, let itself get robbed, and how this was just the latest in a long series of sloppy behavior that has made crypto a byword for hacking. It doesnt help that the most formidable threats are not rogue individuals, but a nation-stateNorth Koreaand organized crime outfits in Eastern Europe. Little wonder companies are getting robbed every week.

The news isnt all bad, though. Martin noted correctly that smart contracts are barely five years old and that the basic building blocks of security to support them are still being built. Its also encouraging that big crypto companies that are fierce rivalsincluding Coinbase and Binanceregularly help each other when it comes to unmasking and stopping hackers.

But Martin said the industry needs to move faster and, in his words, act like grownups. He has that right. Each new breach is yet another blow to the industrys already battered reputation, and, if there is going to be another crypto boom, it will have to be built around a new ethos that values security as much as getting rich quick.

Jeff John Robertsjeff.roberts@fortune.com@jeffjohnroberts

FTXsformer CTO testified that Sam Bankman-Frieds hedge fund dipped into customer money as far back as 2019, and that the exchange lost or squandered $14 billion. (Fortune)

New rules from the U.K. financial regulator that impose a host of strict rules on crypto firms, including those outside the country, are now in effect. (Bloomberg)

A Swiss company is using Coinbases Base blockchain to create tokens that represent shares in a T-bill ETF, though they are only available outside the U.S. for regulatory reasons. (Blockworks)

Yuga Labs laid off an undisclosed number of U.S. employees as its CEO said the firm, best known for its Bored Apes brand, has pursued too many projects. (Decrypt)

A new research note from Bank of America says U.S. Treasuries have been oversolda situation that in the past has been a precursor to major volatility in crypto. (CoinDesk)

Its not fine:

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Coinbases security team has fought crypto hackers for a decade: Heres what has to change - Fortune

Redefining Crypto Standards with Bitcoin Spark, Avalanche, Stellar … – CryptoPotato

October 16, 2023 | Author: admin

The crypto landscape has evolved significantly since the inception of Bitcoin (BTC). And market observers suggest Bitcoin Spark (BTCS), Avalanche (AVAX), Stellar (XLM), and Monero (XMR) are redefining crypto standards.

Avalanche is a blockchain platform that seeks to tackle the blockchain trilemma of scalability, security, and decentralization with its unique Proof of Stake (PoS) consensus mechanism.

Avalanche supports smart contracts and decentralized applications (dApps), utilizing the Solidity language used by Ethereum. This creates greater blockchain interoperability by integrating a number of decentralized finance (DeFi) ecosystems.

AVAX is the native token of the Avalanche network, and it powers transactions within the platform, serves as a medium for distributing system rewards, facilitates governance participation, and covers transaction fees.

Stellar is a blockchain that was created to facilitate fast and cost-effective cross-border payments and issuance of digital assets. It operates on a consensus algorithm known as the Stellar Consensus Protocol (SCP), which enables quick and secure transaction processing by a network of distributed nodes.

Stellars native cryptocurrency, Lumens (XLM), plays a pivotal role in the platforms ecosystem, serving as a bridge currency for facilitating transactions, preventing spam on the network, and supporting the creation of assets on the platform.

Monero is a fork of the Bytecoin blockchain that was launched in 2014. The blockchain was designed to provide users with enhanced privacy, making it nearly impossible to trace the sender, recipient, or transaction amount. It achieves this high level of privacy through advanced cryptographic techniques like ring signatures, stealth addresses, and confidential transactions.

As a result, Monero has gained popularity among users who prioritize privacy and anonymity when conducting digital transactions, making it one of the leading cryptocurrencies in the privacy coin category.

Bitcoin Spark is a new Bitcoin fork. It has gained notoriety in the crypto space for retaining Bitcoins fixed supply of 21 million coins while introducing a range of features and improvements that solve its limitations and bring forth a new age of digital transactions.

The Bitcoin Spark blockchain assures lightning-fast transactions and low gas fees with its short block time, high individual block transaction capacity, and extensive nodes. The blockchain also primes itself as a scalable platform for building and using diverse smart contracts and decentralized applications (DApps). It boasts a multiple-layered architecture with a seamlessly integrated smart contract layer, ensuring scalability. The smart contract layer includes separate execution systems that all reach finality on the main network, allowing developers to use a variety of programming languages, including Solidity, Vyper, and Rust.

Bitcoin Spark distinguishes itself with its groundbreaking consensus mechanism, the Proof-of-Process (PoP). The PoP requires users to provide processing power to the network in order to confirm blocks and earn rewards. However, the mechanism exponentially diminishes rewards per additional power, promoting a fairer system. This nonlinearity of rewards, combined with the networks massive nodes, allows even those with low-powered devices to participate in network validation, ensuring true decentralization.

Notably, the Bitcoin Spark application, which will serve as the networks native wallet, will also enable users to participate in network validation. The projects team has made notable steps to ensure the app is safe, easy to use, lightweight, and compatible with popular operating systems, including Windows, iOS, and Android.

The contributed power will be rented out as remote computing power through Bitcoin Spark, with payments required in BTCS. This gives rise to a new concept of decentralized CPU and GPU rental, helping institutions and individuals get additional computing resources while providing a new way to incentivize network validators, as they will receive 97% of the revenue generated in addition to newly minted BTCS and transaction fees from confirmed blocks.

Going further, the Bitcoin Spark application and website will have small spaces for community-policied ads, also paid for in BTCS. This integrates the decentralized ecosystem with the marketing industry, creating income for the participants and the team as they will share the revenue equally. Notably, those involved in policing the ads will also receive extra incentives for their efforts.

The massive investments made in Bitcoin Sparks ongoing Initial Coin Offering (ICO) suggest great belief in its prospects.

Bitcoin Spark (BTCS), Avalanche (AVAX), Stellar (XLM), and Monero (XMR) are attempting to redefine crypto standards, expanding what crypto and blockchain technology can achieve.

For more information on Bitcoin Spark and its ICO:

Website: https://bitcoinspark.org/

Buy BTCS: https://network.bitcoinspark.org/register

Disclaimer: The above article is sponsored content; its written by a third party. CryptoPotato doesnt endorse or assume responsibility for the content, advertising, products, quality, accuracy, or other materials on this page. Nothing in it should be construed as financial advice. Readers are strongly advised to verify the information independently and carefully before engaging with any company or project mentioned and do their own research. Investing in cryptocurrencies carries a risk of capital loss, and readers are also advised to consult a professional before making any decisions that may or may not be based on the above-sponsored content.

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‘Tokenised’ assets could save markets $17b a year: RBA – The Australian Financial Review

October 16, 2023 | Author: admin

These could come from reducing the cost of capital and transaction costs. The calculations are based on a fraction of the benefits which emerged when trading went electronic, the RBA said.

Estimated cost savings for Australian financial markets sit in the range of $1 billion to $4 billion per year. These could be created by tighter bid-ask spreads, reflecting higher trading volumes as tokenised assets are made available to a wider range of investors. There could also be gains from atomic (instant) settlement, such as for cross-border payments without needing to rely on corresponding banks. Savings could also come from lower collateral requirements, and reduced costs relating to failed settlements.

The numbers seem sufficiently large to us that, at a minimum, its worthy of further investigation, Mr Jones said.

Commonwealth Bank managing director of blockchain and digital assets Sophie Gilder said the RBAs estimates were very aligned to what were seeing in terms of the potential for cost savings. These would come from operational efficiencies and reduced levels of regulatory capital. Well get more and more refined in terms of understanding what those cost savings actually are, she said.

CBA is exploring use cases in debt capital markets. Ms Gilder said if digital currencies could be combined with tokenised assets to create instant settlement, that would produce some huge benefits.

David Lavecky, co-founder of Canvas Digital, said its focus was foreign exchange markets. It has been working alongside the RBA in one of its pilots to test a CBDC in Australia, known as the eAUD.

In some cases, it may be quicker to take cash out of the ATM, get on a flight and take it to another country rather than using your regular bank accounts, he said. Using a CBDC presents an entirely new way of doing foreign exchange. We were able to show that an hour-long process went down to seconds and became atomically settled across blockchains.

Mr Jones said in a world of tokenised real assets, the role of traditional financial intermediaries would evolve as market-making activity was reduced along with manual reconciliation of records.

He also pointed to various risks and challenges. One was regulatory uncertainty about compliance, such as who is accountable if smart contracts go awry and for anti-money laundering responsibilities.

Markets would need to be interoperable with traditional infrastructure for the foreseeable future to limiting fragmentation between assets traded across different venues, Mr Jones said. Trades, and even orders, would need to be prefunded, which could increase liquidity requirements for market participants.

The CBDC project has highlighted opportunities for a wholesale CBDC to act as a complement to, rather than substitute for, new forms of privately issued digital money, such as tokenised bank deposits and asset-backed stablecoins.

It is certainly plausible that stablecoins issued by well-regulated financial institutions and that are backed by high-quality assets (i.e. government securities and central bank reserves) could be widely used to settle tokenised transactions, Mr Jones said.

But it is more contestable whether this would be the case for stablecoins issued by institutions that currently sit outside the prudential regulatory perimeter, including non-bank financial institutions and technology companies.

What is blockchain network congestion? – Cointelegraph

October 16, 2023 | Author: admin

Blockchain network congestion, explained

Blockchain network congestion refers to a situation where the number of transactions exceeds the networks capacity, resulting in processing delays.

When there are more pending transactions than the network can handle, blockchain networks get congested. Limited block sizes and the length of time required to construct a new block are the causes of this issue.

Transactions are delayed, and users notice slower processing times when the volume of transactions exceeds the networks capacity to confirm them quickly. The release of BRC-20 tokens on the Bitcoin blockchain led to a rapid increase in transactions, resulting in Bitcoin network congestion.

Increased usage, high transaction volumes and events like initial coin offerings (ICOs) can strain the system and cause congestion. Users may choose to pay extra fees to have their transactions prioritized, which raises expenses even more during these busy periods. Moreover, transactions become more expensive and less efficient as a result of the congestion, which also affects the overall user experience.

However, blockchain networks are always working on ways to improve scalability, ensure smoother transactions, and reduce congestion-related problems, such as protocol updates and layer-2 scaling solutions. These initiatives are essential for widespread adoption because they increase the robustness and effectiveness of blockchain networks, even in times of heavy demand.

Efficient blockchain transaction processing is vital for enabling high throughput, low latency, reduced transaction fees and enhanced data security across various industries.

The widespread use and integration of blockchain technology into various industries depend on effective blockchain transaction processing. Scalability is one of its main advantages; it enables blockchain networks to manage a large volume of transactions quickly and concurrently.

Scalability has been a problem in conventional systems, but effective blockchain processing eliminates this problem, providing smooth operations even during periods of high usage. Additionally, by lowering latency and congestion, it improves network performance and enables real-time transaction validation and confirmation. Transaction fees are also reduced by efficient transaction processing, making blockchain technology more affordable for both private individuals and commercial enterprises.

Furthermore, effective blockchain processing ensures swift, safe and tamper-proof transactions in industries where data security is crucial, such as finance, healthcare and supply chain management. The speed at which blockchain can handle transactions will be a deciding factor in how quickly new technologies are developed and adopted.

Blockchain network congestion arises from factors such as high transaction volumes, increased adoption, DApps, ICOs and malicious activities, causing delays and higher fees in transaction processing.

The processing capacity of the blockchain network is strained by a number of issues, which cause delays and higher transaction fees. For instance, a large number of transactions that exceed the networks capacity can overwhelm the processing power, delaying confirmation of transactions.

Moreover, as blockchain technologies are more widely used, more individuals and companies make transactions, which increases network traffic. Decentralized applications (DApps), platforms for decentralized finance (DeFi) and the concurrent execution of smart contracts all place a considerable burden on the networks resources and cause congestion.

In addition, as investors participate in events like ICOs and token sales, the network is further clogged with transactions. Last but not least, malevolent actors can cause system disruption by sending a large number of low-value transactions, and physical restrictions in the network architecture, like poor internet connections, can obstruct the smooth flow of data and cause congestion problems.

In blockchain systems, network congestion can have serious repercussions for users, businesses and the general operation of decentralized applications.

One immediate consequence is delayed transaction confirmations. Services that depend on timely payments or transactions are affected when a network is crowded because transactions take longer to process. For instance, Ethereums network was severely congested during the CryptoKitties boom in late 2017, which led to delays in platform transactions.

Higher transaction fees are also a result of significant demand for transaction processing. Users frequently bid higher fees to speed up their transactions when there is congestion or a transaction backlog. Transactions may become more expensive as a result of the increase in fees, especially for smaller transactions. Due to the high demand for DeFi apps, the Ethereum network experienced congestion in 2021, which caused transaction costs to soar.

Additionally, the user experience of DApps is impacted by network congestion due to slow transaction processing. Prolonged congestion and a bad user experience may make users reluctant to interact with the DApp. Users who are frustrated or dissatisfied might abandon the platform completely, which would have an impact on the success of the DApp and its user base.

Also, developers may need to set aside more resources to boost the DApps performance when it is congested. This diversion of resources may have been used to improve user functionality or experience instead, delaying the development of the DApp as a whole.

Blockchain network congestion needs to be addressed with a diverse strategy that includes both short-term fixes and long-term scaling solutions.

Optimizing transaction fees is one such strategy. To prevent unnecessary bidding wars during congestion, users can set reasonable costs. Also, layer-2 solutions, like rollups for Ethereum and the Lightning Network for Bitcoin, can be implemented by developers to reduce the load on the primary blockchain by allowing some transactions to take place off-chain.

Furthermore, by increasing the number of transactions executed in each block and enhancing block propagation methods, throughput can be increased. Additionally, switching to proof-of-stake or other efficient consensus algorithms lowers the computational load, allowing blockchain networks to support more transactions.

As a crucial tactic to deal with blockchain network congestion, sharding, as implemented by the Ethereum blockchain, stands out. Each of the shards created by dividing the blockchain into smaller parts can operate independently to process transactions. The capacity of the network is greatly increased by this parallel processing, enabling numerous transactions to take place simultaneously.

Finally, encouraging DApp developers to improve their smart contracts and code can lessen the needless load on the network. Blockchain platforms can reduce traffic by combining various techniques, resulting in smooth transaction processing and improving the user experience.

What is blockchain network congestion? - Cointelegraph

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What is blockchain network congestion? – Cointelegraph

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