Lending and Interest Income Could Be the Path to Boost Crypto Adoption

Bitcoin and cryptocurrencies, in general, have come a long way from the early days when they were regarded as an internet bubble waiting to burst.

However, even after a decade, one constant criticism is that digital assets haven’t found a niche, and cannot be spent as easily as it has been advertised for long.

The one feather that these digital assets can borrow from the traditional financial world is lending and borrowing, which is the backbone of the majority of the financial ecosystem and banks. This interest-based income, lending and borrowing have already gripped the digital asset world which is evident from a report from Credmark.

The Credmark report suggests that the crypto lending market has already peaked $8 billion in loan amount by the end of the fourth quarter of 2020.

At present, the market size has grown to $10 billion and expected to grow exponentially as the popularity rises overtime. Not only that the global peer-to-peer lending marketplace has also registered annual transaction volumes in upwards of $85 billion.

Lending and Credit Gaining Popularity in Crypto Verse

Genesis Capital, one of the leaders in the crypto credit market, registered its best quarterly performance in the first quarter of 2020, registering $2 billion in the new loan organizations. The firm doubled on its previous quarterly performance and also registered a 20% spike in active loans from the previous quarter.

Celsius Network, the retail-focused crypto lending platform, registered similar growth and currently boasts of 100,000 retail clients and 260 institutional clients spread across 160 countries. The firm has registered $8.2 billion in coin loans to institutional clients since its inception in 2018.

Crypto lending is mostly based on the underlying assets, which makes an easier process as debt is collateralized with the crypto asset. Apart from these asset-backed crypto lending, another form of a lending ecosystem has risen in popularity over the last year in the crypto space i.e decentralized finance (defi).

Defi is an Ethereum based ecosystem which offers decentralized credit system to users based on the collateralized asset.

Users can lock their Ether, Wrapped Bitcoin and other ERC-20 based tokens in smart contracts and withdraw a loan in non-asset backed stablecoin like Dai and USDC. The defi ecosystem has gained massive popularity in the past year, and the value of assets locked as collateral has already crossed the $1 billion mark.

Thus, looking at the popularity, demand and success of lending and borrowing ecosystems in the decentralized space, it could pave the path for mass adoption of crypto in the long-term.

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Author: James W

Bitcoin’s Digital Gold Narrative Reaching ‘Apex’ in Macroeconomic Uncertainty: Report

While halving dominated early conversations in Q1, since then coronavirus has taken over and significantly eclipsed the publicity around the event that is coming in about 25 days, notes the latest report from eToro and the TIE.

COVID-19 along with the macroeconomic uncertainty has Bitcoin emerging as the alternative class and a hedging asset. Born during the 2008-2009 financial crisis that saw massive bank bailouts, inflation, and central bank intervention, in Q1 2020 we are yet again experiencing massive government stimulus packages and interest rates being slashed to zero.

“In this time of great macroeconomic uncertainty, Bitcoin’s digital gold narrative has reached its apex.”

As such, last month, Bitcoin and gold sentiment have been highly correlated with the large changes in sentiment that occurred in unison or within close proximity. Interestingly, still, BTC outperformed not only gold but also S&P 500 up until mid-March. Despite finishing the quarter at a loss of 10.45%, it outperformed the SPY who ended the quarter down 19.92%.

BTC tends to peak with central bank balance sheet growth

On March 12, the market experienced a massive sell-off that occurred in two successive steps. The second drop was “precipitated by automatic liquidations, imparted a long-lasting effect on the market structure,” said Sacha Ghebali & Anastasia Melachrinos of Kaiko.

This has BTC’s correlation to gold and the stock market soaring with markets more volatile than they were a month ago. However, government intervention and fiscal stimulus have the market starting to recover to the early March levels. Kevin Kelly of Delphi Digital noted,

“The backdrop for massive debt monetization is set and it appears all the usual suspects are making their way to the stage. Historical precedent is quite limited given Bitcoin’s relatively short lifespan, but it is notable that prior BTC cycles have tended to peak with major central bank balance sheet growth.”

And all of this is happening near halving. 2020 is already proving to be a turbulent year so far that had miners healthy profit margins turning red after the Covid-19 inspired sell-off. John Todaro of Trade Block explained,

“The network hash rate is closely related to miners’ profit margins. The hash rate increases as the number of resources, in aggregate, committed to securing the network through mining activities rises.”

“As resources dedicated to mining rise over time, the network difficulty increases, which drives efficiency gains in mining activity and/or increased mining costs.

As such, in order to maintain healthy profit margins for miners, a rising hash rate is typically needed to correspond with a rising Bitcoin price.”

But the decreasing hash rate and a decline in network difficulty moved them back into positive territory by the end of the quarter.

Over Q1, nearly all of the cryptocurrencies have been highly correlated, with the exception of Dash.

The report also touched upon the Bitcoin Cash halving which no one really cared about, Cardano’s overall market cap that fell 10x, and that EOS tweets are increasingly coming from the same accounts. The hack of the trinity resulting in IOTA being shut down for nearly a month also saw its long-term perception faltering.

While liquidations of XRP kept Ripple in the green, Stellar’s 50% token burn didn’t result in anything good for the price.

When it comes to the second largest network, Ethereum, a large part of its story, DeFi had a huge chunk of its growth being erased after Ether price crashed. The Black Thursday also forced Maker to shut down.

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Author: AnTy

Libra Whitepaper Gets Updated, Association Members Won’t Get Paid On Reserve Asset Profits

  • The new whitepaper doesn’t use interest to pay early investors, which are predominantly involved in the Libra Association.
  • The interest will still go towards operational costs, keeping transaction fees low, and further development.

Ever since the Libra Association released their whitepaper for their crypto asset (Libra), there have been many regulators pushing for change. Reports by CoinTelegraph shed light on a recent article by Chris Brummer, a law professor at Georgetown University, discussing the new changes that the whitepaper has gone through. Apart from the amendments that were expected with the new list of members, the Libra whitepaper also removed the dividends that were meant to be paid out to early investors in the project.

The original whitepaper for Libra, published in June 2019, stated that the interest accrued for the reserve assets would be used for multiple purposes, including the coverage of system costs, and supporting growth. One of the other uses for the interest was meant to be used towards paying dividends to Libra Association members as the earliest investors in the project. However, the revision has created the following change:

“Interest on the reserve assets will be used to cover the costs of the system, ensure low transaction fees, and support further growth and adoption.”

Brummer stated that the possible reach for the change is that, by awarding dividends to early investors, there’s the possibility of a conflict of interest with the Libra Association members and the currency’s end-users. The reserve assets need to be stable to promote the update of the Libra token, and paying out dividends would put the reserve at risk with other assets. Trust would be reduced or lost entirely, resulting in a lack of uptake for the asset, since the stablecoins rand to lose their value.

Another potential reason for the changes is to address the worries that Libra and other stablecoins could end up being defined as a security, which is the hope of two lawmakers. Still, Brummer remarked that this new definition won’t likely happen, since stablecoins generally keep the same value.

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Author: Krystle M

JP Morgan is Looking Forward to Launching a New Blockchain Network Based on Quorum in Japan

JP Morgan announced its plan to launch a new cryptocurrency, JPM coin, early in 2019 and also to expand its blockchain network, Quorum, in Japan come next year. It also confirmed a new project started to speed up collateral and cash transfers.

In an attempt to achieve these plans, the bank partnered with a fintech Company, Baton Systems. JP Morgan’s launch is a clear indication of technological advancement in handling the financial crisis in the banking world.

The Network has Gained Considerable Support from Japanese Banks

Over 80 banks in Japan are responsive to the platform, which boosts efficiency in receipt screening to curb money laundering. According to a treasury officer in Tokyo, the network will help in the cooperation between banks and regulatory agencies to resolve compliance queries.

JP Morgan is using its capital scale to build an entirely digital bank for better alignment with the client’s interests. It is transforming; this is a good influence for most banks to move from offline legacy and embrace the digital age. It is preparing other banks for a future with global capitalization from cross- border payments to corporate debt issuance over the Blockchain.

How JP Morgan is Expanding Blockchain Projects with Banks

The Blockchain platform will now be used for the improvement of Interbank Information Network (IIN) to improve transaction speed. It will also deal with bank challenges, including data sharing between banks.

IIN uses digital technology to accelerate international money transfers in banks that are interested in thwarting money laundering activities. JP Morgan has now built features to allow verification of transactions sent to valid accounts. The system will enable both domestic and international payments.

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Author: Daniel W

South Africa’s Richest Woman Thinks She Wasted Her Money On Bitcoin Investment

Most people who came to Bitcoin early have made profits as it is one of the biggest growing assets in the past decade. However, Magda Wierzycka, the richest woman of South Africa doesn’t seem to be on board on the crypto train.

In a recent interview with Bruce Whitfield on The Money Show, Wierzycka was asked if she ever wasted money. She replied: “Bitcoin! Bitcoin! Bitcoin! Bitcoin!”.

She goes as far as calling cryptos the biggest skeleton in her investment closet.

She adds:

“I bought my first Bitcoin at $4,000 and my last Bitcoin at $18,000 and watched it plummet – literally – the week after. I was completely caught up in Tulip Mania, I completely bought into the story that this is the digital gold – the digital store of value. I don’t care. I’ve lost so much money. I trust nothing any longer.”

However, Wierzycka has said the company believed strongly in the future of blockchain technology. Her firm Sygnia’s announced that it plans to open a cryptocurrency exchange by November will make it easier for South Africans to invest in this controversial currency.

Their clients will be able to buy cryptocurrencies, such as Bitcoin and Ethereum, on the planned exchange. In so doing, the exchange will hope to benefit from a growing interest in digital currencies.

Wierzycka arrived in South Africa as a 13-year-old refugee from Communist Poland and rose to the very top of the male-dominated world of finance. She co-founded Sygnia Group and became its CEO in 2006. Sygnia is a leader among asset managers in South Africa when it comes to the provision of low-cost, passively-managed investments.

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Author: Sritanshu Sinha

Ten Years Ago, Famous Early Bitcoin Contributor Made the Most Wild Bitcoin Price Prediction

A forum post from the early days of Bitcoin is going viral on Crypto Twitter.

The post was from Harold Thomas Finney, who was an early Bitcoin contributor and also the one who received the first bitcoin transaction from Satoshi Nakamoto, pseudonymous and mysterious creator of the Bitcoin software.

A cypherpunk, Finney had said at that time that the problems of loss of privacy, more centralization, and creeping computerization can be targeted by using the computer as a tool to

“liberate and protect people, rather than to control them.”

In his post from January 10, 2009, he talked about how interesting the bitcoin system is in the way that it can be configured to allow only a certain maximum number of coins to be ever generated.

The idea he said is that the amount of work needed to generate a new coin will become more difficult as time goes on.

However, the immediate problem with bitcoin as is with any new currency is how to value it, he contemplated.

“Even ignoring the practical problem that virtually no one will accept it at first, there is still a difficulty in coming up with a reasonable argument in favor of a particular non-zero value for the coins,”

he said.

Here, he makes an “amusing thought experiment,”

“Imagine that Bitcoin is successful and becomes the dominant payment system in use throughout the world. Then the total value of the currency should be equal to the total value of all the wealth in the world.”

As per this, he puts the value of one Bitcoin at $10 million.

And this was about a week after the genesis block on January 3rd, 2009.

The value was calculated on the basis of total worldwide household wealth estimated to be in the range of $100 trillion to $300 trillion at that time.

“So the possibility of generating coins today with a few cents of compute time may be quite a good bet, With a payoff of something like 100 million to 1! Even if the odds of Bitcoin succeeding to this degree are slim, are they really 100 million to one against? Something to think about…”

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Author: AnTy

Massive Bitcoin Dump by Ponzi Scheme Behind BTC Price Crash

  • PlusToken Scammed $3 Billion from People
  • Massive Sell-off Started in early July

Currently trading around $10,000, Bitcoin lost 18% of its value this week, wreaking havoc in the cryptocurrency market.

Though a drop has been long expected because of the sharp rise of BTC price and the gaps created by CME Group’s Bitcoin futures contracts, a prominent reason could be large amounts of BTC dumped in the market.

On August 14, Dovey Wan, a founding partner at blockchain-based investment company Primitive Ventures brought CT’s attention to the massive sell-off by the Ponzi scheme, dubbed PlusToken.

PlusToken Scammed $3 Billion from People

Recently, Wan wrote how since September 2017, China has been “progressively restricting” cryptocurrencies in the country and prosecute crypto scams and

“seriously offending ICOs.”

PlusTokens was not only among the projects that were scamming their customers but also the largest one that scammed a whopping $3 billion — including ~70K in BTC + ~ 800K in ETH. Core team members of the project were arrested earlier this year in Vanuatu and are now facing decades in jail time.

Most recently, a report by Blockchain security firm CipherTrace brought PlusToken Scheme in the limelight.

Started in mid-2018, PlusToken offered “high yield investment return.” It has 4 layers of membership structure with each one giving a different percentage of rebate.

Massive Sell-off Started in early July

Wan said, in early 2019, PlusToken claimed its membership has over 10 million.

The addresses shared by her are however only the known ones while as per the police report $3 billion were the total scammed amount.

Many of these BTC addresses, she says, started with P2SH — commonly used for multi-sig. Wan says it is likely some people who hold the keys are not caught by the police.

But now the scammed cryptocurrency is crawling back.

This actually started around early July as shared by a security audit firm Peckshield. The firm revealed a total of approximately a thousand were moved to Bittrex and Huobi.

Chinese traders have also been reportedly climbing that an unknown address has been dumping 100 BTC on cryptocurrency exchanges, that Wan connected to PlusToken scheme.

This could be a reason why first in July BTC/USD dropped to $9,150 and now yet again to $9,470 level.

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Author: AnTy