Crypto Currencies

Investors see an onramp to crypto and NFT adoption. Detractors see a flimsy business model and potential for abuse. 

When Vincent Gallarte was laid off in July, the Manila IT analyst found an unusual financial lifeline: an online game that rewards players in cryptocurrency.

In his first two weeks of Pokémon-like questing and battling, Gallarte earned more than 37,000 pesos ($732), three times what he would have made at his “real job.

”Like a lot of newcomers to so-called play-to-earn games, the 25-year-old Gallarte hadn’t had any particular interest in the world of Bitcoin, Ether and other cryptocurrencies. Now he imagines a lucrative side-hustle.

“I started playing Axie the same day my employer terminated my contract,” he said. “I’m so grateful.”

Axie Infinity is among the biggest — and most polarizing — of these new games, which allow players to accumulate tradeable crypto coins. 

To investors like billionaire Mark Cuban and Reddit co-founder Alexis Ohanian, who were part of a $7.5 million funding round for Vietnamese game-maker Sky Mavis in May, it’s a gateway to crypto for people around the world.

Others look at the buy-in cost, now more than $600, and the influx of newbies “working” for low-value tokens and see evidence the Axie Infinity model is unsustainable.

Axie Infinity’s daily active users swelled from 30,000 in April this year to more than 1 million in August, with most logging on from developing countries hit hard by Covid, including the Philippines, Brazil and Venezuela.

Originally built on the Ethereum blockchain, Axie recorded around $30 million worth of Ether transfers a day over the past month, according to Etherscan.

That’s not much in the $2.2 trillion universe of cryptocurrencies, but meaningful for players—and governments—in poorer countries.

On Monday, the Philippines’ Department of Finance and the Bureau of Internal Revenue reminded players that their Axie Infinity profits are subject to income tax, local reports said. 



In Axie Infinity’s virtual world, players steer creatures called Axies — based on a Mexican walking fish called axolotl — to acquire coins.

Sky Mavis Chief Operating Officer and co-founder Aleksander Leonard Larsen says they take their responsibility seriously, monitoring the in-game currencies and tweaking the market as needed.

“Some people say we’re like the Fed,” he said in an interview. “We are ultimately the creators of this universe and are responsible for making sure that it lasts. We are always tracking the economy to make sure it stays at a healthy level.”

In Axie Infinity’s virtual world of Lunacia, players steer colorful, blob-like creatures called Axies to acquire two kinds of coins. Smooth Love Potions (SLP) are awarded for successful battles and can be cashed out or used in the game to breed new Axies.

Axie Infinity Shards (AXS) can be earned in seasonal tournaments or for selling Axies in the game’s marketplace. AXS can be cashed out too, but like other governance tokens, they’re designed to function like shares:

Sky Mavis says holders will eventually be able to vote on new game features or corporate spending proposals. Gallarte heard about the game from a cousin. 

But players need three Axies to get started, at a minimum of around $200 apiece. That was far too much for the newly unemployed Gallarte.

çHe sought out a sponsor, someone who lends his Axies to new players in exchange for a percentage of their in-game takings, sometimes as much as 90%.

Anything a player earns with a borrowed Axie accrues to its owner, who is then supposed to wire the player his cut.Gallarte appealed through Facebook to the Real Deal Guild, a group of Filipinos who now sponsor hundreds of players.

They agreed to let him play their creatures for a small haircut: the guild would keep 30% of his earnings. 

The boom has been a windfall for Sky Mavis, which takes a cut every time an Axie changes hands and collects a fee when players breed new, non-fungible token creatures.

Players have created more than 2 million of the digital monsters, and the Axie trade has generated more than $1 billion in transactions, the first NFT platform to do so, according to CryptoSlam, which tracks NFT marketplaces.

Axie Infinity generated just $21 million in revenue for Sky Mavis from its 2018 inception through July 1. Since then, it’s brought in $485 million.

Players spend tokens to breed new Axies, which can be sold as NFTs. To prevent hyperinflation, Sky Mavis programmed Axies to go sterile after several rounds of breeding.

Virtual goods with real-world value have been a staple of gaming for years now. The difference between Axie and most other big in-game markets is that Axie encourages players to cash out and gives them the tools and transparency to do so.

Instead of a semi-sanctioned peer-to-peer exchange on an unauthorized third-party marketplace, Axie players can take their SLP and AXS directly to a major crypto exchange and sell for whatever’s on offer.

Recent demand from the Philippines was high enough for Binance to offer an SLP-peso trade, as does Manila-based BloomX.

Independent analysts say it’s no mystery why Axie has been a hit in emerging markets.

The price of AXS has soared in the past two months, a sharp contrast with the broader economy in the Philippines, where roughly one out of 11 people are still unemployed. (SLP tokens are less valuable and prices have been more volatile this summer.) 

Access to cryptocurrency also appeals where local currencies are weak or, in Venezuela’s case, in crisis. 

Play to Earn

Axie Infinity's tokens have rallied during a boom in the game's popularitySource: CoinGeckoNote: Prices quoted are in U.S. dollar But the Axie frenzy has also bred criticism that the platform is propped up by new money drawn to a get-rich-quick premise. Vanessa Cao, founder of venture-capital firm BTX Capital, said the Axie model is “fundamentally unhealthy and unsustainable.

” “Players need to spend hundreds of dollars upfront just to play,” she said.

“It’s a wrongful concept. You can’t ask people to pay before even having any idea what the game is about.

”Cao offered Dream Card, from BTX portfolio company X World Games, as a counterpoint. It’s free to get started; its almost 560,000 users customize character cards and trade them.

X World Games doesn’t give a “misleading impression that Santa Claus is coming to town,” she said.

Would-be Axie players are active on Telegram and Discord, looking for sponsors help them get started. That’s how John Aaron Ramos, a 22-year-old university student in the Philippines, says he connected to a Venezuelan gamer in November, months before the game boomed. At the beginning, he earned up to 300 pesos ($6) a day. 

Over the next four months, he bred new Axies and the price of Ether went up, increasing his earnings tenfold. He ended his relationship with his sponsor and built his own stable of contract players, lending Axies to 15 people including friends and relatives. He keeps 30% of their earnings.

In March, he bought two apartments south of Manila for his parents. He also bought insurance plans and is contemplating investing in stocks. “The value of Axie could fall, but I’m not worried,” Ramos said. “I must still have physical assets so that I am in a more secure position.

”Sky Mavis doesn’t regulate the relationships between sponsors and contract players, though in June, the company tweeted to condemn reports that sponsors were soliciting nude photos from female applicants. 

“Axie Infinity is a digital nation and, like in any society, certain people might be criminals,” said Larsen. “How do we deal with those who might be abusing other scholars or players?

These are challenges for us internally.” The company has banned “several thousand” accounts for violating the game’s terms, he said, including for bot behavior or when there is “clear evidence of scams.

”The company seems more comfortable in the role of central bank. After the price of AXS rose nearly 650% from July to early August, Sky Mavis reduced the price to breed Axies. It cut by half how much users can earn each day on quests and increased the rewards available to better players.

Some of the risks for Axie Infinity players and investors are in line with the rest of the crypto world, where massive drawdowns are common. Cuban himself took a bath in June, when a coin he liked went from around $60 to 0 in a single day.

“The investment wasn’t so big I felt the need to dot every I and cross every T,” he told Bloomberg. “I took a flyer and lost.” 
If AXS and SLP tank, as predicted by traders taking short positions against the coins, players may not be able to cut their losses. The game only allows them to cash out SLP every 14 days, a constraint that, like all lock-ups, chafes a lot more when asset values are falling.

As it is, there’s evidence new players may not fully understand how to protect their gains. Larsen says users seeking customer service help have emailed their crypto wallet passwords to the company. 

For evangelists, the learning curve is the point. “It’s going to help digital-asset adoption 100%,” says Lennix Lai, Director of Financial Markets at OKEx, a crypto exchange headquartered in the Seychelles.

“Imagine a large group of people who have never had crypto before, who have never had a wallet and they’ve never transferred within the blockchain — here there are actually huge opportunities for crypto education,” Lai said.Larsen says the game has lasting appeal, whatever happens to the currencies.

“We see it as more of a social network than a game,” he said. “People come in because it's such a new opportunity, then they fall in love with the community and the game that we’ve been building over time.” 

— With assistance by Felix Tam, and Amanda Wang

#1 – If your coins are on an exchange, you need permission from the exchange to spend them. In your own custody, you can do whatever you want and pay whomever you want, whenever you want, at the fee you want.

You will understand this if you’ve ever wanted to move your bitcoin from an exchange and you were blocked because you needed to provide more identification documents or prove your source of income.

You may have been blocked because you reached a 24-hour limit of value you are permitted to withdraw. Your funds may have been unavailable due to unscheduled system maintenance. It is your bitcoin and yet you are in a powerless position.

Bitcoin doesn’t actually care who you are or how much you are transacting. You can move 100,000 bitcoin and you’ll be free to do that without any resistance any time of the day, even on Christmas Eve, if the bitcoin was in your possession.

#2 – Your coins might not really be there. What you see is a promise that if you ask for your bitcoin, they will give it to you.

But if the exchange gets hacked or if the CEO fakes his death and takes the private keys or if the government steps in, all coins could go bye-bye.

Newcomers log into their exchange and see “Balance = 1.0 bitcoin” and they think that is their bitcoin. It is not. That is a number on a screen.

The bitcoin is on the Bitcoin blockchain, the global distributed ledger. The entity that can move that bitcoin from one address to another is the entity that has the private key that generated that address. The user of an exchange does not have the private key, the exchange does! It is their bitcoin. The bitcoin belongs to whoever has the private key. 

This is crucial to understand.The exchange just has a legal agreement that the bitcoin belongs to the user and they show the user their balance. But the user just has a login name, a password, and a promise. Not a private key.

A little sinister trick that blockchain.com employs is a 24-word password to log in to the website. This LOOKS like a bitcoin private key, but it is not. It is just a website-password. Blockchain.com has the private key. This is quite misleading, and confuses beginners as to the true nature of how Bitcoin works.

Many exchanges have been hacked and coins have been stolen from those exchanges:

• Mt. Gox is the first and most famous.
• Quadriga CX, a Canadian exchange, went bust after the CEO — the only person in the company with access to the private keys (allegedly) — died (allegedly) while on a trip to India. The users lost all their bitcoin.
• Cryptopia, an exchange in New Zealand. They got hacked and users lost their funds.
• Binance. $40 million worth of bitcoin was stolen but Binance was wealthy enough to make their users whole. Embarrassingly, the CEO called for a rollback of the Bitcoin blockchain to recover lost funds but was laughed out of town.
• Most recently, the CEO of a Turkish exchange fled the country with $2 billion worth of bitcoin.
• There have been many others that I had not previously even heard about.

There is no way to tell if an exchange really got hacked or if it was an inside job from a rogue employee. The bottom line is: if they hold your bitcoin, you are trusting them to act honestly and safely.

You might not trust yourself with self-custody. That is understandable. But it is your responsibility to educate yourself on self-custody or at least only partially-custodial collaborative custody. Most early Bitcoiners are likely sitting on a lot of bitcoin.

They must step up and look after their coins. People brand new to bitcoin can store their initial small stacks on exchanges and it won’t matter too much. But you, you are early.

You must take responsibility. All the information is available online and free.

#3 – If coins are left on the exchange, they can engage in fractional reserve lending, effectively inflating the supply of bitcoin. If there is a mass withdrawal by the public, exchanges can and have gone bust if they don’t have the coins that were promised.

Coins go bye-bye.Fractional reserve is the fraudulent practice for accepting a deposit, and then lending it out, but the depositor is given the illusion that their money is still available. Somehow this is both common and legal in the fiat banking world. If one bitcoin is deposited and then is loaned out, the depositor should not have access, similar to a term deposit.

This would be full reserve or one-to-one banking.If the depositor requests their funds, then what is returned to them is another depositor’s funds instead and, in theory, no one is hurt. But if many people want their funds at once, then the obligations cannot be fulfilled.This practice not only inflates the supply of money but is a systemic risk.

By withdrawing your coins, you eliminate the risk to you of a bitcoin bank run.Trace Mayer, a once loved Bitcoiner, started Proof-of-Keys Day, on the anniversary of the first Bitcoin block, January 3.

It started a movement where Bitcoin users celebrate by withdrawing all their coins from exchanges all at the same time, putting stress on the system, to keep the exchanges honest. Any exchange that was running on partial reserves could be exposed if enough people participated.

#4 – One day governments may outlaw withdrawals to private wallets, leaving your coins stuck and vastly less valuable. The real bitcoin economy would consist of the open peer-to-peer market outside of the exchanges while the coins trapped inside exchanges would be useless.

I am fully expecting governments to make it extremely difficult or outright ban coins from leaving exchanges into private wallets. We will fight back, no doubt. But the effort by governments will be futile. Most bitcoin is not on exchanges. My estimate is that about two million coins of the 18.7 million mined are on exchanges.

Bitcoin’s future is as peer-to-peer money, with most payments made on the Lightning Network. Coins on an exchange cannot serve this function. Exchange coins will always have a middleman that you will require permission from to make payments.

Coins stuck on the exchange due to laws cannot be used as bitcoin is intended and they will be less valuable. If I offer a service and charge in bitcoin, I will only accept real bitcoin outside of exchanges. I will not take payment from trapped bitcoin to my exchange wallet. I will not be alone.

Therefore, there will emerge a price difference between real bitcoin and IOU exchange-trapped bitcoin.

#5 – Powerful people who want Bitcoin to fail MAY be naked shorting it on futures markets. If we, The Resistance, buy bitcoin and extract it from the trading pool, we will eventually enforce a decoupling of the price of paper bitcoin vs physical bitcoin.

We are fighting the people who print fiat. It’s easy for them to naked short bitcoin and suppress the price because they can print money and therefore have no real risk.

*Click here to read more about how naked shorting can affect the price of assets.

Here’s why they’ll fail: there is an army of Bitcoiners, true believers, who are regularly buying bitcoin and withdrawing coins from exchanges. Most of the coins are off exchanges already. If the naked short attack succeeds in driving down the price, Bitcoiners will eagerly scoop up the cheap sats and remove even more bitcoin from the exchanges.

Miners can somewhat replenish the supply of coins on exchanges. Currently, miners could theoretically dump 900 bitcoin per day onto exchanges. When HODLers remove 900 bitcoin a day, the price is relatively steady.

Wild fluctuations in price can happen despite this, of course, as traders buy and sell coins between each other.

But as more and more coins are removed and as mining supply diminishes (halves every 4 years), there will come a point when not enough bitcoin is available.

This will cause a decoupling of the paper price of bitcoin on the futures market and real bitcoin that is demanded by HODLers or merchants.Be a part of the army to bring this day forward and make bitcoin successful sooner.

Regularly stack bitcoin — Dollar Cost Average (DCA) — and remove the coins from the exchange.#6 Unless you take coins into your own custody, you will never fully appreciate how Bitcoin works.

If you don’t appreciate it, you won’t buy enough of it. And this you will regret.You will need to learn more about self-custody and run a node. 

This will also blow your mind and get you closer to the truth of how amazing this technology is. You might even start using the Lightning Network and be totally obsessed. In a good way.

This is a guest post by Arman the Parman. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Crypto exchanges such as OKEx, Binance, Huobi, Kraken and Bitmex outline the key challenges they face in pushing to establish global operations.
Cryptocurrency exchanges have an important role in driving adoption around the world, but even the biggest operations face significant challenges when trying to expand their services.

The advent of Bitcoin (BTC) and the subsequent development and launch of numerous other cryptocurrencies have changed the way people look at transacting across the world. Dependency on traditional banking systems is no longer the only option available to people.

Blockchain networks and cryptocurrencies are able to bypass conventional financial systems and allow people to transact directly, without having to go through a centralized institution. In an ideal, cryptographically secure world, users would transact peer-to-peer, but there are some barriers to entry for the uninitiated.

Therefore, most of those new to crypto use exchanges as their entry points into the ecosystem as they convert their fiat currency into their cryptocurrency of choice. In 2020, users are spoiled by choices with the sheer number of cryptocurrency exchanges operating internationally.

Nevertheless, a handful of these exchanges are attempting to surge ahead of the pack and establish themselves as truly global enterprises. But what are the key challenges they face, and how have they gone about building their respective empires?

A juggling act

It’s clear that building a successful cryptocurrency exchange requires an enormous amount of time and resources as well as the ability to jump through a number of hurdles at any given time.

This is compounded when working across borders and continents, given that many countries have their own regulations and laws around the use of cryptocurrencies and the transfer and flow of fiat currencies.

Jay Hao, the CEO of OKEx, told Cointelegraph that there are a number of considerations that make for a complex and challenging business environment, which means that “most CEOs in this business don’t get much sleep.

” He added:

“Growing a global cryptocurrency exchange is probably one of the most difficult businesses to be in. There are many challenges from attracting and retaining the right talent to consolidating and expanding your user base, ensuring liquidity, depth of market, and an attractive product offering. You also have to make sure that the exchange is robust and secure, can handle high unexpected amounts of volume with next-to-no downtime, all the while meeting requirements from regulators. The list of challenges is actually endless.”

In a recent interview with Cointelegraph, Changpeng Zhao, the CEO of Binance who is otherwise known as “CZ,” stressed the importance of having a "global mindset" while maintaining a sustainable business model. In order to do this, CZ believes that exchanges need to understand the specific needs of users in different regions. “We have different approaches for various markets,” he further told Cointelegraph, adding:

“To run a global business, we have to make sure we are always offering a solid infrastructure for the users and enhance their experience, which is especially important for the 24/7 crypto space. Then, we have team members from different communities to provide customized products and services to a local market, and ensure our marketing strategy is aligned with local culture, custom and language.”

Huobi’s head of global business and markets, Ciara Sun, shared a similar idea, highlighting two major considerations that the exchange has focused on since its founding: localization and regulatory compliance. Sun told Cointelegraph that having a sound grasp of the wants and needs of users is a driving factor in launching exchange support in new regions:

“Localization doesn’t just mean offering the exchange in a new language. Users in different markets and regions each have different preferences, habits, and requirements, so we need to adapt to each audience and provide local users with highly tailored experiences.” 

As Sun explains, understanding why users in specific countries or regions are looking to use cryptocurrencies also provides some insights into what sort of offerings will work in different places:

“We spend a lot of time learning the intricacies of a new market before we enter it.”Cointelegraph also spoke to BitMEX to gauge its views on the most challenging aspects of running a cross-continent operation. A spokesperson for the company highlighted customer support as a considerable undertaking and one that requires the highest amount of its resources:

“As a 24/7 cryptocurrency derivatives trading platform serving users from around the world, our ability to provide seamless support, regardless of time zone, is an important part of our service. Our Customer Support team is now one of the largest teams within our organisation and offers support in multiple languages.”

A spokesperson for the exchange Kraken told Cointelegraph that regulatory considerations in different jurisdictions are some of the toughest challenges in terms of trying to set up new bases of operation:

“Clear regulatory guidance is important because it helps determine what products we can offer and who we can target with our businesses. If done properly, it can also ensure a level playing field for all competitors. Additionally, education continues to be a focus of ours as well, as there are both awareness and knowledge gaps when it comes to crypto and its benefits.”

Navigating the global waters

So, becoming a global cryptocurrency exchange is not a clear-cut endeavor either, as there is no single regulatory body that exists for the industry. Given that cryptocurrencies have been in existence for just over a decade, regulation is very much down to individual countries and their laws.

Given that most financial institutions around the world face strict control measures from regulatory bodies, cryptocurrency exchanges have had to adopt similar practices.

Many of these operations have to abide by Know Your Customer and Anti-Money Laundering guidelines in order to operate.

As OKEx’s Hao explained, the company takes direction from the guidelines of the Financial Action Task Force, or FATF, when looking to branch out to new regions.

Nevertheless, Hao believes that a global body overseeing cryptocurrency regulation is an unlikely scenario, forcing the exchange to have a large legal team on board in order to ensure compliance in each jurisdiction where the exchange operates:

“I think that it will be very hard to establish a global regulatory authority for this space as all jurisdictions have their own laws and requirements. They are also constantly changing as the industry evolves.”

Huobi’s Sun hammered home the importance placed on regulatory compliance by its exchange as a fundamental part of its business model. “It's crucial that a crypto exchange meets all local regulatory requirements with the proper licenses to operate,” Sun said, adding: “This requires an enormous amount of time and effort and most ‘global’ exchanges don’t actually bother with this but we believe it’s critical.

”A major takeaway from most of the exchanges is the challenging task of navigating a global landscape that has vastly different regulatory and legal parameters. Sun admitted that it is a difficult undertaking, but said that the first port of call is a country or region’s securities and exchange commissions and its financial regulators, adding:

“As of yet, there isn’t a global consensus for classifying and regulating digital assets, so each market is unique with its own complexities.”Binance’s CZ told Cointelegraph that the lack of a global body that governs all markets is down to the fact that the crypto industry is still in its infancy, meaning exchanges have to work closely with regulators in every single country:

“To take the US for example, it has well-established legal and compliance systems, where a crypto exchange has to apply for various licenses from different states in order to serve citizens of those states. [...] For Binance, we always work closely with local governments and regulatory agencies and operate compliantly in all the jurisdictions we serve.”

Kraken’s spokesperson highlighted how operating in different continents requires specific compliance with various regulatory bodies and watchdogs and the rules that they set out.

These considerations go deeper than just adhering to KYC, AML and FATF regulations; they also include following United States sanctions, meaning that Kraken is prohibited from operating in some countries. The spokesperson added:

“We are also increasingly cognizant of maintaining compliance with global data protection regulations, such as the General Data Protection Regulation (GDPR) in Europe.”BitMEX’s spokesperson said that a key driver of success would come down to an exchange’s ability to adapt to regulatory parameters as it continues to develop. Additionally, the exchange sees that regulators all over the world are upping their interest in crypto, adding:

“We welcome their efforts, as they will help to establish greater standards for the cryptocurrency market that will underpin the advancement of this rapidly growing asset class. We believe that the successful platforms of the future will be those that can quickly embrace and maintain these standards.”

Plugging into legacy systems

The proliferation of cryptocurrencies has been slow and steady over the past decade, but the industry has already made the traditional financial landscape aware of itself.

Nevertheless, “the new” still has to plug in and be compatible with “the old.” In order to create accessibility for new users, cryptocurrency exchanges have to create fiat gateways to their platforms, which requires building relationships and compatibility with the traditional financial system.

Kraken offered its take on the intersection of cryptocurrency and traditional banking, conceding that the relationship between the two is important to drive adoption of the former. Nevertheless, the apathy of some banking institutions and the difficulty of interfacing and working with such organizations is still a challenge, as it’s “time-consuming to come to terms with these partners,” the company stated, adding:

“Despite the presence of many forward-looking banks, many others are extremely (and unnecessarily) risk-averse when it comes to crypto. This is unfortunate because they are depriving their clients of opportunities to engage with and benefit from this new and exciting opportunity.”

Further challenges are created by countries that try to apply existing laws to govern the use of cryptocurrencies. As Hao explained, “It’s a help and a hindrance” for the growth of cryptocurrency use, as some countries have developed crypto regulations upon realizing that the current framework cannot be adapted, while other jurisdictions are still lagging behind.

He added: “This can be to the detriment of cryptocurrency as it all depends on how crypto is defined in the first place.


”For Binance’s CZ, regulation is not necessarily in opposition to cryptocurrencies. CZ believes that supporting regulation can drive innovation and help shape the crypto and blockchain space, much like the evolution of foreign exchange trading:


“Given that the forex industry and the crypto industry, both driven by high technologies, share some similarities, forex regulation could serve as a good reference for regulators to formulate more supportive regulatory frameworks for the crypto industry.


”Huobi’s Sun believes that there is a changing attitude toward cryptocurrencies from regulators and the traditional financial system as they slowly gain an understanding of crypto and blockchain systems: “It’s only natural that forex regulation and banking systems have not yet fully caught up,” Sun said, adding that “current regulation continues to evolve as regulators adapt to the changing financial landscape.


”Sun told Cointelegraph that as a result, more and more traditional banking and financial institutions are onboarding the technology and opening up support to cryptocurrencies and exchanges:

“We’re also seeing less resistance from legacy financial institutions and banks. [...] We’ve also partnered with banks to enable fiat gateways for local users in several markets, so while there’s still progress to be made, I believe the legacy banking system is moving quicker than anticipated.”

Ever-changing world

As the various representatives of these cryptocurrency exchanges have highlighted, the global cryptocurrency environment is a complex one. Building and launching a cryptocurrency exchange is a technical and challenging endeavor in and of itself.

Taking that exchange and launching support in different jurisdictions adds multiple layers of complexity that require an inordinate amount of resources and energy.

Given the effort required, exchanges that are slowly building a global footprint are surely at the forefront of the industry and are pushing the adoption and acceptance of cryptocurrencies around the world.

The last few months’ frenzy of institutional money flowing into Bitcoin (BTC) has seen crypto hitting the headlines — at the least as a novelty asset, at the most as a must-have.

There is undoubtedly a trend in the market toward greater awareness and acceptance of digital assets as a new investable asset class.

A June 2020 report by Fidelity Digital Assets found that 80% of institutions in the United States and Europe have at least an interest in investing in crypto, while more than a third have already invested in some form of digital asset, with Bitcoin being the most popular choice of investment.

A good starting point for institutional investors would be to differentiate between crypto (Bitcoin, in particular) and decentralized finance products. To date, most institutional interest has involved simply holding Bitcoin (or Bitcoin futures), with few players dipping into more exotic DeFi products.

There are a plethora of reasons for the recent Bitcoin rage.

Some would cite the relative maturity of the market and increased liquidity, which means sizable trades can now take place without resulting in excessive market movement.

Others would cite the unusual high volatility, high return and positive excess kurtosis (meaning a greater probability of extreme values compared with the stock market) of the asset class.

Bitcoin’s backstory and its limited supply that makes it akin to digital gold have also been highlighted, making it more and more attractive in a world of inflated asset prices and unruly monetary and fiscal policies.

However, the main reason for the recent institutional interest in crypto is much less philosophical, much more practical and has to do with regulations and legacy infrastructure.

Financial institutions are old behemoths, managing billions of dollars’ worth of other people’s money, and are therefore required by law to fulfill an overabundance of rules regarding the type of assets they are holding, where they are holding them and how they are holding them.

On the one hand, in the past two years, the blockchain and crypto industry has made leaps forward in terms of regulatory clarity, at least in most developed markets.

On the other hand, the development of the high-standard infrastructure that provides institutional actors with an operating model similar to that offered in the traditional world of securities now allows them to invest directly in digital assets by taking custody or indirectly through derivatives and funds. Each of these represents the real drivers in giving institutional investors enough confidence to finally dip their toes into crypto.

Keeping institutional interest alive: What about other DeFi products?

With U.S. 10-year Treasurys yielding a little higher than 1%, the next big thing would be for institutions to look at investing in decentralized yield products.

It might seem like a no-brainer when rates are in the doldrums and DeFi protocols on U.S. dollar stablecoins are yielding between 2% and 12% per annum — not to mention more exotic protocols yielding north of 250% per annum.

However, DeFi is in its infancy, and liquidity is still too thin in comparison with more established asset classes for institutions to bother upgrading their knowledge, let alone their IT systems to deploy capital into it. Additionally, there are real, serious operational and regulatory risks when it comes to the transparency, rules and governance of these products.

There are many things that need to be developed — most of which are already underway — to ensure institutional interest in DeFi products, whether on the settlement layer, asset layer, application layer or aggregation layer.

Institutions’ primary concern is to ensure the legitimacy and compliance of their DeFi counterparts at both the protocol level and the sale execution level.

One solution is a protocol that recognizes the status of a wallet owner or of another protocol and advises the counterparty as to whether or not it fits its requirements in terms of compliance, governance, accountability and also code auditing, as the potential for malicious actors to exploit the system has been proved over and over.

This solution will need to go hand in hand with an insurance process to transfer the risk of an error, for example, in validation to a third party.

We are starting to see the emergence of a few insurance protocols and mutualized insurance products, and adoption and liquidity in DeFi need to be large enough to caution the investments in time, money and expertise to fully develop viable institutional insurance products.

Another venue to be enhanced is the quality and integrity of data through trustful oracles and the need to increase the confidence in oracles to achieve compliant levels of reporting.

This goes hand in hand with the need for sophisticated analytics to monitor investments and on-chain activity. And it goes without saying that more clarity on accounting and taxes is needed from certain regulators who haven’t emitted an opinion yet.

Another obvious issue concerns network fees and throughput, with requests taking from a few seconds to double-digit minutes depending on network congestion, and fees twirling between a few cents and 20 bucks.

This is, however, being resolved with plans for the development of Ethereum 2.0 in the next two years and also the emergence of blockchains more adapted to faster transactions and more stable fees.

A final, somewhat funny point would be the need for improvement in user experience/user interfaces in order to turn complex protocols and code into a more user-friendly, familiar interface.

Regulation matters

People like to compare the blockchain revolution to the internet revolution. What they fail to remember is that the internet disrupted the flow of information and data, both of which were not regulated and had no existing infrastructure, and it is only in the last few years that such regulations were adopted.

The financial industry, however, is heavily regulated — even more so since 2008. In the United States, finance is three times more regulated than the healthcare industry.

Finance has a legacy operational system and infrastructure that makes it extremely hard to disrupt and tedious to transform.It’s likely that in the next 10 years, we will see a fork between instruments and protocols that are fully decentralized, fully open source and fully anonymous and instruments that will need to fit in the tight framework of the heavy regulation and archaic infrastructure of financial markets, resulting in a loss of some of the above characteristics along the way.

This will by no means slow down the fantastic rate of creativity and the relentless, fast-paced innovation in the sector, as a large number of new products in the DeFi space — products we haven’t even predicted — are anticipated.

And within a quarter of a century, once DeFi will have first adapted to and then absorbed capital markets, its full potential will be unleashed, leading to a frictionless, decentralized, self-governing system.The revolution is here, and it is here to stay.

New technologies have undeniably shifted the financial industry from a sociotechnical system — controlled through social relations — to a technosocial system — controlled through autonomous technical mechanisms.

There is a fine equilibrium to be reached between tech-based, fast-paced crypto and antiquated, regulated fiat systems. Building a bridge between the two will only benefit the system as a whole.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Amber Ghaddar is one of three founders of AllianceBlock, a globally compliant decentralized capital market.

With a vast amount of experience across the capital markets industry over the last decade, Amber began her career at investment banking giant Goldman Sachs, before moving to JPMorgan Chase where she held a number of different roles in structured solutions, macro systematic trading strategies and fixed income trading.

Amber obtained a B.Sc. in science and technology before graduating with three master’s degrees (neurosciences, microelectronics and nanotechnologies, and international risk management) and a Ph.D. She’s a graduate of McGill University and HEC Paris.

Cardano, now the third-biggest cryptocurrency after bitcoin and ethereum, has soared in recent weeks—outpacing even bitcoin's massive rally.The cardano price has surged a blistering 2,000% over the last 12 months, adding 300% in the last month alone.

Now, as the cardano network bobs around a total value of $40 billion, developers are gearing up for the launch of a major update on Monday—designed to make it into a multi-asset network similar to ethereum.

MORE FROM FORBES

Bitcoin Price Prediction: How Far Could The Bitcoin Bull Run Go?By Billy Bambrough



The cardano price has soared in recent weeks, with cardano breaking into the cryptocurrency top ... [+] LIGHTROCKET VIA GETTY IMAGES

"We can today confirm that the ‘Mary’ cardano protocol update is now fully confirmed for March 1," the Cardano core development team, Input Output HK (IOKH), said via Twitter this week.

"Another key milestone in the Goguen rollout, the update introduces native tokens and multi-asset support, bringing exciting new use cases for cardano.

"The update will allow cardano to support traditional-currency-pegged stablecoins and let users create non-fungible tokens (NFTs)—a way to prove ownership and authentication of everything from social media posts to digital art using public blockchains—which have exploded in popularity in recent weeks.

Cardano's upgrade comes as the ethereum price has rocketed over the last year, smashing through its early 2018 highs.

As well as the growing NFT market, ethereum has benefitted from the rise of decentralized finance (DeFi)—using cryptocurrency technology to recreate traditional financial instruments such as interest, known as "yield," and insurance.

Many of the biggest DeFi projects are built on top of ethereum's blockchain, pushing the ethereum price higher as users flood the network.Cardano and other potential rivals to ethereum, including the sixth-largest cryptocurrency by value, polkadot, are currently jostling for DeFi, NFT and stablecoin market share as ethereum struggles with slow transaction times and sky-high fees.

MORE FROM FORBESBill Gates Issues Serious Bitcoin Warning As Tesla Billionaire Elon Musk Stokes Crypto Price 'Mania'By Billy Bambrough





The cardano price has soared in recent weeks, taking cardano to a total value of over $40 billion ... [+] COINBASE

Cardano's price surge has catapulted it to prominence in the cryptocurrency community over recent weeks.

"Cardano is a rising star in the booming crypto sector," Nigel Green, the chief executive of financial advisory group deVere, said earlier this month alongside an announcement the deVere cryptocurrency exchange had added cardano to its supported digital assets.

"It has had a highly impressive run in recent weeks and there’s no reason why this will not continue. Cardano could, quite realistically, become an increasingly dominant rival to bitcoin, ethereum and tether."

• Meltem Demirors of CoinShares told CNBC on Monday that the “best time to invest in bitcoin was yesterday.”
• Her comments came as bitcoin’s market value recently topped the $1 trillion mark, according to Coindesk.
• Meanwhile, NYU’s Aswath Damodaran argues that bitcoin is “an incredible show to watch” but not an investment.

The reflection of bitcoins in a computer hard drive.Thomas Trutschel | Photothek via Getty Images


As bitcoin continues on its upward trek in 2021, one analyst says the regulatory concerns surrounding the cryptocurrency won’t likely derail its momentum.“The regulatory issues have been around for a long time, we’ve been dispelling them for a long time. At this point, our belief is: Bitcoin is not a question of if, but when,” Meltem Demirors, chief strategy officer at digital asset investment firm CoinShares, said Monday.

“We certainly believe, you know, the best time to invest in bitcoin was yesterday — the second best time to allocate is today,” she told CNBC’s 

Her comments came after bitcoin recently toppled another milestone, pushing past $1 trillion in market value last week, according to Coindesk.Bitcoin has been on a tear since the start of 2021, and has risen more than 90% so far this year, according to data from Coin Metrics. Those strong gains have been attributed in part to increased adoption of bitcoin by major investors and companies, including Elon Musk’s Tesla and the Bank of New York Mellon.

If it’s a currency, it’s a ... horrifically bad currency ... bitcoin seems to be primarily a speculative game.Aswath DamodaranPROFESSOR, STERN SCHOOL OF BUSINESS AT NEW YORK UNIVERSITY

“It’s becoming increasingly difficult for the bitcoin naysayers to continue with their decade-old narrative that bitcoin will never be utilized by traditional … financial institutions,” Dave Chapman, executive director at BC Group, told CNBC’s “Capital Connection” on Monday. “Frankly, I’m not sure how much more evidence one needs to conclude that bitcoin isn’t going away.”Bitcoin last sat at $55,867.95 per coin as of 3:45 a.m. ET Monday.


Allocate 4% to bitcoin in a traditional 60-40 portfolio, says strategistStill, Demirors warned that investors should not be allocating “significant portions of their balance sheet” to bitcoin.“Our research has found that in a traditional 60-40 portfolio, a 4% allocation to bitcoin balances the reward as well as the risk of drawdowns,” she said. The 60% stock and 40% bond portfolio is traditionally a popular allocation strategy designed to generate steady income while guarding against volatility.

Bitcoin a ‘failed currency’?

Aswath Damodaran from New York University was far more skeptical about investing in bitcoin.“This is an ... incredible show to watch. But it’s definitely not an investment,” Damodaran, a professor of finance at NYU’s Stern School of Business, told CNBC’s “Street Signs Asia” on Friday.


Bitcoin is mainly a ‘speculative game,’ NYU professor says“If it’s a currency, it’s a ... horrifically bad currency,” he said, adding that bitcoin “seems to be primarily a speculative game” that has “behaved like a very risky stock.

”“It’s not an asset class. It’s a failed currency, at least into this moment,” Damodaran said.

 “Let’s see whether they can fix it because ... I don’t think that they have an incentive to do so.”— CNBC’s Jesse Pound, Lizzy Gurdus and Sumathi Bala contributed to this report.

Sean Williams

(TMFUltraLong)
Author Bio
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley!

Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Earlier this week, Bitcoin (CRYPTO:BTC), the largest cryptocurrency in the world by market cap, hit a milestone. It handily topped the psychological $50,000 level. As I write this on Feb. 17, it's closing in on a market value of $1 trillion (about $25 billion away).

Bitcoin has gotten an extra bump in recent weeks from a handful of brand-name companies adding it to their balance sheets or accepting it as a form of payment. 

Tesla (NASDAQ:TSLA) purchased $1.5 billion worth of Bitcoin to add to its balance sheet, with enterprise software company MicroStrategy buying in excess of $1.1 billion worth of tokens in December.

Even The Motley Fool has decided to purchase $5 million worth of Bitcoin to add to its balance sheet.

But at The Motley Fool, we strongly believe in understanding both sides to every investment. Personally, I don't think highly of Bitcoin. I have 10 reasons why I'll never buy it for my portfolio.




IMAGE SOURCE: GETTY IMAGES.

1. Its scarcity is a myth
Bitcoin optimists often cite its 21 million token limit. With 18.6 million Bitcoin already in circulation, it'll take close to 120 more years before the remaining 2.4 million are mined and put into circulation. The argument is that Bitcoin's fixed token count will help fight against the ongoing devaluation of the U.S. dollar as the money supply expands.

The flaw in this thesis is that Bitcoin's scarcity is nothing more than an illusion. While unlikely, community consensus could decide, at some point in the future, to increase Bitcoin's token count. Without any physical scarcity to speak of, a promise is all that keeps its token count from rising.

2. Its real-world utility is minimal
Though companies like Tesla are adding fuel to the Bitcoin craze, the reality is that it's not exactly a preferred form of payment. An analysis from business funding company Fundera found that approximately 2,300 U.S. businesses accept Bitcoin.

There are more than 30 million businesses in the U.S., including sole-proprietorships, and about 7.7 million that employ at least one other person. After a decade, Bitcoin has hardly made a dent on the utility front. 

Also, don't forget that a vast majority of tokens aren't actually in circulation. Investors are holding on to them, which further limits Bitcoin's ability to be a medium of exchange.




IMAGE SOURCE: GETTY IMAGES.

3. The barrier to entry is almost nonexistent
Want to start your own digital token? If you've got money and time on your hands, you can create your own digital currency with tethered blockchain. The barrier to entry in the crypto space is exceptionally low, meaning there could be dozens of superior alternatives to Bitcoin or its blockchain in development or available for use. Having virtually no barrier to entry suggests that Bitcoin's first-mover advantage isn't a selling point.

4. It's difficult to short-sell, which leads to inefficient markets
In recent weeks, retail investors (who also happen to be the core fans of Bitcoin) have been in an all-out war with short-sellers -- i.e., investors who profit when the price of a security falls. Some even view short-sellers as evil. But short-selling is a natural part of the investing cycle that helps lead to price discovery.

Bitcoin is really difficult to short-sell on most platforms, which means we're not getting anywhere near a true price discovery. This market inefficiency is one of the reasons Bitcoin is so exceptionally volatile.




IMAGE SOURCE: GETTY IMAGES.

5. It isn't even the best option among financial networks
Bitcoin's network has been touted as a game changer for financial payments. Rather than using traditional banking networks and waiting up to one week for payment to be validated and settled, Bitcoin can do so in an average of 10 minutes. 

However, Bitcoin's usage is strictly limited to the payments side of the equation, and it's not even the best network at what it does in the financial space. 

Stellar (CRYPTO:XLM) can settle validate and settle financial transactions in mere seconds with its Lumens coin.

 Meanwhile, Ethereum (CRYPTO:ETH) provides nonfinancial blockchain applications with the addition of smart contracts -- commands that are executable once all predetermined conditions are met. Once again, Bitcoin may have first-mover advantage, but it's not the most innovative or functional kid on the block by a long shot.

6. Blockchain has been an enterprise bust thus far
Don't overlook that the Bitcoin story is really about advancing its underlying digital ledger, known as blockchain. With blockchain, transactions can be validated and stored forever in a transparent and immutable way.

While there are plenty of applications for blockchain on paper, we haven't seen these ideas translate into real-world functionality.

Businesses have been unwilling to replace their proven network infrastructure with untested blockchain technology, creating something of a Catch-22.

 CoinDesk reported that tech stalwart IBM (NYSE:IBM) practically dismantled its blockchain division, according to four people familiar with the matter. In short, enterprise blockchain has been a gigantic flop thus far.




IMAGE SOURCE: GETTY IMAGES.

7. Storage and security issues are worrisome
This is a bit more personal, but I have no desire to deal with the complexities of storing and protecting Bitcoin from hackers. Bitcoin must be stored in a digital wallet kept on a hardware-based platform or on the web. Either way, it can be far less secure than most folks realize.

An estimated $1.36 billion worth of crypto tokens, including at least 46,000 Bitcoins, were stolen in the first five months of 2020, according to CipherTrace. You'll get absolutely no protection from the Federal Deposit Insurance Corporation, either. 

8. The tax situation can be burdensome
If you think you hate doing your taxes now, try getting involved with Bitcoin. Since the Internal Revenue Service views cryptocurrency as property, all dispositions must be accounted for via capital gains and losses. You'll have to report more than just buying and selling Bitcoin.

If you purchase Bitcoin and sell it to buy another cryptocurrency or a good/service, you'll have to report your cost basis and disposition price. It sounds burdensome, especially if you're using Bitcoin to buy goods and services.



IMAGE SOURCE: GETTY IMAGES.

9. It's driven purely by emotions and technical analysis
There are only two true drivers to Bitcoin's value: investor emotions and technical analysis (i.e., pretty charts). Neither of these is a particularly intriguing reason to buy in, especially since neither will help over the long run.Fear of missing out (FOMO) and cheerleading from the likes of Tesla CEO Elon Musk have fueled this record run higher in Bitcoin.

As noted earlier, utility remains poor, scarcity is a myth, and the barrier to entry is virtually nonexistent. What we're seeing is day traders having a field day, and that's not something I want my money in.

10. History is undefeated
Finally, history is undefeated when it comes to next-big-thing investment bubbles bursting. You can look back more than a quarter of a century to the birth of the internet, business-to-business commerce, genomics, 3-D printing, marijuana, and even blockchain.

No matter what the next great advancement was, the bubble eventually burst. These trends did eventually produce winners, but history suggests that parabolic moves in assets tied to next-big-thing trends aren't sustainable.For these 10 reasons, I don't plan to invest in Bitcoin.

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With a charity and some slapdash art theory as a cover, a copycat makes off with 512 ETH in NFT sales.
As the Crypto Twitter community debates the fair value of Cryptopunks and other NFTs rising to sky-high valuations, there’s at least one clear sign of the digital collectibles market growing irrational:

An individual posing as Banksy, perhaps the most famous living artist, has netted over $1 million in Ether (ETH) in NFT sales. Starting on Sunday, Feb. 14, frequent browsers of the NFT marketplaces Opensea and Rarible noticed an account named “Pest Supply” with branding and nonfungible tokens made in Banksy’s signature graffiti-stencil style.

Many were quick to jump in, given the “real” Banksy’s habit for pop-up installations:

Wallet profiler Nansen shows that the individual’s listed address first became active on Feb. 13 and was most active yesterday, Feb. 19.

 Before Opensea wiped much of the account history and disabled further sales, the account’s records showed hundreds of sales to buyers ranging from 0.116 ETH to over 60 ETH for a piece titled “NFT morons.” Noted whale wallet 0xb1 also made a few purchases, including one transaction worth 34 ETH, or $68,000.

In an email obtained by Cointelegraph, Banksy’s “legal guardian,” Pest Control, has denied any association with the NFTs.

Likewise, the individual has indicated that they are selling knock-offs, comparing themselves to artist Elaine Sturtevant, who was known for inexact replicas of more popular artists’ work, on their Rarible bio.

The account has taken in 512 ETH total, per Nansen, with nearly 430 ETH sent to a secondary address. The individual’s Rarible page includes a set of screenshots and Etherscan transactions ostensibly proving 23.5 ETH in donations to Save The Children, a humanitarian organization — less than 5% of the individual’s total haul.

Duped collectors are now left wondering, however: Were we tricked?

Could it be a double-bluff and a genuine Banksy installation? Do the NFTs have value either way?

Real or fake? Who cares?

Max Osiris, a prominent crypto artist, tipped off the community that Banksy’s “legal guardian,” Pest Control, had denied any association with the NFTs in an email: 

The email exchange, which Osiris forwarded to Cointelegraph, shows Osiris asking if the NFTs are Banksy works listed “legit undercover,” and Pest Control responding by saying “there isn’t an affiliation in any way, shape or form.” Cointelegraph has reached out to Pest Control and received no response. 

This alone doesn’t prove that the NFTs are faked Banksy work, however, as Pest Control is known for denying association with ongoing installations. Instead, the individual’s Rarible page is now the clearest indication that they are not associated with Banksy.

“Locked by decentralized OpenSea as they have no idea who Elaine Sturtevant is and know nothing about art history. This is art history in making,” reads the individual’s bio.

Sturtevant is known for recreating the works of more famous artists from memory, a method that some believe raises philosophical questions regarding the nature of authenticity and originality. 

The art blog NFT Art Review supports the view that the fake Banksy is working in this mode, writing that the individual performed “phenomenal appropriation art that dissects the perception from the collecting circle and how value can be created from satire.

” The individual may have updated their Rarible bio on Friday night in direct response to the the blog, which was published on Friday morning. Osiris believes it’s ultimately up to the collector to make these value judgements, and it’s also up to them to protect themselves from fakes — whatever that means.

“Yes, I think art has value even if it’s a fake because it’s up to the collector to figure out what they’re getting. In a sense this is a pretty successful art project, especially if the money goes to where they claim it will go,” he said, referencing the individual’s charity efforts.

Two of the currently listed works done in Banksy’s style are priced at over 100 ETH, or $200,000 each. The individual claims to have donated roughly $47,000 to charity.

Signs of froth

Noted NFT collector-whale Pranksy marked perhaps the clearest sign of an overheated market with his own NFT run, a true hat-on-a-hat named “Pest Demand.

”While he says he made the run in an effort to “mock” the fake Banksy, he instead made 12 ETH, or $24,000, in sales.

“People bought it because they are all euphoric,” Pranksy said.Artist “Twerky Pepe” highlighted the absurdity of the situation with a tweet, in which they promoted their Pranksy purchase as either a good investment or a fun, ironic buy (the Cointelegraph weekend editorial team was unable to divine which):

Osiris agrees that the collectors and speculators are overeager at this stage in the market and says that the artist, in fact, exploited those very sentiments. 

“It’s a clever slight-of-hand move by someone who timed the excitement of ‘celebrities’ coming into the space, the mystery of Banksy’s modus operandi, and Rarible’s verification system,” he said.

The individual was able to gain a Rarible “yellow checkmark” because they were not, in technicality, posing as Banksy, just using Banksy’s style and legal likeness.It’s mania that may only get worse, he said.

“The frenzy around NFT’s has created a sort of monster where people are trying to rush in and be the first to get something that becomes valuable and fail to look deeper or do more research.”

Sales for the individual’s fake Banksies continue apace, with at least a dozen NFTs purchased in the last twelve hours. 

With much of the world focused on bitcoin and ether as prices breach new all-time high after all-time high, the “Money Reimagined” crew embarks on a more nuanced journey, one that eschews world-changing networks for an art-changing renaissance that’s been long in the making.

We’re talking, of course, about the nonfungible token (NFT) movement that has engulfed the world of crypto collectibles. With big brands like Christie’s auction house and the National Basketball Association getting involved and some tokens already selling for six-figure sums, the question isn’t if NFTs will force a very old industry to adopt some very new practices, it’s when.

On today’s episode of CoinDesk’s “Money Reimagined,” Michael Casey and Sheila Warren are joined by Nanne Dekking, CEO of Artory and formerly the top salesman at Sotheby’s.

Founded in 2016, Artory is creating the first standardized data collection solution by the art world, for the art world. In his former position at Sotheby’s New York, Dekking was vice chairman and the worldwide head of Private Sales. His close relationships with collectors and museums were integral to the continued growth of private sales at Sotheby’s.

Prior to joining Sotheby’s, Nanne was vice president of Wildenstein & Co. He advised individuals, museums and foundations on the formation and development of their collections. From 1996-2001 Nanne was the founder and principal of Nanne Dekking Fine Arts, an art consultancy firm and gallery in New York.

“Which scholar do I trust? Who in the art market do I trust?” Dekking said. “They don’t want to trust anyone.”

In this wide-ranging introduction to NFTs, collectibles and the traditional art market, the discussion ranges from Sheila Warren’s Cryptokitty genealogy to the challenges of selling paintings by the old masters in litigious modern markets, plus a whole lot more.

See also: Government Reimagined, With Jeff Saviano and Glen Weyl

“There are so many charitable things you can do with all this technology but ultimately you want the market to understand the commercial benefits of it. Then it goes fast.

The moment you’re in the realm of charity, it’s like ‘this is such a nice idea’ but in a way you’re dead in the water already if the market just thinks this is only nice for a charitable reason,” said Nanne Dekking, CEO of Artory and formerly the top salesman at Sotheby’s.

“As long as the market believes opaqueness will help [its] business model, which it doesn’t any more, it’s a very old-fashioned idea… The moment Art-Net came up, the moment Google existed … it’s all about this crazy idea that you as a human being are so important in the sales process to an artwork. I mean, you’re not.”

SINGAPORE (Reuters) - Bitcoin stalled just short of the $50,000 mark on Monday and other cryptocurrencies slipped, as investors took profit from a record-breaking rally that is being driven by a worldwide shift in investor and public attitudes towards digital assets.

Bitcoin fell as much as 5.6% to $45,914 in Asian trading hours, after having posting a record high of $49,714.66 on Sunday. Rival crypto ethereum slid more than 8%, though both later pared some of those losses.

The dip, for now, taps the brakes on a surge that has vaulted the cryptocurrency from the fringes of finance to Wall Street, as big investors and large companies have begun to take the digital asset seriously and started to buy a lot of it.

Bitcoin is up about 20% in the week since electric carmaker Tesla Inc announced it had $1.5 billion in bitcoin and would accept the currency as payment. It has gained more than 60% for the year to date and more than 1,100% since last March.

"There's this unadulterated wave of big players (buying) that has continued to push the price higher," said Chris Weston, head of research at Melbourne brokerage Pepperstone. "We might be seeing one or two big funds just cashing out," he said.

"The big question is: OK, you want to buy the pullback, but how big is the pullback that we are talking about?

"Lunar New Year holidays in Hong Kong and China also kept a lid on moves in Asia, while a tweet from Tesla boss and crypto advocate Elon Musk appeared to weigh on the price of dogecoin, which he had previously promoted."If major dogecoin holders sell most of their coins, it will get my full support," he tweeted.

Dogecoin, a dog-themed currency created as a joke has been volatile in recent weeks owing to a number of Musk tweets referring to it.It has dropped 18.3% to $0.0536 in the past 24 hours according to CoinDesk.

Ethereum last sat at $1,740, about 7% below last week's record high of $1,879.GO WESTBitcoin's rise has a cryptocurrency that is still hardly used for transactions on the verge of $50,000 - a far cry from software developer Laszlo Hanyecz's 2010 purchase of two pizzas for 10,000 bitcoins.

But in contrast to previous speculative bitcoin rallies, driven by traders mostly in Asia, gains in the past few months have been driven by a seismic shift in U.S. investors' attitude.

Tesla's investment followed multimillion-dollar bitcoin purchases by business software firm MicroStrategy and a number of Wall Street fund managers, such as billionaire Stanley Druckenmiller, sounding positive on the asset.Bloomberg reported on Saturday that Morgan Stanley's investment arm is also weighing a bet on bitcoin.

Meanwhile, bitcoin has made strides toward being a medium of exchange, with PayPal allowing customers to use bitcoin at its merchants and Mastercard preparing to permit cryptocurrency use across its vast network.

Bank of NY Mellon last week said it formed a new unit to help clients own and trade digital assets and Japanese financial conglomerate SBI Holdings is in talks with foreign firms for its own crypto joint venture.

"In the crypto space, these institutions coming to the party are seen as steps towards acceptable and possible usage," said Michael McCarthy, chief strategist at CMC Markets in Sydney.

Bitcoin has been the most prominent beneficiary, he said, but price moves in other cryptocurrencies - such as EOS, which has more than doubled since late December according to CoinDesk - show that the door remains open to rivals."The race is on amongst those candidates," he said.(Editing by Sam Holmes and Jacqueline Wong)

Ethereum surges near all-time highs, may rally 650% to $10,500: analysts

Zack Guzman·Senior Writer


Following bitcoin’s surge to hit a new all-time high earlier in January, ethereum, the second largest cryptocurrency by market cap, neared $1,440 on Tuesday to inch toward the same feat — but that could just be the beginning of a 650% explosion, according to one strategy firm.

Fundstrat Global Advisors’ cryptocurrency team issued an updated $10,500 price target for ether, implying a 650% upside as the ether-powered Ethereum blockchain continues to fuel more real world applications like smart contracts, stablecoins pegged to the dollar, and the burgeoning decentralized finance space.

“We continue to believe Ethereum fundamentals are incredibly strong and think [ethereum] represents the best risk/reward investment play in crypto,” Fundstrat analysts wrote in a new note published Tuesday night.

Much like fund flows from institutional investors being used as a signal to mark a rising shift from the market to finally endorse bitcoin as a so-called “digital gold,” Fundstrat points to Ethereum’s rising network fees to justify its $10,500 price target.

Ethereum, which collects network fees for powering the projects and applications that run on its blockchain, has seen an explosion in activity in 2021 as more developers tap into its existing blockchain tech.


LONDON, ENGLAND - DECEMBER 08: Founder of Ethereum Vitalik Buterin during TechCrunch Disrupt London 2015 - Day 2 at Copper Box Arena on December 8, 2015 in London, England. (Photo by John Phillips/Getty Images for TechCrunch)

As Fundstrat explains, Ethereum fees totaled $600 million in 2020. Through 17 days in 2021, fees have already topped $180 million, putting it on pace to achieve $3.9 billion this year. Comparing the growth to valuations and multiples in the cloud space that Ethereum’s blockchain technology appears poised to disrupt, Fundstrat posits the crypto deserves a multiple comparable to early cloud disrupters and uses the Bessemer Venture Partners Emerging Cloud Index as a proxy.

With fees set to grow more than 500% in 2021 if trends hold, Fundstrat argues that ether appears vastly undervalued against cloud index peers.



MORGANTOWN, WV - 31 DECEMBER 2017:

Ethereum or ether coin lying on top of similar golden coins to illustrate cybercurrencies “Trading at [a $150 billion] market cap, with $3.9 billion of estimated revenue, Ethereum offers a 39x price to sales ratio. However, Ethereum revenue trends are vastly outpacing the fast growing and high-flying conventional cloud stocks,” Fundstrat analysts write.

“This compares against 21x price to sales multiple and 38% growth for the Bessemer Venture Partners (BVP) Emerging Cloud Index.”Of course, there is no guarantee that Ethereum sees a steady rise in activity considering the boom and bust cycle the cryptocurrency sector has become notorious for.

Ethereum, after all, is a very different crypto than bitcoin, considering its founders and team are known. The technology is also undergoing an open source upgrade to increase network throughput and carries its own set of risks.

However, weighing risk and reward, coupled with the fact that CME Group is preparing to launch ether futures contracts in February, Megan Kaspar, co-founder of the digital asset investment company Magnetic, echoed Fundstrat’s bullish call in an interview with Yahoo Finance last week.

“There is a lot of value that is going to come out of this chain,” Kaspar said. “It’s definitely being overlooked and it’s misunderstood by a lot of investors that are just getting their feet wet to understand the ecosystem as a whole.

”She predicted a move beyond the $1,448 record ether hit in early 2018 could trigger a rally that could test the mid-$3,000 level.

Over the last year, ether has rallied more than 700% while bitcoin has gained more than 300%.

Zack Guzman is the co-host of the 11AM - 1PM hours on Yahoo Finance Live as well as a senior writer and on-air reporter covering entrepreneurship, cannabis, startups, and breaking news at Yahoo Finance.

Follow him on Twitter @zGuz.

Bitcoin has lost more than 10% of its value in the last 24 hours as the world’s largest crypto asset dropped below the $34,000 level on Wednesday. The recent bearish move came after high selling pressure kept BTC under $40,000 level.

The overall market cap of cryptocurrencies dipped below $1 trillion today.

According to the latest data available on coinmarketcap, Bitcoin has removed all gains of the previous week as the cryptocurrency is now down over 2% in the last 7 days.

Ethereum plunged more than 12% in the last 24 hours as the world’s second-largest cryptocurrency reached $1,250 after registering an all-time high of $1,420 earlier this week.Glassnode, a crypto analytics platform, pointed out on Wednesday that the number of Bitcoin addresses holding at least 1,000 BTC reached an all-time high of nearly 2,440.

“Bitcoin addresses holding over 1000 BTC ($35 million) hit a new all-time high. This year alone 164 addresses got added, currently worth $6 billion,” crypto research and analytics platform unfolded mentioned in a tweet.The recent price action has escalated anonymous Bitcoin transfers.

Whale Alert, a blockchain tracking company, highlighted two different transactions involving nearly 5,000 BTC. In the first transfer, an unidentified Bitcoin whale transferred 3,217 BTC from an unknown wallet to the Huobi exchange. The second transaction shows the movement of 1,529 BTC from a mysterious wallet to the Poloniex crypto exchange.

Cryptocurrency Market

The crypto market has seen substantial moves since the start of this week as altcoins posted strong gains. Bitcoin’s dominance dipped below 65% for the first time in almost 4 weeks.

Crypto assets like Polkadot, Cardano, and Chainlink posted double-digit gains this week. Bitcoin is facing a tough challenge ahead due to high selling pressure on leading crypto exchanges.

Finance Magnates earlier reported about JPMorgan’s analysis of the recent Bitcoin price action. The investment bank mentioned in a note that BTC’s failure to break above $40,000 may result in huge selling pressure by the trend-following traders.

After hitting a new all-time high, the price of Ether (ETH) could potentially head to $10,500, according to a strategist at major market research company Fundstrat Global Advisors.

Fundstrat strategist David Grider commented on ETH hitting new historical records of about $1,430 in an investor note on Tuesday, Bloomberg reported. Grider said that the second-largest cryptocurrency could climb more than sevenfold to $10,500 after setting a new record.

The strategist reportedly said that Ether is now “the best risk/reward investment play in crypto,” emphasizing that the Ethereum blockchain is the biggest foundation for decentralized finance, or DeFi, applications. “Blockchain computing may be the future of the cloud,” Grider noted.

As Ethereum has been progressing with its proof-of-stake upgrade, its network has the potential to scale significantly and process transactions at a level similar to Mastercard and Visa, the strategist added.

The latest Ether prediction comes as ETH finally broke its new historical record on Jan. 19, about 10 days after Bitcoin hit its $42,000 ATH on Jan. 8. Despite Bitcoin outpacing Ether to be the first coin to post a new ATH after the 2017 crypto rally, Bitcoin is apparently less popular in terms of daily transactions so far. According to January data from crypto analytics firm Messari, the Ethereum network now has up to 28% more transactions daily than Bitcoin.

At publishing time, ETH is trading at $1,290, down about 9% over the past 24 hours. Over the past 30 days, the altcoin has surged more than 100%, according to Cointelegraph’s ETH price index.

• Bitcoin slid on Friday as investors took profits from the volatile trading week.
• The cryptocurrency fell as much as 11%, to $34,409.04, at intraday lows.
• The slide closes out bitcoin's second most volatile week in the last three years. Choppy trading saw the token climb as high as $41,440 and fall as low as $30,324.
• The week also saw more voices dismiss the cryptocurrency as a dangerous market bubble.
• Billionaire investor Mark Cuban likened it to the internet stocksof the dot-com era, and European Central Bank president Christine Lagarde deemed it a "highly speculative asset which has conducted some funny business."
• Watch bitcoin trade live here.

Bitcoin dipped on Friday as less volatile trading pulled prices back below $35,000 after clearing $40,000 the day prior.BThe cryptocurrency fell as much as 11%, to $34,409.04, at intraday lows..

The week's choppy price action saw the cryptocurrency rise as high as $41,440 and fall as low as $30,324. The market froth made for the second most volatile week in the last three years.

After clearing its 2017 peak in December and doubling to nearly $42,000 in the new year, bitcoin has fluctuated as investors weigh securing profits against missing out on additional gains. The token currently trades roughly 25% higher year-to-date but about 11% below its early January record.

Read more: The CIO of a $500 million crypto asset manager breaks down 5 ways of valuing bitcoin and deciding whether to own it after the digital asset breached $40,000 for the first time


A growing chorus of voices deemed the crypto trade a bubble throughout the week, likening it to the dot-com boom of the 1990s. Billionaire entrepreneur Mark Cuban said the token has traded "exactly like the internet stock bubble" that surged to extreme valuations before crashing in the early 2000s.

European Central Bank president Christine Lagarde, who sees a digital euro becoming reality in the next couple of years, said this week Bitcoin is not a currency but a "highly speculative asset which has conducted some funny business.

"Strategists have also tamped down on some of the hype surrounding bitcoin's rally. 

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"Wall Street just drools over the word 'crypto' any time it sees it without understanding any of this at all. It's not a surprise Wall Street does so, as anything that shows an exponential price increase would get their interest," Michael Every, a global strategist at Rabobank, said.

Technical analysts have said the price is fluctuating between support levels that could pave the way for record highs or a far deeper retreat. The Relative Strength Index for bitcoin - which tracks momentum over the last 14 days - only recently fell below levels indicating the token was overbought.

"While $35,000 may provide an interesting test, the only level that really matters is $30,000. A break of this could trigger a much sharper correction," Craig Erlam, senior market analyst at Oanda Europe, said.