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Originally published in The Conversation, under Creative Commons licence CC-BY-ND. Updated here by the author.

Mainstream commentators are often dismissive of the people who buy bitcoin, writing them off as naive victims of a fraudulent bubble. But if we look more carefully, we can trace the history of bitcoin, and its growing acceptability, through the arrival of different kinds of buyers. Each group has been drawn by a different narrative of bitcoin’s value, and it is these groups and narratives that have gradually contributed to its long-term growth.

The Idealists

Bitcoin arose from a tiny group of cryptographers, known as “cypherpunks,” who were trying to solve the “double spend” problem facing digital money: “cash” held as a digital file could easily be copied and then used multiple times. The problem is easily solved by financial institutions, who use a secure central ledger to record how much everyone has in their accounts, but the cryptographers wanted a solution that was more akin to physical cash: private, untraceable, and independent of third parties like the banks.

Satoshi Nakamoto’s solution was the Bitcoin blockchain, a cryptographically-secured public ledger that records transactions anonymously and is kept as multiple copies on many different users’ computers. The first narrative of bitcoin’s value was built into Nakamoto’s original “white paper.” He claimed that bitcoin would be superior to existing forms of electronic money such as credit cards, providing benefits like eliminating chargebacks to merchants and reducing transaction fees.

The Libertarians

But from an early stage, Nakamoto also marketed bitcoin to a libertarian audience. He did so by stressing the absence of any central authority and particularly bitcoin’s independence from both states and existing financial institutions.

Nakamoto criticised central banks for debasing money by issuing increasing amounts of it and designed bitcoin to have a hard limit on the amount that could be issued. And he stressed the anonymity of bitcoin transactions: safe, more or less, from the prying eyes of the state. Libertarians became enthusiastic advocates and buyers of bitcoin, more as an act of autonomy than for financial reasons. They have remained highly influential in the Bitcoin community.

The HODLers

These, however, were small constituencies, and bitcoin really started to take off in July 2010 when a short article on Slashdot.org (“news for nerds”) spread the word to many young and technically-savvy buyers. This community was influenced by the “Californian ideology” – belief in the capacity of technology and entrepreneurs to transform the world.

Many bought small quantities at a low price and were somewhat bemused to find themselves sitting on significant investments when the price multiplied. They became used to huge fluctuations in the price and frequently advocated “HODLing” bitcoin (a misspelling of “hold,” first used in a now iconic message posted by an inebriated user determined to resist constant “sell” messages from day traders). The HODLers insisted, half seriously, that bitcoin was going “to the moon!” and talked of buying “lambos” (lamborghinis) with their gains. This countercultural levity generated a sense of community and a commitment to holding bitcoin that helps stop its value from sinking to zero when sentiment turns against it.

The Gamblers

The more recent groups that have contributed to bitcoin’s history are more conventional. The fourth group consists of individual speculators who have been attracted by the volatility and peaks in bitcoin prices.

On the one hand, we have day traders, who hope to exploit the volatility of bitcoin’s price by buying and selling quickly to take advantage of short-term price movements. Like speculators in any other asset, they have no real interest in the larger picture or of questions of inherent value, but only in the price today. Their only narratives are “buy” and “sell,” often employed in an attempt to influence the market.

On the other hand, we have those who are drawn in by news of price bubbles. Ironically, bubble narratives in the press, often designed to deter investors, can have the opposite effect. These investors join what Keynes called a “beauty contest” – they don’t care about long-term or intrinsic value but only about what other people might be prepared to pay for bitcoin in the short- to medium-term future.

The Portfolio Balancers

Bitcoin started to become more attractive to more sophisticated investors when narratives of its value as a useful element in a larger investment portfolio started to emerge. These investors buy bitcoin to hedge against wider risks in the financial system. According to modern portfolio theory, investors can reduce the riskiness of their portfolios overall by holding some bitcoin because its peaks and troughs don’t line up with those of other assets (i.e., bitcoin became known as an “uncorrelated” asset), providing some insurance against stock market crashes. This is arguably the narrative that started to break down the barriers to bitcoin’s acceptability among mainstream investors: they often take the view that risk, rather than something to be avoided, is something to be embraced as a source of high returns in a properly-balanced portfolio.

The Corporate Enthusiasts

Most recently the continuing upward progression of bitcoin’s price plateaus and market value have started to make it attractive to corporate investors. Initially this has been driven by enthusiasts in senior positions in a few large corporations who have made very large purchases of bitcoin to hold as part of the corporation’s own portfolio of assets. These purchases have enhanced the narrative of bitcoin as a mainstream investment, but they also contribute to a different narrative about the value of the corporation’s own shares. When a company’s bitcoin holding becomes a significant part of its assets, its own shares can be positioned as bitcoin-like investments, which should rise in price when bitcoin does, and vice-versa. They therefore become more attractive to investors who want some exposure to bitcoin but are wary of buying it themselves – or are legally prevented from buying it, like some mutual funds.

Where Next?

As bitcoin becomes attractive to more and more constituencies of buyers, the major financial institutions are becoming increasingly eager to get in on the act. We can expect them to package up new financial products, including derivatives, that give investors indirect exposure to the bitcoin market. In a narrative that has been bubbling under for some time, they are preparing to position bitcoin-related products as a routine element of institutional portfolios. If they succeed, the packagers will also have to buy bitcoin themselves to hedge against their commitments to buyers of their financial products. The irony, of course, is that these recent developments tie bitcoin ever tighter into the financial institutions that Nakamoto designed it to escape from.

Bitcoin’s value, then, has been built on an evolving series of narratives which have drawn in successive waves of buyers. While mainstream commentators are often dismissive of bitcoin as lacking inherent value, all asset market values depend on narrative processes like these, so bitcoin is much more like conventional assets than they are prepared to admit. Of course, bitcoin prices may well collapse again, but so may those of any other financial asset. Investing in bitcoin is arguably neither more nor less risky, for example, than investing in the latest technology company to be launched on the stock market without ever having made a profit.

This is a guest post by Dave Elder-Vass. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

The bull case for bitcoin is fairly straightforward. Risk assets are on the up and up again, and bitcoin’s leading the way. It’s outperforming growth stocks at an unusually powerful pace this past month, something that in the past has preceded big breakouts for crypto. Even the heady narrative of currency debasement and hyperinflation still rings true for some, with stagflation the number one concern among investors. But forget the fantasies about what bitcoin’s utility may one day be – that doesn’t matter. What matters is that bitcoin history tells us that if it breaks out higher past a previous record, it pays to chase the rally. And in case you haven’t noticed, people are pretty hyped about this new ETF. It’s an undeniably bullish cocktail.

Now, the bearish take.

Firstly, the price action in bitcoin is not quite as bullish as it was the last time it was approaching an all-time high. RSI – the technical momentum measure that I identified as a red flag back at $65k in April – is flashing yellow. Momentum today is much more muted than the last time bitcoin was surging toward an all-time high. Bitcoin was on fire this time last year as it screamed toward the $20k record, notching RSI levels as high as 90. Today, RSI is 72. It’s not nearly as alarming as in April when RSI was downtrending, but it might make the hurdle over $65k a bit harder to clear.

  There’s a bigger issue, though. For this thesis, let’s make the assumption that the vast majority of people are interested in buying bitcoin because they think it will make them money: to sell it to the Next Guy. Let’s also establish that the debut of the bitcoin ETF marks the full integration of bitcoin into the investing marketplace. With the ETF, bitcoin is now completely accessible to anyone who has any interest in the asset. You don’t have to have an account with a strictly crypto broker, make a digital wallet or have enough money in your account to trade futures. And the most important development: your advisor can do it for you with the simple – fully legal – punch of a button. The barrier to entry in bitcoin is now zero.

 If bitcoin is, in fact, about selling to the next guy, an ETF is not a long-term bullish catalyst. In fact, it’s the opposite. It is as close to a formal a beginning to the end of the “adoption” narrative as there is. The ETF vehicle is as entry-level as it gets. The first step for new investors. The everyday person. The consummate Next Guy. With a ton more bitcoin ETFs on the way, the pool of remaining “next guys” to sell to will begin to shrink rapidly. For bitcoin whales and devout coiners who’ve been awaiting this moment for years, the ETF screams Mission Accomplished. For many, that likely means time to take profit.

Follow me on Twitter. Oliver Renick…

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As a veteran fund manager with 17 years of experience running a multi-asset portfolio at investment titan HSBC, Charlie Morris spent a lot of time looking for different and interesting asset classes that could offer non-correlated returns.

Bitcoin was one of the assets that caught Morris's attention back in 2013. 

But, at that point, it wasn't quite ready to be neatly packaged into an investor's portfolio, so Morris instead focused his attention on the data behind the asset class. He co-founded ByteTree.com, an institutional crypto data provider that offers investors access to a terminal with metrics to analyze the price action of bitcoin as well as traditional commodities, like gold and silver.

Only last year, did Morris return to the idea of adding bitcoin to investors' portfolios with the launch of ByteTree's asset management arm, which offers exposure to two different crypto funds.

This timing was perfect. Bitcoin (BTC) surged 375% from November 2020 as adoption picked up among institutional invecstors, retail traders and even countries, such as El Salvador, where it is legal tender now.

Just this week bitcoin reached an all-time high of around $66,000 on the back of the launch of the first US bitcoin futures exchange-traded fund, which already has $1 billion assets under management days after launching.

The bitcoin 'hype cycle'

While the ETF launch has driven a burst bullish price action, Morris is not convinced it will last.

He's particularly concerned about the ETF sustaining the momentum, based on the performance of commodity futures ETFs in the past.

"Over time, they just massively underperformed the underlying and you're going to see the same thing here," Morris said. "Now unfortunately, for bitcoin futures, the more demand there is for bitcoin, the worse the roll yield gets. At the top of hype cycles, you get the most underperformance."

Insider recently spoke to several crypto investors and ETF experts who made similar points. Morris draws comparisons to the USO ETF, which tracks WTI crude oil futures and has underperformed relative to the price of oil over the long-term.

"A lot of these things become effective trading vehicles where in the short term, you don't care about the slippage, here and there, for days, weeks, months, they don't really notice," Morris said. "But it's when you're there for years, then it really starts to impinge on performance."

Even before the launch of the futures ETF, Morris was bearish on the sentiment and price action surrounding bitcoin. At the Token2049 conference in London, on October 8, he said bitcoin was "overpriced" and worth no more than $28,000 based on ByteTree's fair value model.

The model calculates fair value based on network value to transaction ratio (NVT-BT) and on-chain data to create a fair price valuation. Morris compares NVT-BT to the traditional price-to-sales ratio in equity analysis as one of the most direct measures in determining fair value.

Leveraging 12-week transaction data, on October 22, the current fair value for bitcoin is around $36,000, meaning it's trading at a premium of around 71%, he said.

Currently, around $50 billion is changing hands each week on the blockchain, Morris said. 

"We've now got a price where you'd normally see about $70 or $80 billion worth of bitcoin changing hands, and now you've got $50 billion," Morris said. "Since I spoke at that conference, that gap has closed by $10 million, so the chain is picking up, but this is definitely trading on narrative at the moment."

Despite his skepticism over the short term, Morris remains long-term bullish on bitcoin. He believes simply that the market remains ahead of events right now.

"We've had bitcoin below fair value on four occasions in the last 12 months, but just on no occasion since June," Morris said.

Bitcoin could keep going up

2021 has become the year of the bitcoin narrative, Morris said. However, this isn't down to bitcoin alone. Morris believes this is driven by the wider bubble seen across a range of asset classes.

"People just get carried away about cash flows in a zero rate world," Morris said. "You've got this big bubble in pretty much everything, in bonds and in equities and so forth. Now you've got the inflation coming through. And so until they put the brakes on, then I think the bubble is in many asset classes, not just crypto."

With bitcoin now breaking out to new record highs, Morris expects this could attract a lot of money to the space with the potential to go even higher.

"Whenever bitcoin has gotten excited, it tends to be in the fourth quarter for whatever reason," Morris said. "2018 was exceptional, but most years, the fourth quarter is pretty strong and there's quite strong seasonality around that."

Morris focuses on the inverse relationship between gold and bitcoin and offers a strategy that rebalances between gold. Typically gold performs well in the first and third quarters of the year. Whereas bitcoin performs well in the second and fourth quarter, he said.

Morris' general fund is fully invested in crypto right now with an 80% allocation to bitcoin and a 20% allocation to ethereum. 

"I'm naturally skeptical of hype cycles, I'm not enjoying bitcoin in 2021 nearly as much as I did in 2020," Morris said. Yet his long-term thesis keeps him invested in the asset class.

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A historic run for cryptocurrencies that's recently stalled has some investors nervous that history will repeat itself and that digital assets will crash like after the blow-off top in late 2017.

But those concerns are overblown, says Brian Mosoff, CEO of Ether Capital, even as bitcoin (BTC), the leading cryptocurrency and a barometer for smaller coins, has slipped substantially from its all-time highs as China on Friday reiterated a call to crack down on digital assets.

Mosoff, a self-described "crypto degenerate," has been in the space since 2013, which makes him a veteran in the nascent world of cryptocurrencies. He's seen several crypto market cycles and notes that this crypto bull rally has been driven by a wave of support from non-tech-savvy individuals, corporations, and governments that's unlikely to reverse anytime soon.

Bitcoin bulls have long-time crypto skeptic Jerome Powell, the chairman of the Federal Reserve, to thank for the digital asset's mammoth 46% year-to-date run. By continually expanding the money supply, critics say Powell's Fed has crippled the dollar's value while making rampant inflation a threat. Bitcoin, which has a capped supply, is seen as a solution to easy Fed policy.

Bitcoin inevitably inspired legions of hopeful competitors aspiring to be the next hot coin after garnering mainstream attention in late 2020 as a store of value akin to a "digital gold." 

"Bitcoin is the gateway for everyone to enter into the space," Mosoff told Insider in an interview. "… You've got bitcoin season, and then you have 'alt season.' And then there's kind of this rotation of capital that goes first into bitcoin — that's what drives these runups — and then it kind of hits these plateaus, and then that capital looks for other ways to find more leverage to the sector."

Ether's 'hard to ignore' success inspires copycats

Those looking for crypto exposure beyond bitcoin tend to find ether, the ethereum blockchain's native token and the second-largest crypto by market capitalization. Count Mosoff's Toronto-based firm, which prioritizes ether among the digital assets it stockpiles, in that group.

Ethereum is attractive for several reasons, Mosoff said: It's well-established, has broad developer support, is currently the backbone of the decentralized finance (DeFi) movement that promises to bank the unbanked, and also now allows ether holders to earn passive income via returns of roughly 6%, which dwarf the interest payments that banks offer.

These steady, low-risk returns are achievable through "staking," a process where ether holders are rewarded for locking up tokens for a set amount of time to secure the network. Ethereum staking turns previously "unproductive commodities" into yield-generating assets, Mosoff said.

"Against the backdrop of [interest] rates at zero, if you wanted to bet on crypto over the next five or 10 years, ether is a really compelling investment," Mosoff said. "You get that hedge, that store of value, that nonpolitical-agenda asset while getting some type of return by staking it."

Ethereum's growing success is "hard to ignore," Mosoff said. Naturally, competitors have taken note. A new wave of "ethereum killers" has popped up in hopes of stealing market share and capitalizing on the network's most-criticized weakness: transaction charges called "gas fees" that critics say are unreasonably high.

A pair of crypto networks — polkadot and solana — has emerged as frontrunners in the race to be the leading alternative to ethereum, Mosoff said. But he said they're really competing with ethereum layer 2, which is a network that runs on top of the ethereum mainnet. 

Basically, ethereum has a first-mover advantage that smaller networks will struggle to catch up with even if they offer lower fees or more advanced networks. Transaction fees are far from the only relevant factor that DeFi developers must consider. Security and stability, two hallmarks of the ethereum network, are hard for competitors like solana to match — evidenced by an unexpected 17-hour shutdown that its network suffered in mid-September.

"A lot of new entrants to the market are very focused on just the transaction-fee narrative, and they're not looking at the wider picture," Mosoff said. "… If you can stay inside that ethereum ecosystem and remove all the friction of bouncing between different platforms, keep that capital formation into the same ecosystem, and have all the infrastructure, there's no reason for the capital to go somewhere else." 

With that said, Mosoff isn't an ethereum maximalist. He shared with Insider four altcoins that have promise and offered commentary for each name. Mosoff said that the only one of these altcoins he owns is polkadot.

Symbol: DOT

Use case: A multi-chain protocol designed to connect blockchains with different technical attributes and properties that could allow for the cross transfer of messages and assets

Commentary: "Ethereum, which is super, super secure, that is what looks like is kind of taking the place of what polkadot was meant to be. Now, that's not to say that polkadot can't succeed here. It is a high-profile project, it does have a unique community. … Polkadot is still in its early days. The network is not fully up and running. They haven't fully launched the network with smart contract support and parachains being live. They're getting there, but it's not in its full-blown vision. It is something to watch because it is a pseudo-competitor to ethereum."

Symbol: SOL

Use case: An open-source project intended to improve scalability with proof-of-history and proof-of-stake consensus mechanisms

Commentary: "What solana has is, they looked at this narrative that you have either centralized or decentralized [blockchains] and said, 'Well, maybe it's not so binary. Maybe there are degrees in between, and these communities have been wrong to just say, "You're either a centralized chain or a decentralized chain."' And Solana said, 'Well, maybe we can set that dial somewhere in the middle.' Because the more you try and become decentralized, the harder it becomes to scale up."

Symbol: AVAX

Use case: A fast, cheap smart contract platform that offers scalability

Commentary: "It's a high-profile team. It's had a price run-up recently. It has activity happening in their world of decentralized finance. It has more scalability than ethereum does, so it's still in that bucket of, 'Will it remain and be successful, or no?'"

Symbol: NEAR

Use case: A decentralized application platform that promises scalability and steady fees

Commentary: "NEAR Protocol is closer in design to ethereum than most of these other projects. It actually looks very similar in architecture to ETH 2's full-blown vision wants to be. They have something called the rainbow bridge so that you can move your assets between ethereum and NEAR, or NEAR back to ethereum. … Can you offer an environment for just cheaper activity to take place? … Today, all of these chains are trying to do it, and they're saying, 'ETH is moving very slow, so there's an opportunity here to swoop in, build a community, [and] get a network effect. [And] as ethereum scales, hopefully, that activity doesn't leave us.'"

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Cryptocurrencies were mostly higher on Thursday as some traders appear to be rotating into tokens that have underperformed over the past month. Bitcoin was roughly flat over the past 24 hours, compared with a 7% jump for ether over the same period.

“Direction-wise for BTC, we find ourselves with a bullish bias but unable to form a strong bullish conviction in spite of the clear optimism in the market,” crypto trading firm QCP Capital wrote in an announcement on Telegram.

Despite BTC’s recent outperformance, QCP mentioned that it is “extremely excited” about the new growth phase in the decentralized finance (DeFi) market. The firm maintains long positions in tokens such as Algorand’s ALGO and Solana’s SOL relative to its neutral BTC position.

Latest PricesBitcoin (BTC), $57,730, +1.2%Ether (ETH), $3,788, +7.7%S&P 500: +1.7%Gold: $1,799, +0.3%10-year Treasury yield closed at 1.518%Ether underperformance narrows

Ether, the second-largest cryptocurrency by market capitalization, is holding price support above $3,500, and its underperformance versus BTC over the past month appears to be narrowing as some investors look toward improving fundamentals in alternative cryptocurrencies.

FundStrat, a global advisory firm reiterated its bullish stance on ether in a newsletter published on Wednesday. “We remain comfortable in the perceived tailwinds that the leading smart contract platform is set to benefit from and expect rotations into ETH to follow any sizable run-up in a bitcoin-dominated market,” the firm wrote.

From a technical perspective, the chart below shows the ETH/BTC ratio rising from the 200-day moving average for the first time since April, which preceded a period of strong outperformance. The ratio broke above a short-term downtrend in August and could see further upside toward 0.07 over the short term.

Still, some analysts expect bitcoin’s outperformance to continue given expectations for a bitcoin exchange-traded product (ETF) in the coming weeks.

“BTC open interest (the total number of outstanding futures contracts) is still 30% away from May highs, suggesting that markets have yet to reach a state of euphoria,” Delphi Digital wrote in a blog post. “As BTC’s ETF narrative strengthens, it’s likely that ETH and the alt L1 narrative (layer 1 altcoins) will take a back seat at least for the near future.”

Bitcoin exchange outflows moderate

Crypto exchanges are seeing modest outflows of bitcoin. Typically, outflows mean traders are deciding to store their BTC in wallets, anticipating higher prices instead of holding BTC on an exchange to buy or sell.

“May-July was the primary period of net inflows [to exchanges], however this has been fully reversed,” Glassnode, a crypto data firm, tweeted on Thursday.

Over the past few months, however, exchange outflows have plateaued, as seen in the chart below. That suggests traders are gradually moving BTC back onto exchanges for trading purposes as bitcoin’s price rallies. Over time, a shift to exchange inflows could signal a peak in BTC’s price, similar to what happened in May.

Altcoin roundupUniswap Labs hires former Obama spokesman: Uniswap Labs, creator of the Uniswap exchange, has named ex-Obama spokesman Hari Sevugan to the role of communications chief, CoinDesk’s Andrew Thurman reported. Sevugan, a former Washington operative who has held senior staff positions for multiple high-profile politicians, will manage public-facing communications for Uniswap Labs, including “helping the company tell its story to existing users and new audiences and managing media affairs,” according to a Uniswap spokesperson.Digital Pound Foundation launches to push for UK central bank digital currency: A group of private sector professionals launched the Digital Pound Foundation, an organization that aims to promote the development of a central bank digital currency (CBDC) for the U.K., CoinDesk’s Eliza Gkritsi reported. The foundation will conduct research about and advocate for a digital British pound, and get multiple stakeholders to work together to help design and roll out the currency, according to a press release.NEAR’s Aurora raises $12M to expand Ethereum Layer-2 network: Aurora, a project built on the NEAR blockchain that allows for Ethereum-compatible smart contracts to run on the chain, has completed a funding round of $12 million at a $150 million valuation, Thurman reported. The round was led by Pantera Capital and Electric Capital, and also included more than 100 investors.Relevant NewsDeFi Pushes North America to Become World’s Second-Biggest Crypto MarketCoinbase Proposes US Create New Regulator to Oversee CryptoDecentraland Books Deadmau5, Paris Hilton and More for Metaverse Music FestivalBitwise Files for Physically Backed Bitcoin ETF With NYSE ArcaOther markets

Most digital assets in the CoinDesk 20 ended the day higher.

Notable winners as of 21:00 UTC (4:00 p.m. ET):

Chainlink (LINK), +9.6%Uniswap (UNI), +7.8%

Notable losers:

Polkadot (DOT), -3.6%Subscribe to First Mover, our daily newsletter about markets.

News

Helium Network, a provider of decentralized wireless infrastructure, has concluded a $111 million token sale led by some of the biggest venture firms in the blockchain industry. 

The sale, which centered around Helium’s native token, HNT, was scooped up by several venture capital firms, including Andreessen Horowitz. Alameda Research, Multicoin Capital and Ribbit Capital also contributed, according to BNN Bloomberg.

General partner at Andreessen Horowitz Ali Yahya told Bloomberg that new cryptocurrency protocols like Helium will “challenge centralized incumbents” and compete with bigger telecommunication service providers.

Yahya tweeted Tuesday that his firm will work with Helium to create a "grassroots telecom network" of the future. 

— Ali Yahya (alive.eth) (@alive_eth) August 10, 2021

The founder of Alameda Research, Sam Bankman-Fried, described Helium as a “tremendous opportunity to bring 5G to the masses around the world and greatly enrich the quality of their lives.”

Related: Smart cities are the future, but they might threaten privacy

Helium, which was founded in 2013 by Shawn Fanning, Amir Haleem and Sean Carey, is utilizing blockchain technology to create the world’s first peer-to-peer wireless network. The company’s mission is centered around building wireless infrastructure for the Internet of Things, which describes the new paradigm of connected devices. Since launching in North America, Helium has already expanded into Europe.

The company plans to use the newly raised funds to continue building its decentralized 5G network and support mobile network operators as they expand coverage.

Andreessen Horowitz has been behind some of the biggest fundraisers in crypto. In June, the venture capital firm announced a new innovation fund that would allocate $2.2 billion to promising blockchain and crypto plays. Andreessen’s participation in crypto startups adds to the growing narrative around decentralized technologies and their role in disrupting decades-old industries.

Related: Andreessen Horowitz launches biggest-ever crypto venture fund at $2.2B

#Andreessen Horowitz #Business #Funding #Venture Capital #Internet of Things Related News Bitcoin Price Rally by 2021 Looks Likely From Five Fundamental Factors Team gallops to a new NFT standART with playable, DNA-enriched digital horses joined by famous footballer Michael Owen Bitcoin payments for real estate gain traction as crypto holders seek monetization The future of art? World-famous artists delve into NFTs Andreessen Horowitz launches biggest-ever crypto venture fund at $2.2B Blockchain analytics firm Nansen secures $12M in Andreessen Horowitz-led raise

The U.S. is now the number one destination for bitcoin miners, eclipsing China for the first time ever. While it was already trending in that direction, new data from Cambridge University released early Wednesday makes it official.

As of July, 35.4% of bitcoin's hashrate – an industry term used to describe the collective computing power of miners – is in the United States, according to the Cambridge Centre for Alternative Finance. That's a 428% increase from September 2020.

America partly has China to thank for its newfound dominance in the mining industry.

Twelve months ago, China was the market leader in terms of hashrate – by a long shot. But Beijing's crypto crackdown in the spring took half the world's bitcoin miners offline practically overnight.

Miners started fleeing China en masse, heading to the cheapest energy sources on the planet in what was dubbed "the great mining migration." A whole lot of them ended up in America.

The newly-released Cambridge data zeroes out China's average monthly share of the global hashrate in July – a major reversal from September 2020, when China captured about 67% of the market.

"The whole narrative of China controls bitcoin is now completely destroyed," said Boaz Sobrado, a London-based fintech data analyst.

Heading to America

The U.S. ticks a lot of boxes for migrant bitcoin miners searching for a new home.

For one, states like Texas boast some of the world's lowest energy prices, which is a major incentive to miners who compete in a low-margin industry, where their only variable cost is typically energy.

The U.S. is also flush with renewable power sources.

Washington state is a mecca for hydropowered mining farms. New York produces more hydroelectric power than any other state east of the Rocky Mountains, and it counts its nuclear power plants toward its 100% carbon-free electricity goal. Meanwhile, Texas' share of renewables is growing over time, with 20% of its power coming from wind as of 2019. The Texas grid also continues to rapidly add more wind and solar power.

Miners across the country have also harnessed nuclear power. Some are latching their rigs to otherwise stranded energy, like natural gas going to waste in oil fields across Texas. This reduces greenhouse gas emissions and generates money for the gas providers and miners.

This shift toward zero-emission, clean energy sources has already begun to recast the narrative among skeptics that bitcoin is bad for the environment. 

"Mining is price sensitive, so as to seek out the lowest-cost power and the lowest-cost power tends to be renewable because if you're burning fossil fuels ... it has extraction, refinement and transport costs," Blockstream CEO Adam Back said. 

Besides lower electricity costs, some U.S. states like Texas also have crypto-friendly policymakers and an adequate supply of hosting infrastructure.

The state has a deregulated power grid with real-time spot pricing that lets customers choose between power providers, and crucially, its political leaders are pro-crypto. Those are dream conditions for miners who want a kind welcome and cheap energy sources.

"If you're looking to relocate hundreds of millions of dollars of miners out of China, you want to make sure you have geographic, political, and jurisdictional stability. You also want to make sure there are private property rights protections for the assets that you are relocating," said Darin Feinstein, co-founder of Core Scientific. 

Luck meets preparation

America's rise to the top is also a case of luck meeting preparation. The U.S. has been quietly boosting its hosting capacity for years.

Before bitcoin miners started coming to America, companies across the country made a gamble that eventually, if adequate infrastructure were in place, they would set up shop in the U.S. 

That gamble is paying off.

When bitcoin crashed in late 2017 and the wider market entered a multi-year crypto winter, there wasn't much demand for big bitcoin farms. U.S. mining operators saw their opening and jumped at the chance to deploy cheap money to build up the mining ecosystem in the States. 

"The large, publicly-traded miners were able to raise capital to go make big purchases," said Mike Colyer, CEO of digital currency company Foundry, which helped bring over $300 million of mining equipment into North America.

Feinstein says that in the last 18 months, there has been a serious growth of mining infrastructure in America. "We've noticed a massive uptick in mining operations looking to relocate to North America, mostly in the U.S.," continued Feinstein.

Companies like North American crypto mining operator Core Scientific kept building out hosting space all through the crypto winter to ensure the capacity to plug in new gear, according to Colyer. 

"A majority of the new equipment manufactured from May 2020 through December 2020 was shipped to the U.S. and Canada," he said.

Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced miners, points out that maturing capital markets and financial instruments around the mining industry also played a big role in the industry's quick ascent in the U.S. Brammer says many of these American operators were able to start rapidly expanding once they secured financing by leveraging a multi-year track record of profitability and existing capital as collateral.

Covid also played a role.

Though the global pandemic shut down large swaths of the economy, the ensuing stimulus payments proved a boon for U.S. mining companies.

"All the money printing during the pandemic meant that more capital needed to be deployed," explained bitcoin mining engineer Brandon Arvanaghi. 

"People were looking for places to park their cash. The appetite for large-scale investments had never been bigger. A lot of that likely found its way into bitcoin mining operations in places outside of China," continued Arvanaghi.

Then, there's Kazakhstan

Not all miners, however, are headed to renewable destinations.

Kazakhstan is just behind the U.S. in terms of its share of the global bitcoin mining market, with 18.1% of all crypto mining. It's home to coal mines that provide a cheap and abundant supply of energy — but also ample carbon dioxide emissions.

However, several mining experts tell CNBC they think that Kazakhstan, which neighbors China, is just a temporary stopover on a longer migration west.

Brammer sees large miners going there in the short-term with older-generation equipment. "But as older-generation machines reach the end of their service lives, those companies will likely deploy new machines into more stable and energy efficient and renewable jurisdictions," he said.

Also likely to put a damper on Kazakhstan's popularity is a law newly signed by the president that will introduce extra taxes for crypto miners starting in 2022.

"This will significantly change the incentives for people to deploy capital in Kazakhstan," said Brammer.

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No one’s being their own bank in Bitcoin. There is no such thing as ‘be your own bank because you have Bitcoin’ because banks aren’t cash. It’s a depository.

What is more important? Being free or being equal?

-Dr. Craig S. Wright

As we move through all the sections of the Bitcoin whitepaper with Ryan X. Charles and Dr. Craig Wright in “The Theory of Bitcoin: The Bitcoin Whitepaper series,” it becomes more and more apparent what its creator’s intentions were and how far they deviate from the narrative of BTC and other digital currencies. This is not a system to replace banks. This is not a system to facilitate anarchy. Bitcoin is not digital gold.

Bitcoin is the innovation of a lifetime not only because of how it works technically, but also because its creator factored human nature into its functionality. Not all miners are created equal, and the proof of work system thrives on competition and inequality. Dr. Wright chooses freedom over equality because you can’t have both.

Video 9 of Theory of Bitcoin: The Bitcoin Whitepaper builds us up for the grand finale of the series, covering the “Combining and Splitting of Value” and “Privacy” whitepaper sections. Here are my key takeaways from Charles and Dr. Wright’s conversation in this >okens in an envelope”

Section 9 of the whitepaper, “Combining and Splitting Value” addresses “how you can deconstruct and reconstruct a coin,” Dr. Wright sums up.

Dr. Wright likes to tell people to think of Bitcoin as a set of tokens in an envelope. In a transaction, each of the input “envelopes” gets ripped open and the tokens are “poured out”—you can think of the tokens as being little grains of rice—the tokens or “grains” are then put into new envelopes and we can decide how much we put into each envelope for the outputs.

“Bitcoin is really one hundred million individual tokens. Each of these tokens are fungible, separate items,” Dr. Wright explains.

We can merge coins if we have lots of small amounts, or we can break them down if we have lots of big amounts, similar to how cash works when you change a 20-dollar note into smaller notes, for example. With BSV blockchain’s signature low fees, all of this can be done at a minimal cost.

To merge or not to merge

In general, we should have lots of little “pots” as opposed to merging all the outputs together into one big “pot” for privacy and other reasons. (BTC’s exorbitant fees are the reason why the “one big pot” narrative started). 

Dr. Wright explains that one big pot slows down the process and there are two main reasons we should have lots of little pots as outputs: 

Privacy. If you have one big transaction to pay for something and you send yourself back the change, it’s easy to follow and figure out what the payment and change amount was from that single transaction. If you have a lot of small transactions getting sent to the merchant and back to yourself as change, in other words a lot of different outputs, it’s much harder to follow.

Availability of funds. What if you want to spend again immediately? If you make one big payment for a small transaction, you’ll have to wait for the change to come back as confirmed before you can pay another merchant, and this could take time. 

There are some special cases when merging outputs together into bigger pots would be beneficial. For example, if you are going to make a huge transaction, it might be better to merge or else you could end up paying a lot in fees for processing all the smaller transactions. Therefore, it’s a bit of a balancing act between how much privacy you want and how much you are willing to pay in fees. 

As a side note, once we get to a thousandth of a cent for fees (transaction fees will go down as the network scales), this balancing act will no longer exist because the fees are so low.

Dr. Wright also points out that the more inputs you have, the more time it takes to validate and verify. With a single transaction, we’re talking a fraction of a second. However, if you have a hundred thousand transactions, each worth 100th of a cent, for the purchase of a TV for example, it will take a minute or so to validate all the inputs before the transaction is sent off to the blockchain. It’s kind of like the old lady coming into the shop with the penny jar to pay for something, Dr. Wright jokes.

With all of this in mind, some people will prefer to have more small transactions if they are concerned about privacy and others will prefer to have larger ones because they don’t care as much about privacy and they want the process to be quick and at a lower cost. Wallets will eventually be able to construct and deconstruct coins for their users, perhaps updating and reassigning values in the middle of the night, once a week.

Bitcoin is not anti-bank

While the concept of Bitcoin not being “anti-bank” is on the periphery of what’s covered in sections 9 and 10 of the whitepaper, Dr. Wright sets the records straight in this episode.

“There is not anti-bank stuff in Bitcoin. No one’s being their own bank in Bitcoin. There is no such thing as ‘be your own bank because you have Bitcoin’ because banks aren’t cash. It’s a depository,” he says.

Dr. Wright explains how a bank consolidates and reinvents money by taking a lot of short-term amounts and putting them into long term outputs. Bitcoin doesn’t do that.

Dr. Wright also does not see Bitcoin completely replacing fiat at any point in the future. Rather, he predicts people will be using fiat currencies on chain and these currencies will be tokenized. He also predicts that if we’re transacting in small amounts, Bitcoin will prevail as the currency of choice because “it always will be more efficient,” he says.

Traditional banking system privacy model

Moving on to the whitepaper’s section 10 “Privacy,” Charles and Dr. Wright start off by making the distinction between the traditional banking system’s privacy model and Bitcoin’s privacy model. Let’s begin with the traditional model.

In traditional banking, identities and transactions are put together, given to the trusted third party, they then go through a counter party and the public has no idea, they are firewalled off from the entire process.

In actuality, the traditional banking system is not private, think of what happens when it gets compromised. “The whole model is completely screwed up! There are instances of 100 million individuals being compromised at once. All their information now known,” Dr. Wright points out.

Dr. Wright goes on reference a security breach when 11 million Target customers had their information compromised. Why should Target have all your information if all you want to buy is a low-cost item such as a candy bar, he questions? Why should they have this information to be hacked? Your information can now be used for identity fraud, etc, and all you wanted was a candy bar.

There are so many third parties handling our information on the internet these days and this does not have to be the case. Bitcoin makes it possible to buy that candy bar digitally, but without the possibility of having personal information compromised.

Bitcoin privacy model

The privacy that Bitcoin provides is something Dr. Wright wanted from the very beginning, in fact it’s one of the most essential parts, he says.

In Bitcoin, identities are firewalled off from the public. Dr. Wright and Charles use the analogy of a stock exchange—the ticker tape can be compared to the blockchain—you know things are happening, but you don’t know who is doing these things. The size and amounts of trades are revealed, what’s being traded, how much it’s going for. The trades are not linked to individuals, unless they have to disclose such information by law.

Dr. Wright explains that there is a difference between anonymity and privacy. Keeping public keys anonymous doesn’t mean a user is keeping their identity a secret, it just means they will have a level of privacy from the public. Public keys can be linked to a user’s identity and this allows for the law to work when it needs to.

Bitcoin is fungible and traceable

It’s important to note that Bitcoin is consistent with the legal systems all over the world and was not created for anarchy. Despite popular belief, even though it is private, Bitcoin is traceable and therefore not a crime-friendly system whatsoever. 

It’s not just tracing, it’s following, Dr. Wright points out. Following transactions are not “reversible,” rather it’s a one-way function. “From you, I can’t go backwards and find out what transactions are yours, but from the transactions you can follow the path. That’s a big critical distinction,” Dr. Wright explains.

“With a warrant or whatever else, there would be methodologies that could be deployed…through all of this, we now have a system that allows us to capture any stolen coins,” he adds. 

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

One or a group of large bitcoin buyers, also called bitcoin whales, appeared to be behind Wednesday’s price pop, based on data that showed large bitcoin purchases on exchanges during early U.S. trading hours.

But why the whale – or whales – placed bitcoin buying orders of nearly $1.6 billion in a few minutes on a centralized exchange remains unclear.

At press time, bitcoin was changing hands at $54,938.47, up 7.89% in the past 24 hours, according to CoinDesk 20.

According to South Korea-based blockchain data firm CryptoQuant, someone or a group of people purchased the massive amount of bitcoin on the spot market on centralized exchanges between 13:11 and 13:16 UTC Wednesday.

The timing of the purchase came not long after U.S. Republicans shared favorable comments on cryptocurrencies and amid increased expectations from markets that the U.S. could soon approve a futures-based bitcoin exchange fund.

The purchase could have started on Coinbase, Ki Young Ju, co-founder and CEO of CryptoQuant told CoinDesk. He pointed out that “Coinbase premium” rose sharply around the same time before it dropped again.

The “Coinbase premium” is an indicator showing the gap between Coinbase’s BTC/U.S. dollar (USD) pair and Binance’s BTC/USDT pair involving the tether stablecoin. When the number increases, it usually reflects stronger buying power on Coinbase, the centralized exchange.

But Willy Woo, an independent blockchain data analyst, disagreed with this narrative. He told CoinDesk that the purchase mostly came from Binance, citing data from another blockchain data firm Glassnode.

According to Glassnode, the hourly charts of net transfer volume for bitcoin from and to Coinbase, or the difference in volume flowing into and out of Coinbase, has been more neutral compared with its competitor Binance, on a 48-hour moving average.

On Binance, the difference in bitcoin volume flowing into and out of the exchange has been negative since the past weekend.

I “haven’t seen any netflows coming out of [Coinbase] [and] also the buying on there is not that out of the ordinary compared to other exchanges,” Woo said. “The buying actually looked stronger on Binance ... Coinbase was net selling more than buying.”

Lucas Outumuro, head of research at Miami, Florida-based blockchain data firm IntoTheBlock, also said the purchase mainly came from Binance, citing data from his own company.

Regardless of which exchange was responsible for the large order that seemed to spur bitcoin’s spike, the bigger question is why the purchase took place on an exchange.

Large bitcoin orders are usually placed through the over-the-counter (OTC) market. In that way, the transactions won’t move prices the way they would have if the trades were occurring on the spot market via exchanges.

A large purchase on the spot market that potentially has moved the market up dramatically seems suspicious to CryptoQuant’s Ju, who suggested that whales were trying to stimulate interest among other investors by creating a price increase. These investors would then become fearful of missing out on the surge. “Sometimes, you have to manipulate the price to make FOMO (fear of missing out),” Ju said.

But Outumuro said that large buys via OTC desks can be too slow for some traders because of the current bullish sentiment on the market.

“Given that bitcoin broke out of a multi-month trendline and above a local high, I’d argue there’s a high amount of momentum trading taking place in spot markets – with high volume and conviction,” he said.

Indeed, the market’s attention is now back to bitcoin in full bullish mode: As bitcoin broke above $54,000 on Wednesday, institutional interest in bitcoin has risen significantly too.

One-month bitcoin futures contracts based on the Chicago Mercantile Exchange (CME) are trading at an annualized premium as much as 17.73% to the spot price, according to derivatives research firm Skew.

As CoinDesk reported, the increased premium on CME’s bitcoin futures contracts shows higher demand among CME traders to build long exposure in bitcoin. In the crypto market, analysts and traders consider CME synonymous with institutional investors.

“It’s rare to see BTC in the top 5% of crypto asset performers in any given 24 hours,” digital asset prime broker Genesis wrote in its newsletter on Wednesday. “Given that BTC is for many large institutions the ‘on ramp,’... this further supports the conclusion that this runup is institution-driven.” (Genesis is owned by Digital Currency Group, which also owns CoinDesk.)

Blockchain is rapidly growing in adoption in the GCC region, driven largely by the push by regional governments to digitise operations.

Recently Gulf Business had a chance to sit down for an exclusive interview with Juwan Lee, chairman and group CEO of Nexchange Group who discussed and shared his insights on the current market trends.

Is blockchain worth the hype?

Blockchain hype has its ups and downs. But beyond that, the fact that the world is moving away from centralisation to decentralisation, and the Fourth Industrial Revolution is underway – thanks to many emerging technologies like blockchain that see relatively slow, but progressive adoption. Blockchain is ready to be implemented today because so many technologies are already in place, like mobile phones, the internet and the cloud. Moreover, the pricing structure in the centralised world has become too high, and it’s the reason why blockchain is a great tool for disruption.

From your experience, how do you think blockchain technology has evolved in the Middle East region?

This region has developed rather quickly in terms of business and tech opportunities. Add to this, local natural entrepreneurial talent, interest in technology application, and regulatory certainty — those seeds are already in the rich soil of the Middle East. Hence, blockchain has an opportunity to flourish here.

In my opinion, one of the most important building blocks here are the very progressive regulation efforts shown by UAE, Bahrain, and Saudi Arabia. These countries are forward-thinking and tech-friendly jurisdictions. Central banks actively explore digital currencies, while fintech sandboxes support entrepreneurs from across the ecosystem. And of course, Emirates Blockchain Strategy plays a big role in the state-level blockchain adoption not only in the Middle East but globally, too.

Which industries do you think blockchain will impact the most?

Undoubtedly, the industry that sees a lot of blockchain development and will be probably decentralised is logistics, and supply chains. The number of use cases globally will rise exponentially. Of course, blockchain has already revolutionised the financial industry, with all types of digital assets, with blockchain-based transactions, with decentralised tools, with crypto, after all — and it’s all here to stay. Traditional finance will have to move or be digitised. Also, with the emergence of NFTs, I’m sure the art world will be somewhat disrupted and probably re-built.

What are the latest trends and developments in the Decentralised Finance platform?

DeFi has grown tremendously over the last few years: Total Value Locked (TVL) grew by 14 times in 2020 and has more than tripled in 2021. Traditional financial primitives also work in the DeFi space, where protocols mimic financial tools. What’s trending now is so-called GameFi, an intersection of DeFi and the gaming industry, where protocols let gamers transfer assets within games, earning a return on their game-based cryptocurrencies. DEXs, or decentralised exchanges, also fuel industry growth. On DEXs, crypto owners transact with each other directly, as opposed to centralised platforms.

Can you elaborate on the non-financial applications of blockchain?

The greatest disruption and improvement that blockchain brings to the table are seen in supply chains and logistics, in healthcare records, vaccine credentials, digital identity, land registry, agriculture, education certificates issuance, and voting. Use cases that impressed me the most recently are in launch pads, gambling, and NFTs. Even though there is a lot of hype in this segment, NFTs are not going away. We continue to evolve and live in a hybrid world, where new tech has a narrative that keeps on building upon old ones.

What were your key takeaways from the recently held Gulf Blockchain Week?

NexChange together with our partners Evolution Group and EcoX co-hosted Gulf Blockchain Week, and the event highlighted the culmination of the development of the Gulf region as a hub for the blockchain ecosystem, where a long-term strategic plan has been put into place. The event showcased and debated important topics such as crypto regulations, the investment landscape, supply chain management, blockchain case studies in real estate as it pertains to the Gulf, to name a few. The Gulf region, particularly Dubai, has been the main beneficiary for the way it has dealt with the pandemic. Most importantly, it allows innovative companies to get the message out to the public.

TagsBlockchainDubaiGCCGulf Blockchain WeekInterviewNexchange GroupTechnology0 CommentsShareTweetShareShareYou might also likeDubai’s DP World launches a single window digital solution for smart logistics The SME Story: Mohamed Al Fayed, co-founder and CEO of GrubTech Dubai’s tourism sector won’t rebound until late 2022, S&P says Dubai’s Emirates NBD nine-month profit rose an annual 29% to Dhs7.3bn

The benchmark for any leading crypto is its popularity and the fan wave that spins around it. The same holds for dogecoin’s price. As dogecoin has a fairly high adoption among investors, it indicates the currency’s dynamic and stabilized value. It is no surprise that the entire DOGE community is holding on to the fact that the currency’s value will skyrocket anytime soon, given its quick progression from being an underrated cryptocurrency with the meme theme of a dog to become an inspiration for other cryptocurrencies.

Currently, the global market capitalization of dogecoin is US$32 billion and holds the 10th position in the market. The token has been reaching for its primary support line of 200-day after facing rejection from higher levels. Experts believe that DOGE might be amongst some of the most significant and most agile cryptocurrencies in the world.

The undisputed leader of the meme cryptocurrency has jumped over 25% since the last week. Its value has retraced close to 25% of its lost value from profit-booking in September 2021. For investors to continue acknowledging it as bullish with robust investment sentiments, it has to cross the 200 DMA resistance as early as possible. Breaching its 200 DMA level will show that the digital token is constantly moving upwards, indicating a positive stance for the asset.

THESE THREE CRYPTOCURRENCIES WEATHERED THE STORM AS BITCOIN PLUNGEDTOP 10 HIGH PERFORMING DOGECOIN CLONES IN THE CRYPTO MARKETDOGECOIN IS THE BEST INVESTMENT IN 2021. HERE’S WHY?

As per the technical analysis of dogecoin’s price, it might too, fall under the volatile category and is susceptible to market highs and lows. The current dogecoin price, according to coinmarketcap is $0.2440. Its market value has dived down by 0.42% in the past 24 hours.

The digital token has a strong buying value around $0.20 levels and faces resistance around $0.26 levels. This spasmodic 30% range is the base ground for consolidation. The token has to break this consolidation level and move in a different direction to keep the buyers’ interest consistent.

According to experts, traders expect to witness a positive momentum in the dogecoin to USD price trends in the upcoming weeks. As per analysis, a long-term increase is expected. The price analysis for 2026 is $0.945, and in the next 5 years, the value is expected to be more.

To understand and consider investing in it, investors have to research and consider certain factors, including legitimacy, history of the token, market valuation, and much more. DOGE makers claim that since the token has been in the market for over 7 years now, there should be no doubts about its legitimacy. It is one of the largest cryptocurrencies in the market. It has a defined purpose of creating a payment system that is free from traditional banking regulations. Hence, if investors are putting their money, they are participating in a constructive project, which forms a good investment. The real reason behind the investors’ attraction towards dogecoin is its low value, which has also proved helpful to teach new investors about the crypto market and the basic principles of demand and supply.

Comparing it to bitcoin, dogecoin scales relatively faster. It is built on a basic technology that allows digital assets to verify transactions, and through this process, it provides secure access to sending and receiving money without intermediaries. DOGE allows employs SCRYPT in its algorithm, which processes faster than BTC.

Tech giants like Elon Musk and other celebrities have promoted dogecoin for investments, which makes it a preference for a good investment. Dogecoin’s impact on the crypto market as a whole is remarkable. It has changed the narrative of the market, but most importantly, investors are free to trade on it at their own pace.

Digital currencies have been witnessing a massive volatility phase and dogecoin is no exception. The overall crypto market capitalization has marked a significant change, which includes DOGE’s market cap too. To be optimistic, it is obvious that the fluctuations in the token’s price predictions are based on the short-term and the long-term investment sentiments of the traders. To reach close to the 200 DMA, DOGE should take the support of $0.20 levels and try again to breach the 0.30 levels, hoping to cross the previous important levels. Nonetheless, it will remain as one of the most-favored cryptocurrencies in the market.

DogecoinShare This ArticleDo the sharing thingyAbout AuthorMore info about authorSayantani SanyalMore by Sayantani SanyalRelated Latest News ArticlesSimilar Posts From Latest News CategoryTop 10 Python Libraries for Machine Learning in 2021October 17, 2021Interlinking Artificial Intelligence with Human Brain through CognitionApril 20, 2021Demystifying Data Silos with Data Virtualization into the Big Data FabricAugust 2, 2020

The total cryptocurrency market cap has soared about 200% this year, hitting $2.5 trillion at the time this was written. Much of that growth has come from Bitcoin (CRYPTO:BTC), which makes up about 45% of the market, according to Coinmarketcap.com. But over the long term, other digital assets such as Cardano (CRYPTO:ADA) and Aave (CRYPTO:AAVE) could help drive growth and adoption in this exciting sector. Let's explore why. 

1. Cardano 

Launched in 2017, Cardano is a public blockchain platform that facilitates peer-to-peer transactions through its internal cryptocurrency called Ada. The platform allows users to program decentralized applications (dApps). And it has an edge over rival programable blockchains like Ethereum (CRYPTO:ETH) because of its more environmentally friendly proof-of-stake mining process called Ouroboros.

Unlike proof-of-work protocols, in which miners harness thousands of computers to solve complex computational problems to validate transactions (and mint new coins), Ouroboros allows miners to validate transactions based on the number of coins (the stake) they hold. This system consumes less energy, giving Cardano an economic advantage in an increasingly environmentally conscious world. 

Cardano hosts several dApps, which are peer-to-peer software projects programmed on its blockchain, the network of computers where blocks of encrypted data reside. These include the decentralized cryptocurrency exchange Flanoswap and Theos, a marketplace for digital certificates of ownership (non-fungible tokens, or NFTs) of art, video and music. Because these dApps are programmed on Cardano, they will help support demand for Ada tokens, which will be used to validate transactions. 

Ada prices have rocketed more than 1,100% since the start of the year, earning Cardano a market cap of roughly $69 billion, and making it the fourth biggest cryptocurrency. Cardano's environmentally friendly mining system and ecosystem of useful dApps could help sustain continued long-term expansion. 

2. Aave

Cryptocurrencies often rely on the greater fool theory, which means people buy them to sell to someone else for a higher price without considering fundamentals. Assets such Aave push back against this narrative by building real-world use cases to encourage adoption. 

Unlike Cardano, which is a public blockchain, Aave is an ERC-20 protocol programmed on the Ethereum blockchain. It aims to decentralize consumer finance by allowing people to borrow and lend more than 20 different cryptocurrencies without a central intermediary. 

Users deposit digital assets into "liquidity pools" where they earn interest. The pools also serve as funds that borrowers can draw upon, with the loans overcollateralized (borrowers must put up more than 100% of the loan value in other tokens) to reduce risk on the platform. Lenders benefit from earning income from their cryptocurrency holdings, while borrowers can cash out their holdings without having to sell. 

At a recent price of $301 per coin, Aave has soared about 500% during the past 12 months, according to cryptocurrency exchange Coinbase Global (NASDAQ:COIN). Its  market cap is about $4 billion, making it a small fry compared to major cryptocurrencies like Bitcoin or Ethereum, with market values of $1.2 trillion and $450 billion, respectively. 

Investing for the long haul

Cryptocurrency is a challenging investment because of all the speculation involved in digital-asset valuations. But investors focused on fundamentals can mitigate this uncertainty by betting on platforms that offer tangible value to users. Environmentally friendly blockchain Cardano and decentralized-finance platform Aave fit the bill, which could set them up for long-term success, even if the crypto hype cools. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer. Stock AdvisorS&P 500655%141%Join Stock AdvisorCumulative Growth of a $10,000 Investment in Stock AdvisorCalculated by Time-Weighted ReturnStocksADACardano CRYPTO:ADABTCBitcoin CRYPTO:BTCETHEthereum CRYPTO:ETHCOINCoinbase Global, Inc. NASDAQ:COINAAVEAave CRYPTO:AAVERelated Articles 12345

Cardano (CCC:ADA-USD) could move higher as one of the big four cryptocurrencies alongside Bitcoin (CCC:BTC-USD), Ethereum (CCC:ETH-USD), and Binance Coin (BNB-USD). In fact, Cardano has at times moved to the third place spot depending on the daily moves in Binance Coin and its own price. As it stands today Cardano has a market value of over $73 billion and is just shy of a billion dollars away from reclaiming the third place spot.

Source: Stanslavs / Shutterstock

In fact, after tumbling to a trough on July 20 of just under $1.03, it is up over 100% in a few months to $2.27. The main reason seems to be the change that the cryptocurrency took in August.

This development is likely to keep pushing Cardano even higher.

The Alonzo Hard Fork

Cardano is a proof-of-stake blockchain platform that recently had a hard fork in Aug. 2021. According to Decrypt magazine:

“…the Alonzo hard fork will bring smart contract functionality to the network, meaning that developers will be able to build decentralized finance (DeFi) apps that enable the lending, borrowing, and trading of assets without resorting to centralized intermediaries such as banks.”

That is why Cardano is up so much. The hard fork developed by IOHK, the crypto’s promotion firm, allowed smart contracts to begin launching as of Sept. 12. This puts it in direct competition with Ethereum, which started using smart contracts way back in 2015. So Cardano has a huge hill to climb here.

One of the issues now is that there are no decentralized apps (dApps) that stand ready to use Cardano as a smart contract. An article published in Decrypt said that the lack of “killer apps” to introduce Cardano smart contracts multi-transaction processing is a viable criticism.

So it may take some time before this crypto gets its act in gear. IOHK hopes that the new smart contract ability will entice developers to use Cardano as a platform for new dApps and even NFTs (non-fungible tokens).

Cointelegraph magazine points out that this could be a long process. It quotes an analyst who says it will be “more than two years for DApps to be deployed and operate at full scale on Cardano, as it was with the Ethereum network.”

Nevertheless, the article points out that Cardano is one of the most developed cryptos. It has the highest average monthly commits per month on code repository GitHub.

These “commits” essentially represent any additions or amendments made to the network’s source code on GitHub. Cardano essentially ranks ahead of Ethereum in these commits. This shows that there are large numbers of developers familiar with Cardano who may not want to use it for dApps and NFTs.

Where This Leaves Cardano

Cardano began development in 2015 helmed by Charles Hoskinson in order to outperform Ethereum. Six years later it is finally able to offer smart contracts and dApps on its platform. It’s been a long road.

If the crypto can eventually live up to the ability to directly compete with Ethereum, then its market cap of $73 billion might actually be deserved. But, of course, that is using rationality.

The way the market works is that it will project out first and then adjust. That works on the upside just as well as the downside. Right now the narrative is that Cardano might actually be able to get there, so let’s keep its market value high.

And if it does start capturing market share in the dApps, DeFi and NFT arenas, Cardano will likely leap forward to an even higher market cap. In other words, the market will jump forward ahead another three or four years.

But, of course, the opposite could happen as well, so let the buyer beware.

On the date of publication, Mark R. Hake held a long position in Bitcoin and Ethereum but not in any other security mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.

Article printed from InvestorPlace Media, 1 InvestorPlace Media, LLC

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Because I’ve used an analogy of how gold miners add resources to circulation isn’t the same as saying this is a gold economy.

The transaction fee can be very low in Bitcoin. Now, if transaction fees are low and its simple and easy to transact, the more people will start using it. This isn’t the Bitcoin Core concept where you need high fees and all the rest. It’s exactly the opposite. They have the economics wrong.

– Craig S. Wright

Video seven in the Theory of Bitcoin: The Bitcoin Whitepaper series with Dr. Craig Wright and Ryan X. Charles covers the sixth section of the Bitcoin whitepaper, which is all about incentive. 

It’s critical for everyone to understand that it’s not just about the block reward when it comes to mining Bitcoin; the real focus should be on transaction fees because the block reward will eventually go to zero. Big blocks mean lots of transactions which means substantial transaction fees for miners. 

Charles and Dr. Wright dive into miner incentives and more throughout the episode, here are my key takeaways from their discussion.

https://youtu.be/1-ojBHVt9NA

Bitcoin is a small world network

According to the BitcoinSV wiki, “A small world network is a network in which most nodes are not directly connected, but where the neighbors of any given node are likely to be neighbors of each other, and most nodes can be reached from every other node by a small number of hops or steps.”

You can also use the term “Mandala network” to describe the same concept, as Dr. Wright and Charles do earlier in this series and as Jerry Chan does in his “Future of Bitcoin ecosystem” editorial piece for CoinGeek.

When asked about the significance of Bitcoin being a small world network, Dr. Wright says “it’s moving away from the idea that everything has to do everything. It’s the typical rule of specialization.”

Being a small world network, in Bitcoin there’s a clump of full nodes in the middle that receive everything simultaneously. All transactions do not have to reach every single node on the network and this is to enable scaling. The incentives of the network have been designed so nodes are encouraged to get the transactions that they need and nodes that do not have the transactions they need (or the block info) can ask other nodes for the information. 

Full nodes are incentivized to have all the transactions because they need them in order to win the next block. Nodes are missing opportunities if they have to request a block after missing one, it’s a waste of CPU to try and solve a block that’s already been solved and all other nodes have already accepted it.

The significance of incentives

According to Dr. Wright, there are many incentives that power the Bitcoin system and we’ll start with the node operation.

“[Incentives] guide behavior. So if we want to keep nodes honest, that’s really what the system’s about. Then we have to give them some reason to be honest,” Dr. Wright says.

Dr. Wright goes on to explain that the nodes’ incentives are not to get as much coin as possible because it’s not to the benefit of a node to take over the network. If a node took over the network, people could clearly see there’s just one big node and they won’t want to use the network. The value of the coin will go down.

Also, if a node is a huge percent of the network, they may be mining all the coins, but paying a huge amount to do this. Not to mention if a node captures all the Bitcoin, no one else will use it and then it’s an unusable system. To balance everything out, the majority of the Bitcoin must be held by other people.

When asked about 51% attacks, Dr. Wright says they won’t happen because first of all the attack would be obvious—there are records and the nodes will get caught. Second of all, even if there weren’t any records, why would nodes invest all this money and collapse a system they’re a part of? It doesn’t make any sense.

Bitcoin is not digital gold

Despite the current BTC narrative, Bitcoin was not created to be “digital gold.” The comparison is often made because there is a limited volume of gold, similar to how there is a limited volume of Bitcoin. The issue with gold is that new mines can be discovered and therefore the supply is unpredictable. This situation cannot happen with Bitcoin. 

While Dr. Wright is crystal clear in explaining that Bitcoin is not digital gold, he did reference gold miners in the whitepaper—he drew a parallel between them and a node on the network.

“Because I’ve used an analogy of how gold miners add resources to circulation isn’t the same as saying this is a gold economy,” Dr. Wright clarifies.

Bitcoin nodes distribute coins, but they do not issue coins. “The central authority was me on day one—I issued them—and then I let the system go. That’s the whole point. So there’s one issue in Bitcoin,” Dr. Wright explains.

The role of transaction fees

Bitcoin miners receive a subsidy for finding blocks and they are also rewarded with the transaction fees associated with that particular block, together referred to as a the “coinbase reward.” Dr. Wright emphasizes that it’s not about a small number of transactions with high fees as we’re seeing on networks such as BTC and ETH.

Dr. Wright points out that Walmart and Amazon make money by selling goods for just a little more than the costs. “They have really, really small margins and the only way to make money on really, really small margins is to sell a hell of a lot,” he says. This is why big blocks and the ability to scale massively are crucial to the health and longevity of the Bitcoin system. Seeing as the subsidy halves roughly every four years until it goes to zero, the miners will eventually have to make their money from transactions fees alone. 

“The problem is the subsidy. The subsidy is slowly disappearing, but too much grew too fast and too many people jumped on board too quickly and pumped up the subsidy and the subsidy is what skews the market. But the subsidy disappears,” Dr. Wright warns.

Take BTC for example. Dr. Wright explains that too much value happened too quickly. Too many people jumped on board without building anything and therefore locking BTC into an unsustainable model. People did not re-invest back into the system by building things. With BTC’s block cap, there’s no push to increase transaction numbers and therefore no investment in improving mining hardware. What will happen to the network when the block subsidy goes to zero?

The extraordinary transaction fees are another huge issue with BTC as they severely limit the use of the system. With low transactional friction, liquidity increases. If people can actually use Bitcoin in any denomination and send it somewhere else for a small fee, we can develop network effects that actually grow.

“The transaction fee can be very low in Bitcoin (SV). Now, if transaction fees are low and its simple and easy to transact, the more people will start using it. This isn’t the Bitcoin Core (BTC) concept where you need high fees and all the rest. It’s exactly the opposite. They have the economics wrong,” Dr. Wright explains.

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

This article originally appeared in Valid Points, CoinDesk’s weekly newsletter breaking down Ethereum 2.0 and its sweeping impact on crypto markets. Subscribe to Valid Points here.

October marks the beginning of the fourth quarter and perhaps an end to the crypto market’s fifth annual September Dump.

More importantly, we are excited to announce the release of CoinDesk Research’s Q3 Quarterly Review, containing data-driven analysis on Bitcoin, Ethereum, DeFi and NFTs.

While digging through the aftermath of EIP 1559, I realized that the upgrade was more multifaceted than I once understood. CoinDesk columnist Nic Carter had pointed out that EIP 1559′s design changes are “inherently political’ and that they pit blockscape consumers, token holders and miners against each other. While this could be true on a case-by-case basis, I don’t believe it captures the overall sentiment of any class of Ethereum stakeholders.

Why? The changes to the fee market and the addition of a burn mechanism have wider effects on all aspects of the user experience than what appears just on the surface. Furthermore, it is likely too early for any single participant to know how the upgrade will affect them in the long run. For example, CoinMetric’s data shows us that while miners may have lost out on a majority of transaction fees, profitability in USD has remained roughly the same.

Can the newfound scarcity narrative have a long-term positive impact on the price of ether? Should miners be upset if they generate similar revenue through block rewards alone? Again, I believe it is too early to assert any final takeaways from the upgrade, which I am most likely guilty of doing myself.

If you are interested in further analysis around EIP 1559, MEV, DeFi and more (like Bitcoin), take a look through our Quarterly Review.

Pulse check

The following is an overview of network activity on the Ethereum 2.0 Beacon Chain over the past week. For more information about the metrics featured in this section, check out our 101 explainer on Eth 2.0 metrics.

Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network.

Validated takesCompound’s founder, Robert Leshner, calls into question the ethos of decentralized finance (DeFi) after an $80 million dollar bug. BACKGROUND: A bug in Compound’s smart contracts allowed certain users to claim massive COMP rewards. Leshner briefly threatened to turn the receiving addresses over to the IRS, only to revoke the statement after strong backlash from the community. The incidental bug provoked questions on how the DeFi industry should be governed, if not by law.AXS peaked at $155 after Axie Infinity’s revenues fell 40% in September. BACKGROUND: Arguably the most popular play-to-earn game, Axie Infinity announced an airdrop to long-time players, launching their governance token to new highs. AXS has an over $8 billion market capitalization, and the protocol earned $721 million during the third quarter, showing the potential for NFT-based gaming models.Polygon flipped Ethereum in active user addresses after growing from 200,000 to nearly 600,000 during September. BACKGROUND: Users have scrambled for scalability throughout the last year as transaction fees on Ethereum’s layer 1 remain costly. Polygon has attracted over $4 billion in Total Value Locked (TVL) alongside a slew of new users shortly after announcing its merger with Hermez.DeFi and NFTs collide as NFTfi looks to help collateralize art, collectables and more. BACKGROUND: NFTs and tokenization have helped create a liquid market for art that was once not very tradable (or valuable). Collateralized NFTs could allow for users to leverage against their NFT holdings, in what could be described as a digital pawn shop. NFT collateralization is a precursor to the tokenization of real world assets, highlighting the capital efficiency tokenizing could bring to other non-liquid markets.The Altair Beacon Chain upgrade is set to activate on Oct. 27. BACKGROUND: The upgrade presents a low-stakes opportunity for Beacon Chain developers and client teams to prepare for the coming Merge. Altair will give the Beacon Chain “light client support, minor patches to incentives, per-validator inactivity leak accounting, an increase in slashing severity and cleanups to validator rewards accounting for simplified state management.”Factoid of the weekOpen comms

Valid Points incorporates information and data about CoinDesk’s own Eth 2.0 validator in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which d323ddad0f574fdcc50eeefec34ed9d2039ecb.

Search for it on any Eth 2.0 block explorer site.

Subscribe to Valid Points, our weekly newsletter about Ethereum 2.0.

Next-generation internet platform Cardano poses tough competition to Ethereum with its smart contract functionality, attracting exciting DeFi projects and applications to its blockchain. 

Third largest cryptocurrency ADA is 45% cheaper than ETH based on user fundamentals

Grayscale, a leader in cryptocurrency asset management, recently published a report on Cardano. The asset management firm has evaluated the Web 3.0 crypto network.

The Cardano network is currently processing over 115,000 transactions per day, up over 13 times since the beginning of 2021. 

The early ecosystem projects on Cardano have attracted several applications to the blockchain. 

A feature of Cardano that differentiates it from top competitors like Ethereum is that the network allows users to send multiple asset types within the same transaction. This feature is expected to attract more decentralized applications projects to the network. 

The altcoin’s transaction count has increased despite the price rise.

ADA price v. transaction count.

The asset management firm valued the altcoin in terms of active users per month and revealed that Cardano is currently nearly 45% cheaper than Ethereum. 

Though the rollout of decentralized applications (dApps) on Cardano mainnet is still in its early stages, there is an ecosystem of projects testing their smart contract capabilities on the Ethereum-killer’s blockchain. 

Besides, Cardano’s monthly active wallet address count exceeds Ethereum, fueling the narrative that ADA is ready to take over the largest altcoin by market capitalization. 

Cardano & Ethereum monthly active addresses. 

Grayscale analysts expect that ADA would display higher volatility than Bitcoin and most other altcoins in the long term. 

Proponents consider that the rise of use cases and projects on the Cardano network is likely to increase network usage and support value rotation into ADA. 

FXStreet analysts have evaluated the ADA price trend and expect the altcoin to rally past $2.64. Analysts expect a transition in ADA price trend on October 5. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed-->  Latest Crypto News Latest Crypto News & Analysis Editors’ PicksCrypto bulls unfazed by flash crash

Bitcoin price action initially shakes off strong selling pressure, finds buyers at support, then resumes some selling pressure. Ethereum price action mixed post-all-time high rejection. XRP price awaits its own bullish breakout and an opportunity to outperform its peers.

More Cryptocurrencies NewsMATIC price ready for new all-time highs as $188 million flow into Polygon

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More MATIC NewsAVAX price offers a bullish opportunity before Avalanche hits new all-time highs

Avalanche (AVAX) price has seen a bullish outbreak on Thursday after it broke out above – and then retested – the red descending trend line at $61.62. With even more buyers and bulls coming in, expect a run towards new all-time highs at $81.

More AVAX News XLM price building base for bullish breakout

Stellar bulls are in the last phase of completing a bullish triangle. As XLM price is getting squeezed against the base ($0.40), expect a quick breakout of 12%. After taking a breather, expect another 10% of profits to follow. 

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Read the weekly forecast BTC ETH XRP Crypto partners in your location

Solana, also popularly known as the “Ethereum-killer’, has emerged as one of the fastest-growing cryptocurrencies in the ecosystem. The altcoin move into NFTs has attracted capital rotation from Bitcoin and Ethereum onto the SOL ecosystem. 

Analysts expect SOL to rally based on developments in the Solana network

Solana’s Ignition hackathon concluded with 568 new projects formed on the network’s blockchain. The new projects are expected to launch the next wave of cryptocurrency applications and web3 infrastructure on Solana. 

While Solana’s total value locked (TVL) was $1 billion in late July; the ecosystem’s top 5 projects each have now over $1 billion in total value locked. The network has attracted several non-fungible token (NFT) projects and customized applications with varying degrees of rarity. 

Matty Tay, head of growth at Solana, reflected on the growth of the top five projects on the SOL network in a recent tweet:

Analysts argue that Solana is not as decentralized as other cryptocurrencies in the top 10. The “Nakamoto coefficient” outlined by Balaji Srinivasan, former CTO of Coinbase, is used to estimate the decentralization of a blockchain network. 

Using the Nakamoto Coefficient, higher scores correspond to higher levels of decentralization. When measuring Solana using the Nakamoto Coefficient, it scores higher than Bitcoin and Ethereum, contrary to popular belief. 

Interestingly, 78% of Solana’s circulating supply is staked, based on data from Solana Beach, an SOL ecosystem statistics platform. Rise in the staked supply of SOL is fueling a bullish narrative for SOL price. 

Pseudonymous cryptocurrency analyst @CanteringClark is bullish on SOL price and expects the altcoin to outperform the rest. He states:

​​There are so many reasons to have been long SOL to this point. Are you seeing the trend yet? Even on a day where Bitcoin is the main show, SOL is outperforming. Fast horse.

Elliot Laybourne, a cryptocurrency analyst, is bullish on SOL price for when capital rotation from BTC to altcoins begins. Polkadot and Solana were the top two cryptocurrencies leading the altcoin rally before Bitcoin started trading closer to an all-time high. 

Laybourne shared his analysis in a recent tweet:

Laybourne was recently quoted:

As long as Solana remains above $85.00, I consider the structural bull market intact. Therefore, I expect to see buying on any dip towards $100. As long as Solana respects the rising trend channel, I maintain a long-term bullish price outlook.

FXStreet analysts have evaluated the SOL price trend and predicted that the altcoin is primed to hit a new all-time high at $225. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed-->  Latest Crypto News Latest Crypto News & Analysis Editors’ PicksCrypto bulls unfazed by flash crash

Bitcoin price action initially shakes off strong selling pressure, finds buyers at support, then resumes some selling pressure. Ethereum price action mixed post-all-time high rejection. XRP price awaits its own bullish breakout and an opportunity to outperform its peers.

More Cryptocurrencies NewsMATIC price ready for new all-time highs as $188 million flow into Polygon

The total number of transactions on Polygon network dropped nearly 15% due to a rise in transaction fees over the past week. This hasn’t negatively impacted the network as the number of unique daily active users remained stable. 

More MATIC NewsAVAX price offers a bullish opportunity before Avalanche hits new all-time highs

Avalanche (AVAX) price has seen a bullish outbreak on Thursday after it broke out above – and then retested – the red descending trend line at $61.62. With even more buyers and bulls coming in, expect a run towards new all-time highs at $81.

More AVAX News XLM price building base for bullish breakout

Stellar bulls are in the last phase of completing a bullish triangle. As XLM price is getting squeezed against the base ($0.40), expect a quick breakout of 12%. After taking a breather, expect another 10% of profits to follow. 

More Stellar NewsBEST CRYPTO BROKERS/EXCHANGESMore infoMore infoMore infoBitcoin Weekly Forecast: Markets revert to mean, but BTC price remains indecisive

Bitcoin price shows considerable strength after springing from the recent crashes. Still, it is uncertain whether the current bullish impulse will morph into a new uptrend or lead to a more profound decline.

Read the weekly forecast BTC ETH XRP Crypto partners in your location

A war is brewing among states to attract bitcoin miners, and new data shows that a whole lot of them are headed to New York, Kentucky, Georgia, and Texas.

Within the U.S., 19.9% of bitcoin's hashrate – that is, the collective computing power of miners – is in New York, 18.7% in Kentucky, 17.3% is in Georgia, and 14% in Texas, according to Foundry USA, which is the biggest mining pool in North America and the fifth-largest globally.

A mining pool lets a single miner combine its hashing power with thousands of other miners all over the world, and there are dozens from which to choose. 

"This is the first time we've actually had state-level insight on where miners are, unless you wanted to go cobble through all the public filings and try to figure it out that way," said Nic Carter, co-founder of Castle Island Ventures, who presented Foundry's data at the Texas Blockchain Summit in Austin on Friday. "This is a much more efficient way of figuring out where mining occurs in America."

But as Carter points out, the Foundry dataset does not account for all of the U.S. mining hashrate, since not all U.S.-based mining farms enlist the services of this pool. Riot Blockchain, for example, is one of the largest publicly-traded mining companies in America, with a huge presence in Texas. They don't use Foundry, so their hashrate is not accounted for in this dataset – which is part of the reason why Texas' mining presence is understated. 

Though the dataset only captures a portion of the country's domestic mining market, it does point to nationwide trends that are reshaping the debate around bitcoin's carbon footprint. 

Many of the states ranking the highest are epicenters of renewable energy, a fact which has already begun to recast the narrative among skeptics that bitcoin is bad for the environment. 

While Carter acknowledges that U.S. mining isn't wholly renewable, he does say that miners here are much better about selecting renewables and buying offsets. 

"The migration is definitely a net positive overall," he said. "Hashrate moving to the U.S. will mean much lower carbon intensity."

Foundry USAWhere did all the miners go

When Beijing decided to kick out all its crypto miners this spring, about half of the bitcoin network went dark practically overnight. While the network itself didn't skip a beat, the incident did set off the biggest migration of bitcoin miners ever seen. 

The Foundry dataset shows the largest bitcoin mining operations are in some of the states with the most sources of renewable energy – a game changer for the debate around bitcoin's environmental impact.  

Because miners at scale compete in a low-margin industry, where their only variable cost is typically energy, they are incentivized to migrate to the world's cheapest sources of power – which also tend to be renewable.

Take New York, which leads Foundry's ranking. A third of its in-state generation comes from renewables, according to the latest available data from the U.S. Energy Information Administration. 

New York counts its nuclear power plants toward its 100% carbon free electricity goal, and critically, New York produces more hydroelectric power than any other state east of the Rocky Mountains. It was the third-largest producer of hydroelectricity in the nation, as well.

New York's chilly climate – plus its previously abandoned industrial infrastructure ripe for repurposing – have also made it an ideal spot for bitcoin mining. 

Crypto mining company Coinmint, for example, operates facilities in New York, including one in a former Alcoa aluminum smelter in Massena, which taps into the area's abundant wind power, plus the cheap electricity produced from the dams that line the St. Lawrence River. The Massena site, at 435 megawatts of transformer capacity, is billed as one of – if not the – largest bitcoin mining facility in the U.S.

New York was weighing legislation this year to ban bitcoin mining for three years so it could run an environmental assessment to gauge its greenhouse gas emissions. Lawmakers have since largely walked it back. 

"Bitcoin mining in New York is actually very low in carbon intensity, given its hydro power, and, as a consequence, if New York were to ban bitcoin in-state, it would probably raise the carbon intensity of the bitcoin network overall," said Carter. "It would be the complete opposite of what they wanted."

Other states capturing a large share of America's bitcoin mining industry include Kentucky and Georgia.

Beyond the fact that Kentucky's governor is friendly to the industry, having just passed a law this year that grants certain tax exemptions to crypto mining operations, the state is also known for its hydroelectric and wind power.

Connecting rigs to otherwise stranded energy, like natural gas wells, is another power source. Although coal is also a big player in the energy mix, many mining operations there gravitate to renewables.

And then there's Texas

Texas may rank fourth according to Foundry's data set, but many experts believe there is no question that it is the leading jurisdiction for miners right now. 

Some of the biggest names in bitcoin mining have set up shop in Texas, including Riot Blockchain, which has a 100-acre site in Rockdale, and Chinese miner Bitdeer, which is right down the road. 

Orders for new ASICs – the specialty gear used to mint new bitcoin – show that tens of thousands more machines are due to be delivered in Texas, according to The Block Crypto. 

The appeal of Texas comes down to a few big fundamentals: Crypto-friendly lawmakers, a deregulated power grid with real-time spot pricing, and perhaps most importantly, access to significant excess energy which is renewable, as well as stranded or flared natural gas. 

The regulatory red carpet being rolled out for miners also makes the industry very predictable, according to Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced miners.

"It is a very attractive environment for miners to deploy large amounts of capital in," he said. "The sheer number of land deals and power purchase agreements that are in various stages of negotiation is enormous."

Some miners plug straight into the grid in order to power their rigs. ERCOT, the organization that operates Texas' grid, has the cheapest utility-scale solar in the nation at 2.8 cents per kilowatt hour. The grid is also rapidly adding wind and solar power. 

"You just can't beat the cost of power in West Texas, and when you couple that with a skilled power management company that can manage your demand response programs, it's almost unbeatable anywhere else in the world," continued Brammer. 

Deregulated grids tend to have the best economics for miners, because they can buy spot energy. 

"They can participate in economic dispatch, which means that they stop buying electricity when prices get high, so you have far more flexibility if you are active in the spot markets," explained Carter.

Another major energy trend in the bitcoin mining business in Texas is using "stranded" natural gas to power rigs, which both reduces greenhouse gas emissions and makes money for the gas providers, as well as the miners.

Carter says that if this is fully exploited, flared gas in Texas alone could power 34% of the bitcoin network today – which would make Texas not only the clear leader in bitcoin mining in the U.S., but in the world.

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Bitcoin surged toward $54,000 on Wednesday, the highest level in almost five months. The cryptocurrency is up about 8% over the past 24 hours, compared with a 3% rise in ether over the same period.

Analysts pointed to renewed bullish sentiment ahead of the U.S. Securities and Exchange Commission’s (SEC) decision on a bitcoin ETF, which could occur in the coming weeks.

In the bitcoin futures market, front-month contracts based on the Chicago Mercantile Exchange (CME) were trading at an annualized premium of 12.8% to the spot price, which is the highest level since mid-April. A futures-based ETF, if approved, could bring more buying pressure for the CME futures, CoinDesk’s Omkar Godbole reported.

For now, some analysts see room for continued upside for BTC as momentum improves.

“I have to say, looking at the daily chart, the rise looks healthier this time as momentum has built steadily from the $40,000 area without facing rejection before crossing $50,000, as it has done many times before,” Daniela Hathorn, an analyst at DailyFX, wrote in an email to CoinDesk.

Latest Prices

Bitcoin (BTC), $54,913, +7.3%Ether (ETH), $3,581, +2.6%S&P 500: +0.5%Gold: $1,765, +0.2%10-year Treasury yield closed at 1.524%Bitcoin dominance

The bitcoin dominance ratio, which measures BTC’s market capitalization relative to the total crypto market capitalization, increased to about 44%, from a low of about 40% last month. The rise in the dominance ratio reflects bitcoin’s recent outperformance versus alternative cryptocurrencies (altcoins) – a trend that some analysts expect will continue this quarter.

“There has been fresh spot buying activity in BTC, and looking at the price action we expect to see a fresh all-time high in the coming weeks,” Pankaj Balani, CEO of Delta Exchange, wrote in an email to CoinDesk. “We also expect BTC to outperform altcoins and the money to rotate into BTC from alts going forward.”

The bitcoin dominance ratio had declined in recent months as altcoins outperformed. During the sell-off last month, investors may have rotated out of altcoins and into bitcoin.

Ether underperforms

Ether, the world’s second-largest cryptocurrency by market capitalization, is underperforming bitcoin. The ETH/BTC price ratio is attempting to break below 0.065, which provided support for ether relative to bitcoin in August. Failure to hold current support could trigger further downside toward 0.057, although oversold signals are starting to appear on the charts.

Outside of bitcoin, ether’s market capitalization continues to dominate other altcoins. The adoption of non-fungible tokens (NFTs), decentralized finance (DeFi) and other blockchain applications have helped push the narrative that ETH’s market capitalization could continue to grow, according to a report by CoinDesk Research.

Altcoin roundupNational Bank of Georgia to test central bank digital currency next year: The National Bank of Georgia, which in May said it was exploring the possible development of a central bank digital currency (CBDC), plans to launch a pilot program next year, reported CoinDesk’s Sheldon Reback. Initial testing will be aimed at retail use, Interfax first reported, citing Papuna Lezhava, a vice governor at the central bank. A digital lari is not crypto currency, but is the evolution of cash, Lezhava said. It will improve the efficiency of the Georgia’s payments system and broaden financial inclusion.Strips Finance closes $8.5 million funding round for DeFi derivatives project: Strips Finance, a fixed-income platform, raised the funds in a token sale with participation from Fabric Ventures, Morningstar Capital, Multicoin Capital and Sequoia Capital India, CoinDesk’s Andrew Thurman reported. Strips is planning to launch in November with initial functionality that will enable interest rate swaps (IRSs) via automated market makers (AMMs), the decentralized exchanges over which much of DeFi is transacted.Binance registers three more firms in Ireland as crypto regulation heats up: Binance (APAC) Holdings, Binance (Services) Holdings and Binance Technologies were all formally established in the country on Sept. 27, according to a report by Ireland’s Independent news outlet on Wednesday. The move follows mounting pressure from regulators against the Binance brand, including in countries such as Australia, the U.S. and the U.K., CoinDesk’s Sebastian Sinclair reported. Company documents list the Binance firms’ place of business as an accounting firm’s office above a sports shop in a building in Dublin, according to the report. Binance’s $BNB token was trading at $436 on Wednesday afternoon.Relevant NewsMexican Stock Exchange Is Considering Listing Crypto Futures, CEO SaysGensler’s Crypto Testimony: 6 Key TakeawaysArt Blocks Raises $6M From True Ventures, Galaxy on Strength of Generative NFTsDOJ to Launch National Crypto Enforcement Team: ReportOther markets

Most digital assets in the CoinDesk 20 ended the day higher.

Notable winners as of 21:00 UTC (4:00 p.m. ET):

Bitcoin (BTC), +7.3%Bitcoin Cash (BCH), +5.3%

Notable losers:

Algorand (ALGO), -3.7%The Graph (GRT), -2.4%Subscribe to Crypto for Advisors, our weekly newsletter defining crypto, digital assets and the future of finance.

Cryptocurrency prices continue to be in a mix of red and green on October 19. The global cryptocurrency market cap is Rs 186.37 lakh crores, a 0.82 percent decrease over the last day, while the total crypto market volume over the last 24 hours is Rs 7,29,319 crore, which makes a 12.17 percent increase.

Bitcoin's price is currently Rs 48,11,002  and its dominance is currently 47.01 percent, an increase of 0.19 percent over the day.

Meme cryptocurrency Shiba Inu tops the WazirX exchange in terms of volume with Tether and Bitcoin trailing behind on second and third respectively.

SHIB, the self-proclaimed "dogecoin killer", which was created in August 2020 by someone who uses the name Ryoshi is modeled after Dogecoin. It is currently trading at Rs 0.002187, 9.03 percent higher since yesterday.

Ayushmann Khurrana has become the latest celebrity to venture into the cryptocurrency space through his association with CoinDCX’s 'Future Yahi Hai' campaign.

Close Related stories Khurrana joins A-listers like Amitabh Bachchan, Ranveer Singh, and Salman Khan to be associated with various crypto exchanges and crypto trade platforms like  Chingari and Coin SwitchKuber.

The CoinDCX  'Future Yahi Hai' Megadrive is directed towards addressing major questions and doubts and dispel myths when it comes to crypto investments from the perspective of young India.

The campaign, which eventually plans to rope in popular personalities from various spheres, aims to drive home a simple but engaging narrative that breaks through misconceptions surrounding crypto for both new and old investors and, consequently, increases participation in crypto-enabled financial services.

Also, two cryptocurrency lending platforms were asked to cease activities in New York by the state's attorney general on Monday and three other platforms were directed to provide information about their business.

The move comes weeks after New York Attorney General Letitia James won a court order forcing the closure of cryptocurrency exchange Coinseed.

As off 7.55 am on October 19, these are the prices of the largest cryptocurrencies (data from WazirX): NAMEPRICE (INR)24H Cardano166.7959-1.01%Binance 54.23% [Input from Reuters] Moneycontrol News Tags: #bitcoin #cryptocurrency first published: Oct 19, 2021 08:29 am --> Watch Must Listen

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