Marathon Patent Group (MARA) announced Thursday it will bankroll the work of Bitcoin Core developer Jonas Schnelli. The year-long grant is worth $96,000, payable in bitcoin.
Previously, Bitmain funded Schnelli’s work before nixing his and other’s grants last year, something Marathon Patent Group highlighted in its correspondence with CoinDesk.
“Bitmain cancelled all of their funding for [Schnelli and other developers]…which left Jonas seeking a new grant,” Merrick Okamoto, Marathon’s chairman and CEO, told CoinDesk.
Related: Bitcoin and Inflation: Everything You Need to Know
“It feels amazing that the community has each others’ back. I sent a single tweet (that I lost the Bitcoin sponsorship) and things moved super fast,” Schnelli told CoinDesk.
In a press release, Okamoto commented, “We believe it is essential that we do our part to help advance the Bitcoin network. Absent core developers like Jonas, Bitcoin’s efficacy and long-term adoption, and therefore our business, could be impacted. This grant will allow Jonas to continue his important work on our collective behalf.”
Funding Bitcoin developmentThe funding is crucial for an open-source project like Bitcoin that has no company or central entity backing it, and it’s coming from a grassroots movement of Bitcoin companies following each other’s leads to give back part of their profits to the developer community.
Schnelli has been contributing to Bitcoin Core since 2013 and his 516 commits make him the the ninth most active developer on the Bitcoin Core code. Along with his work on the Bitcoin source code, he has created a code library for creating Bitcoin applications in the C coding language and helped design the BitBox hardware wallet.
Related: Market Wrap: Bitcoin Reverses Wednesday’s Losses, Ether Climbs
In addition to this grant, Schnelli also has 55 individual sponsors on GitHub.
Schnelli told CoinDesk that he’ll use the new funding “to work on Bitcoin Core, mainly on maintenance and usability.” Namely, he’d like to finish up a working version of Bitcoin Improvement Proposal 324 for encrypted peer-to-peer messaging between Bitcoin nodes, along with “proposing a Simplified Payment Verification mode (SPV) for Bitcoin Core” and working on Bitcoin Core CI scripts.
Bitcoin developer grantsAnother Bitcoin developer, João Barbosa, had his funding from Bitmain revoked at the same time as Schnelli, but Barbosa bounced back at the end of 2020 when he received one of Coinbase’s first Crypto Community Fund grants.
Schnelli and Barbosa’s positions are not uncommon.
Before last year, most all open-source developers in Bitcoin volunteered their time to work on the Bitcoin software and protocol. Others were lucky enough to be hired by a well-capitalized firm like Blockstream or Chaincode Labs, but most never received compensation for their work.
Now, dozens of open source protocol developers and software designers are on the payrolls of Marathon, Coinbase, BitMEX, Kraken, OKCoin, Square Crypto, Gemini and Human Rights Foundation, among others.
Update (18:42 UTC): This article has been updated with quotes and information from Marathon Patent Group.
Update (19:16 UTC): This article has been updated with quotes from Jonas Schnelli.
Related Stories1. Federal Reserve Chair Jerome Powell said the U.S. central bank will keep its policies loose. The Fed will maintain its current $120 billion per month bond-buying program until “substantial further progress” is made in terms of inflation and employment.
Bitcoin enthusiasts see long-term benefits for the cryptocurrency under this current regime, which is committed to letting inflation run hot. Bitcoin didn’t react to the Fed’s statements immediately, but is up 7% (at press time) after trading in the red Wednesday.
2. The DeFi scene is heating up. Grayscale Investments, the world’s largest digital asset manager, has filed to register five new trusts for cryptocurrency assets, several being connected to the decentralized finance (DeFi) space. (Digital Currency Group owns Grayscale and CoinDesk.)
Related: US Congress Plans Hearings on GameStop Market Pumps
3. Long-time bitcoin skeptic Mark Cuban has apparently reversed course and gone bullish on nonfungible tokens (NFTs) and blockchain. Corresponding with CoinDesk’s Jeff Wilser, the billionaire owner of the Dallas Mavericks and “Shark Tank” celebrity said, “You can sell anything digital using NFT,” conceivably even merch for his basketball team.
Game. Stop.
Yesterday, I was talking to a colleague about, what else, GameStop and the gamification of the stock market. We’ve covered here in the past how traditional markets are becoming more and more like crypto, especially as coronavirus precautions cause people to spend more time online.
Millennial-friendly brokerages like Robinhood allow just about anyone to buy, hold and trade, take out complicated derivatives positions and even fractionalize stocks – turning the S&P 500, though more often, penny stocks, into a casino.
That, coupled with the easy money of zero interest-rate macroeconomic policy (ZIRP) has caused some, say, distortions in the market. It’s with all this in mind that my colleague actually asked seriously, has crypto become more rational than stocks?
Related: Market Wrap: Bitcoin Reverses Wednesday’s Losses, Ether Climbs
All of this starts with WallStreetBets, a subreddit dedicated to day trading, and what has become perhaps the biggest financial story since markets bottomed out in March, during the early days of the coronavirus crisis. A plan was hatched among the self-proclaimed “degenerate traders” on Reddit to pump the price of GameStock (GME), “squeezing” a hedge fund that had gone short on the video game retailer (which has seen better days).
What began out as a whimsical attempt to best a hedge fund has had real effects, with real money on the line. As CoinDesk’s Zack Voell notes, a similar playbook is being repeated across other stocks, including BlackBerry (BB), AMC Entertainment (AMC) and Kodak (KODK).
To try to prevent the meme-fueled contagion, WSB’s moderators briefly took the subreddit private last night while Discord banned the group’s server, ostensibly for hate speech. TD Ameritrade has halted GME trading and Nasdaq – the second-largest stock exchange in the world – said the platform has begun monitoring social media and will halt trading if another WallStreetBets-driven pump is flagged.
Even the U.S. Securities Exchange Commission (SEC) is watching, issuing a brief statement that it is “reviewing” the “ongoing market volatility.”
CoinDesk columnist Preston Byrne said the trend is likely to continue, in a recent op-ed: “The people who stand to lose the most from GameStop-style events are going to try to curtail freedom of speech and economic freedom by targeting the technology companies that enable the exercise of those freedoms.”
It’s crazy! It actually makes my head hurt! As Bloomberg Matt Levine columnist wrote, “A popular conclusion from the GameStop story is, ‘Well, I guess the stock market is nonsense now,’ and I’m not sure that conclusion is wrong. Seems like the sort of thing the SEC wouldn’t like. But what can they do about it?”
Crypto has its fair share of pump and dumps. In the long list of crypto assets (more than 8,000) any given token or coin could pump any given day for seemingly any given reason. But as market commentator Mati Greenspan told First Mover this morning, “You gotta take the bad with good. Overall, what we’re talking about is the democratization and freedom of financial markets.”
Reddit founder Alexis Ohanian has also picked up on the trend, telling CNBC’s “Squawk Box”: “We vote with two things in the USA: votes and dollars. The internet has obviously had a huge impact on our democratic process. Now we’re seeing the impact it’s having when the internet revolutionizes the dollar votes, too.”
As often said, many view bitcoin as a buy against the unprecedented amount of money printing. Ethereum is an increasingly attractive offer for institutional investors because a legitimate, though experimental, alternative financial system is being built on top of it.
So has crypto become saner than traditional markets? Well, maybe you should see what happened to doge.
CORRECTION (Jan. 28, 23:11 UTC): An original reference to BlackBerry called the stock “heavily shorted.” Approximately 7% of BlackBerry’s outstanding shares are currently sold short.
Market intelFollowing a tweet from “WSB Chairman,” unaffiliated with the popular subreddit, inquiring about the meme cryptocurrency dogecoin prices went haywire.
Scott Minerd, chief investment officer of the multi-billion dollar investment firm Guggenheim Partners, said bitcoin will have a hard time staying above $30,000.
Bitcoin typically underperforms during tax time, new data shows. From 2014 to 2020, bitcoin was down in four out of seven Januarys and six out of the past seven Marchs. According to Delphi Digital, average losses for those months were 5.24% and 12.59%, respectively.
The Office of the Comptroller of the Currency on Thursday put former acting Comptroller Brian Brooks’ controversial “fair access” banking rule on hold pending a review by the new administration.
OPINION: We Don’t Need the OCC’s ‘Political Discrimination’ Rule
Related StoriesBitcoin’s (BTC) price has recovered from Wednesday’s losses since the U.S. markets opened Thursday morning. However, traders and analysts are not sure whether the rebound is sustainable, with some telling CoinDesk it was likely the result of GameStop’s stock drama.
Read more: WallStreetBets Reddit Group: What Is It?
Related StoriesIran is trying to make crypto mining a source of income for the state, while cracking down on miners.
Iran, hit hard by international sanctions, lost revenue supplied by oil exports. Crypto might be a way to get some extra cash, so Iran has been toughening its grip on miners at home in an effort to better control this revenue stream. Since last year, Iran has also opened new opportunities for foreign mining firms.
Iran is a notable player on the bitcoin mining market, and during 2020 it contributed almost 4% of the global bitcoin hashpower, according to research by the University of Cambridge.
Related: ‘The 4 Wars We Could Fight With China,’ Feat. Kyle Bass
But Iran’s relationship with miners is best described as complicated.
On the one hand, Iran clearly sees crypto mining as a way to generate income for the state. Iran began requiring miners to register with the country’s Ministry of Industry, Mines and Trade and pay a higher tariff on electricity than retail or industrial users last year.
But Iran has also blamed bitcoin miners for recent power outages. Just this month, Iranian authorities reportedly shut down 1,620 unregistered mining farms and confiscated 45,000 mining devices.
CoinDesk takes a deep dive into Iranian mining.
Lights outRelated: Bitmain Co-Founder Exits, Resolving Years-Long Power Struggle as Mining Firm Preps IPO
In January, Iran experienced a number of power outages. The authorities blamed the outages on bitcoin miners and went for a sweeping attack on miners, big and small.
Ziya Sadr, Iranian bitcoin advocate and blogger, insists that mining has nothing to do with outages and instead blames government mismanagement of the electricity grids. “They shut down miners, but we still have blackouts. So guess what? It’s nothing to do with the miners!” Sadr told CoinDesk.
To be sure, the government has said miners only consume 2% of Iran’s electricity, according to the Associated Press.
But the Iranian government has also claimed miners have made the country’s power grid “unstable” since 2019, Radio Free Europe reported. The publication cited Iran’s deputy energy minister, who said some mining farms were based in “schools and mosques” that receive electricity for free.
Iranian journalist Ehsan Norouzi wrote in 2019 that the list of entities running mining operations on free electricity might actually be much bigger: the country’s elite armed forces, the Islamic Revolutionary Guard Corps, control a broad network of religious schools, mosques and other entities that get electricity for free.
There is no proof all of them are mining crypto, Norouzi told CoinDesk via a call, but “if there is free electricity there will be a market for it,” he said. Back in 2019, Iranians were sharing photos on social networks of at least one mining farm in a mosque. The government asked the mullahs to declare fatwas against stealing electricity.
Chinese investorsAmong the victims of the latest blackout-related shutdowns is a mining company that recently opened a big farm in one of the country’s special economic zones.
On Jan. 14, a couple days after a nation-wide power outage, Iranian authorities temporarily shut down a mining farm in Rafsanjan, Kerman province, citing the excessive burden on the power grid. The data center was certified by the authorities, according to the local new outlet Mehr News, but was taken offline “in order to manage [power] consumption in the current situation.”
The farm is operated by the Iran and China Investment Development Group. The organization’s website does not mention crypto mining, only saying that Iranian and Chinese investors are building a joint 1 million terabyte datacenter in the Rafsanjan special economic zone. The idea that the Chinese crypto miners were to blame for the blackout quickly spread on Twitter, prompting some anti-China sentiment, The Diplomat reported.
The Chinese investor is a company called RHY, according to Omid Alavi, head of Vira Miners, and Ziya Sadr. Two Iranian miners who wanted to stay anonymous also told CoinDesk that it was RHY’s farm that was shut down.
RHY boasts multiple mining sites, including some in the Middle East, without specifying where. On its website, RHY posted a video titled “175 MW Mine,” showing several hangars filled with ASICs. A car briefly appearing in the video has a license plate with Farsi lettering and a flag resembling the Iranian one.
According to the electricity bill, translated by The Diplomat, the mining farm consumed a little short of 60 megawatt of power during one month. BBC Persian reported a similar capacity for the farm in Rafsanjan.
RHY does not share the company’s contact information on its website, and a customer service chat operator declined to connect CoinDesk to RHY management or a PR representative. The operator also declined to discuss the firm’s Iran business. A request for comment sent via RHY’s Facebook page went unanswered.
The Rafsanjan farm shut down because after Iran introduced the new rules for miners, the electricity tariff went up sharply, Alavi believes.
“The Chinese came two years ago and they were looking for cheap electricity,” Alavi said. “They found some place in Kerman and started building a big farm. At that time, the Iranian government didn’t have any regulation in crypto, and they [the Chinese company] used the industrial tariff. After one year, the government started regulation and changed the tariff, so the company had to pay new bills.”
An Iranian Telegram channel dedicated to miners’ issues with authorities mentioned the story in a Jan. 14 post, writing that “any foreign investor will run away after seeing the treatment of the Chinese investor in Rafsanjan.”
The channel also posted a letter of Mohammad Hassan Ranjbar, chairman of the Board of Directors of Iran-China Investment Development Group. According to Ranjbar, the mining farm in Rafsanjan had been paying 4,000 rials per kilowatt, which is a high price.
“China is currently the only country that can invest in Iran due to sanctions,” Ranjbar said in that statement, also quoted by Aljazeera. “It is both rich and has technology, so we can help each other to invest and build more projects. But we can also send them away from Iran and become completely isolated and alone in the world.”
Foreign guestsRHY was not the only Chinese mining company in Iran – an array of firms have been active in the country for a couple of years. In August 2019, miner Liu Feng told the Chinese crypto media outlet 8btc he moved 3,000 of his ASICs to Iran to take advantage of the country’s cheap electricity, $0.006 per kilowatt-hour.
In August 2020, Chinese mining pool Lubian also told 8btc about building a mining farm in Iran. Lubian broke into the bitcoin hashrate competition last spring right after the latest bitcoin halving, immediately becoming one of the leading mining pools.
Talking to 8btc, Lubian co-founder Liu Ping said the mining pool established a good rapport with Iranian authorities.
“We have our own customs clearance channels as we have the experience of establishing the logistics company. And we have good local resources in Iran, and we have maintained good relations with the Ministry of Energy, the Ministry of Foreign Affairs and even the army in Iran,” he said.
It’s not only Chinese miners that are tapping into Iran’s energy market: In April 2020, Turkish mining firm iMiner reportedly received a license for a 6,000-ASIC farm in the city of Semnan.
Dmytro Ziablov, CEO of Ukrainian mining company BeeMiner, told CoinDesk the company is running a 2-megawatt mining facility in Iran and is planning to expand to 70 megawatts later this year. BeeMiner received hosting requests from Chinese companies, including Huobi Pool, Ziablov said: “The Chinese government gets not that friendly to the miners from time to time, so [miners are] interested in finding new places to mine.”
In addition to the Chinese miners, Turkish and UAE companies are also coming to Iran, Ziablov said. Asked if it was difficult to get the farm licensed in Iran, he said the process took 2.5 months. “It’s hard, but with some persistence, connections and resources it’s feasible,” he added. He said he didn’t know why the Chinese farm in Rafsanjan had to shut down.
Domestic challengesIn the meantime, for small-scale domestic miners the situation has been tough in recent years, according to one long-time miner who talked to CoinDesk anonymously.
Basir (not his real name) told CoinDesk he started mining seven years ago, but three years ago, the authorities took notice. In May 2018, police came to Basir’s house, he said, telling him they suspect he owned an unlicensed gun. Then they saw the ASICs. First, the police thought the machines were “a spy server,” but then the cyber police figured out what they were dealing with.
According to him, Basir spent one week in jail, was charged with having illegal income and money laundering and had to pay a bail that basically swept out his family’s wealth. CoinDesk could not independently verify the details of Basir’s account.
“I sold the house, I sold the car, I sold the graphic cards [that were in my] warehouse at the low price, gold and savings. All was destroyed,” he said. “My luxury life turned into a poor life.”
Last year, the Iranian government issued a directive that all mining facilities in Iran must register with the government. The owners must disclose their identities, the size of their farms and what kinds of ASICs they are using. The government has also raised the electricity tariff from 482 rials to 1,930 for kilowatt per hour (in U.S. dollars, from 0.1 cent to 4.6 cents).
According to the Ministry of Energy, there are currently 24 officially registered mining farms in Iran, consuming 310 megawatt of power.
Miners also need to register their mining equipment, and if it was smuggled into the country, they need to pay the customs fees if those weren’t paid in time, Sadr said. Until recently, there simply was no legal procedure to import ASICs into Iran at all, he added.
Related StoriesThe price of dogecoin (DOGE) more than doubled after a popular Twitter account from a WallStreetBets trader mentioned the meme-loving cryptocurrency in a tweet.
The Reddit-based trading community known as r/WallStreetBets discusses stock and options trading and has made headlines in recent days after causing havoc in the financial market by pumping stock and causing major headaches for short sellers.
The “WSB Chairman” Twitter account, which has quickly gained almost 400,000 followers and says it is not associated with the Reddit group, tweeted Thusday: “A lot of you are talking about Dogecoin. What’s that? A meme crypto?” In another tweet they asked: “Has Doge ever been to a dollar?”
Related: Reddit Joins With Ethereum Foundation to Build Scaling Tools
In response, the price of the Shiba Inu meme-based cryptocurrency shot up as much as 142%, from $0.007 to $0.017 in under 2 hours, according to CoinDesk 20 data. At press time, Thursday, DOGE was trading lower at $0.012.
The WallStreetBets Reddit community has in particular focused on GameStop (GME), driving its share price up nearly 900% in five days to around $347 on Wednesday. Amid signs of potential regulatory scrutiny over its actions, the message board has since been taken private by its moderators leaving followers searching for information on other social media sites.
The U.S. Securities Exchange Commisison (SEC) released a notice on Wednesday not directly acknowledging the group’s activity, but stating it is “reviewing” the “ongoing market volatility.”
DOGE’s latest price spike is reminiscent of a sharp rise last summer as videos on TikTok encouraged users to invest in the cryptocurrency. And, on Jan. 3, adult star Angela White tweeted she had been a HODler of DOGE, prompting many of her 1.3 million followers to push the price up as much as 203%.
Related: DOGE’s Gone Wild! Meme Coin Soars After Adult Star Says She’s a HODLer
Read more: DOGE’s Gone Wild! Meme Coin Soars After Adult Star Says She’s a HODLer
Related StoriesIndependent Reserve, one of the largest digital currency exchanges in Australia, says it will delist the bitcoin SV cryptocurrency due to controversial behavior by its team.
In an announcement Wednesday, the exchange said, “In light of recent events and community feedback Bitcoin SV (BSV) and related trading pairs will be delisted.”
CoinDesk reached out to clarify the reasons for the move, with CEO Adrian Przelozny responding:
Related: Bitcoin Developers Weigh the Costs of Defying White Paper Copyright Claim
“Bitcoin is ‘The People’s Money’. At its very core are the principles of openness and freedom and these were also the founding values of Independent Reserve. The behaviour shown by the team behind BSV has been completely counter to these ideals, repeatedly spreading misinformation and making baseless threats against the community. Recent talk of legal action against developers working to improve the Bitcoin ecosystem proved to be the final straw. These are the actions of a bully and they must stop.“
Przelozny’s comments appear, in part, to reference threats by high-profile BSV proponent Craig Wright to sue entities hosting the bitcoin white paper online, claiming he owns the copyright. Earlier this month, Wright sent take-down letters from his lawyers to several entities, with Bitcoin Core – bitcoin’s primary developer team – complying in the face of a costly legal battle.
Wright controversially claims to be Satoshi Nakamoto, the inventor of bitcoin, but has yet prove his claim to the satisfaction of most in the community and media, bar some supporters of BSV. Wright also claims BSV “is bitcoin,” making the claim in the title of his blog.
The bitcoin white paper was originally released under the permissive MIT license, meaning anyone is free to use or distribute it. Since Wright sent out his legal letters, a number of notable entities have taking the decision to host the white paper, including Square, the city of Miami and the governmental websites of Colombia and Estonia.
Related: Why Everyone From Square to Facebook Is Now Hosting the Bitcoin White Paper
Independent Reserve will halt trading of BSV on March 28, allowing a further six months for customers to withdraw any BSV holdings from the platform.
See also: What Is the Bitcoin White Paper?
Related StoriesScott Minerd, chief investment officer of the multi-billion dollar investment firm Guggenheim Partners, believes bitcoin may struggle to stay above $30,000.
In an interview with Bloomberg Television on Wednesday, Minerd said he doesn’t think bitcoin‘s institutional investor base is “big enough” or “deep enough” to justify its current valuation. The comments come weeks after he publicly declared bitcoin’s price should be in the hundreds of thousands of dollars.
“Right now, the reality of the institutional demand that would support a $35,000 price or even a $30,000 price is just not there,” he said.
Related: Bitcoin ‘Underperforms’ During Tax Time: Analysis
Demand from institutional investors is said to have been the cause for the top cryptocurrency’s astronomical rise in recent months, as the likes of Paul Tudor Jones, Stanley Druckenmiller and MicroStrategy said they had invested.
Recently, a JPMorgan analyst said a bearish outlook could be triggered if bitcoin failed to claw its way back over $40,000, leading to steeper losses in the mid-term.
Starting in mid December, the price of bitcoin soared 110% from $20,000 to $42,000 over a two week period. Since Jan. 9, 2021 bitcoin’s price has fallen 25% and is changing hands for around $30,960 at press time.
See also: Guggenheim CIO Says Bitcoin ‘Should Be Worth’ $400,000
Related StoriesBitcoin technology company Blockstream said it bought $25 million worth of mining machines from MicroBT to expand its mining operations.
Ethereum, la criptomoneda con la segunda capitalización más grande del mercado, tocó un nuevo máximo histórico al alcanzar los USD 1.439,33 el 25 de enero. Es la primera vez que este activo digital supera el techo de los USD 1.400 desde el 13 de enero de 2018, y sus retornos acumulan un 76% en lo que va del año, 19 veces más que los de Bitcoin en 2021. A pesar de haber experimentado una corrección transitoria, sigue siendo uno de los activos de mayor rendimiento entre los 10 principales.
Aunque no han habido factores evidentes que se puedan considerar fundamentales para impulsar la subida a un nuevo máximo histórico, Ether había estado a punto de superar su precio récord durante más de dos semanas, después de escalar hasta USD 1.350 el 10 de enero. El crecimiento exponencial del mercado de las finanzas descentralizadas, conocido en inglés como DeFi — cuyos protocolos, al día de la fecha, albergan criptoactivos por un valor de alrededor de USD 24.000 millones—, fue, probablemente, un factor que contribuyó al impulso alcista de este activo. Ahora, con Ethereum acercándose a un territorio inexplorado, todas las miradas estarán puestas en que la segunda criptomoneda más relevante del mercado alcance su próximo hito importante: la marca psicológica de los USD 2.000. Esta legendaria línea se encuentra a más de un 50% de distancia del precio actual (al cierre de esta edición), pero hay tres acontecimientos importantes programados para 2021 que podrían ayudar a que esto sea posible.
Read this article in English.
1. Los futuros de Ethereum de CMERelated: Market Wrap: Bitcoin Drops to $29.9K While DeFi Hits Record $29B Locked
La mayor plataforma de derivados financieros del mundo, la Bolsa Mercantil de Chicago —CME, por sus siglas en ingles—, anunció públicamente el 16 de diciembre sus planes de lanzar futuros en Ethereum hacia el 8 de febrero, si logra recibir la aprobación reglamentaria de la Comisión de Negociación de Futuros de Productos Básicos de Estados Unidos (CFTC, por sus siglas en inglés). Los derivados financieros son básicamente contratos comerciales que permiten a los inversores apostar por el precio futuro de un activo subyacente sin la necesidad de poseerlo.
Este nuevo producto financiero de liquidación en efectivo — lo cual significa que cualquier ganancia obtenida se pagará en dólares estadounidenses en lugar de Ether— llega tres años después de que la bolsa lanzara los futuros de bitcoin, que en la actualidad son el producto de futuros de bitcoin más negociado en el mundo y representan más del 20% de todos los contratos abiertos.
En definitiva, la llegada de los futuros de Ethereum aportará una mayor madurez al mercado de criptomonedas y, aunque los futuros no se distribuyen físicamente, una mayor liquidez. Esto es beneficioso porque brindará a los inversores institucionales, en especial, la oportunidad de cubrir posiciones al contado, lo cual reduce el riesgo en general y a su vez convierte a Ethereum en una inversión mucho más atractiva.
2. Retiro de Ether y comisiones predeciblesCualquier acción llevada a cabo en las aplicaciones descentralizadas (dapps) o protocolos construidos sobre Ethereum es concebida como una transacción, la cual requiere una tarifa adjunta para incentivar a los mineros a procesarla. En la actualidad, estos valores se determinan mediante un sistema de subasta en el que los usuarios que asignan las tarifas más altas a sus transacciones son quienes logran que los mineros las procesen más rápidamente. Esta dinámica plantea una serie de inconvenientes, concretamente: tarifas imprevisibles y a menudo excesivas durante los periodos de mayor congestión. En la red esta aglomeración se genera cada vez que hay un pico de actividad comercial, como cuando el precio de Ethereum cambia bruscamente y miles de operadores quieren entrar o salir del mercado al mismo tiempo.
Related: Reddit Joins With Ethereum Foundation to Build Scaling Tools
EIP 1559 es una propuesta de mejora de Ethereum presentada por el cofundador del proyecto Vitalik Buterin junto con los desarrolladores Eric Corner, Ian Norden, Rick Dudley y Matthew Slipper. Ésta pretende implementar cambios en la forma en que las tarifas de las transacciones de Ether son presentadas a los usuarios así como en la gestión de la oferta de Ethereum. EIP 1559 sugiere desechar el actual sistema de precios por subasta y sustituirlo por uno determinado algorítmicamente, llamado BASEFEE. Éste busca introducir una tarifa uniforme en todas las plataformas y servicios que funcionan sobre Ethereum, la cual aumente y disminuya en función de la actividad de la red. Tal cambio implicaría que dejaran de existir discrepancias de tarifas entre billeteras, protocolos y plataformas de intercambio (exchanges) compatibles con el token ERC-20.
Sin embargo, EIP incluye la opción para que los usuarios den una propina a los mineros si desean que sus transacciones sean procesadas más rápidamente. La segunda función del EIP 1559, y la que probablemente tendrá el mayor impacto en el precio futuro de Ethereum, es la introducción de la opción de retirar (burn) Ether. Retirar (NdT: o “quemar”, si se usa la traducción literal del término en inglés, burn) significa eliminar completamente la existencia de tokens, provocando una reducción de la oferta en circulación. EIP 1559 planea retirar el BASEFEE, de manera que la gran mayoría de Ether utilizado como forma de pago de las tarifas originadas en el procesamiento de transacciones sea destruida en lugar de ser dada a los validadores de la red.
El objetivo es que esto fomente la deflación constante del Ether, lo que a su vez debería ayudar a reforzar los precios con el paso del tiempo. Se prevé que el EIP se ponga en marcha en algún momento después del hard fork de Berlín, que podría ocurrir a partir de febrero.
3. Lanzamiento de la fase 1 de Ethereum 2.0Ethereum está en proceso de pasar de ser una blockchain basada en Proof-of-Work a una que opere bajo un mecanismo de consenso conocido como Proof-of-Stake, con el propósito de convertirse en una plataforma más rápida, eficiente y escalable. La actualización de Ethereum 2.0 consta de cuatro fases distintas —fase 0, fase 1, fase 1.5 y fase 2—, cada una de las cuales sienta las bases técnicas de la siguiente hasta llegar a completar la fase final. El 1 de diciembre de 2020 se puso en marcha la fase 0 y con ésta la implementación de la Cadena Beacon, una nueva capa de blockchain que coordinará la actividad entre las cadenas cortas (shard chains) de Ethereum (NdT: sharding es un método propuesto para dividir la infraestructura de Ethereum en piezas más pequeñas con el objetivo de escalar la plataforma para que soporte más usuarios).
La fase 1 es la siguiente en el desarrollo de Ethereum y supondrá el lanzamiento de 64 shard chains. Toda la actividad de transacciones en la red, eventualmente, se dividirá y procesará en estas blockchains separadas. Mediante este nuevo sistema los intercambios no tendrán que ser validados por toda la red sino por solo una shard chain, lo que reducirá en gran medida los tiempos y permitirá el manejo de volúmenes significativamente mayores sin que se genere el nivel de congestión que se da en la red actualmente.
Aunque no hay fecha confirmada para el lanzamiento de la fase 1, se espera que llegue en algún momento de este año.
Traducido por Andrés Engler.
Related StoriesU.S. Federal Reserve officials voted Wednesday to keep monetary conditions at historically loose levels while waiting for the economy to heal.
Chairman Jerome Powell said he doesn’t want to put a timeline on tapering the U.S. central bank’s $120 billion-a-month in asset purchases.
“In terms of tapering it’s just premature,” Powell said. “We said we’d want to see substantial, further progress towards our goals before we modify our asset purchase guidance. It’s just too early to be talking about dates. We need to see actual progress.”
Related: Federal Reserve Holds Rates, Asset Purchases Steady as Economic Activity Moderates
A little bit of inflation in 2021 would be welcome news for the Federal Reserve if it means fewer jobs are permanently lost, Powell added.
“I’m much more worried about falling short of a complete recovery and losing people’s careers and lives that they built because they don’t get back to work in time,” Powell said. “I’m much more concerned about that than the possibility which exists of higher inflation. … Frankly, we’d welcome higher inflation.”
This might be welcome news for bitcoin’s true believers.
The Federal Open Market Committee (FOMC) will keep the target rate for federal funds in a range of 0% to 0.25%, and the Fed plans to keep buying $80 billion of U.S. Treasury bonds and $40 billion of agency mortgage-backed securities every month.
Related: Bitcoin Briefly Dips Below $30K, Dollar Bounces Ahead of Fed Reserve Rate Announcement
The committee noted that “the pace of the recovery in economic activity and employment has moderated in recent months,” but that it would continue accommodative monetary policy until inflation averages 2% over time.
Market reactionThe market didn’t budge at the news. The S&P 500 has been on a steady downward trajectory for most of the day and has fallen by more than 2%. Bitcoin was up a mere 1% since Powell’s comments.
The comments were in line with recent observations from economists who believe the Fed plans to let the economy run hot until sectors hard-hit by the pandemic reopen.
Powell did not address Vice Chair Richard Clarida’s comments earlier this year stating that the Fed would have to see inflation at 2% for a year before raising rates.
“Because inflation has been running persistently below 2%, we’d like to see it run moderately above 2% for some time,” Powell said. “We have not adopted a formula, we’re not going to adopt a formula. … We’re going to preserve an element of judgement.”
The only time bitcoin came up during the meeting was in a question from CNBC’s senior economics reporter Steve Liesman who asked the chair if low interest rates were pushing up asset prices and creating a bubble that could cause economic fallout. Powell responded by saying that “financial stability vulnerabilities overall are moderate.”
Related StoriesJanuary ushers in a new tax season. It is also, historically, a time when bitcoin underperforms relative to the other months of the year. Some analysts say that may not be a coincidence.
From 2014 to 2020, bitcoin was down in four out of seven Januarys and six out of the past seven Marchs. According to Delphi Digital, average losses for those months were 5.24% and 12.59%, respectively.
“As we enter tax season, [a period when] bitcoin has historically underperformed other months, this by no means is predictive on a stand-alone basis but important to note,” Paul Burlage, analyst at Delphi Digital, told CoinDesk.
Related: Market Wrap: Bitcoin Drops to $29.9K While DeFi Hits Record $29B Locked
At the press time, bitcoin’s price was at $31,571.54, down 1.22% in the past 24 hours. The No. 1 cryptocurrency by market cap fell below $30,000 briefly earlier Wednesday, according to the CoinDesk BPI.
According to Delphi Digital’s January bitcoin outlook report, one of the biggest reasons for the drop is that “those [investors and traders] who realized significant gains trading various crypto assets last year will likely have to sell at least a portion of their holdings to cover expected tax liabilities.”
“It’s difficult to pinpoint exactly how much selling pressure can be expected, and different jurisdictions treat capital gains more favorably than others,” Kevin Kelly, co-founder and head of global macro at Delphi Digital, said. “But bitcoin alone added more than $400 billion to its total market value last year. A decent portion of those returns accrued to speculators and traders who may have already realized some gains or rolled profits into other corners of the crypto market, thus triggering taxable events.”
The Internal Revenue Service (IRS) released updated instructions with on answers to virtual currency-related questions during taxpayers’ tax filing at the end of December. Compared with 2019, 2020’s tax form places a yes-or-no question (“At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”) right on the first page, one of the first questions asked.
Related: BIS Chief Blasts Bitcoin’s Viability, Prompting Blowback From Advocates
IRS guidance also further clarifies that transactions involving “virtual currency” will include “purchase of virtual currency.”
Future taxing of unrealized gains?In recent days, there has been market chatter around Treasury Secretary Janet Yellen’s proposal on taxing unrealized capital gains. Such a proposal would have a broader impact on crypto-related gains.
John Todaro, director of institutional research at TradeBlock, told CoinDesk last week that tax proposals on unrealized capital gains would impose a degree of impact on investors on almost every asset. Cryptocurrency analytics firm TradeBlock is a subsidiary of CoinDesk.
Read More: Bitcoin Slumps to $31K on Sell-Off in US and Europe
The Biden Administration’s tax proposal also has some points that might affect crypto investors. One of the proposals, for example, includes collecting taxes of “long-term capital gains and qualified dividends at the ordinary income tax rate of 39.6% on income above $1 million,” which could impact larger crypto investors.
Bradley Keoun contributed to this report.
Related StoriesSpot prices in bitcoin are sliding as investors get distracted by other market opportunities. Those include in the decentralized finance (DeFi) ecosystem, which hit a record level of value locked on Tuesday.
The price of bitcoin lost ground for the second straight day Wednesday. The world’s oldest cryptocurrency fell to as low as $29,298 around 15:00 UTC (10 a.m. ET), according to CoinDesk 20 data.
Read More: Bitcoin Below $30K, Dollar Bounces Ahead of Fed Reserve Announcement
Related: El camino de Ethereum hacia los USD 2.000: tres razones para ser optimista
It was the first time bitcoin traded below $30,000 since Jan. 21. On that day, prices went as low as $28,845 before picking up and staying in a $30,000-$35,000 range until Wednesday.
“Technically, BTC is still in a descending triangle, which is a continuation pattern, showing lower highs and lower lows with currently a floor price at $29,000,” Cindy Leow, portfolio manager of multi-strategy trading firm 256 Capital Partners, told CoinDesk. “But if we close daily below [$29,000], could see another sweep of the mid-$20,000s.”
Traders appear to be distracted by other opportunities such as GameStop (NYSE: GME) and fiat currencies in the foreign exchange market, noted Jason Lau, chief operating officer for San Francisco-based exchange OKCoin. “Attention is likely elsewhere, especifically the GME drama and dollar strength,” Lau said.
Read More: GameStop Craze Proof of Concept for Bitcoin Success: Scaramucci
Related: What DeFi Has in Common With Cubism
The U.S. dollar index, or DXY, a measure of the greenback versus a basket of other government currencies, is in the green 0.52% at press time after a volatile day and an over 7.3% total decline over the past year.
“The short U.S. dollar trade has been working since the start of the pandemic and is one of the more crowded trades out there,” said Chad Steinglass, head of trading at digital assets firm Crosstower. “I think that some of this jockeying for position is putting pressure on both BTC and ETH, though the effects are felt more acutely in BTC, which has shown relative weakness compared to its little brother in recent weeks.”
On the institutional side, notional activity on LMAX, known for spot trading by larger-order players, has declined since BTC’s last $30,000 price point crossover on Jan. 20. However, it was on an uptrend according to Tuesday’s closing data from CoinDesk subsidiary TradeBlock. It’s worth noting that over the past month, notional value, which represents the total value of positions, seems to spike nicely with price gains.
“Bitcoin’s held up so far, but a decided break might trigger further price declines,” said Denis Vinokourov, head of research at digital assets prime broker Bequant. “This is despite bullish momentum from institutional investors including the likes of BlackRock [BLK], publicly listed Marathon [MARA] and university endowment funds.”
After dropping to a one-year low of 0.55 on Jan 4., the 90-day correlation coefficient between bitcoin and ether is picking back up, to 0.65 as of Tuesday’s close data.
Peter Chan, lead trader at OneBit Quant, expects long-term BTC and ETH correlation to head closer to 1, which is the strongest correlation number between assets. “There’s always been a strong correlation between BTC and ETH on the macro view,” Chan said. “In this case there’s mean reversion opportunity – for example, short ETH and long BTC.”
Value locked in DeFi increases over 2,900% in past yearThe second-largest cryptocurrency by market capitalization, ether (ETH), was down Wednesday, trading around $1,288 and slipping 3.9% in 24 hours as of 21:00 UTC (4:00 p.m. ET).
Read More: EY’s Paul Brody Expects Consumer DeFi Ignition in 2021
The total value locked in decentralized finance (DeFi), which is primarily run on the Ethereum network, crossed $26 billion for the first time Tuesday. It’s a 30-fold leap over the past year, as on Jan. 27, 2020, the amount “locked” in DeFi was at a minuscule-by-comparison $850 million.
256 Capital’s Leow points to an overheated market for the reason why DeFi value locked is hitting fresh highs as traders rotate into lesser-known tokens.
“Traders are already highly levered in DeFi perpetuals, fueled by immense upside volatility earlier this month,” Leow noted. “DeFi/alts have been holding up okay against BTC for now, but we could easily see a reversal. The trend is already showing potential downside ahead.”
Other marketsDigital assets on the CoinDesk 20 are mostly red Wednesday. Notable winners as of 21:00 UTC (4:00 p.m. ET):
Notable losers:
Read More: Harvard, Yale, Brown Endowments Have Been Buying Bitcoin for a Year
Equities:
Commodities:
Treasurys:
The chief banker at the bank for central banks, Agustín Carstens, cast doubt on bitcoin’s long-term viability Wednesday, saying it was only a matter of time before a 51% attack brings down the world’s original cryptocurrency.
Carstens’ comments, which he delivered to the Hoover Institute, underscored his belief that bitcoin fails as a currency, a medium of exchange and a value storage mechanism, working only as a “speculative asset” and seldom as money.
He also issued a dire warning to would-be bitcoin investors: the center cannot hold:
Related: Bitcoin ‘Underperforms’ During Tax Time: Analysis
“Above all, investors must be cognizant that Bitcoin may well break down altogether. Scarcity and cryptography alone do not suffice to guarantee exchange,” he said.
Carstens then levied attacks against the attributes that have kept bitcoin running. He pointed out the “sad side effect” of bitcoin’s monstrous electricity dependence, which he said is as high as Switzerland’s where the Carsten’s organization, the Bank for International Settlements, is based. Bitcoin’s proof-of-work mechanism currently burns through reams of energy.
Carstens reserved particular bombast for what he framed as the inevitable systems failure hard-coded into bitcoin’s 21 million issuance cap. Fewer coins getting minted means fewer miners processing transactions, he said, and confirmation wait times will go up. So too will bitcoin’s vulnerability to a “majority attack.”
“So, clearly, if digital money is to exist, the central bank must play a pivotal role, guaranteeing the stability of value, ensuring the elasticity of the aggregate supply of such money, and overseeing the overall security of the system,” he said.
Related: Market Wrap: Bitcoin Drops to $29.9K While DeFi Hits Record $29B Locked
Bitcoiners were merciless in their rebuttal.
Jameson Lopp, chief technical officer at bitcoin storage startup Casa told CoinDesk Carstens’ arguemnt fails to stand up to bitcoin’s technical realities.
“Bitcoin becoming attackable like other networks is not likely, because it would still require a large upfront capital expense for someone to acquire the appropriate hardware. This would only make sense in a world where another SHA256 secured network came along and became far more valuable to mine than Bitcoin,” he wrote in an email.
Castle Island Ventures partner Nic Carter issued CoinDesk a point-by-point takedown of Carstens arguments, asserting that volatility does not mean something cannot be money, and that it doesn’t matter one way or another if bitcoin is money, because it is “a means to store value over time and space,” a job that Carter said bitcoin does better than gold.
Carter also said Bitcoin network’s energy dependence is a function of price and issuance, not security or necessity.
“Regardless, the energy cost is well worth paying, because the existence of a non-state monetary commodity is something that the world finds valuable,” Carter said.
Related StoriesChina is leading the world in the development and piloting of a Central Bank Digital Currency (CBDC). With that lead comes increased scrutiny and concerns over the downstream effects a digital yuan might have regarding privacy and political power.
A new report from the Center for New American Security (CNAS) not only lays out in stark terms the history and state of China’s CBDC system but also reviews what few technical details of it are available and recommends policy steps the U.S. should consider in an escalating CBDC conflict.
“This CBDC system, which the Chinese government calls Digital Currency/Electronic Payment (DCEP), will likely enable the Chinese Communist Party (CCP) to strengthen its digital authoritarianism domestically and export its influence and standard-setting abroad,” reads the report.
Related: BIS: CBDC Research Gaining Steam but Widespread Issuance Years Away
“By eliminating some of the previous constraints on government data collection of private citizens’ transactions, DCEP represents a significant risk to the long-held standards of financial privacy upheld in free societies.”
Privacy risks of China’s digital yuanThe privacy concerns arise largely from the massive amount of insight a CBDC would give Chinese authorities into its users’ financial data and behavior, as well as information about anyone who interacts with those users – including, potentially, American citizens.
“DCEP would give the Chinese Communist Party something that no government has ever had in history: The ability to monitor in real time the minute financial dealings of its citizens,” said Yaya J. Fanusie, an Adjunct Senior Fellow at CNAS and co-author of the report, in an email to CoinDesk. His research focuses on the national security implications of cryptocurrencies.
He said that while much of the world transacts digitally today, that transactional data is not accessible wholesale by government authorities because the government has to go through financial institutions to acquire the data.
Related: ‘The 4 Wars We Could Fight With China,’ Feat. Kyle Bass
The DCEP design deviates from this model, putting the data directly in the hands of the CCP without having to go through intermediaries. Anyone using a digital yuan pretty much concedes his or her financial privacy directly to the Chinese government, according to Fanusie. It’s not yet clear how accessible DCEP would be outside China, but if it is, this has implications for other governments.
“The U.S. government needs to assess whether DCEP use should be blocked in the United States,” said Fanusie. “But private-sector U.S. tech companies should also be thinking about whether they will allow the DCEP application to be accessible on their platforms, such as app stores.”
The report notes that officials of the People’s Bank of China have said the CBDC will have “controllable anonymity,” meaning the central bank could observe and monitor transactions taking place while the transacting parties would remain private. However, the central bank has also said it would be still able to analyze transactions to monitor “crimes.”
Taken in conjunction with China’s loose-knit social credit system, information gleaned from digital yuan transactions could be used to wield punitive power against Chinese citizens. Additionally, any metadata collected could give insight into users’ personal and device movements, according to the report, further rounding out a body of significant personal data.
“PBOC modeling of DCEP shows that each digital currency token held by users would be constructed with a cryptographic algorithm expression, with various data inputs such as information on the owner of the token,” reads the report. “Not all of the data will be available to those transacting in DCEP, but they will all be available to the central bank, according to its early proposed design sketches and most technical reports about DCEP.”
The PBOC will thus become a possessor of a significant data trove to combine with its tools for censuring and surveilling individuals.
The political power of CBDCsRelated to privacy concerns are the ways a lack of privacy coupled with the use of big data can be used to deprive individuals of political power and even change their behavior.
The parable of the panopticon is one way of looking at this. In it, a central observation tower is placed within a circle of prison cells so guards can see every cell and its occupant, while inmates are unable to see into the tower. Never knowing if they are being watched or not, prisoners assume they are being surveilled and behave accordingly – that is, the way authorities want them to act.
While certainly simplistic when it comes to the complications of the digital age, it’s a basic model for understanding that information and surveillance are forms of power that can be wielded in the service of a specific set of outcomes.
In the U.S., the founders created the Fourth Amendment to the Constitution precisely because it was understood that if the government had access to everyone’s private possessions (such as their papers at home), it would lead to government repression, according to Fanusie.
“This dynamic continues to exist, and places like China which don’t have this standard built into their governing system are more likely to abuse their citizens and hinder their ability to advocate for their interests or redress grievances,” he said.
The report notes the PBOC is already testing a digital yuan as “a way to disburse government salaries and subsidies.” The centralized monitoring and control of DCEP wallets would make it easier for the government to cut off a person’s ability to transact than if it had to attempt to do so through other third parties.
Cryptocurrencies have been attractive to some parties as a means to engage in a financial world beyond the reach of the state. Some case studies of the benefits of this are clear in places like Nigeria, where groups protesting police violence were able to receive funds via bitcoin after the government froze their bank accounts, and in Belarus where protestors against the country’s latest illegitimate election were supported by bitcoin grants after being fired from their jobs for protesting.
CBDCs bring the idea of a digital currency squarely under state control and may seem in conflict with the ethos of cryptocurrencies. But Fanusie said CBDCs probably won’t directly impact cryptocurrencies’ ability to flourish “unless financial authorities technically try to ban cryptocurrencies, which is not feasible.”
CBDCs could be seen as a way for citizens to have the functionality of digital money instead of permissionless cryptocurrencies.
“So, there’s certainly an element of governments wanting to compete with crypto,” said Fanusie. “But one big possibility is that by developing the infrastructure for digital wallets, programmability and microtransactions via CBDCs, governments might actually make cryptocurrency adoption easier.”
Policy recommendationsThe report concludes with a set of specific policy recommendations from Fanusie and his co-author, Emily Jin, a research assistant for the Energy, Economics, and Security Program at CNAS.
These include things such as pursuing a diplomacy campaign urging Chinese government transparency and restraint in using DCEP for punitive measures, monitoring any DCEP data collection on U.S. citizens, making CBDCs a key part of U.S. national security concerns and examining the private sector in the U.S.’ ties to “China’s digital financial authoritarianism.”
Finally, the report suggests the U.S. lead CBDC standard-setting going forward, conduct more research into the economic impact of CBDCs, and look at economic statecraft possibilities for combatting CBDCs, including evaluating “whether and how the United States can apply sanctions tools to CBDCs.”
CBDCs aren’t a question of if at this point, but rather when. The sooner key considerations such as these are taken into account and seen as an integral part of geopolitics, the sooner countries can consider the risks and benefits they offer.
“The U.S. should raise this as an important issue in diplomatic channels and also emphasize the privacy component in intergovernmental discussions on CBDC, such as with the Bank for International Settlements, but also the Financial Stability Board, the G7, and G20,” said Fanusie.
Related StoriesThe monetary revolution will be digitized … but for the vast majority of earthlings likely not anytime soon, according to central bank digital currency (CBDC) research published Wednesday by the Bank for International Settlements (BIS).
To get there, though, 86% of the central banks surveyed in BIS’ third annual CBDC questionnaire said they were at least considering the pros and cons of issuing digital-first fiat, up from 80% last year. This year’s survey featured 65 central banks.
Even more telling was the share of central banks moving beyond mere table talk. BIS said 60% of central banks are now conducting CBDC experiments or proof of concepts. Just 42% said the same in 2019.
Related: BIS Chief Blasts Bitcoin’s Viability, Prompting Blowback From Advocates
Read more: What Is a CBDC?
Emerging market central banks are driving CBDCs forward with more gusto and purpose than their counterparts in advanced economies, citing financial inclusion and payments efficiency as top motivating forces. They’re also participating in higher numbers: seven out of eight CBDC projects are in emerging markets.
“A testament to these motives is the launch of a first ‘live’ CBDC in the Bahamas,” BIS wrote. “This front-runner is likely to be joined by others: Central banks collectively representing a fifth of the world’s population are likely to issue a general purpose CBDC in the next three years.”
Although BIS did not provide a country-by-country issuance plan breakdown, that staggering figure could only be representative of China, home to over 18% of the world population and also one of the most advanced CBDC projects. China is already one year into pilot testing its DCEP.
Related: Geopolitics at Stake in US Response to China’s Digital Yuan: Report
Still, global CBDC adoption is likely still years away, BIS said. Countries are just not backing their heightened CBDC research with definitive plans to roll a project out. Tellingly, half of the central banks that in 2019 said they were “likely” to issue a CBDC in the short term downgraded their sentiment to “possible” or “unlikely” in the 2020 survey.
Advanced-stage projects are also hedging their go-live windows, BIS said.
Most central banks are more interested in a “retail” CBDC (consumer and day to day use) than a “wholesale” CBDC (systemic payments; transfers between banks). Some countries that once considered both models now focus their research on retail, perhaps seeing more value in digital fiat for the people than digital currency for the banks.
CBDC legality remains a largely unanswered question among the surveyed central banks. Forty-eight percent were not certain they had the authority to issue digital currency and 26% were certain they didn’t.
Central banks continued to view cryptocurrencies as a largely irrelevant force with limited if any appeal in the 2020 survey. Strong majorities ranked cryptocurrencies as “trivial” for the domestic payments space for the third consecutive year. Notably, over 40% said crypto could have “nice” appeal in the cross-border payments space, a rare bright spot in the otherwise crypto-minimalist data.
Read more: Geopolitics at Stake in US Response to China’s Digital Yuan: Report
Central banks, and especially those in emerging markets, indicated more concern in the threat posed by stablecoins. Over two-thirds of central banks are studying the issue, BIS said.
But the respondents were nonetheless adamant that private stablecoin arrangements (read: Facebook’s libra/diem) are not a driving force behind their CBDC projects. Competition from stablecoins and cryptocurrencies fail to provide them with a compelling CBDC rationale.
“When it comes to cryptocurrencies, central banks continue to see them with no widespread use as a means of payment,” the report said.
Related StoriesDecentralized finance (DeFi) exchange Uniswap’s native token uni (UNI) broke $15 per token on Coinbase Wednesday morning. It’s up more than 92% in one week and up 1,300% since the token debuted in September 2020, according to CoinGecko at press time.
Valued at $4.2 billion, Uniswap’s UNI has the highest market cap of any DeFi token on the market, according to research firm Messari.
The governance token has been caught up in bitcoin’s 2020-21 bull run along with other DeFi tokens. At $25.1 billion, DeFi Pulse’s Total Value Locked (TVL) metric – similar to assets under management (AUM) – is up nearly $10 billion from Jan. 1. TokenSets’ DeFi Pulse Index, which measures a suite of DeFi token prices, is also up 136% on the year.
Related: First Mover: Risks Nobody’s Ever Seen, From the Fed to Tether (and GameStop)
A governance token, UNI holders can vote on the direction of Uniswap version 2 such as how the Uniswap treasury will be spent. The exchange’s weekly volume has also surpassed its impressive initial run during “DeFi summer.” During the first three weeks of January, volume averaged some $5.6 billion while available liquidity on the exchange consistently sat above $3 billion, according to info.uniswap.
Those figures are even better than Uniswap’s summer run, which saw the exchange briefly surpass trading volumes on soon-to-IPO Coinbase. Not bad for a unicorn.
Read more: Uniswap Is the Number One Gas Guzzler on Ethereum
At the time, Uniswap conducted what’s called a token “airdrop” to anyone who had ever used the exchange before. The token drop was in response to rival exchange SushiSwap forking Uniswap’s codebase and trying to draw away users with a new token, SUSHI, in what is now called “vampire mining.” Each nominal user was given 400 UNI tokens amounting to 60% of the 1 billion UNI minted. Each airdrop is now worth about $6,000; it was jokingly referred to at the time as crypto’s own stimulus check. SUSHI is also up 177% over the last 30 days, according to Messari.
Related: Bitcoin Briefly Dips Below $30K, Dollar Bounces Ahead of Fed Reserve Rate Announcement
Uniswap investors, advisers and team members are also up big after an initial allocation of the tokens, although a four-year vesting schedule remains in place. According to a Uniswap blog post, 21% or 212,660,000 UNI (at press time: $3.2 billion), were allocated for current and future team members. An additional 18% or 180,440,000 UNI ($2.7 billion) were set aside for investors plus 0.69% or 6,900,000 UNI ($103.5 million) for advisers.
Uniswap, whose core team is based in Brooklyn, N.Y., raised $11 million in a Series A backed by Andreeson Horowitz, Paradigm, Union Square Ventures and VersionOne.
Uniswap founder Hayden Adams declined to comment.
Disclosure: This reporter holds a small UNI allocation from the initial airdrop.
Related StoriesReddit is growing its role in the Ethereum ecosystem, with the goal of building out scaling tools for the blockchain network.
The social media platform announced Wednesday it was expanding its work with the Ethereum Foundation to provide development resources to scaling tools. In the announcement, posted to the Ethereum subreddit, Reddit employee u/jarins said the move increases its commitment to the technology, and echoes its long-held “decentralized ethos.”
“In this new stage of our partnership, immediate efforts will be focused on bringing Ethereum to Reddit-scale production,” the announcement said. “Our intention is to help accelerate the progress being made on scaling and develop the technology needed to launch large-scale applications like Community Points on Ethereum.”
Related: El camino de Ethereum hacia los USD 2.000: tres razones para ser optimista
This partnership could result in Reddit working on layer 2 scaling tools or pushing projects from a prototype stage to production.
Reddit development resources, including a developer team, would be involved in this work. Ultimately, the idea is a project like Reddit’s Community Points feature could be capable of supporting the site’s millions of users (Reddit has over 50 million daily users as of press time, according to Wednesday’s announcement).
“Our blockchain efforts will be led by Reddit’s Crypto team,” the announcement said, adding the company currently has job openings for backend engineers.
Community pointsReddit introduced Community Points last year, rolling them out to the CryptoCurrency and FortNiteBR subreddits (communities built around cryptocurrency discussion and the FortNite game).
Related: First Mover: The Smart Money (Literally) Buying Crypto as Harvard Said to Be Holding
In short, the idea is users can reward each other points for making “quality posts,” with these points being redeemable for badges or other custom features. These points are stored on Ethereum’s Rinkeby testnet as ERC-20 tokens, meaning that unlike Reddit’s in-house karma system, the company cannot control these points.
The company had been experimenting with the idea for at least a month prior to rolling it out to the website. In June, it asked for the community to assist with scaling the project.
The company did not provide volume figures for how many points have been rewarded or redeemed to date, but the CryptoCurrency and FortNiteBR subreddits each had over 1 million users as of press time.
It does not appear that Reddit plans to expand the system to additional communities, or move from Rinkeby to the Ethereum mainnet.
“The scaling technology developed through this partnership will be open-sourced and publicly available for anyone to use,” the announcement said.
Related StoriesThe Federal Reserve said Wednesday it would keep U.S. interest rates close to zero and continue its $120 billion-a-month bond-buying program.
“The pace of the recovery in economic activity and employment has moderated in recent months,” the committee said in a statement released after the meeting of the Federal Open Market Committee (FOMC). “The path of the economy will depend significantly on the course of the virus, including progress on vaccinations.”
Other key points from the statement:
Related: Fed Chair Powell: ‘We’d Welcome Higher Inflation’
The low-interest-rate environment is thought to be a boon for bitcoin and other high-yield investments that can offer the market alternatives to bonds.
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