13 minute read
Microsoft: All Eyes on the Metaverse Arena��������������������������������������������������������������������������������������������������������������������������
Crypto Weekly
By Marty Shtrubel
Advertisement
Metasoft? Microverse? Both have a pretty nice ring to it. The company is not likely to change its name either, but Piper Sandler's Brent Bracelin thinks the move represents Microsoft's entry into the "consumer metaverse arms race." It is simply too big an opportunity to ignore. After the announcement of the largest acquisition in the company's history, it seems that the company is fully aware of the potential.
On Tuesday, Wall Street was taken aback with the news Microsoft will buy mired in controversy gaming giant Activision Blizzard for a cool $68.7 billion in cash. Not only does the deal position Microsoft right at the center of this newfangled industry, but Bracelin believes it has the potential to "elevate its footprint in gaming and advertising into a $40B+ combined segment by CY23." Microsoft has a smaller product portfolio within the consumer technology sector, and as such, Bracelin thinks the acquisition will "strengthen its foothold" in the segment. ATVI brings with its 10K+ workforce 400 million monthly active users and a leading gaming franchise that is nearing annual revenue of $10 billion, all providing Microsoft with "attractive strategic value."
Strategic benefits aside, Braclein notes that ATVI's estimated free cash flows of over 3 billion amount to a "higher cash yield than it would otherwise attain by holding this outsized cash position on the balance sheet." But it's not only the gaming opportunity here. There are also a "variety of monetization channels" involved, including subscriptions, inapp purchasing, and advertising. Those are the most important. "Considering the advertising industry is 3-4x bigger than gaming," the 5-star analyst said, "we are equally bullish on the opportunity for share gains in both advertising and gaming as Activision Blizzard-King content is repurposed across cloud, mobile, AR/VR, and the metaverse."
Although Bracelin notes the "increasing integration and execution risk," the analyst views the transaction as a positive one and "would look to add to positions on weakness." Bracelin rates MSFT an Overweight (i.e. Buy) along with a $352 price target based on the above. The implication for investors? Overall, there are 26 analyst reviews on record, and barring one skeptic, all the rest say Buy, providing MSFT stock with a Strong Buy consensus rating. The forecast calls for 12-month gains of 22%, considering the average target clocks in at $375.12.
Tip Ranks
This Gem Won't Stay Hidden For Long
dexioprotocol.com dexiochat
Crypto Weekly
Downloads of China's Digital Yuan Top Apple and Xiaomi App Stores Before Lunar New Year
e-CNY wallet was most downloaded last week, but the rollout is limited to selected cities
Digital yuan can be used on mobile payment apps such as Alipay and WeChat Pay, but the dedicated app has maintained momentum.
Coco Feng in Beijing and Che Pan in Beijing
A resident of Suzhou used the e-CNY smartphone app in a trial on December 14, 2020. One of Kyodo China's most downloaded apps is its digital yuan wallet, disrupting the consumer
payment market dominated by Alipay and WeChat Pay.
App Annie reports that e-CNY surpassed WeChat, a super app from Tencent Holdings that features mobile payments, to become the most downloaded app on Apple's iOS on Wednesday, a day after arriving in app stores. It remained in the first place through Saturday before falling to second place behind Kuaishou.
By Monday, the app was the second most downloaded financial app in Xiaomi's app store, after topping the list last Wednesday, according to market
Crypto Weekly
researcher Qimai. However, it ranked just 43rd in Huawei's store on Monday, ten spots higher than the previous day. Both stores are popular options for Android users in mainland China, where Google Play is blocked.
The e-CNY app's popularity could be a positive sign for efforts from the People's Bank of China to promote its central bank digital currency (CBDC), officially called the Digital Currency and Electronic Payment (DCEP), ahead of the 2022 Winter Olympics next month.
The central bank's Digital Currency Research Institute, which developed the app, has been studying the implementation of a digital yuan for years. Trials of the digital yuan started in 2020. The institute has partnered with local authorities to hand out e-yuan red packets to citizens in ten pilot cities, including Shanghai, Shenzhen, Xiongan, Chengdu, Suzhou, and Winter Olympics venues in Beijing. While the app is broadly available for download, it is only usable in designated cities.
The digital yuan's payment turnover and user base are still tiny compared with the mobile payment titans WeChat Pay and Alipay, which is owned by Ant Group, the fintech affiliate of Alibaba Group Holding, owner of the South China Morning Post. Together, the two entrenched tech giants make up 90 percent of China's mobile payments market.
Red packets, a digital version of a traditional holiday gift in the form of an envelope of cash, along with other incentives, have so far helped drive interest in trying out the new app. Chengdu resident Robin Deng said he downloaded the app last year and has been using it frequently since October to get discounts on public transport and shared bikes from Meituan.
"I get 50 percent off when using digital yuan to take the subway," he said. "Paying with e-CNY is similar to WeChat Pay and Alipay."
Last September, Beijing resident Lily Zhang tried it at the China International Fair for Trade in Services, where she used digital currency to buy drinks and ice cream.
"It was very convenient, as one can use it even without an internet connection," Zhang said. She added that if it were accepted widely across Beijing, she would use it more because "it is relatively safe. "However, Alipay and WeChat Pay allow users to pay offline, and most mobile users in China already have these apps. That could make it hard for e-CNY to maintain momentum when the discounts and other incentives dry up.
Howard Qian, another Chengdu resident, removed the app from his phone days ago over lack of use. "The money I topped up in the e-CNY wallet won't turn out any deposit interest," he said. "I'd rather store it in the money market funds in WeChat or Alipay," Qian added that he would only use the e-CNY app again to keep getting subsidies.
May Lu, a resident of Beijing, said she was not impressed by e-CNY and that installing another payment app on her phone felt unnecessary.
"I don't think e-yuan offers huge advantages to users currently, especially for those in the big cities where third-party e-payment services are ubiquitous," said Wang Leilei, an analyst at Shanghai-based financial industry consultancy Kapronasia. "In the lowertier markets in small cities … it might stand a chance."
Can China handle the risks of cryptocurrency?
As the Chinese government conducts research and development of a CBDC, it has become increasingly hostile towards cryptocurrencies such as Bitcoin. It has stepped up its crackdown on Bitcoin mining, pushing most of it out of the country, and issued a blanket ban on cryptocurrency exchanges.
The government has stated that the digital yuan is designed to replace coins and notes in circulation, but the push to digitize cash has also fanned enhanced state surveillance on transactions. The digital yuan is not just limited to the e-CNY app. It can be used across many mobile payment apps in China, including Alipay, WeChat Pay, and the apps of seven Chinese banks – the Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of China, Bank of Communications, Postal Savings Bank of China and China Merchants Bank.
The Chinese government's increased efforts to promote DCEP comes just weeks before the Lunar New Year, a week-long holiday in mainland China that begins on February 1 and is a popular time to exchange red packets. In addition, it occurs just before the Winter Olympics, which start on February 4. Mu Changchun, the head of the Digital Currency Research Institute, said in November that 140 million Chinese had opened a digital yuan account as of October 2021, with accumulated transactions reaching 62 billion yuan (US $9.7 billion) since launch.
A formal launch date for DCEP has yet to be announced, but the central bank has stated that foreign visitors to the Olympics will use digital yuan without a Chinese bank account.
South China Morning Post
14
Crypto Weekly
Bank of England Tells Ministers to Intervene on Digital currency 'Programming'
The Bank of England has called on ministers to decide whether a central bank's digital currency should be programmable, allowing the issuer to control how the recipient spends it.
On Monday, a director at the Bank of England said that programming could be a vital feature of any future central bank digital currency, which would release money only when certain conditions are met. "You could introduce Programmability - what happens if one of the participants in a transaction restricts the use of money in the future?"
"There could be some socially beneficial outcomes from that, preventing activity which is seen to be socially harmful in some way. But at the same time, it could be a restriction on people's freedoms." He warned that the Government would be required to intervene and make the final decision.
Mr Mutton said: "That is a really delicate debate that needs to be had. It is not something we can settle ourselves, that is for the Government to lead on."
A digital currency could make payments faster, cheaper, and safer and open up new technological possibilities, including programming: effectively allowing a party in a transaction, such as a state or an employer, to control how the recipient spends the money. "One potential use could be control over benefits payments," said Sandra Ro, chief executive of the Global Blockchain Business Council.
She compared a programmed digital currency to the US system of paying benefits in vouchers. It could have a similar goal of restricting the recipient to buying only essentials such as food with the money.
Earlier this month, Sir Jon Cunliffe, a deputy governor at the Bank, said digital currencies could be programmed for commercial or social purposes, even down to the way children spend pocket money.
He told Sky News: "You could think of smart contracts in which the money would be programmed to be released only if something happened." "You could think of giving your children pocket money, but programming the money so that it couldn't be used for sweets. There is a whole range of things that money could do, programmable money, which we cannot do with the current technology."
A Treasury spokesman said: "Programmability is a potential feature of a Central Bank Digital Currency (CBDC). The Taskforce is coordinating the exploration of a potential CBDC, and no decisions have been taken on whether to introduce a CBDC in the UK or its design."
Telegraph
Crypto Weekly
Ethereum Is No Longer a One-Chain Ecosystem
Edward Oosterbaan
Recently, Evan Van Ness of Starbloom Ventures and Josh Stark of the Ethereum Foundation released a report on the Ethereum network's activity in 2021, The Year in Ethereum 2021. Some of the most promising developments and trends within the current Ethereum ecosystem are highlighted in the report.
Adoption from all angles
Demand for blockspace on Ethereum skyrocketed during 2021, with $9.9 billion in transaction fees being paid throughout the year. Since fee per transaction is vastly different chain to chain, the metric is not great for comparing usage on layer 1s and 2s, but it does provide insight into how eager users were to access DeFi, NFTs, and DAOs. On basically every metric, Ethereum showed adoption: total value locked in DeFi, active addresses on the network, OpenSea volume, and application developer activity all grew exponentially.
More importantly, the report highlighted that Ethereum is no longer a one-chain ecosystem. The Ethereum community will need to offer layer two technologies capable of handling transactions from billions of users to achieve scalability. 2021 proved to be the first step in experimentation with both optimistic and zero-knowledge proof rollups. The two finally began to take significant market share in daily transactions away from Ethereum.
As a technology, Ethereum and other smart contract chains have proved to be an exciting and profitable platform for creators and developers to build and share their work. DeFi developers have created billions of dollars in value by building financial products open and accessible to the world. Artists have found fantastic success with creating digital, liquid art in the form of NFTs.
That being said, Ethereum's "creator economy" is competing with top platforms like YouTube, Spotify, and OnlyFans, delivering $3.5 billion in earnings to those building on top of the network. The report also focused on the technical state of the network, diving deep into the pending transition to proof-of-stake, EIP 1559's effect on the network, and the issue of client diversity on the Beacon Chain.
Coindesk
Crypto Weekly
Bitcoin, Ether, and Altcoins Suffer Losses as Market Slips Below $2 Trillion
Adam Morgan McCarthy
On Wednesday, the overall market fell more than 2% in value, pushing the total capitalization below $2 trillion as a wave of risk aversion swept across the investment landscape in light of surging bond yields and rising inflation expectations. Currently, the global crypto market stands at $1.95 trillion, down from a peak of close to $3 trillion in mid-November, according to CoinMarketCap.
This dip comes after US Treasury yields hit two-year highs, which also caused stocks to sink. This has been a common theme so far in 2022, as the Federal Reserve repeatedly signals that it could hike US rates several times throughout the year. Higher rates tend to weigh on more speculative assets, as investors are more likely to put their cash into market areas that they perceive to be less risky. "Currently, the S&P 500 seems to dictate the direction of Bitcoin and the overall crypto market, evident by correlations reaching new highs. Bitcoin's 90-day correlation to the S&P 500 is currently at its highest since October 2020," the company said in a note. Arcane Research supports this correlation reports linking the S&P 500 to bitcoin.
Bitcoin fell more than 1% to $41,471, while Ethereum's Ether token suffered heavier losses of more than 3%, falling to $3,070 and threatening to dip below that $3,000 mark for the first time since September. Altcoins suffered more severely as Cardano dropped 8% to $1.38 and Avalanche dropped 5%, seeing it sit at $82.31 at the time of writing. Several altcoins had logged significant gains last week as capital flooded into NFT and DeFi projects built on alternative smartcontract platforms to Ethereum. The so-called 'Ethereum killers' have made impressive gains over the past year.
JPMorgan reported that Ethereum's dominance in the NFT space had gone from 95% at the beginning of 2021 to around 80%. In particular, Cardano's ADA token had seen significant gains over the past ten days, as it was up over 30% at one point, according to data from CoinMarketCap. The altcoin founded by Ethereum cofounder Charles Hoskinson is one of 4 cryptocurrencies considered by some analysts to be a significant threat to Ethereum as it is "more scalable." However, the budding crypto is still some way off all-time highs of $3.10 from September 2021.
Business Insider
of the week
Crypto Weekly
NFT
Compounding Assets, Adoption Rising, and the Brilliant Mind Pushing This Daily, FOR US ALL...
