Cryptocurrency: The Economics of Money and Selected Policy Issues
Cryptocurrencies are digital money in electronic payment systems that generally do not require government backing or the involvement of an intermediary, such as a bank. Instead, users of the system validate payments using certain protocols. Since the 2008 invention of the first cryptocurrency, Bitcoin, cryptocurrencies have proliferated. In recent years, they experienced a rapid increase and subsequent decrease in value. One estimate found that, as of March 2020, there were more than 5,100 different cryptocurrencies worth about $231 billion. Given this rapid growth and volatility, cryptocurrencies have drawn the attention of the public and policymakers. A particularly notable feature of cryptocurrencies is their potential to act as an alternative form of money. Historically, money has either had intrinsic value or derived value from government decree. Using money electronically generally has involved using the private ledgers and systems of at least one trusted intermediary. Cryptocurrencies, by contrast, generally employ user agreement, a network of users, and cryptographic protocols to achieve valid transfers of value. Cryptocurrency users typically use a pseudonymous address to identify each other and a passcode or private key to make changes to a public ledger in order to transfer value between accounts. Other computers in the network validate these transfers. Through this use of blockchain technology, cryptocurrency systems protect their public ledgers of accounts against manipulation, so that users can only send cryptocurrency to which they have access, thus allowing users to make valid transfers without a centralized, trusted intermediary.
Money serves three interrelated economic functions: it is a medium of exchange, a unit of account, and a store of value. How well cryptocurrencies can serve those functions relative to existing money and payment systems likely will play a large part in determining cryptocurrencies’ future value and importance. Proponents of the technology argue cryptocurrency can effectively serve those functions and will be widely adopted. They contend that a decentralized system using cryptocurrencies ultimately will be more efficient and secure than existing monetary and payment systems. Skeptics doubt that cryptocurrencies can effectively act as money and achieve widespread use. They note various obstacles to extensive adoption of cryptocurrencies, including economic (e.g., existing trust in traditional systems and volatile cryptocurrency value), technological (e.g., scalability), and usability obstacles (e.g., access to equipment necessary to participate). In addition, skeptics assert that cryptocurrencies are currently overvalued and under-regulated.
The invention and proliferation of cryptocurrencies present numerous risks and related policy issues. Cryptocurrencies, because they are pseudonymous and decentralized, could facilitate money laundering and other crimes, raising the issue of whether existing regulations appropriately guard against this possibility. Many consumers may lack familiarity with cryptocurrencies and how they work and derive value. In addition, although cryptocurrency ledgers appear safe from manipulation, individuals and exchanges have been hacked or targeted in scams involving cryptocurrencies. Accordingly, critics of cryptocurrencies have raised concerns that existing laws and regulations do not adequately protect consumers dealing in cryptocurrencies. At the same time, proponents of cryptocurrencies warn against over-regulating what they argue is a technology that will yield large benefits. Finally, if cryptocurrency becomes a widely used form of money, it could affect the ability of the Federal Reserve and other central banks to implement and transmit monetary policy, leading some observers to argue that central banks should develop their own digital currencies (as opposed to a cryptocurrency); others oppose this idea.
Virtual Blockchain Week Unveils Most Ambitious Crypto Conference of 2020
Weeklong event kicks off with VIP Speaker Meet & Greet, followed by five days featuring more than thirty speakers and presenters, and ending with the 3rd Annual Crypto Influencer Awards
DENVER, April 2, 2020 – Virtual Blockchain Week (VBW), the cryptocurrency and blockchain industry’s most ambitious virtual conference experience, unveiled today dates and speakers for the week-long event featuring the biggest names in blockchain. The 7-day event will take place online at VirtualBlockchainWeek.com. Virtual Blockchain Week will be hosted by Joel Comm and Travis Wright of The Bad Crypto Podcast.
“While the threat of Coronavirus has led to the cancellation or postponement of our favorite blockchain events, we are fortunate to have an incredible community and the technology to create similar experiences on a global scale,” said Joel Comm, Co-founder of Virtual Blockchain Week. “We are dedicated to delivering a conference experience that delivers fantastic content in an interactive setting which sets a new high bar for all future virtual conferences.”
Virtual Blockchain Week will offer FREE registration for anyone in the world to participate and view all content via livestream. A VIP experience which includes speaker meet & greets, as well as a networking pre-party, will be offered starting at $97. Fifty percent of the proceeds from VIP ticket sales go to support COVID-19 non-profit relief efforts.
Thirty (30) prolific blockchain and cryptocurrency experts have signed on to present for Virtual Blockchain Week. The diverse roster of luminaries includes:
Tim Draper: Venture Capitalist
John McAfee: Entrepreneur, Innovator, and Presidential Candidate
Changpeng Zhao: Co-Founder & CEO of Binance
Roger Ver: Founder of Bitcoin.com
Brittany Kaiser: Own Your Data Foundation
Anthony Pompliano: Host of Off the Chain Podcast
Charlie Shrem: Crypto OG, Entrepreneur
G. Edward Griffin: Legendary author of “Creature from Jekyll Island”
Caitlyn Long: Founder & CEO of Avanti Financial Group
Samson Williams: FinTech Anthropologist
Jennifer Greyson: Founder of the Blockchain Sisterhood
Maureen Murat: Attorney, CoFounder of Axes & Eggs
Cherie Aimee: Near-Death Survivor & Tech Leader
Chris J. Snook: Chairman of the World Tokenomic Forum
Peter McCormack: Host of What Bitcoin Did Podcast
Mati Greenspan: Founder of Quantum Economics
Alyze Sam: CEO of GiveNation, Author
Oz Sultan: Founder at Sultan Interactive Group
Miko Matsumura: Co-Founder at Evercoin, VC
Rachel Wolfson: Enterprise Blockchain Journalist
Sir John Hargrave: Author, Provocateur
Lea Thompson: Founder of Girl Gone Crypto
Mahbod Moghadam: Co-Founder of Everipedia
Vesa Kivenin: Digital Artist
Ryan Rodden: Founder of CastleCrypto.gg
Joel Comm: Internet Pioneer, Co-Host of The Bad Crypto Podcast
Travis Wright: Marketing Technology, Co-Host of The Bad Crypto Podcast
“In today’s world, you have to be nimble,” said Travis Wright, co-founder of Virtual Blockchain Week. “With many events around the world being canceled, we decided now would be the time to produce a global livestream experience with the top minds in the blockchain space. We are all ecstatic about creating an event unlike any other that can be enjoyed from the comfort of your own home or office.”
The event will conclude with the 3rd Annual Crypto Influencer Awards, with winners selected by the general public, produced by Adam Charles.
Cointelegraph, the world’s most widely read publication covering cryptocurrency and blockchain, is Virtual Blockchain Week’s primary media partner. For coverage of the event, before, during and after, visit Cointelegraph.com
Virtual Blockchain Week will also feature business announcements from numerous companies, providing attendees with the latest news and discoveries from the blockchain world. Sponsorship packages are available.
To see the full Virtual Blockchain Week lineup or to register, visit www.VirtualBlockchainWeek.com
SOURCE Virtual Blockchain Week
CoinEx and Simplex Form Global Partnership to Offer Credit Card Payments of Cryptocurrencies
March 31, 2020 04:30 AM Eastern Daylight Time
HONG KONG – CoinEx, a global and professional cryptocurrency exchange service provider, has reached a new partnership with the leading fiat infrastructure provider, Simplex. It makes cryptocurrency buying more convenient on CoinEx.
“We are thrilled to be partnering with Simplex to lower the threshold for more people to enter the crypto world. This is also a milestone for CoinEx, as it’s the first fiat onramp we integrated to our platform. We endeavor to provide our current and potential users with more convenient functions,” said Haipo Yang, Founder and CEO of CoinEx.
Simplex only charges a processing fee of 3.5% per transaction (minimum 10 USD). The daily limit per user is 20,000 USD, while the monthly limit is 50,000 USD.
“Enabling fast and secure credit card payments is a key step to mass crypto adoption. We are excited to partner up with CoinEx and bring a better and easier experience to users worldwide,” said Nimrod Lehavi, the Co-Founder and CEO of Simplex.
With more than one hundred quality projects listed, CoinEx has developed rapidly and established itself as one of the renowned cryptocurrency exchange platforms. In December last year, it also successfully obtained the operating license in Estonia.
“Our goal in 2020 is to cover at least 10 different languages speaking markets, and building a fiat gateway is our first move to attract more users around the world,” said Haipo.
As a global and professional cryptocurrency exchange service provider, CoinEx was founded in December 2017 with Bitmain-led investment and has obtained a legal license in Estonia. It is a subsidiary brand of the ViaBTC Group, which owns the fifth largest BTC mining pool, which is also the largest of BCH mining, in the world.
CoinEx supports perpetual contract, spot, margin trading and other derivatives trading, and its service reaches global users in nearly 100 countries/regions with various languages available, such as Chinese, English, Korean and Russian.
Licensed in the EU, Simplex is the leading fiat infrastructure for the crypto world, providing guaranteed fraudless payment processing solutions. Simplex processes credit card payments with a 100% zero fraud guarantee – in case of a chargeback, the merchant gets paid by Simplex. Its cutting-edge fraud prevention solution and proprietary state-of-the-art AI technology stop fraudulent transactions and allow legitimate users to complete payments with ease and speed while increasing conversion rates and enabling merchants to focus on their business growth.
Simplex is based in Israel, with a subsidiary in Lithuania. Founded in 2014, Simplex works with some of the largest crypto exchanges, wallets and trading platforms.
Telegraphs, Steamships, and Virtual Currency:
An Analysis of Money Transmitter Regulation
Money transmission is an age-old practice. What started as a way of sending money to a person across the country via telegraph networks has evolved into a complex world of electronic payments on a global scale among several types of institutions. Some prominent companies, such as Western Union, MoneyGram, and PayPal, are well-known examples of money transmitters, but thousands of smaller money transmitters in the United States operate in the background of many financial services transactions Americans use every day. For example, Americans use money transmitters to pay bills, purchase items online, or send funds to family members and friends domestically and abroad. A number of social and financial issues attracting congressional interest, such as immigration, payroll processing, prison reform, campaign finance, and anti-money laundering (AML), have at least one thing in common: a money transmitter.
New Research Suggests Bitcoin Founder Satoshi Nakamoto Created Monero
Satoshi Nakamoto and Nicolas van Saberhagen may be the same person or people
LOS ANGELES, April 1, 2020 – Bitcoin appeared during a financial crisis on October 31, 2008, with the release of a whitepaper authored by the unknown Satoshi Nakamoto. Three years later, December 12, 2012, saw the presentation of the technology behind the cryptocurrency Monero in a whitepaper authored by the unknown Nicolas van Saberhagen. Today, as a new financial crisis threatens, historical research and textual analysis indicate Satoshi Nakamoto and Nicolas van Saberhagen may have been the same person or group.
Nakamoto is famous yet unidentified. He, she, or they are largely defined through the document “Bitcoin: A Peer-to-Peer Electronic Cash System,” called the Bitcoin Whitepaper. It describes the multiple parts of a cryptocurrency, including the network, the blockchain, and the proof-of-work algorithm that secures the blockchain without a central authority.
Saberhagen’s CryptoNote whitepaper, “CryptoNote 1.0,” also defined a new cryptocurrency, one focused on privacy and empowerment. It improved on Bitcoin by changing the blockchain structure and using a new proof-of-work, addressing issues that had arisen since Bitcoin’s invention. It also made a number of smaller enhancements to Bitcoin, like simplifying transaction scripts and dynamically adjusting block reward and size. The CryptoNote Whitepaper led, eventually, to the creation of Monero.
Nakamoto had clear motive to write the CryptoNote Whitepaper. In a Bitcointalk forum posting on August 13, 2010, Nakamoto first posted the concepts for privacy in cryptocurrency that would later appear in the CryptoNote Whitepaper: the ideas of stealth addresses, which hide receivers in a cryptocurrency transaction, and ring signatures, which hide senders. Also, by the time of the CryptoNote Whitepaper, Nakamoto had witnessed the struggles with Bitcoin’s block size changes (Nakamoto himself stealthfully inserted a 1 MB block size limit into the Bitcoin codebase in 2010) and mining reward halving that the new whitepaper tackled.
The Central Processing Units (CPUs) in personal computers are widely owned, and the Bitcoin Whitepaper advanced the concept of “one CPU one vote” in securing the network. But this directive had stopped working by the time of the CryptoNote whitepaper, as Bitcoin’s SHA-256-based proof-of-work algorithm had been ported to faster Graphical Processing Units (GPUs) and implemented on Application Specific Integrated Circuits (ASICSs). Saberhagen’s new proof-of-work addressed exactly this.
“After watching deeply held philosophical ideals yield under the old design, Satoshi appears to have revised the algorithms,” said Almutasim, Monero Outreach Editor, “with new knowledge, new insights, and years of hard thinking by one of humanity’s greatest minds leading to the transcendent concepts in the CryptoNote Whitepaper.”
Writing analysis shows a style connection between the two whitepapers. Monero Outreach, in studies using the Java Graphical Authorship Attribution Program (JGAAP) stylometry software—applying the Burrows Delta Analysis Method—found that the author of the CryptoNote whitepaper was more likely to be the author of the Bitcoin whitepaper than the author of any of 15 leading papers selected from the Monero literature. Stylometry theory says Nicolas van Saberhagen’s writing has more in common with Satoshi Nakamoto’s than with that of 15 prominent experts.
But JGAAP’s deep scientific algorithms are not really required, as clear visible parallels abound: Both whitepapers used the same unexpected spelling of “favour/favourable.” Both used the contraction “can’t” contrary to the usual style of academically formatted papers. Both used the wording “In this paper, we…” Both used black-and-white line drawings with solid and dashed lines. And so forth.
“When you first look at those two documents side by side you can get floored by the crazy similarities,” said Thunderosa, Monero Outreach Creative Lead. “Maybe we should start calling the author Satoshi van Saberhagen.”
With these historical motivations, scientific analysis, and compelling similarities, the stark affirmation of Satoshi Nakamoto being Nicolas van Saberhagen rises like a full moon over a calm ocean on a cloudless night. It gives new perspectives on what had been assumed to be two of the greatest inventors of our age: Nakamoto, the progenitor of all of cryptocurrency, and Saberhagen, the creator of cryptocurrency that protects human privacy and liberty.
Yet one should not expect this revelation to be embraced by either the Bitcoin or the Monero community—each with strong opinions and customs—overnight. There will be resistance.
“Like many, I’m still processing this,” said Xmrhaelan, Monero Outreach Organizer. “I will, though, say with confidence that if Satoshi Nakamoto is Nicolas van Saberhagen, Monero was Satoshi’s greatest work.”
“It could also be that this is all coincidence combined with results-tailorable academic software, with no real connection between the two authors. Maybe Nicolas van Saberhagen is actually a talented, creative, humble techie who admired Satoshi Nakamoto and wants to stay anonymous while hiding in plain sight,” said Almutasim.
“Even if we knew who Saberhagen really was, we wouldn’t tell,” added Thunderosa.
The cryptocurrency Monero was launched in April 2014 in response to privacy issues present in Bitcoin. Since launch, ongoing improvements have provided better security and privacy and made Monero easier to use. It has attracted over 500 developers, the third highest code contributor count among all cryptocurrencies. Monero advances with the uncompromised priorities of privacy and security.
Monero Outreach is a semi-autonomous workgroup, separate from Monero’s Core Team, focused on Monero public relations, education, and marketing.
SOURCE: Monero Outreach
Historical evidence for bitcoin performing like digital gold
In the first days after the outbreak of the coronavirus crises in the West, crypto plunged like traditional asset classes. Bitcoin was pronounced dead. A historical analysis by SEBA Research of several assets indicates that except for this event, crypto does not correlate with stock markets.
In spite of BTC price drop, the underlying blockchain technology has operated well. Furthermore, the demand for stable coins is on the rise. Both observations indicate that crypto is supported by a robust technology and is here to stay.
Looking at the blockchain network fundamentals, significant drop in difficulty as it was the case last week, has historically been a reliable indicator for price bottom formation.
Zug, 3 April 2020 – In the recent crash, the independence of bitcoin relative to other assets has been challenged as it dropped by more than the S&P500 index. Many are tempted to conclude by saying the diversification argument does not hold anymore. The Research Department of SEBA Bank has a different opinion, based on an analysis of three examples of financial stress with a focus on gold. This precious metal is an asset revered as a classic diversifier and, like bitcoin, does not belong to the official monetary system.
BTC comparable to gold on the long run
During the financial crisis 2008, gold crashed 30%, in parallel with equities. But after three months, the correlation disappeared and gold served as a diversifier again. During the Black Monday crisis in 1987, the gold price went up in the beginning and then declined over several years while the opposite happened at the stock markets. An analysis of the dot-com bubble shows a high correlation during two to three months before gold and shares performed completely different for years. Being a classical diversifier on the long run does not necessarily mean anti-correlation during the first days of a crisis.
Bitcoin is now experiencing its first global crisis. During the general run on liquidity, bitcoin fell more than other markets which were supported by governments and central banks. After the sell-off, the correlation has declined. This behaviour is similar to what we have observed with gold and S&P 500 during the dot-com bubble burst.
“Does this mean that we know for certain that bitcoin is going to bounce regardless of what happens to other asset classes? Absolutely not. Only it is premature to conclude that diversification does not work. Bitcoin had been pronounced dead 380 times before the recent crash by prominent personalities. This will be bitcoin’s 381st death, and it will be resurrected for the 381st time”, says Yves Longchamp, Head Research of SEBA Bank.
High demand in stablecoins
Besides historical analysis of financial markets, cryptocurrencies are resisting the crisis. In 2020, stablecoins saw a steady rise of 20%, and during the recent sell-off, the demand for stablecoins has increased. Stablecoins are built on top of existing blockchains. The growing demand for stablecoins gives us confidence that space is, in fact, thriving.
Download the research publication here.
For more information on SEBA bank, please visit https://www.seba.swiss/
Founded in April 2018 and headquartered in Zug, SEBA is a pioneer in the financial industry, building a progressive technological bridge between the digital and traditional asset worlds. In August 2019, SEBA received a Swiss banking and securities dealer licence – the first time a reputed, regulatory authority such as FINMA has granted a licence to a financial services provider with a main focus on digital assets and crypto. The wide and vertically integrated spectrum of services, as well as the high security standards make SEBA’s business approach unique. SEBA enables clients to invest, safely keep, trade and borrow against traditional and digital assets, as well as issue tokens, in one place.