HIDDEN GEMS
BEGINNERS GUIDE
CRYPTO Page 24
LIVING THE FANTASY Page 05
THE ETHEREUM MERGE $ CLIMATE Page 08
Page 32
VIDEO OF THE WEEK
Page 36
WEEKLY $2 cryptoweeklymag.com April 2022 | Volume 23
CRYPTO & GAMING COLLIDE Page 22
SEC PLANS EXCHANGE REGS Page 26
SHOPIFY ACCEPTS BITCOIN Page 09
THE END OF FIAT? Page 28
BRITAIN STUDIES CRYPTO Page 14
THE FUTURE OF MONEY Page 30
WINE INDUSTRY NFT OBSESSION Page 16
IS YOUR CRYPTO SAFE? Page 18
AN UNREGULATED METAVERSE Page 20
U.S. BANKS TRY CRYPTO Page 34
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CONTENTS $2 cryptoweeklymag.com April 2022 | Volume 23
05
Entertainment Companies Create Ways to Live in Fantasy Lands
06
Cryptocurrency Trading Could Move to the Metaverse, Says Survey
07
Only 2 Million Bitcoin are Left to be Mined
08
Ethereum Merge Could Solve a Crypto Climate Issue and End Mining
09
Shopify and Jack Mallers' Strike Announce Bitcoin Lightning Payment Integration
10
IMF Warns that Crypto is Very Popular in Corrupt Countries
11
World's Oldest and Largest Dark Web Market has been Seized by Germans
12
EU Releases Fifth Sanction to Russia to Block Deposits Into Crypto Wallets
14
Britain Making a Plan to To Study Crypto and How it Will Benefit Society
16
The Wine Industry is Obsessed with NFTs
18
Are You Sure Your Crypto Is Safe?
20
A Metaverse Without Regulation Would be a Scary Thing Experts Warn
22
The 'Play-to-Earn' Economy Collides With Cryptocurrency and Gaming
24
Hidden Gems
26
Garry Gensler's Plans for Regulating Crypto Exchanges from the U.S. SEC
28
Peter Thiel Predicts End of Fiat as Central Banks Go Bankrupt, and Crypto Replaces Them
30
Money-Replacing Innovations are on the Horizon, Says 'Future of Money'
32
What is a Bitcoin ETF?
34
Banks in the United States Experimenting with Crypto
36
Bitcoin Trade Lessons - And a VERY Quick Case for 200k
CRYPTOWEEKLY CEO | Nathan Hill
LETTER FROM
THE EDITOR
nathan@cryptoweeklymag.com Publisher | Colin Woolley colin@cryptoweeklymag.com Editor | Robert Stone
Welcome to Crypto Weekly
editor@cryptoweeklymag.com Editorial | Anthony Burton editorial@cryptoweeklymag.com Features | Thomas Stokes tom@cryptoweeklymag.com Advertising | Philip Greenwood philip@cryptoweeklymag.com Design | Dilin Divan dilin@cryptoweeklymag.com
Hello, and a warm welcome to the 23rd issue of Crypto Weekly. Crypto Weekly is the brainchild of the guys at CMC, and I am Rob Stone, Editor, and I hope to bring you an informative read on everything crypto, every week of the year.
Crypto Weekly Magazine is published by the Crypto Marketing Company 71-75 Shelton Street, Covent Garden, London, United Kingdom, WC2H 9JQ
Another week has gone by and this is our twenty-third issue of Crypto Weekly. I have been mining the search engines for the best stories in the news, current happenings, and the ideas the world is excited about in the cryptosphere. At times it is overwhelming, all the work, curating, and writing, that goes into the next issues. But, I am also caught up in the excitement of the crypto revolution and everything I come across that I want to share with all of you on these pages. The hours that my work entails pass so quickly that I don’t have time to feel daunted by it. I can only wish they could pass more slowly so I might be able to make the next edition even richer. As usual, a lot of stuff has happened in the last week because the music never stops in the crypto sphere and the time keeps rolling on. I hope you all enjoy what we have brought together for you this week. Please let us know your thoughts, and if you would like to see something featured, please do get in touch.
editor@cryptoweeklymag.com
Follow Us Stay Connected Robert Stone Editor
cryptoweeklymag
NEWS
5
Crypto Weekly
Entertainment Companies Create Ways to Live in Fantasy Lands
V
irtual worlds like "Tron" and "The Matrix" are becoming a reality. Among the entertainment visionaries who have upgraded traditional 2-D movies, Maureen Fan is one. Her studio created a virtual set in "Baba Yaga," starring Glenn Close and Kate Winslet. According to Maureen in an interview, "soon, people will be able to inhabit the "universes" of popular movies such as 'Star Wars’ and 'Lord of the Rings’." “How awesome would it be to inhabit a universe you love? Do you wish that you could visit a place in your imagination that you could never reach in real life? Well, here's your chance." Fan's studio has made eight animated films, each more complex and interactive than the
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previous one - pushing the boundaries of imagination. It's not a substitute for real life but just another way to experience it. She said things that cannot be accomplished in the real world can be done in the Metaverse. From sports events, concerts, and gaming, the Metaverse may become a popular destination for Americans. “This is really exciting. It's a world that someone else has created that you could not have imagined. That is one I find very magical." Many companies are investing in creating a 3D virtual world, or several connected virtual worlds, including Facebook, Microsoft, and others. According to insiders in Silicon Valley, it is likely to change how people live their lives. Matthew Ball said the Metaverse should be seen as the next evolution of the
internet. Ball writes, “The Metaverse will revolutionize everything with seven of the richest companies investing billions into it.” He believes the Metaverse will be worth trillions of dollars in a few years. Deloitte is traditionally more known for spreadsheets than interactive entertainment. In order to test ideas for the future of entertainment in the Metaverse, Allan Cook has created a studio. He said that approximately 6 to 10 trillion dollars are the most commonly estimated value of the Metaverse by 2032. "Content consumption has been almost the same for the last hundred years," Cook said. "As we go forward, it'll be in 3-D, and we'll be able to experience things in a very immersive way," Cook added.
April 2022 | Volume 23
6
NEWS Crypto Weekly
Cryptocurrency Trading Could Move to the Metaverse, Says Survey developers' thoughts and ideas about the Metaverse. Developers were also asked if the role of nonfungible tokens (NFTs) will continue to grow and become the most prominent form of currency in the Metaverse. The response was 53% in favor and 24% against. As part of the survey, the majority of developers believed that crypto and blockchain innovations would shape the future of the Metaverse. Over 70% of respondents considered advancements in the blockchain and cryptosphere to impact the Metaverse significantly. One out of three respondents believes data privacy and security may be a big challenge.
Data Privacy Will Continue to be an Issue
B
Trading to be Taken Over by Metaverse
33% of respondents believe that data privacy and security are the biggest hurdles to be overcome in the Metaverse. There are also other challenges to overcome for Metaverse users, such as ecosystem interoperability, disinformation, and hate speech. Moreover, developers' access to tools, the creation of a currency and payments ecosystem, identifying users, and inadequate hardware are also crucial to the success of the Metaverse.
According to a new study focused on developers, the Metaverse may become the most popular way to buy and sell crypto someday. The Metaverse is expected to become the most popular place to trade crypto in the future, according to 57% of developers. Agora, a provider of APIs, commissioned the study which surveyed 300
The number of NFT hacks and Metaverse security breaches have increased over the last few months. Recently, $615 million was stolen from the Ronin Network, a key platform for Axie Infinity. In addition, BAYC was hacked on April 1. Mutant ApeYacht Club (MAYC) NFTs were even stolen by the hackers.
lockchain innovation will have a crucial role in shaping the future of the Metaverse. According to a new study, the rise of NFTs and Metaverse has been noted over the last year. Cryptocurrency and blockchain markets, however, are dominated by top coins such as BTC and ETH.
Banks Asked for Info on Crypto Activities by U.S. FDIC
F
ederal Deposit Insurance Corporation (FDIC) says banks it supervises should notify it of any crypto-related activities they are pursuing or planning. According to the FDIC, firms considering investing in crypto assets or activities should notify the agency of their plans, and institutions already involved in crypto assets or activities should "promptly" notify the regulator. "Crypto-related activities may pose significant safety, soundness, and consumer protection risks," the FDIC warned, while noting that credit, liquidity, pricing, and operational risks have not yet
April 2022 | Volume 23
been fully explored. The request comes as the U.S. banking regulators grapple with the popularity of cryptocurrencies. Earlier this month, U.S. President Joe Biden instructed government agencies to assess the risks and benefits of cryptocurrencies, a move viewed as acknowledging the potential consequences of digital assets' growth. It said disruptions in crypto-asset transactions or activities could cause a "run" on a firm's financial assets, and consumers could become confused about crypto assets offered by, through, or associated with their institutions. FDIC-supervised
institutions should notify the regulator as soon as possible if they intend to engage in crypto-related activities. A review of the information will take place to determine whether it is safe and sound, financially stable, and consumer-friendly.
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NEWS
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Crypto Weekly
Only 2 Million Bitcoin are Left to be Mined peer-to-peer alternative to governmentissued fiat currencies. Based on his white paper, Nakamoto mined the first Bitcoin cryptocurrency using the software he had written, but the code was hardwired to produce only 21 million Bitcoins. Bitcoin has since become perceived as a "store of value" and hedge against inflation because of the deflationary supply cap of 21 million Bitcoins. The limited supply of Bitcoin has enabled its price to increase over 230% a year over the past decade, exceeding any government-run inflation rate of double digits. Bitcoin was named the "asset of the decade" because of these incredible gains.
Almost all Bitcoin has been mined.
This week, the 19 millionth Bitcoin was mined. Bitcoin miners have minted 19 million of the digital currency, and only 2 million remain unmined, according to cryptocurrency publication Cointelegraph. The original allotment is now less than 10% mined. Initially, Bitcoins' crypto code was only designed to generate 21 million coins
using a proof-of-work (PoW) method to validate transactions. The pseudonymous author Satoshi Nakamoto is credited with the invention of Bitcoin in a nine-page paper published in 2008. It was designed as a peer-to-peer monetary system to offer individuals a
Miners have minted 19 million Bitcoins, and only 2 million coins remain unminted. According to the article, SBI Crypto mined the milestone Bitcoin on Friday, April 1, in block 730002, leaving only 2 million coins unminted. It might seem like the remaining 2 million Bitcoin will be mined and circulated within a few years, given that they minted 19 million in just over a decade. However, because Nakamoto designed a system to slow the number of Bitcoin mined as a reward for proof-of-work (PoW) transaction validation, it will be over 110 years before the full 21 million Bitcoin are fully mined. In the future, all 21 million Bitcoins will be minted before the next halving takes place in 2024, 2028, 2140, and so on until all 21 million Bitcoins have been mined.
In the future, scarcity should drive Bitcoin's price up. The demand for an asset rises proportionately as supply decreases, so prices of that asset will also rise as supply decreases. For example, as the supply of Bitcoin decreases, the demand for it will increase proportionally.
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April 2022 | Volume 23
8
NEWS Crypto Weekly
Ethereum Merge Could Solve a Crypto Climate Issue and End Mining
A
major upgrade is coming to the blockchain that powers the secondlargest cryptocurrency in the world. In a sense, there are several ways to look at the event, referred to as the merge, because two major aspects of the Ethereum platform will be combined: an existing chain and a relatively new one. In this part of the crypto world, it will transform how people transact with Ether a transformation that will lead to a greener and more secure future. It'll be like changing out the engine of a plane while it's flying, as some have described.
Merging puts an end to mining. Miners create Ethereum by solving complex computational puzzles with extremely fast computers. Once these puzzles are solved, the transactions on the Ethereum blockchain are secure. Each miner that solves a puzzle receives Ether as a reward. Recent years have seen that reward rise to over six thousand Ether, which is the equivalent of around two Ether these days.
April 2022 | Volume 23
Miners are encouraged by this competition to run their computers at 100% for long periods of time, which consumes a lot of energy - about the same as the carbon footprint made by Finland, according to blockchain firm Consensys. Cryptocurrency can have a negative impact on the environment, which is why critics are concerned. As a result of the merge, Ethereum will move from proof-of-work to proof-ofstake, putting an end to the Ether crypto mining industry. Owners of crypto coins can deposit, or stake, Ether to become validators instead."It will replace these energy-hungry machines," said David Lawant, research director at Bitwise Asset Management, “and Ethereum will end up consuming 99% less energy than it does today.” You have a greater chance of being chosen as a validator if you stake more. You receive Ether in exchange for arranging people's transactions on the Ethereum blockchain into blocks. Validators are incentivized to perform their tasks better since they stake
their own crypto. Otherwise, their staked Ether will drop. Therefore, proponents of proof-of-stake view the model as a boon for greater security - validators are motivated to keep the network safe and secure. Ether coins will also be issued in limited quantities, creating a scarcity for the virtual currency. Upon completion of the merge, Ethereum's blockchain will be a proof-ofstake chain called the Beacon Chain. More institutional investors are expected to be interested in the space due to its higher security and lower risk of adverse climate impacts. Fortune recently reported that billionaire investor Mark Cuban is "very bullish" on the merger.
But does the merger have a date? Although it is unclear when it will happen, some developers predict this summer. It is difficult to set a firm timeline for transferring to a new model because it involves complex engineering. Asked when the merge will ship, an Ethereum developer will answer "when it's ready," Lawant said.
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NEWS
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Crypto Weekly
Shopify and Jack Mallers' Strike Announce Bitcoin Lightning Payment Integration support to its new wallet. Mallers said that this is about protecting America's ability to innovate. As part of his work with lawmakers, he has also been working with Wyoming Senator Cynthia Lummis (R) on legislation that would empower the country to build freely.
J
ack Mallers, CEO of Strike, announced a range of high-powered partnerships for Bitcoin's Lightning Network on Thursday at the Bitcoin 2022 conference in Miami which included an integration with Shopify. Millions of American storefronts will be connected to the Lightning Network so that you can pay at millions of locations. A spokesperson for the company said Strike partnered with Point-of-Sale (POS) giant NCR (NCR) as well as payments giant Blackhawk. Mallers, a passionate Bitcoiner and Lightning Network supporter, presented the "King's Gambit" to a packed Miami Beach Conference Center main stage. “Our goal is to make the Bitcoin network more accessible and easier to use,” he said. “Using Bitcoin as a cheap payments network is key to achieving that,” he said, contrasting it with the "caviar-eating" history of boomerissued credit cards that haven't innovated (beyond onboarding middlemen and their fees) in years. "There's not been, since 1949, a superior payments network that allows us to innovate for consumers,” he claimed. "Let's build the superior payments network from scratch."
to allow for payments across the Bitcoin Lightning network – for those merchants who want to opt in. A press release stated, "Strike's integration with Shopify enables merchants to diversify their existing payment options, as well as to reach global markets and increase their purchasing power. Strike's integration also allows Shopify merchants to achieve savings through low transaction costs. Strike reduces the complexity merchants face by converting Bitcoin payments (BTC) instantly into dollars." With Maller's announcement, Lightning Network adoption may skyrocket. Robinhood Markets (HOOD) announced Tuesday it will add Lightning Network
His lead-up, laced in sarcasm, Mallers' payoff was simple: Bitcoin's Lightning Network "carries all the properties" for homegrown success. He said Strike would partner with Shopify's global network of merchants
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April 2022 | Volume 23
10
NEWS Crypto Weekly
IMF Warns that Crypto is Very Popular in Corrupt Countries
I
t's no wonder so many of those scams about investing in a token that's going to revolutionize an industry come from countries with poor governance practices. Cryptocurrencies are much more popular in countries with insecure currencies and corrupt governments, according to a new International Money Fund report. Governments are urgently moving to regulate cryptocurrency because the global market is expected to reach $2.2 billion by 2026. As new scams use the excitement surrounding Bitcoin and Ether to push through all sorts of frauds and Ponzi schemes, the rush is on to punish bad actors. However, regulations
can vary greatly between countries. The ease of using and abusing cryptocurrency in some parts of the world is due to this.
Weak Economies, Rising Inflation, Capital Controls Approximately 2,000 to 12,000 respondents in each country were surveyed by the IMF about cryptocurrency use in more than 55 countries. Several reasons may explain why cryptocurrency is more popular in certain countries than others, according to the report. A popular cryptocurrency like Bitcoin can be more stable than a local currency due to high inflation. Cryptocurrency can also be used to circumvent taxes and limits since many poorer nations have very strict capital controls that prevent the flow of foreign money into and out of their economies. The study's authors write that currency with a history of high inflation may be less valuable as a store of value. "Inflation as
April 2022 | Volume 23
a proxy for currency stability may affect the attractiveness of crypto assets as an alternative store of value."
How about When El Salvador Bought the Dip? The results aren't so great for countries like El Salvador, which adopted cryptocurrency overly enthusiastically last year. With a transaction dated September 20, 2021, it was the first country to accept Bitcoin as legal tender.
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NEWS
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Crypto Weekly
World's Oldest and Largest Dark Web Market has been Seized by Germans
T
his week, German authorities aren't finished busting crime networks using the dark web. German authorities (the Bundeskriminalamt) have seized the world's largest and longestrunning dark web marketplace, Hydra Market, working with US law enforcement. The site had about 17 million users and 19,000 sellers. Since 2015, it has taken in about $5.2 billion in cryptocurrency and accounted for about 80% of all dark web-linked cryptocurrency transactions. Approximately $25 million in Bitcoin was seized from servers and crypto-wallets. Russia resident, Dmitry Pavlov, has been charged with narcotics distribution and money laundering for his involvement with Hydra servers. Hydra mainly served Russian-speaking countries that wanted to buy or sell contraband, such as drugs, hacking services,
and stolen data. As mentioned previously, it also participated in crypto "mixing," so it was harder to track the use of digital currencies. Hydra and Garantex, a Russian crypto exchange, were further punished by the Treasury Department by being added to a "specially designated nationals" list along with over 100 crypto addresses. According to a statement, Hydra has been under investigation by the Bundeskriminalamt and the U.S. since August of last year. Authorities have also shut down dark web markets in the past. Recently, Silk Road, AlphaBay, and DarkMarket have all been shut down. Other dark web shops will take Hydra's place after the seizure. While this may disrupt operations for a while, it could also serve as a reminder that even the largest digital black markets may collapse suddenly.
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April 2022 | Volume 23
NEWS
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Crypto Weekly
EU Releases Fifth Sanction to Russia to Block Deposits Into Crypto Wallets T
he Russian attacks on Ukraine continue to harm, not just Ukrainians, but also Russians. According to the EU, sanctions are being imposed on Russia due to its "special military operation."
Another Round of Sanctions Against Russia! In the fifth package of sanctions against the Russian Federation, a more specific set of goods and services were targeted to weaken the country's financial system further. Added to the list of embargoed products, including cement, rubber, wood, liquor, and more, these sanctions targeted the coal industry and import bans. Additionally, the European Union has announced it is banning the export
April 2022 | Volume 23
of advanced semiconductors worth €10 billion ($10.86 billion). Furthermore, advanced semiconductors could also be used to mine cryptocurrencies. The EU may make it difficult for Russia to own and operate any cryptocurrency to escape sanctions. Several countries have already blocked the Russian accounts and eliminated any possibility of an escape. Washington had asked crypto exchanges to follow suit. Japan imposed sanctions on crypto exchanges that failed to comply with sanctions against Russia, as other countries have in the past. The EU announced today that it would extend the ban on deposits to cryptowallets, making crypto usage in Russia more difficult.
Russia's Escape The country has relied on crypto since fiat has become an impossible escape. Even though many global exchanges block sanctioned individuals, these people have been exploring other options. Their assets can be liquidated in countries that haven't completely stopped them. In the United Arab Emirates (UAE), Russians are trying to sell cryptocurrencies for cash and buy real estate to make some sense of their money. Moreover, the Russian Deputy Energy Minister called for the legalization of crypto mining so that Russia could use crypto without using exchanges as the value of the fiat continues to decline.
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NEWS
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Crypto Weekly
The UK Will Issue an Official NFT W
hether you like digital tokens or not, the UK wants to show it's embracing crypto. This summer, the Royal Mint will issue an official NFT, according to Chancellor of the Exchequer, Rishi Sunak. Economic Secretary John Glen describes the token as a symbol of the "forwardlooking approach" the country takes toward crypto technologies. Financial technology, especially crypto, will be supported as part of a greater effort. Glen says that the UK government intends to create a
"dynamic regulatory landscape" that embraces the technology. The country plans to integrate stablecoins into its payment infrastructure, evaluate the legal status of Decentralized Autonomous Organizations (DAOs), and remove "disincentives" for crypto investment funds. The Financial Conduct Authority has already set up a regulatory sandbox, and the agency plans to hold its first blockchain sprint in May. A Cryptoasset Engagement Group, including members from the FCA, Bank of England, and business, will meet as many as eight times per year.
Bitcoin Becomes Legal Tender in Honduras' Special Economic Zone Officials of Honduras' Caribbean coast have adopted Bitcoin and other cryptocurrencies as legal tender in a special economic zone there, officials said. This special zone, named "Honduras Prospera," was established in 2020 to boost investment, and it has administrative, fiscal, and budgetary autonomy. "Honduras Prospera's flexible regulatory framework enables Bitcoin use by all users, including residents, businesses, and the government," the company said in a statement.
As part of the zone's jurisdiction, municipalities, local governments, and international firms can also issue Bitcoin bonds. In addition to the picturesque island of Roatan, Honduras Prospera includes the city of La Ceiba on Honduras' Atlantic Coast. In September, El Salvador became the first country in the world to adopt Bitcoin as legal tender, although the transition was bumpy and fraught with skepticism. It has been stated that the Central Bank of Honduras is unable to endorse cryptocurrency transactions. "Transactions with virtual assets are the responsibility and risk of the person who conducts them," the bank said in a March statement responding to queries on Thursday.
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April 2022 | Volume 23
14
NEWS Crypto Weekly
Britain Making a Plan to Study Crypto and How it Will Benefit Society
B
ritain has developed a detailed plan to harness the potential of crypto-assets and their underlying blockchain technology to improve consumer payments. John Glen, the UK's financial services minister, said some stablecoins would be regulated by adhering to existing payment rules to create a global crypto-asset hub.
"systemic" stablecoins. Britain will consult in the second half of this year about regulations for a wide range of crypto-assets, including bitcoin, considering the sector's energy consumption.
Cryptocurrencies such as stablecoins, which are designed to have a stable value relative to traditional currencies or commodities such as gold, avoid the volatility that makes bitcoin and other digital tokens unsuitable for most commerce.
If crypto is going to be a significant part of the future, the UK wants to be at the forefront. "We see great potential in crypto, and we intend to take advantage of it." Britain's "detailed plan" will also explore the value of blockchain, including whether it can be used to issue government bonds or gilts. Glen replied, "I'm not sure, but I'm sure we'll find out."
Regulation should be imposed on all stablecoins that refer to fiat currencies. "This approach is designed to make it possible to convert fiat currencies into stablecoins ondemand," said the finance ministry, adding that the Bank of England would regulate
Royal Mint to Create a Crypto Token and NFT Regulatory bodies around the world are attempting to understand cryptocurrencies. The European Union has published a draft law on crypto markets. A non-fungible token will be created by the Royal Mint by the
April 2022 | Volume 23
summer, according to UK finance minister Rishi Sunak. An NFT is a digital asset stored on a blockchain, which is a database of networked computer transactions. Glen said that the Bank of England and the FCA would launch a "sandbox" for testing blockchain next year. The Law Commission will examine the legal status of decentralized autonomous organizations that use blockchain and the implications of crypto for taxation, Glen said. Overall, Glen said, the tax code doesn't need major surgery to make crypto work easier. The tax treatment of "defi" loans – where holders of crypto-assets lend them out for a return - will be assessed. He said that Britain would also look at removing disincentives for fund managers to include crypto-assets in their portfolios.
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NFT FEATURE Crypto Weekly
The Wine Industry is Obsessed with NFTs
H
umans have been producing wine for about 8,000 years. Despite this, there has been a lot of innovation in recent years. A fast-growing category is lowsugar wine. Rosé Prosecco has been allowed for production, canned wine is a huge hit, and wine releases paired with NFTs are exploding. Because many wine-NFT release prices are quoted in cryptocurrency, we have replaced looking at vintage charts for the best price-to-quality ratio with finding out how much Ethereum is worth in USD. Despite this, most of our offers also accept traditional currencies, such as dollars, euros, or pounds.
In exchange for two $50 bills, the NFT can exchange for a $100 bill. Wine NFTs actually make sense for authentication purposes, but wine brands' initial forays into the non-fungible realm have included enough gimmicks to obscure actual value. I received an NFT drop from Graham Norton's He-Devil winery, which included "first release" rights
to He-Devil wine (hmm, sounds like wineclub allocation) and a physical print signed by the winery's co-founders. Then there was Sarah Jessica Parker's Invivo X brand's NFT, which featured digital art representations of two of her wine labels. Even Château Angelus, renowned
We're all familiar with NFTs by now, right? Blockchain technology records NFT transactions incorruptibly. The term "nonfungible token" describes a digital asset representing a real-world item such as music, art, or video. The non-fungibility of an item refers to the fact that it cannot be exchanged or replaced for another of equal value. All Bitcoins have the same value.
April 2022 | Volume 23
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NFT FEATURE
17
Crypto Weekly
a digital identity: a unique NFT is created for every bottle to ensure authenticity and verify ownership." Wineries and original issuers can also profit from NFTs on the secondary market, which they were unable to do before. In 2018, $558,000 was the highest price paid for a bottle of Romanée-Conti. As opposed to the winery, the reseller and auction house reaped the profits from the sale. An NFT attached to that bottle 77 years ago would have allowed Domaine Romanée-Conti to earn profit.
A barrel is an exception to this rule. For example, Chateau Angelus or Penfolds would be able to share profits if it were written into the code (as it wasn't in the Angelus code for 2020). Once the liquid gets poured into bottles, validation becomes impossible, unless the winery follows Penfolds's lead. Single-barrel NFTs will be converted into 300-bottle NFTs at the time of bottling in October 2022, with each vessel containing a bottle and barrel number. Using NFTs for wine makes sense, especially for expensive, rare bottles, which are often
for its Bordeaux wines, offered threedimensional label art and a barrel of its 2020 Angelus. Taking a hybrid approach, Robert Mondavi Winery created three special wines in handcrafted porcelain magnums commissioned from the French porcelain house Bernardaud, which made both the wine and the art unique. According to our calculations, the price of Ethereum was approximately $3,510 at the time of writing. Yao Family Wines' 2016 "The Chop" Cabernet Sauvignon and NFT are being released by former NBA player Yao Ming's Yao Family Wines. Only 137 bottles have been sold, and they could only be purchased with Ethereum. The wine is all that's included, even with a little buzzy crypto. Two NFTs were released by Penfolds this year. One featured a Magill Cellar 3 Cabernet Shiraz barrel from 2021, which sold for $130,000 in 12 seconds. Digital labels were not used. It might have sold so quickly because it was priced in dollars; potential buyers may not have been able to trust a currency they are unfamiliar with. As soon as the Penfolds Magill Cellar 3 2018 was released via BlockBar, a marketplace for non-fermented spirits and wines, all 300 bottles were sold. When you get past the buzzwords and art projects, attaching an NFT to a bottle, or barrel, of wine seems like a good idea, especially to combat counterfeiting. The NFT tokenization of digital identity and the realtime tracking of wine bottles can be achieved by VitaBella Paris, according to Guillaume Jourdan, a consultant for the luxury and wine industries. “An NFT makes a bottle of wine ‘phygital,' which means physical with
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The co-founder and CEO of Vinsent, a digital marketplace for fine wine that pioneered the tokenization of wine, Jacob Ner-David, explained, "Several blockchains, including Ethereum and Polygon, can pay a percentage of each secondary-market transaction to the winery. This characteristic is inherent to the NFT and cannot be modified."
counterfeited and sold at auction. What's up with winery-released NFTs having digital artwork attached to them? Wineries (rather unimaginatively) have followed that trend since the first generation of NFTs were linked to digital art. Due to the fact that the wine will eventually be consumed, limited-edition artwork provides something of lasting value to the buyer. However, winery executives may want to remember that liquid itself should be regarded as a work of art for NFTs based on wine. Moreover, most tangible works of art don't last very long. Wine does. As opposed to an oil painting, once a vino deteriorates, it cannot be restored. In fact, even the highest-rated vintage will degrade over time, so wine investment is low-return. If wine NFTs are to offer more than authentication, someone needs to come up with an idea more compelling than a byte-sized piece of art. Any ideas?
April 2022 | Volume 23
18
FEATURE Crypto Weekly
Are You Sure Your Crypto Is
Safe? There have been several high-profile crypto hacks recently. One of a string of crypto hacks of the same hue, an $11 million attack last month targeted DEFI protocols Agave and Hundred Finance. How did it happen? Does crypto have security problems? What is being hacked? What can the innocent crypto trader or HODLer do?
April 2022 | Volume 23
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FEATURE
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Which crypto targets are in hackers' sights? Centralized exchanges are particularly vulnerable. Historically, crypto exchanges were considered "low-hanging fruit" by hackers, leading to devastating consequences in many cases. Japan was the site of heavy hacks of Mt Gox (in 2014), Coincheck (early 2018), and Zaif (late 2018). These two businesses were eventually acquired by larger companies, while the former was forced out of business altogether. KuCoin's raid of 2020 was the last such attack on a crypto exchange - leading some to suggest that, in recent times, trading platforms have stepped up their security. A cybersecurity expert from South Korea tells FX Empire that the security landscape has changed for crypto players in recent years. The security of even the most prominent exchanges was notoriously lax in the past. Despite having millions of dollars worth of currency in their possession, they had very low-security fences. The crypto space is still not immune to security breaches since BitMart was hacked, and users' funds worth almost $200 million were stolen. Security protocols for employees and software security have been improved since then. “Although not perfect, they have made a more considerable investment in staying safe than they used to. Some have learned the hard way." Kim says.
Hacks on Protocols and Decentralized Exchanges These kinds of attacks have been on the rise in recent years. A hack on the Ronin network recently caused Sky Mavis' Axie Infinity playto-earn game, its AXS coin and its users to lose $625 million, the biggest hack in crypto history. In January, Qubit Finance Protocol suffered an $80 million loss, while Grime Finance lost $30 million at the end of last year. Blockchains and decentralized platforms continue to increase, increasing the number of hackers' targets. In her view, this form of attack is now the default mode of attack for most would-be crypto thieves. Kim observes
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that crypto exchange employees remain the "prime target" of attackers, with bogus job offers often made via platforms like LinkedIn, with attackers posing as employees from their partner companies. In her view, this form of attack is now the default mode of attack for most would-be crypto thieves.
CryptoCore, a group based in Eastern Europe, had hacked no fewer than five cryptocurrency exchanges, earning $200 million as a result. The police are still in the hunt for raiders in notorious attacks like the $ 520 million 2018 Coincheck raid - but with very little to show for their efforts.
“As long as you believe they are who they claim to be, you can use their back door by clicking on a link. Once they've installed that software onto the computer, they know they're set." But, there are dangers too for ordinary crypto traders and holders. When customers receive urgent messages or phone calls claiming that someone is trying to access their cryptocurrency, they are often sent into panic mode.
Are countries also hacking crypto?
When victims are panicked, they often click on links in emails that lead them to sites that ask them to enter their login and password information - unaware that the websites are designed to help hackers harvest such information. It is a blessing that many larger exchanges are aware of such threats and inform their customers about how to ensure that mail comes from their employees. Remember that no exchange employee will ever ask for your password or private key.
Why would anyone hack cryptocurrencies? There are several different types of hackers. There are many reasons why people hack. Occasionally, "white hat" hackers penetrate protocols and exchanges to expose risks and return the funds. In addition, there are plenty of people who take advantage of their advanced computer skills for their own gain. Many hackers form groups as well. A blockchain expert claimed in 2020 that
North Korea, as well as other countries around the world, have repeatedly been accused by the UN of masterminding attacks on crypto targets across the border in the South. As part of a long-term fundraising strategy, Pyongyang has trained at least 20 "elite cyber warriors" to hack crypto exchanges. Nevertheless, North Korea has rejected these claims and characterized them as fabrications that only a morally bankrupt "spying empire" like the United States could "concoct." Kim comments: "There can be no doubt that some very well-thought-out traps are out there in the Korean language - obviously set by Korean-speaking hackers looking for some very lucrative crypto prizes!" How does crypto security fare in the future? If crypto is to close its security holes permanently, it has a long way to go. Digital currencies and decentralized assets will always be subject to risk, according to those who argue that they will never achieve this goal. According to laws in South Korea and some other countries, crypto exchanges must back the deposits made by their users with their own tokens and fiat holdings which means that if there has been a hack on a regulated exchange, platforms are legally obligated to refund users. Centralized exchanges may provide some comfort to those who hold their coins there, but they aren't the end-all and be-all of crypto. Some traders do not use them at all. How, then, can cryptocurrency holders enhance their own security without a silver bullet that can slay all hackers? You should keep your crypto as secure as possible, stay away from anything that appears to be a scam, back up your wallets, move any crypto you're not trading into cold storage, and keep your security phrases secret.
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FEATURE Crypto Weekly
A Metaverse Without Regulation Would be a Scary Thing Experts Warn E
arlier this week, Meta Platforms (FB), formerly known as Facebook, failed to quash a shareholder proposal that asked if its planned virtual world could harm the real world. Some critics of the Metaverse say that regulation is needed to protect its users from the rapidly growing virtual world. The absence of rules to govern the Metaverse could hurt consumers as other online platforms have hurt them. According to critics, the Metaverse could also create brand-new injuries without proper oversight.
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The more ubiquitous the Metaverse becomes, the more critical regulation becomes. During a panel discussion last week, Harvard Law School professor Lawrence Lessig said, "The first thing we need to ask people is, what is the business model?" "I think it's scary if Meta becomes the dominant platform you need to participate in to do anything...If it becomes Facebook 2.0, and that's what it becomes, then there is no law to govern it." In light of the rise of the Metaverse, already a focus for various
companies, lawmakers may be too late. Big Tech firms like Google and Meta Platforms like Facebook have already created the software and hardware that power the Metaverse. Meta even changed its name to signal its commitment to 3-D virtual spaces. Nike and Samsung have already held events and launched products in 3-D virtual worlds. Experts say lawmakers can counteract the influence of a few companies like Meta, pioneers of the Metaverse, by adopting laws
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time - no amount of regulation that is always ten years too late can catch up with us,” Kanevesky argued. "Our systems must be designed to make it impossible for us to get it," she said. The Metaverse is not created by one company. Meta's chief legal officer, Jennifer Newstead, emphasized that no single company can create the Metaverse in a keynote address. Users will give away their privacy. She acknowledged a number of legal uncertainties. “What are the implications of varying enforcement standards across different Metaverse platforms? How do we resolve disputes in borderless, decentralized communities? The Metaverse also poses challenges for real-time content moderation,” Newstead said. “In real-time, synchronous environments, how do we deal with content moderation challenges?” She asked. "What are the rights of a digital avatar, and what does it mean to experience harm in a digital environment? And what remedies are available when that occurs?"
that encourage creators to create healthy virtual environments. In the opinion of Lessig and other legal experts, new laws will deter privacy violations and data collection abuse and prevent unauthorized use of intellectual property. As a result of Facebook whistleblower Frances Haugen's series of reports, the Wall Street Journal exposed the psychological harms suffered by teenage Instagram users.
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Some industry members are also advocating consumer protection. Second Life CEO Anya Kanevsky said, at the same panel as Lessig, that the Metaverse must protect against data collection no matter what lawmakers do. “If we continue to develop ways to collect the data we need about anyone who interacts with our products - regardless of whether it has anything to do with their interaction with our products or not, at any
Despite the fact that the Metaverse complicates risk in some ways, others argue that it can also eliminate specific harms. The blockchain can verify digital contracts, so some of the legal risks inherent in today's online world might vanish in the Metaverse. "In web 2.0, you have this kind of randomness that is part of the web 2.0 world," Tai said, referring to the current iteration of the internet.
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FEATURE Crypto Weekly
The 'Play-to-Earn' Economy Collides With Cryptocurrency and Gaming T
he owner of a collection of digital pets, Jarindr Thitadilaka, says he made up to $2,000 a month last year. He would breed them and then send them into battle to win cryptocurrency. The man was playing Axie Infinity, a game that combines entertainment and financial speculation based on blockchain technology. Millions of players, and billions of dollars, have been invested in games that utilize NFTs and virtual worlds to introduce people to cryptocurrency. With Axie Infinity, users can buy virtual blobs with various attributes as non-
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fungible tokens - digital assets whose owner can be recorded on the blockchain - for anything from tens of dollars to hundreds of thousands of dollars. Pets may be used to win battles and create new pets, whose rarity affects their value. Players can trade assets on the platform with 1.5 million daily users. "Games are no longer just games. They are more like ecosystems," said Thitadilaka. Axie Infinity, a crypto gaming company, was hit by a $615 million heist last week, bringing the dangers of this speculative ecosystem and the largely unregulated crypto gaming
industry into sudden focus. In the game, hackers targeted a system for transferring cryptocurrency in and out. Axie Infinity's owner, Sky Mavis, has announced it will reimburse the lost money with a combination of its own funds and $150 million raised from investors, such as Binance. Aleksander Larsen, co-founder of Sky Mavis, has stated that had he been able to do things differently while growing the game, which launched in 2018, he would have focused more on security. “We ran at 100 miles per
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hour to get to this point,” he said. "We made some trade-offs that maybe weren't ideal." The hack shed light on pay-to-win games, a young market that's growing fast outside crypto and gaming circles. DappRadar, a market tracker, estimates that players spent $4.9 billion on NFTs in games last year, equivalent to about 3% of the global market. Gaming NFT sales in 2022 have topped $484 million, despite a drop in demand since a peak last November. According to DappRadar, venture capital funding for NFT-based games increased to $4 billion last year, up from $80,000 in 2020. Larsen pointed out that Axie Infinity's revenues exceeded $1.3 billion last year due to a large number of users interacting with the technology. “It's like discovering a new continent for the first time... or discovering America all over again." In addition to this, unofficial financial networks have also emerged around these games, as players leverage their coveted ingame possessions for profit. In July of last year, Itadilaka in Thailand, decided that he wanted to make more money than he could playing alone, so he and his friends formed what we call in gaming lingo a "guild.” As a result of Axie Infinity being one of the most popular play-to-earn games, they took a cut of the transaction. Teriz Pia, 25, from Manila, said Axie Infinity is one of the most popular play-to-earn games. Thitadilaka says his guild, GuildFi, has grown
into a network with 3,000 players who split their earnings 50:50. Thitadilaka runs GuildFi as a full-time job, and the company has raised $146 million from investors. Since her brother founded the play-to-earn gaming guild, Real Deal Guild, last June, she quit her job as a preschool teacher. She earns up to $20,000 a month from her network of more than 300 players across multiple games and digital assets. In Axie Infinity, she lets her players keep 70%, while taking a 30% cut. In Pegaxy, in which players buy and trade NFTs of virtual horses, the split is 60:40. "I don't call them workers.” “In the Philippines, the pay for teachers is not enough. I'm a college graduate, a teacher, but it's not enough. I never imagined I could
earn this kind of money." But Pia cautioned that the job was risky. "I invest in new games with a team and researchers on board, but at the end of the day, it's still crypto." Yield Guild Games, one of the biggest play-toearn networks, said that its Axie Infinity players received $11.7 million in earnings in the fourth quarter of 2021 after keeping 70% of their earnings. He estimates that 95% of play-to-earn gamers are "renters," generating revenue without owning the assets, while 5% are owners. Australia-based Corey Wilton founded Pegaxy, which has 160,000 daily users. Those who invest in risky assets have no safety net, leaving them highly vulnerable if a project fails or if the market for the assets disappears. Regulators around the world are attempting to understand cryptocurrencies themselves, but little oversight exists for NFTs and the relatively niche phenomenon of play-to-earn games that use crypto tokens in-game that can be cashed out for traditional currency. "Investing in projects like this can be risky. Earning in play-to-win blockchain-based games is often through rewards paid in its native token," said David Lee, cryptocurrency associate at Fladgate LLP. "As tokens and in-game assets are not guaranteed values, their value can be determined by supply and demand on the market. This can lead to significant volatility in the price, and if the project becomes less popular or is abandoned, then these assets could be worthless one day." Yet proponents of these games claim success is a combination of skill, strategy, and luck. "Playing to earn is not the same as charity, which is how people get hurt," Wilton said.
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April 2022 | Volume 23
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HIDDEN GEMS Crypto Weekly
PROJECT 1
estatex.eu
EstateX
EstateX enables the tokenization of real estate through new and highly advanced blockchain solutions. With this, anyone can get into real estate with as little as $100. Using these solutions, EstateX is able to trade real estate security tokens on their secondary market 24/7 without financial, or country, barriers. The advantage of fractional ownership is that it removes entry barriers and lowers entry and exit costs. Previously, non-accredited individuals could not participate in the real estate market due to restrictions and limitations. By using smart contracts, blockchain offers safe, secure, and transparent transactions that are not controlled by humans, preventing human error and wasting time. It is now possible to buy a fraction of a property and enjoy
PROJECT 2
catcoincrypto.me
perpetual returns, without the need to maintain the property. We all know that the old-fashioned system is in need of an update. And that update seems to be coming; EstateX offers good, realistic solutions to open up this market. Although it seems that the big players and banks don’t like to see this system change, it’s a matter of adapting or giving up for these parties. Blockchain, which is going to be as big as the rise of the Internet, will bring about this revolution. EstateX is acting smartly and is one of the first parties to offer a new way of investing. The only question that arises isn’t or but when will the big banks, real estate parties and investors join the queue behind EstateX
Catcoin
catcoin_bsc
CatCoin was launched on November 26, 2021 by Miaoshi Nekomoto (Satoshi Nakamoto's Cat) as a community-influenced project with big goals but little funding. Renounced by Miaoshi shortly after launch, CatCoin is now completely owned and run by its amazing community. Catcoin is a community-influenced project that connects the crypto world with social media. Catcoin is the first crypto-related project to offer a 24/7 live stream on Twitch.tv, allowing the community
April 2022 | Volume 23
estatexeu
estatexofficial
catcoinbsc
to share their thoughts on Catcoin at any time. Catcoin values a friendly and caring community. Anyone can be a part of the Catfamily. In addition, Catcoin's development is primarily focused on the Catnip project, which will be developed and released by mid-2022 at the latest and implemented into the Metaverse (Catverse) at the request of the community.
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CLICK HERE
www.estatex.eu www.estatex.eu
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FEATURE Crypto Weekly
Garry Gensler's Plans for Regulating Crypto Exchanges from the U.S. SEC A
ccording to SEC Chairman Gary Gensler, the agency is looking into how to regulate cryptocurrency trading exchanges, including how to separate out crypto market makers. Gensler also argued that most cryptocurrencies are likely securities, so they should be regulated accordingly. "Tokens are securities and are governed by the same market integrity laws as other securities," according to Gensler at the
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Penn Law Capital Markets Association Annual Conference on Feb. 16. “The crypto market should not be treated differently just because it uses a different technology... We already have robust mechanisms to protect investors on platforms. We ought to apply these same mechanisms to the crypto market." As part of its investigation, Gensler said the agency is looking into how crypto trading
platforms can also act as market makers, allowing them to trade for their own accounts on the other side of their customers. In addition to determining whether the market makers should operate separately from those platforms, it is determining whether they can do so. The SEC is also investigating whether protections offered to investors on traditional exchanges are applicable to
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crypto after someone asked if exemptions for so-called alternative trading systems (ATS) could be applied to crypto. Gensler says there is a major difference between crypto trading platforms and traditional brokers in that millions of retail customers directly buy and sell on crypto trading platforms. Crypto trading platforms should be registered with the SEC and regulated like exchanges. "It is essential that crypto tokens that are securities are registered with the SEC," Gensler said. "Crypto token issuers must register with the SEC and comply with our disclosure requirements, or qualify for some type of waiver."
from hacking losses. More trading platforms are allowing users to deal in crypto, but hacks continue to occur. According to Chainalysis, over $14 billion was stolen last year. According to Gensler, crypto is a security under both the Congressional and Supreme Court definitions of security. When an investment is made in a common enterprise with a reasonable expectation of profit, the Howey test requires a contract to be formed. "These decentralized platforms may very well meet the definition of securities in many cases," he said. Gensler's case for safeguards on stablecoins. Besides supporting regulating stablecoins, Gensler
As part of Gensler's latest warning to the crypto industry, he urged crypto players to remember that the SEC recently charged BlockFi with failing to register its retail crypto lending product. This suggests the SEC may take enforcement action against firms that fail to comply with the SEC's requirements. As part of this coordination, Gensler said the SEC is looking into how to support the CFT's supervision of crypto trading platforms where commodity tokens and security tokens are traded. In addition, Gensler asked the staff of the SEC whether it would be prudent to separate out customer assets held by exchanges. Earlier this month, the Commission announced new cryptocurrency accounting standards designed to protect crypto assets also claimed that the two biggest stablecoins by market capitalization, which were created by crypto trading and lending platforms, are often owned by the platforms and investors have no direct right of redemption. Ultimately, more oversight is needed on issues such as conflicts of interest and market integrity. A number of the Biden administration's concerns about stablecoins were echoed by Gensler, including concerns about monetary policy and financial stability. Regulators should also prevent stablecoins from being used for illicit purposes, such as money laundering, tax compliance, and sanctions. About 80% to 85% of trades and loans occur on crypto trading platforms and lending platforms using stablecoins pegged to fiat currencies.
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April 2022 | Volume 23
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FEATURE Crypto Weekly
Peter Thiel Predicts End of Fiat as Central Banks Go Bankrupt, and Crypto Replaces Them P
eter Thiel, PayPal co-founder, predicted Bitcoin would surpass the value of gold and eventually rival the stock market when its price reached 100 times what it is today. The billionaire investor said shadowy and malicious figures within traditional finance and politics are holding back cryptocurrency during his appearance at the Bitcoin 2022 conference in Miami on Thursday. "The governments are destroying their own economies," he said. “The era of fiat is coming to an end," he added. "It's always hard to say where Bitcoin will go from here. With its current price of $43,000, where will it go? Bitcoin, in my opinion, is the best and most honest market in the world. I'm still hopeful that Bitcoin will grow over 100 times." In recent years, Mr. Thiel has been an outspoken advocate of Bitcoin, praising its decentralized nature and fixed supply that renders it anti-inflationary. As one of the keynote speakers at what is being dubbed the largest Bitcoin event in history, Mr. Thiel threw $100 bills into the crowd. There is a common narrative among crypto enthusiasts that Bitcoin's underpinning
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technology makes it a safe haven asset that serves as a store of value despite its price volatility. The founder of PayPal, Mr. Peter Thiel, elaborated on this idea by suggesting that Bitcoin could go far beyond this by replacing the US dollar as the world's reserve currency and generating greater returns on investment than any other stock or asset. He said the real competitor for Bitcoin isn't Ethereum, gold, or even the S&P 500 as a whole, but the stock market in general.
Bitcoin is not measured against gold but against equities, and the question is, why cannot Bitcoin and equities be at parity? "Enemy number one," he said, “was Berkshire Hathaway CEO Warren Buffett, claiming that he is a "sociopathic grandpa." He then listed a host of other political, media, and financial people he deemed intent on holding Bitcoin back. "Why has Bitcoin still not reached $100,000 or $1 million? What does it take to achieve this?" he asked. "In one dimension, this is a political question, whether the movement succeeds or whether its opponents succeed in destroying it." Thiel also included Jamie Dimon, CEO of JPMorgan Chase, and Larry Fink, chairman of BlackRock. "There's always the sense that if you're a money manager, you want to pretend that it's complicated to invest. And if all you have to do is buy Bitcoin, that's ridiculous. All these people are out of business," he said. "It is the finance gerontocracy that runs the country versus a revolutionary youth movement. And we have to go out from this conference and take over the world."
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FEATURE Crypto Weekly
Money-Replacing Innovations are on the Horizon, Says 'Future of Money' Economist Eswar Prasad Cash will not always be king, according to economists. Eswar Prasad, an economist with CNBC's Make It, says the Covid-19 pandemic accelerated the shift toward digital and contactless payments and led to a wider acceptance of physical cash alternatives, such as cryptocurrency. Prasad, author of "The Future of Money," writes, “If concerns about the tactile nature of cash receded, most consumers and businesses who switched to digital payments would be unable to return.” Professor Prasad, a professor of trade policy at Cornell University, a fellow at the Brookings Institution, and the former chief of the IMF's China desk says, "The era of cash is ending, and the era of central bank digital currencies is starting."
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According to Prasad, “Cryptocurrency, stablecoins, central bank digital currencies (CBDCs), and other digital payment systems will decrease the use of physical cash. However, one technology alone will not replace it. Cryptocurrencies by themselves will not replace it. Stablecoins may have more chance, but their reach may be limited," he says. Ideally, a CBDC would be "widely available."
Below are a few details about each. (CBDCs) Digital Currencies Issued by Central Banks As Prasad points out, several central banks are experimenting with CBDCs, but most are at an early stage. CBDCs are digital versions of banknotes that a central bank
backs. Chinese, Japanese, Swedish, and Nigerian CBDC trials are underway, and the Bank of England and European Central Bank are planning their own trials. The Bahamas launched its first CBDC, the sand dollar. Despite the uncertainty, U.S. Federal Reserve chair Jerome Powell has said the central bank is thoroughly studying the possibility of developing a CBDC. Each CBDC uses a different technology, depending on the country and its central bank. In some cases, CBDCs use distributed ledger technology, which is a type of database that can store multiple copies of financial records, such as transaction histories, across multiple entities. Central banks can manage these entities overall. Since CBDCs are controlled by one entity, a central bank, they
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can't be considered cryptocurrencies, unlike popular decentralized cryptocurrencies such as Bitcoin. Prasad says there would be several potential upsides if the U.S. Federal Reserve issued a CBDC. As a result, "even the poor and unbanked would have easy access to a digital payment system and basic banking services." Prasad also predicts that it would hinder illegal activities such as drug deals and money laundering. CBDCs are concerned about privacy issues. "Even with safeguards in place to ensure confidentiality, no central bank would give up auditability and traceability of transactions, which are necessary for limiting digital currency use to legitimate ones," he says.
Stablecoins As Prasad explains, stablecoins are digital currencies pegged to a reserve asset such as gold or the dollar but not issued by a central bank. "The advantage of stablecoins is that they can be easily transacted across borders at low costs," he says. Regulation of stablecoins could allow for "faster, more efficient, and more inclusive payment options." One such critic has questioned whether Tether, a stablecoin supposedly pegged to the dollar, has enough dollar reserves to support its currency. Additionally, to being the largest stablecoin by market value, stablecoins have caught the attention
of U.S. lawmakers as potential threats to financial stability, with many at the center of controversy.
as a medium of exchange. Cryptocurrencies are not likely to be used for everyday transactions due to their instability.
Prasad says that the limited use of stablecoins as a medium of exchange could benefit "the poor and unbanked, and small businesses, such as street vendors," in making transactions. Biden's advisers advised Congress to pass legislation that limits stablecoin issuance to insured banks because the move would enable federal regulators to further control the industry.
The Downsides of Cashless Payments
Cryptocurrency According to Prasad, cryptocurrencies will improve payment systems. Cryptocurrencies like Bitcoin don't have central control. These other cryptocurrencies, unlike stablecoins, are not backed by any reserve asset. Supply and demand determine their value. A peer-to-peer finance system, such as Bitcoin, launched in 2009, intending to provide a cost-effective way to transfer funds. There is a well-thought-out ecosystem behind its blockchain. Due to its limited supply and built-in scarcity, Bitcoins are seen by their holders as a store of value. “Cryptocurrencies could improve the efficiency of payments by facilitating quick and transparent cross-border financial transactions,” says Prasad. People who need to send money overseas could find that useful in a number of situations. Prasad says most cryptocurrencies are very volatile, which could hamper their long-term success
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In addition to the fact that Prasad is confident cashless payments will be the future, he admits that relying primarily on digital payments may not necessarily lead to perfection. In spite of his view that digital payments can democratize finance, they may also contribute to income and wealth inequality, he says. "The rich may be better able than others to take advantage of new investment opportunities and reap the benefits," Prasad says. "With limited access to digital technology and limited financial literacy, some changes could harm, as well as benefit, economically marginalized segments." As a result, smaller economies may see their central banks and currencies fade away or become less relevant. "This could concentrate economic and financial power in the hands of the large economies." Cash has a number of other benefits, including confidentiality and privacy in financial transactions. Therefore, he believes that the future of money should be carefully considered. “Eventually, cash will disappear, and we need an extensive public debate on what will replace it,” Prasad says. "After all, it will affect the economy, finance, and society as well."
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BEGINNERS GUIDE Crypto Weekly
What is a Bitcoin ETF?
C
ryptocurrency exchange-traded funds (ETFs) are pools of Bitcoin-related assets traded on traditional exchanges by brokerages. With these ETFs, retail investors and investors who are uncomfortable investing in cryptocurrencies, can have access to them without actually owning them.
popular, the idea for a Bitcoin exchangetraded fund emerged. Bitcoins can also be traded to generate returns. With Bitcoin's price rising above several thousand dollars, retail investors and average investors lost the chance to invest directly in Bitcoin. In response to investor demand, brokers began designing Bitcoin exchange-traded
funds. The Winklevoss brothers applied for approval with the Securities and Exchange Commission (SEC) in 2013.
Understanding a Bitcoin ETF A mutual fund that tracks stocks buys those stocks on its behalf. The company that
An exchange-traded fund consisting of Bitcoins or assets tied to Bitcoin price is a Bitcoin ETF. Unlike cryptocurrencies, Bitcoin ETFs are traded on traditional exchanges. An exchange sells or trades Bitcoin after the company securitizes it. Although the SEC continues to reject these proposals, there are no cryptocurrency ETFs that directly represent underlying coins. The underlying assets of Bitcoin ETFs are currently Bitcoin futures contracts traded on the Chicago Mercantile Exchange. Shortly after Bitcoin prices began rising and the cryptocurrency became more
April 2022 | Volume 23
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Benefits of a Bitcoin ETF
Investors dont need to own bitcoin directly
No hassle associated with keeping crypto secure
purchased these shares offers fractionalized shares on exchanges, which trade nearly 24 hours a day, seven days a week. According to this structure, a Bitcoin ETF would buy and hold Bitcoin. It could then offer fractionalized shares of its holdings on an exchange, which could be traded like a traditional ETF. SEC approval of Bitcoin ETFs has not been granted to funds that own Bitcoins. Bitcoin ETFs backed by futures contracts traded on the Chicago Mercantile Exchange (CME) have been approved. A futures contract involves the exchange of a specific quantity of assets, for a specific price, on a particular day. The Bitcoin futures contract consists of exchanging a contract unit of Bitcoin between two parties. In this instance, a contract unit is five Bitcoins. Funds create shares based on the price of one contract unit and then trade them on exchanges. Bitcoin was first linked to an ETF in October 2021 when the Securities and Exchange Commission approved the Proshares Bitcoin Strategy ETF (BITO).
What Bitcoin ETFs Achieve A Bitcoin ETF in its current form - and the form desired by many investors - enables more people to make investments in Bitcoin without incurring the expense and hassle of purchasing it. While providing a familiar
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ETF investors can short BTC if they think prices will fall
investment type, they eliminate the need for security procedures and excessive funds.
Security and Bitcoin ETFs Your wallet doesn't physically contain cryptocurrency, but you do have security keys that you need to protect. You can opt to store your cryptocurrency keys on an exchange if it offers that service, if you purchase your cryptocurrency through that exchange. It requires no cryptocurrency ownership or storage, nor does it require you to move keys between different types of storage. The fund, on your behalf, is responsible for storing keys. The downside is that your cryptocurrency can be stolen if wallets and exchanges are hacked, and keys are obtained. Several methods exist for keeping your keys offline, but none is 100% safe or guaranteed. The keys can be stored in a "hot wallet" (online) or "cold storage" (offline). Both have their advantages.
Obstacles The most significant obstacle for the average investor is the price. Soon after the Proshares Bitcoin ETF went public on the NYSE, the cost of Bitcoin (BTC) reached a record high of close to $69,000 per BTC. The price then declined over the next few months, hitting close to $35,000 per BTC.
Institutions can invest without going through crypto exchanges
It may not be possible for retail investors to buy a BTC, even at low prices. Budget, risk appetite, and investment goals are considered when investing in an ETF. ETFs are More Known About than Crypto In addition to their increasing popularity, digital coins and tokens are becoming more complex. It's more beneficial to learn about exchange-traded funds than blockchains, mining, distributed ledgers, key storage, and cryptocurrency to trade digital currencies. Furthermore, investors are more familiar with ETFs than cryptocurrencies.
Bitcoin ETF Investing Your broker or advisor may offer Bitcoin ETFs if available to you. Several Bitcoin ETFs are traded on exchanges like the New York Stock Exchange, ARCA, and Nasdaq. Bitcoin ETFs track Bitcoin prices either through spot markets, derivatives, or Bitcoin ownership. Before making this investment, a professional should be consulted because it is hazardous.
Which ETF is best for Bitcoins? Bitcoin ETFs are based on Bitcoin futures contracts, and there are several available. Bitcoin Strategy ETFs from ProShares, Valkyrie, and Van Eck are a few examples. If you wish to invest in a Bitcoin ETF, consult a professional advisor.
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FEATURE Crypto Weekly
Banks in the United States Experimenting with Crypto T
op U.S. banking regulators warned last week that banks should be careful as they capitalize on the popularity of cryptocurrencies by offering related services to clients. Cryptocurrency has become a focus for some of the biggest banks operating in the United States. Among the first Wall Street banks to announce that it would hold, transfer, and issue Bitcoins for its asset management clients, Bank of New York Mellon announced in February 2021. The BNY Mellon crypto wallets, which will be created in partnership with crypto infrastructure company Fireblocks, will allow customers to store Bitcoin and Ether, the two largest cryptocurrencies. The move will take place in the coming months.
funds. In March, State Street Corp announced that it would offer cryptocurrency custody services through Copper.co, but it cautioned that these services would need regulatory approval. A World Economic Forum report said Deutsche Bank had already developed a proof of concept service for institutional investors to hold and trade cryptocurrencies. BNP Paribas has also completed a proof of concept with cryptocurrency wallet provider
Curv for a secure method of transferring tokenized securities in 2020. This step was a step toward developing an integrated custody solution for digital and traditional assets alike. In 2021, several big banks began offering crypto exposure to wealth management clients, led by Morgan Stanley. According to CNBC, Morgan Stanley began making Bitcoin funds available to clients with assets worth
U.S. Bancorp went live with its Bitcoin custody services in October. The bank uses Bitcoin company NYDIG as a sub-custodian. The bank's services are geared towards institutional investors managing private
April 2022 | Volume 23
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at least $2 million at the bank in March. Five cryptocurrency products were approved by JPMorgan Chase & Co's wealth management clients for buy and sell orders in July. Also in the summer of 2021, Wells Fargo & Co began offering cryptocurrency exposure to its wealthy clients, as did State Street. Private Bitcoin funds were registered with NYDIG by JP Morgan and Wells Fargo in August. In June, Citigroup Inc.'s wealth management division developed a digital asset unit that facilitates investments in cryptocurrencies, stablecoins, non-fungible tokens, and central bank digital currency in June. According to regulatory documents, Goldman Sachs opened up a crypto fund to wealthy clients through Galaxy Digital in March of this year. Despite mothballing its cryptocurrency desk in 2019, Goldman restarted it in March 2021. Clients can speculate on Bitcoin's future price with a team within the bank's Global Markets division, which deals in Bitcoin futures and non-deliverable forwards. By March of this year, Goldman Sachs became the first major U.S. bank to execute an over-the-counter crypto trade in conjunction with Galaxy Digital, a cryptofocused asset manager. Bank of America and CME Group Inc.'s partnership will allow some of its clients to trade Bitcoin futures
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in July 2021. According to a statement, “Bank of America is currently evaluating its cryptocurrency and digital asset strategies." Last August, Citigroup said it was considering offering Bitcoin futures trading to some institutional clients, but media reports suggested the bank was awaiting regulatory approval. Citi had no comment at the time. IFR reported in December that Citi had cleared its first Bitcoin futures trade through CME Group. PNC Financial
Services Group is also awaiting approval from regulators to allow its customers to trade cryptocurrency. A variety of banks are also investing in research. Bank of America launched its digital assets research division in October. As a result of the global growth of cryptocurrencies, Morgan Stanley created a crypto research group in September. At its institutional division, Citigroup said, in November, it would create 100 new roles this year focused on digital assets, including blockchains and digital currencies.
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of the
week
NFT
Bitcoin Trade Lessons And a VERY Quick Case for 200k
James Sides is an experienced and well-respected trader who has been a friend of Crypto Weekly`s Editor for many years. He has a free-to-enter Facebook group if you would like to learn more from him called Crypto Common Sense.
April 2022 | Volume 23
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Trading Advice from Full Time Trader James Sides Several times over my career, both in business and in trading I have come into contact with over the top arrogance. Many times those people have later come back to me for advice or help when the other shoe dropped on them. Right now, I'm seeing it again in crypto. People who had no problem trolling my bearish views or telling people to "go all in" a year ago, now admit they've lost enormous sums of money to the market - and wanting my help to learn how to trade properly. And I KNOW that many more who had not-so-nice things to say are secretly in the hole but would never admit it. The reality is, we all have egos. And sometimes, those egos get the best of us. I'm no exception. If you've not yet heard it, here's a cliche you will want to remember. "Markets eventually make fools of us all." All I can tell you is, that trading is a legitimate way to make
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consistent and 'life-changing' levels of income. But trading has nothing to do with gambling. Trading is not going 'all in' on a coin and hoping it goes up 100x some day. Trading is managing your risk so no one idea takes you out of the game. Trading is using risk management to make more off a single small move in the market, than many will make off large moves. Trading is finding one simple set of 'rules' that allow you to produce results, day after day, week after week, month after month.. regardless of market conditions. If you're not yet achieving those types of results and want to make a change, I'd suggest you reach out to me for a link to either join my course or my discord. Heck, I've even been dropping a lot of trading videos in Patreon lately, which costs less than many people spend on coffee each week...
I'm not putting the link here because frankly, Fb hates them and buries the posts. But if you're not going to join any of my programs, at the very least, stop listening to crypto bubble boys and grab some books/training from real traders. Here are three books that I feel are "required reading" for those serious about learning to trade: Trading in the Zone - Mark Douglas Charting and Technical Analysis Fred McAllen The Complete Turtle Trader - Michael Covel If you read these, I suggest reading them in that order. The first one deals with the psychology of trading. The second walks through technical analysis. And the third goes deep into Richard Dennis and how trend trading leads to him turning a few thousand dollars into hundreds of millions.
James Sides Crypto Common Sense https://www.facebook.com/groups/ cryptocommonsense
April 2022 | Volume 23
2022. The Year of the CAT
Time to
SUIT UP!
