News

Crypto is (and is not) money

Published

8 months ago

3 June, 2024

None of your coins are money and you all have brain damage. “Money” is a sloppy word, but it is generally used to refer to items that constitute a general unit of account (like the U.S. dollar) and/or a generally accepted medium of exchange (like a bank deposit).

Money almost never means something that is simply a solid store of value, or that is expected to generally increase in value over time. Of course, storing value is an important function of money, but it is the only one of the three functions that is more widely shared with other things.

There are many more things that function as a “store of value” than there are things that function as a “generally accepted unit of account” or a “generally accepted medium of exchange.” This makes being a unit of account or medium of exchange much more specific to money.

Of course, many things can still be used as a medium of exchange, giving rise to a notion of “money” based on the general willingness of people to accept a thing in exchange.

So when we talk about money, what actually makes it money is its use for the purpose of exchange and accounting for value. However, when cryptocurrencies talk about money, for some reason they seem to only care about being a store of value – the way bitcoin is “digital gold”. Ultrasonic deflationary assets and all that nonsense.

At least be honest with yourself: you’re not talking about money, you’re talking about fixed assets. In some cases, you invoke a discounted cash flow. In some cases, you cite the scarcity or preciousness of crypto digital assets. In some cases, both.

But we don’t usually talk about money since the money is actually used.

To be honest, I’m not sure any of us really know what money is in the 21st century. In crypto, the definition of money has been polluted by people hyper-obsessed with stores of valuable assets, selling our collective future short. Money is about accounting and exchange, not just about storing value.

You could argue all day about whether ETH (ETH) or GROUND (GROUND) or ATOM (ATOM) is a better store of value without me making fun of money (although I could care less about other things). But if you really want to talk about money, you need to explain how cryptography can be used as a unit of account and medium of exchange – for example, how the original idea for bitcoin was a “peer-to-peer digital currency” .

A unit of account is something in which you denote your debts (this includes what we call “prices”). A medium of exchange is something you use to settle debts when they come due. You can read more about these definitions of the functions of money here.

It should be clear to everyone that our crypto assets are hardly used for these purposes.

Is this really true? Well, not exactly.

The only place where crypto is definitely used, and where we could definitely consider token money, is in the context of their own block space. ETH block space is priced and settled in ETH, so ETH is money in the context of an economy centered around its own block space.

You could also argue that ETH (or SOL or ATOM or any other token) is used as a medium of exchange or unit of account in some other crypto-focused circuits, including base pairs in exchange or for purchasing cryptocurrencies. NFT.

To the extent that some things are valued directly in ETH, SOL or ATOM, or to the extent that debts are denominated in these units, then they act as a unit of account. Since payments are settled using these tokens, they function as a medium of exchange.

One of the challenges is that it does not make sense to use volatile assets as a unit of account. Even gas prices seem to adapt more to inherent accounting in dollars than in native tokens.

However, it appears that some NFTs have been priced more in native token than in dollars. There is also the case of protocol-owned liquidity, where debts are denominated in a native token, like how ATOM was loaned by Cosmos Hub to Osmosis and to Neutron is a debt denominated in ATOM.

The liquid staking revolution is also relevant here, as these native tokens, locked as capital assets storing value, can also be used as a medium of exchange (to the extent that people wish to settle their debts into liquid staked assets).

All of this is to say that there’s no point arguing over which is the best money right now, because almost no one actually uses tokens as money. Unless you set or settle a significant fraction of your payments in crypto, in which case you have my respect.

Rather than debate, I would encourage the entire sector to deepen their knowledge on the subject. And no, I’m not just talking about Graeber’s “debt” and Fergusson’s “rise of money.” The most important book for understanding the monetary context of cryptocurrencies is “Private money and public currencies, the challenge of the 16th century”. The book describes the background to the rise of central banks, and therefore the motivation for crypto.

I also recommend a intensive five-book course on the history of money, some of which cover an important aspect which is too absent from the discourse on money: the payment graph. The key to building a stable, sustainable currency is to balance the payments chart, the ledger that shows who owes money to whom. This is a key element behind Cyclesa new project that reinvents payments and credit.

It should be noted that Cosmos has by far the most advanced understanding of all of this, both implicitly and explicitly. Jae Kwon and I, the two co-founders of Cosmos, have always insisted that ATOM is not money. More recently I started calling it Interchain Capital.

The Cosmos philosophy of sovereign interoperability is fundamentally a monetary philosophy, but it inherently recognizes that we don’t really know what money is in the 21st century and will have to experiment to understand it. The Cosmos remains the privileged place of this experimentation, and the Blockchain Cosmos Hub is itself an anchor for this.

By refusing to fall prey to the memetics of “ultra-sound money” and focusing on fostering a broader culture of innovation through sovereign interoperability, ATOM and the Cosmos Hub become homes for a new type of experiment on what money is.

Of all the “currencies” in the crypto space, ATOM has the most decentralized governance on what that means. While ETH focuses on deflation and SOL on cheap global computation, ATOM focuses on the political issues at the heart of money itself.

This is part of what makes ATOM so much more complicated and hated. But that’s where its uniqueness lies. Not to mention that ATOM secures one of the top liquid staking sites and is poised to become a leading place to launch new chains and access cross-chain capital with the next Atomic wars And Partial set security.

Fuente

Up Next

StakingFarm aims to compete fiercely as crypto exchanges embrace staking services

Don't Miss

In today’s financial world, knowledge of cryptocurrencies is more important than ever

Financial Block Staff

We are the editorial team of Financial Block, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on Financial Block, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

Click to comment

News

Bitcoin soars above $63,000 as money flows into new US investment products

Published

6 months ago

1 August, 2024

Financial Block Staff

Bitcoin Surpasses $63,000 as Money Flows into New US Investment Products

Bitcoin has surpassed the $63,000 mark for the first time since November 2021. (Chesnot via Getty Images)

Bitcoin has broken above the $63,000 (£49,745) mark for the first time since November 2021, when the digital asset hit its all-time high of over $68,000.

Over the past 24 hours, the value of the largest digital asset by market capitalization has increased by more than 8% to trade at $63,108, at the time of writing.

Learn more: Live Cryptocurrency Prices

The price appreciation was fueled by record inflows into several U.S.-based bitcoin cash exchange-traded funds (ETFs), which were approved in January this year.

A Bitcoin spot ETF is a financial product that investors believe will pave the way for an influx of traditional capital into the cryptocurrency market. Currently, indications are favorable, with fund managers such as BlackRock (BLK) and Franklin Templeton (BEN), after allocating a record $673 million into spot Bitcoin ETFs on Wednesday.

Learn more: Bitcoin’s Success With SEC Fuels Expectations for an Ether Spot ETF

The record allocation surpassed the funds’ first day of launch, when inflows totaled $655 million. BlackRock’s iShares Bitcoin Trust ETF (I BITE) alone attracted a record $612 million yesterday.

Bitcoin Price Prediction

Earlier this week, veteran investor Peter Brandt said that bitcoin could peak at $200,000 by September 2025. “With the push above the upper boundary of the 15-month channel, the target for the current market bull cycle, which is expected to end in August/September 2025, is raised from $120,000 to $200,000,” Brandt said. published on X.

The influx of capital from the traditional financial sphere into Bitcoin spot ETFs is acting as a major price catalyst for the digital asset, but it is not the only one. The consensus among analysts is that the upcoming “bitcoin halving” could continue to drive flows into the bitcoin market.

The Bitcoin halving is an event that occurs roughly every four years and is expected to happen again next April. The halving will reduce the bitcoin reward that miners receive for validating blocks on the blockchain from 6.25 BTC to 3.125 BTC. This could lead to a supply crunch for the digital asset, which could lead to price appreciation.

The story continues

Watch: Bitcoin ETFs set to attract funds from US pension plans, says Standard Chartered analyst | Future Focus

Download the Yahoo Finance app, available for Apple And Android.

Fuente

News

FRA Strengthens Cryptocurrency Practice with New Director Thomas Hyun

Published

6 months ago

1 August, 2024

Financial Block Staff

Forensic Risk Alliance (FRA), an independent consultancy specializing in regulatory investigations, compliance and litigation, has welcomed U.S.-based cryptocurrency specialist Thomas Hyun as a director of the firm’s global cryptocurrency investigations and compliance practice. Hyun brings to the firm years of experience building and leading anti-money laundering (AML) compliance programs, including emerging payment technologies in the blockchain and digital asset ecosystem.

Hyun has nearly 15 years of experience as a compliance officer. Prior to joining FRA, he served as Director of AML and Blockchain Strategy at PayPal for four years. He established PayPal’s financial crime policy and control framework for its cryptocurrency-related products, including PayPal’s first consumer-facing cryptocurrency offering on PayPal and Venmo, as well as PayPal’s branded stablecoin.

At PayPal, Hyun oversaw the second-line AML program for the cryptocurrency business. His responsibilities included drafting financial crime policies supporting the cryptocurrency business, establishing governance and escalation processes for high-risk partners, providing credible challenge and oversight of front-line program areas, and reporting to the Board and associated authorized committees on program performance.

Prior to joining PayPal, Hyun served as Chief Compliance Officer and Bank Secrecy Officer (BSA) at Paxos, a global blockchain infrastructure company. At Paxos, he was responsible for implementing the compliance program, including anti-money laundering and sanctions, around the company’s digital asset exchange and its asset-backed tokens and stablecoins. He also supported the company’s regulatory engagement efforts, securing regulatory approvals, supporting regulatory reviews, and ensuring compliance with relevant digital asset requirements and guidelines.

Thomas brings additional experience in payments and financial crime compliance (FCC), having previously served as Vice President of Compliance at Mastercard, where he was responsible for compliance for its consumer products portfolio. He also spent more than seven years in EY’s forensics practice, working on various FCC investigations for U.S. and foreign financial institutions.

Hyun is a Certified Anti-Money Laundering Specialist (CAMS) and a Certified Fraud Examiner (CFE). He is a graduate of New York University’s Stern School of Business, where he earned a bachelor’s degree in finance and accounting. Additionally, he serves on the board of directors for the Central Ohio Association of Certified Anti-Money Laundering Specialists (ACAMS) chapter.

Commenting on his appointment, Hyun said, “With my experience overseeing and implementing effective compliance programs at various levels of maturity and growth, whether in a startup environment or large enterprises, I am excited to help our clients overcome similar obstacles and challenges to improve their financial crime compliance programs. I am excited to join FRA and leverage my experience to help clients navigate the complexities of AML compliance and financial crime prevention in this dynamic space.”

FRA Partner, Roy Pollittadded: “As the FRA’s sponsor partner for our growing Cryptocurrency Investigations and Compliance practice, I am thrilled to have Thomas join our ever-expanding team. The rapid evolution of blockchain and digital asset technologies presents both exciting opportunities and significant compliance challenges. Hiring Thomas in a leadership role underscores our commitment to staying at the forefront of the industry by enhancing our expertise in anti-money laundering and blockchain strategy.”

“Thomas’ extensive background in financial crime compliance and proven track record of building risk-based FCC programs in the blockchain and digital asset space will be invaluable as we continue to provide our clients with the highest level of service and innovative solutions.”

“FRA strengthens cryptocurrency practice with new director Thomas Hyun” was originally created and published by International Accounting Bulletina brand owned by GlobalData.

The information on this website has been included in good faith for general information purposes only. It is not intended to amount to advice on which you should rely, and we make no representations, warranties or assurances, express or implied, as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our website.

Fuente

News

Bitcoin trades around $57,000, crypto market drops 6% ahead of Fed decision

Published

6 months ago

1 August, 2024

Financial Block Staff

Bitcoin trades around $57,000, crypto market drops 6% ahead of Fed decision

Bitcoin fell in line with the broader cryptocurrency market, with ether and other altcoins also falling.
Financial markets were weighed down by risk-off sentiment ahead of the Fed’s interest rate decision and press conference later in the day.
10x Research said it is targeting a price target of $52,000 to $55,000, anticipating further selling pressure.

Bitcoin {{BTC}} was trading around $57,700 during European morning trading on Wednesday after falling to its lowest level since late February, as the world’s largest cryptocurrency recorded its worst month since November 2022.

BTC has fallen about 6.3% over the past 24 hours, after breaking below the $60,000 support level late Tuesday, according to data from CoinDesk. The broader crypto market, as measured by the CoinDesk 20 Index (CD20), lost nearly 9% before recovering part of its decline.

Cryptocurrencies have been hurt by risk-off sentiment in broader financial markets amid stagflation in the United States, following indications of slowing growth and persistent inflation that have dampened hopes of an interest rate cut by the Federal Reserve. The Federal Open Market Committee is due to deliver its latest rate decision later in the day.

Ether {{ETH}} fell about 5%, dropping below $3,000, while dogecoin {{DOGE}} led the decline among other major altcoins with a 9% drop. Solana {{SOL}} and Avalanche {{AVAX}} both lost about 6%.

Bitcoin plunged in April, posting its first monthly loss since August. The 16% drop is the worst since November 2022, when cryptocurrency exchange FTX imploded, but some analysts are warning of further declines in the immediate future.

10x Research, a digital asset research firm, said it sees selling pressure toward the $52,000 level due to outflows from U.S. cash exchange-traded funds, which have totaled $540 million since the Bitcoin halving on April 20. It estimates that the average entry price for U.S. Bitcoin ETF holders is $57,300, so this could prove to be a key support level.

The closer the bitcoin spot price is to this average entry price, the greater the likelihood of a new ETF unwind, 10x CEO Markus Thielen wrote Wednesday.

“There may have been a lot of ‘TradeFi’ tourists in crypto – pushing longs all the way to the halving – that period is now over,” he wrote. “We expect more unwinding as the average Bitcoin ETF buyer will be underwater when Bitcoin trades below $57,300. This will likely push prices down to our target levels and cause a -25% to -29% correction from the $73,000 high – hence our $52,000/$55,000 price target over the past three weeks.”

The story continues

UPDATE (May 1, 8:56 UTC): Price updates throughout the process.

UPDATE (May 1, 9:57 UTC): Price updates throughout the process.

UPDATE (May 1, 11:05 UTC): Adds analysis from 10x.

Fuente

News

The Cryptocurrency Industry Is Getting Back on Its Feet, for Better or Worse

Published

6 months ago

1 August, 2024

Financial Block Staff

The Cryptocurrency Industry Is Getting Back on Its Feet, for Better or Worse

Hello from Austin, where thousands of crypto enthusiasts braved storms and scorching heat to attend Consensus. The industry’s largest and longest-running conference, which can sometimes feel like a religious revival, offers opportunities to chat and listen to leading names in crypto. And for the casual observer, Consensus offers a useful glimpse into the mood of an industry prone to wild swings in fortune.

Unsurprisingly, the mood is noticeably more positive than it was a year ago, when crowds were sparse and many attendees were quietly confiding that they were considering switching to AI. In practice, that means some of the more obnoxious elements are back, but not to the level of Consensus 2018 in New York, when charlatans parked Lamborghinis outside the event and the hallways were lined with booth girls and scammers pitching “ICOs in a box.”

This time around, Elon Musk’s Cybertrucks have replaced Lamborghinis as the vehicle of choice for marketers. One of the most notable publicity stunts was a startup that paid a poor guy to parade around in the Texas sun in a Jamie Dimon costume, wig, and mask, and then staged a mock assault on him by memecoin characters.

Outside the event was a giant “RFK for President” truck, while campaign staffers manned a booth instead — a reflection of both the election year and crypto’s willingness to latch onto any candidate, no matter how outlandish, who will talk about the industry. RFK himself is scheduled to address the conference on Thursday.

Excesses aside, the general sense of optimism was understandable. The cryptocurrency market has not only recovered from the wave of fraud that nearly sank it in 2022, it is riding a new wave of political legitimacy. This month, cryptocurrencies scored once-unthinkable political victories in Washington, D.C., and there is a sense that the industry has not only withstood the relentless regulatory assaults of SEC Chairman Gary Gensler and Sen. Elizabeth Warren, but is poised to defeat them.

And while cryptocurrency is still searching for its flagship application, the optimists I spoke with pointed to signs that it is (once again) upon us. Those signs include the rapid advancement of zero-knowledge proofs as well as the popularity of Coinbase’s Base blockchain and, perhaps most importantly, the large-scale arrival of traditional finance into the world of cryptocurrencies – a development that not only provides a major financial boost, but also a new element of stability and maturity that will, perhaps, tame the worst of crypto’s wilder side. Finally, this consensus marked the end of the Austin era as the conference, under new leadership, will be held in Toronto and Hong Kong in 2025.

The story continues

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

This story was originally featured on Fortune.com

Fuente