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Mass adoption would ruin cryptocurrencies. Keep it in a niche

Published

5 months ago

14 June, 2024

Mass adoption would ruin cryptocurrencies. Keep it in a niche

Cryptocurrencies would be better off remaining a niche.

The biggest cryptocurrency crisis so far has been, without a doubt, the rapid decline and tremendous fall of FTX. At the time of the collapse of what turned out to be Sam Bankman-Fried’s personal piggy bank, it was the third largest cryptocurrency exchange. Its demise sent shockwaves across the industry, bringing down not just prices but a host of companies.

Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

This article is excerpted from The Node, CoinDesk’s daily roundup of the top stories in blockchain and cryptocurrency news. You can sign up to get the full service newsletter here.

At the time, in late 2022, it was unclear whether the cryptocurrency concept would ever recover: the blatant fraud of what was until then one of the most reliable and consumer-friendly cryptocurrency companies seemed to confirm the widespread assumption that all of this it was just a ruse to hide a fraud.

Today, things are improving, although there remains a pervasive fear that the industry is repeating old mistakes and is headed for another punishment. For veteran cryptocurrency investors and observers, this is and always has been normal: since the days of bitcoin (BTC) 2014 market crash, following the Mt. Gox bankruptcy, e subsequent reboundthe cyclical nature of the market has been an accepted part of life.

But isn’t it strange that this maturing industry has normalized these boom-and-bust cycles? It seems to me that the mass adoption of any blockchain or consumer application depends on whether the price of its token – or the industry itself – is not always at risk of imminent collapse.

And that’s the point. To a large extent, the biggest problem with the growth of cryptocurrencies is the growth of cryptocurrencies. This whiplash between euphoria when markets rise and despair when they fall, every four years or so, is the result of cryptocurrencies’ quest for mass adoption.

The process is clear, a textbook case for economist Robert Shiller “irrational exuberance.” Promises to reinvent everything from money to the Internet itself pique interest. People believe in the dream of decentralization (or, for many, the promise of easy money). Popularity drives prices up, which reflexively it drives them up further as more and more people invest, until something breaks.

Almost always, the things that fail are the things that blockchains were built to mitigate or replace. And these things, almost always, were built to make cryptocurrencies attractive and/or easy to use. It is not an uncommon opinion that “the masses” will probably not self-guard. But without self-custody, what’s the point of something like Bitcoin?

“The risk of growing adoption is that new entrants are unaware of the core tenets of Bitcoin: decentralization, self-custody, hard money, etc. If new entrants do not learn, understand, and espouse these core beliefs, the characteristics that make them these realities may not remain in the protocols over time,” said Alex Thorn, head of corporate research at investment bank Galaxy Digital.

Adoption means respecting the law (which is often at odds with cryptocurrency values) and creating easy-to-use logins and logins (which can be compromised). There is a tension – if not a direct competition – between the goals of decentralization and mass adoption. Grow cryptocurrency too much and you risk destroying what it is actually useful for. “Just bending to the dominant financial system ends up giving away a lot of the opportunities that matter with this technology,” said Nathan Schnieder, a professor of media studies at the University of Colorado Boulder and author of “Governable Spaces.”

It’s a point echoed by University College Dublin lecturer Paul Dylan-Ennis, who said that “cryptocurrency is a subculture that can’t accept being a subculture. Most of our problems stem from how talking about “onboarding the next billion” makes us decay our values.”

There is a certain irony in the fact that developers, founders and investors have spent 15 years and billions of dollars searching for a “killer app” for blockchain, yet it already has one.

Satoshi Nakamoto, and those who actually follow in his footsteps, have built digital tools that can be used in any way and cannot (easily) be taken away.

That’s all. This is the whole point of cryptocurrencies.

Mind you, these are huge markets. But today, as in other times when cryptocurrencies appear to be on the verge of breaking out, this use pales in comparison to the speculative use of cryptocurrencies, where capital comes in, jumps from coin to coin or protocol to protocol, and causes the number to rise – essentially creating a circular economy.

Alright then. Gambling is a use case to some extent. But if people want cryptocurrencies to be used productively, developers, founders, and investors should work for the people who have a real need for money and censorship-resistant tools. Almost by definition, this is a limited audience.

This is just my opinion. Many disagree.

Molly White, author of the critical crypto news stories Web3IsGoingGreat and “Citation Needed,” argues that crypto is already mainstream. “There are individual projects that are still small and niche, but with Brian Armstrong and Sam Bankman-Fried rubbing shoulders in Congress and BlackRock and Fidelity launching bitcoin ETFs, I think the ship has probably sailed,” she said in a direct message.

Privacy advocate, educator, and monero superuser SethforPrivacy sees things differently. The “unfortunate reality is that most people do not yet realize the need for Bitcoin nor are they willing to take on as much personal responsibility, and as such we must focus our efforts on improving Bitcoin for those who do. Today,” he said.

It is also argued that decentralization is the very reason why cryptocurrencies will go global, so to speak.

“The ONE thing that makes Bitcoin’s global rise possible is its most cypherpunk attribute: it is owned by no one and is run by users, not states or corporations,” said Alex Gladstein, chief strategy officer at Human Rights Foundation.

However, it is not exactly clear what the masses want. Ethereum advocate Emmanuel Awosika, for example, admits that “while we believe *everyone* wants privacy, censorship resistance, and protection against nation-state attacks, some people are fine with a product that solves a problem and has good UX.”

While not everyone needs, let alone wants, privacy, resistance to censorship and maximum decentralization, Awosika added: “We should explore the possibility of putting cryptocurrencies in the hands of as many people as possible.”

Likewise, Roko Mijic, of “Roko’s basilisk” fame, argued that it’s actually scale that gives decentralized tools any power, which is evidently true as Bitcoin is difficult to attack because it has miners spread across the world. “You can’t resist censorship from within a small-scale crypto network because the government will simply destroy the entire network,” Mijic said.

Justin Ehrenhofer, founder of Moonstone Research in Chicago, echoed this sentiment, pointing out that a currency is only useful if it is widely accepted, and therefore “cypherpunks should focus on building systems that attract outsiders.” However, he added that “with widespread adoption” there has been a degradation of the spirit of cryptocurrencies, as the average user stores their wealth in custodial exchanges.

I guess the question is, how valuable are cryptocurrency fundamentals?

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News

Cryptocurrency Price August 1: Bitcoin Dips Below $65K; Solana, XRP Down Up To 8%

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

Major cryptocurrencies fell in Thursday trading following the Federal Reserve’s decision to keep its key interest rate unchanged. Overnight, the U.S. Federal Reserve kept its key interest rate at 5.25-5.5% for the eighth consecutive time, as expected, while also signaling the possibility of a rate cut at its next meeting in September. The unanimous decision by the Federal Open Market Committee reflects a continued wait-and-see approach as it monitors inflation trends.

CoinSwitch Markets Desk said: “Bitcoin has fallen below $65,000 after the US Federal Reserve announced it would keep interest rates unchanged. However, with markets now anticipating rate cuts at the next Federal Reserve meeting in September, the outlook for a Bitcoin rally by the end of the year has strengthened.”

Meanwhile, CoinDCX research team said: “The crypto market has plunged after the Fed decision. Tomorrow’s US unemployment rate announcement is expected to induce more volatility, with the ‘actual’ figure coming in higher than the ‘expected’ one, which is positive for cryptocurrencies.”

At 12:21 pm IST, Bitcoin (BTC) was down 3.2% at $64,285, while Ethereum was down nearly 4.5% at $3,313. Meanwhile, the global market cryptocurrency The market capitalization fell 3.6% to around $2.3 trillion in the last 24 hours.

“Bitcoin needs to clear its 200-day EMA at $64,510 to consolidate further. Otherwise, a retest of $62,000 could be in the cards,” said Vikram Subburaj, CEO of Giottus.

Altcoins and meme coins, such as BNB (3%), Solana (8%), XRP (5.7%), Dogecoin (5%), Cardano (4.6%), Avalanche (4.3%), Shiba Inu (3.8%), Polkadot (3.4%), and Chainlink (4%) also saw declines.

The volume of all stablecoins is now $71.64 billion, which is 92.19% of the total cryptocurrency market volume in 24 hours, according to data available on CoinMarketCap. Bitcoin’s dominance is currently 54.99%. BTC volume in the last 24 hours increased by 23.3% to $35.7 billion.

(Disclaimer: Recommendations, suggestions, opinions and views provided by experts are personal. They do not represent the views of the Economic Times)

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News

Altcoins WIF, BONK, RUNE, JUP Down 10% While Bitcoin Drops 4%

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

Altcoins WIF, BONK, RUNE and JUP drop 10% as Bitcoin recedes 4%

Altcoins dogwifhat, Bonk, THORChain, and Jupiter have suffered losses of more than 10%, while Bitcoin is down 4% in the last 24 hours.

After a period of relative calm yesterday, July 31, Bitcoin (BTC) price action has seen a drastic change as the cryptocurrency dropped by more than $3,500, bringing its value to $63,300. At the same time, altcoins mirrored this trend, with the total value of liquidated positions rising to nearly $225 million over the course of the day.

Initially, the week started on a positive note for Bitcoin, which reached its highest point since early June, hitting $70,000. However, this peak was short-lived, as it was quickly rejected, leading to a substantial decline, with Bitcoin falling below $65,500.

The cryptocurrency managed to regain some stability, trading comfortably at around $66,800. However, following a Press conference According to Federal Reserve Chairman Jerome Powell, the value of Bitcoin has fallen again to $64,300, down more than 3% in 24 hours.

BTC Price Chart 24 Hours | Source: crypto.news

The recession coincided with a relationship from the New York Times stating that Iran had called for retaliatory measures against Israel following the assassination of Hamas leader Ismail Haniyeh in Tehran, increasing the risk of further conflict in the region.

Meanwhile, on the economic front, the Federal Reserve decided to keep its benchmark interest rates in place, offering little information on a planned September rate cut. Powell also hinted that while no concrete decisions have been made on the September adjustment, there is growing consensus that a rate cut is likely.

Amid Bitcoin’s decline, altcoins have suffered even more significant losses. For example, dogwifhat (Wife) saw a 12.4% drop and (DISGUST) has suffered a 10% drop. Other altcoins such as THORChain (RUNE) also fell by 10%, while Jupiter (JUPITER) and the Ethereum naming service (ENS) decreased by 8% and 9% respectively.

Among the largest-cap cryptocurrencies, the biggest losers are Solana (SOL) with a decrease of 8%, (Exchange rate risk) down 6%, Cardano (ADA) down 4%, and both Ethereum (ETH) and Dogecoin (DOGE) recording a decrease of 4.4%.

Data from CoinGlass indicates that approximately 67,000 traders have been negatively impacted by this increased volatility. BTC positions have seen $61.85 million in liquidations, while ETH positions have faced $61 million. In total, the value of liquidated positions stands at $225.4 million at the time of writing.

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News

Riot Platforms Sees 52% Drop in Bitcoin Production in Q2

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

Riot Platforms posts 52% decrease in Bitcoin production for Q2

Bitcoin mining firm Riot Platforms has released its second-quarter financial results, highlighting a decline in cryptocurrency mined due to the recent halving.

Colorado-based Bitcoin (BTC) mining company Riot platforms revealed its second quarter financial results, highlighting a significant reduction in mined cryptocurrencies attributed to the recent halving event that took place in early April.

The company reported total revenue of $70 million for the quarter ended July 31, a decline of 8.7% compared to the same period in 2023. Riot Platforms attributed the revenue decline primarily to a $9.7 million decrease in engineering revenue, which was partially mitigated by a $6 million increase in Bitcoin extraction income.

During the quarter, the company mined 844 BTC, representing a decline of over 50% from Q2 2023, citing the halving event and increasing network difficulty as major factors behind the decline. Riot Platforms reported a net loss of $84.4 million, or $0.32 per share, missing Zacks Research forecast a loss of $0.16 per share.

Halving increases competitive pressure

The Colorado-based firm said the average cost of mining one BTC in the second quarter, including energy credits, rose to $25,327, a remarkable 341% increase from $5,734 per BTC in the same quarter of 2023. Despite this significant increase in production costs, the firm remains optimistic about maintaining competitiveness through recent deals.

For example, following the Recent acquisition Cryptocurrency firm Block Mining, Riot has increased its distributed hash rate forecast from 31 EH/s to 36 EH/s by the end of 2024, while also increasing its 2025 forecast from 40 EH/s to 56 EH/s.

Riot Platforms Hashrate Growth Projections by 2027 | Source: Riot Platforms

Commenting on the company’s financials, Riot CEO Jason Les said that despite the halving, the mining company still managed to achieve “significant operational growth and execution of our long-term strategy.”

“Despite this reduction in production available to all Bitcoin miners, Riot reported $70 million in revenue for the quarter and maintained strong gross margins in our core Bitcoin mining business.”

Jason Les

Following its Q2 financial report, Riot Platforms shares fell 1.74% to $10.19, according to Google Finance data. Meanwhile, the American miner continues to chase Canadian rival Bitfarms, recently acquiring an additional 10.2 million BITF shares, increasing its stake in Bitfarms to 15.9%.

As previously reported by crypto.news, Riot was the first announced a $950 million takeover bid for Bitfarms in late May, arguing that Bitfarms’ founders were not acting in the best interests of all shareholders. They said their proposal was rejected by Bitfarms’ board without substantive engagement.

In response, Bitfarms She said that Riot’s offer “significantly understates” its growth prospects. Bitfarms subsequently implemented a shareholder rights plan, also known as a “poison pill,” to protect its strategic review process from hostile takeover attempts.

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News

Aave Price Increases Following Whales Accumulation and V3.1 Launch

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

Aave price surges amid whale accumulation and V3.1 launch

Decentralized finance protocol Aave is seeing a significant spike in whale activity as the market looks to recover from the recent crash that pushed most altcoins into key support areas earlier this week.

July 31, Lookonchain shared details indicating that the whales had aggressively accumulated Aave (AAVE) over the past two days. According to the data, whales have withdrawn over 58,848 AAVE worth $6.47 million from exchanges during this period.

In one instance, whale address 0x9af4 withdrew 11,185 AAVE worth $1.23 million from Binance. Meanwhile, another address moved 21,619 AAVE worth over $2.38 million from the exchange and deposited the tokens into Aave.

These withdrawals follow a previous transfer of 26,044 AAVE from whale address 0xd7c5, amounting to over $2.83 million withdrawn from Binance.

AAVE price has surged over 7% in the past 24 hours amid buy-side pressure from these whales. The DeFi token is currently trading around $111 after jumping over 18% in the past week.

Recently, the price of AAVE increased by over 8% after Aave founder Marc Zeller announced a proposed fee change aimed at adopting a buyback program for AAVE tokens.

Aave v3.1 is available

The total value locked in the Aave protocol currently stands at around $22 billion. According to DeFiLlamaApproximately $19.9 billion is on Aave V3, while the V2 chain still holds approximately $1.9 billion in TVL and V1 approximately $14.6 million.

Aave Labs announced Previously, Aave V3.1 was made available on all networks with active Aave V3 instances.

V3.1 features improvements that are intended to improve the overall security of the DeFi protocol. The Aave DAO governance has approved the v3.1 improvements, which also include operational efficiency and usability for the network.

Meanwhile, Aave Labs recently outlined a ambitious roadmap for the projectwith a 2030 vision for Aave V4, among other developments.

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