A (Brief) Crypto Glossary – Learn Survival Crypto-speak in Just 10 Minutes!

Whether you’re a blockchain aficionado or crypto noob, it’s easy to feel like a total blockhead when you’re checking out what the in-the-knows are saying about the markets on Twitter, Reddit, Discord, Telegram, and the rest. Trying to work out what the members of online crypto communities are talking about can leave you feeling dizzy – particularly when the terminology and acronyms start flying.

But help is at hand: Fret no more, as FX Empire has prepared a survival guide to help you navigate the often-confusing jargon that gets bandied about on crypto social media. Master some of these terms and crypto Twitter will (hopefully) look less like Ancient Egyptian hieroglyphs…and more like something approximating contemporary English!

Alt – This term is short for altcoin (alternative + coin), which basically refers to almost every cryptocurrency out there. If you’re asking “alternative to what?”, you’re on the right track. And the answer is Bitcoin (BTC) – although confusingly some also consider the number 2 market cap coin Ethereum (ETH) to be a non-alt!

Example: “I got drunk last night and bought a load of unknown alts! I should never trade when I’m near beer!”

Nocoiner – Being called a nocoiner is basically the equivalent of being called a “normie” in most other corners of the internet. For crypto folk, it’s something close to an insult, as it refers to people who typically reject crypto, refuse to buy coins, or like to lecture others about how BTC is a scam.

Example: “The nocoiners will have a field day crowing about the latest price dip!”

FUD – A dismissive term that is used as a stick to beat those who like to forecast imminent doom for the crypto ecosystem. Mainstream media outlets that predict imminent ruin for the crypto world are often accused of “spreading” FUD (fear, uncertainty and doubt).

Example: “Check out the latest FUD from the Financial Times!”

Sh*tcoin – A (sadly) increasingly common phenomenon whereby a little-known and somewhat suspicious-looking alt (see above) turns out to be, well…a pile of sh*t.

Example: “Joe just bought a load of sh*tcoins – what a sucker!”

Whale – The owners of enormous quantities of high-cap coins (usually BTC). These individuals usually bought into Bitcoin when it was worth just a few dollars and have resisted the urge to trade their vast holdings for cash over the years. When these massive sea creatures start moving their coins around, the shrimps and crabs of the crypto world had better take notice!

Example: “The whales have started to liquidate – quick, sell everything you have!”

Bear/bull – Continuing with the zoological theme, this comes from the world of traditional finance and refers to market sentiment, but also to individuals. Bears are cautious and think the market is headed downwards, and so is the bear market, while bulls think the opposite – and act accordingly. Those who remain optimistic about BTC regardless of volatility are often called “Bitcoin Bulls.”

Example: “Company X is hiring a bunch of crypto developers. Sounds bullish!”

Maxi – Usually short for “Bitcoin maximalist,” this term refers to people who think that only Bitcoin will make it in the future – and that a day may well come when all other coins fall by the wayside with BTC becoming the “native coin of the internet age.”

Example: “Why don’t you buy any alts? Are you a BTC maxi?”

BTFD – Another acronym, this one short for “buy the f***ing dip!” Not much to explain here – this is something of a rallying cry for people who are heavily invested in crypto and want to put a brave face on things when tokens hit periods of volatility.

Example: “ETH prices are crashing – it’s time to BTFD!”

PND – Short for “pump and dump,” this refers to a malicious move that stock traders might recognize. Using a range of tools such as social media, sponsored media content, and the like, the masterminds of a PND try to drive up the price of a coin before selling it at a high price, usually leaving it to crash down to the floor in their wake.

Example: “I think I’ll pass on this coin, looks like a PND!”

Rug Pull – Another nasty phenomenon in crypto: This one usually involves the project’s core developers vanishing off into the sunset with armfuls of their investors’ funds!

Example: “Don’t buy into this rug pull project – you’ll lose everything you invest!”

Sats – Short for satoshis (from Satoshi Nakamoto, the pseudonymous creator of Bitcoin), these are fractions of a Bitcoin and are often used with the verb “stack.” To be stacking sats means buying small amounts of BTC over a long period of time, rather than making big, lump-sum purchases. Unless you’re a whale (see above) or you have a few thousand dollars sitting around in the bank, chances are all most traders will ever do in the Bitcoin market is stack sats!

Example: “I sent a few sats to you for your birthday – have a great one!”

Multi sig – A security-related term that refers to a type of cryptocurrency wallet (multi-signature) that requires two or more private keys to sign and authorize a transaction. It can be complicated to comprehend or manage for newbies, but if safeguarding your coins is important to you, it may be worth looking into.

Example: “This new multi-sig wallet is sick!”

Bear Trap – A somewhat sneaky move orchestrated by groups of experienced traders who try to snare “bears” (see above) into going short on a coin as a response to falling prices. The trap operators might do this by selling high volumes of a coin to drive the market downward. The bear, expecting the market to continue trending in the same direction, can end up selling at a price that is still high – only for prices to bounce back again once the “trap” has been sprung!

Example: “Don’t sell those coins yet, this looks like a bear trap!”

Just How Safe Is Your Crypto?

High-profile crypto hacks are on the rise. Last month saw the DEFI protocols Agave and Hundred Finance stung in an $11 million raid, just one of a slew of crypto hacks of a similar hue.

So what’s the deal? Does crypto suffer from security issues? Who’s hacking what? And is there anything you – the innocent crypto trader or HODLer can do about it?

What kind of crypto targets find themselves in hackers’ crosshairs?

Centralized Exchanges

Once upon a time, crypto exchanges were “low-hanging fruit” for crypto hackers with catastrophic effects, in many cases.

In Japan, Mt. Gox (in 2014), Coincheck (early 2018), and Zaif (late 2018) all suffered huge hacks. The former was put out of business altogether, while the latter two were bailed out by larger companies that eventually took them over.

The last attack of such a scale on a crypto exchange was the KuCoin raid of 2020 – leading some to suggest that, in more recent times, trading platforms have upped their security game.

Gina Kim, a South Korea-based cybersecurity expert, tells FX Empire that the security landscape has changed for crypto players in recent years. She says:

“Not so long ago, centralized exchanges – even the bigger ones – were notoriously lax when it came to security. Despite the fact that they were often handling millions of dollars worth of coins, they had very low security fences, so to speak. And hackers who targetted them knew that.”

Kim continues:

“Things have changed a lot now, with better security protocols for employees and improved security at the software level. They aren’t perfect, but they have certainly invested a lot more than they once did in staying safe. Some have learned the hard way.”

Regardless, the sector is still not immune to security breaches – only a few months have passed since hackers made off with almost $200 million worth of user funds from the BitMart exchange.

Hacks on Protocols and Decentralized Exchanges

Sadly, these kinds of attacks are now on the rise. A hack on the Ronin network recently saw the Sky Mavis-developed Axie Infinity play-to-earn title, its AXS coin and its users lose $625 million in the biggest hack in crypto history.

In January, the Qubit Finance Protocol suffered an $80 million loss, while Grime Finance lost $30 million in a hack at the end of last year.

As the amount of blockchains and decentralized platforms continues to rise, so too does the number of targets now open to exploitation by hackers.

Voice and spear-phishing

Kim tells FX Empire that this form of attack is now the “hacking attack of choice” for most would-be crypto raiders. She notes that the “prime target” of many hackers remains crypto exchange employees, who are sometimes targetted with sophisticated and “tailored” attacks that involve bogus job offers made via platforms like LinkedIn, with attackers posing as employees from partner companies.

She explains:

“All they need to do is convince you that they really are who they are pretending to be. Often that’s all it takes for you to trust them enough to click on a link that opens a back door for them. Once they’ve got that software onto a computer, they are set.”

But there is danger too for ordinary crypto traders and holders. Kim notes that targetting crypto exchange customers with “urgent-looking” messages and phone calls claiming that someone is trying to access their crypto often sends unsuspecting customers into a panic.

In a panicked state, it is often easy to lead victims to click on links in emails that send these customers to sites where they enter their login and password details – unaware that such sites have been custom-made to help hackers harvest such data.

Fortunately, many larger exchanges are aware of such threats, and inform customers about ways to make sure that mails actually do come from their staff. It’s worth remembering that no exchange employee will ever ask you to hand over your password or private keys.

Who hacks crypto?

Individual hackers and groups

People have all sorts of reasons for hacking. There are even some “white hat” hackers who break into protocols and exchanges to expose risks and later return the funds.

But there are also plenty of people who simply use their advanced computer skills to fill their own pockets.

Hacker groups are also common. In 2020, blockchain analysts claimed that the Eastern Europe-based CryptoCore group had masterminded no fewer than five crypto exchange hacks, reaping some $200 million in the process.

In the case of notorious attacks like the $ 520 million 2018 Coincheck raid, police are still hunting down raiders – with very little to show for their efforts.

Do states hack crypto, too?

The UN has repeatedly accused North Korea and the notorious Lazarus group of masterminding multiple raids on crypto targets across the border in the South – as well as elsewhere in the world. Experts in Washington and Seoul have claimed that Pyongyang has trained a group of at least 20 “elite cyber warriors” to hack crypto exchanges as part of a long-term fundraising strategy.

The North has rejected these claims, however, calling them fabrications that only a morally bankrupt “spying empire” like the United States could “concoct.”

The South Korea-based Kim remarks:

“It’s hard to say if the allegations about North Korea are 100% true or not, but there can be no doubt that there are some very well-thought-out traps out there in the Korean language – obviously laid by Korean-speaking hackers with their eyes on some very lucrative crypto prizes!”

What’s the future for crypto security?

Crypto has a long way to go if it is to shore up its security holes once and for all. Some may argue that perhaps it will never achieve this feat, and that users will simply have to accept that using digital forms of money and decentralized assets will always be subject to risk.

In South Korea and some other areas, crypto exchanges are required to back their users’ deposits on their platforms with their own token and fiat holdings – meaning that in the case of hacks on regulated exchanges, platforms are legally obliged to refund users.

This might be of some comfort to those who keep their coins on centralized exchanges, but CEXes are not the be-all, end-all of the crypto world. Some even prefer not to use them at all.

So in the absence of a silver bullet that will slay all hackers, how can individual crypto holders boost their own security?

The (very) short answer: Keep your crypto as secure as possible, avoid anything that looks remotely like a scam, back up your wallets, move any crypto you’re not trading into cold wallets, consider self-custody and keep your security phrases under lock and key.

Crypto in Football – What’s it Being Used for and What’s it Good for?

Scores of players – some legends of the past like David Beckham and Andreas Iniesta, others contemporary superstars like Lionel Messi – are launching tokens, promoting crypto firms, or advertising crypto as a way to spin money.

Some dismiss this as a gimmick, but others are more positive about creating a brand-new model for fund-raising and fan involvement. With Crypto.com set to become one of the main sponsors of football’s biggest showcase – the World Cup – later this year, the crypto-football link is about to come under more scrutiny than ever.

How is crypto actually being used in football?

And will the increasingly tight relationship between digital tokens and the world’s favorite sport prove a hit – or will it turn out to be an own goal for the industry…and the beautiful game?

Application cases:

Sponsorship

This is possibly the most obvious connection between football and crypto. As a sport that attracts billion of USD per year in the betting markets, it makes sense that big crypto exchanges – who rely on risk-loving customers for much of their client base – would also look for a way into the picture.

As such, you can now pretty much name it – competitions, individual players, huge global teams – when it comes to football, crypto firms are keen to have their names plastered all over the lot.

Even arguably the biggest club of the lot – FC Barcelona – has had its share of crypto sponsor suitors. Not every club in the world wants a crypto exchange on the front of its matchday shirts, but it is now becoming increasingly hard to find a major club without some kind of crypto sponsorship deal in place, either major or minor.

Player payment and transfers

Transferring players is a process that looks like it belongs in the 1980s. It’s a sector of football still mired in fax machines, scanned documents, deal sheets and super-clunky bank transactions. In the fast-moving world of global football, using crypto to buy and sell players would seem to make a lot more sense. The immutable nature of blockchain protocols would help with transparency and auditing, while crypto transactions are faster and require no banking intermediaries.

Smart contracts could also be used to activate clauses in players’ contracts – performance bonuses or additional appearance fees, for instance. Some, like Messi, have even received payments in crypto.

Earlier this year month, one of Mexico’s leading women’s football clubs, Tigres Femenil, sold a midfielder named Stefany Ferrer to an American club named Angel City in a crypto-only deal. The American club’s owners include celebrities like Natalie Portman, Eva Longoria, Mia Hamm, Becky G and Serena Williams.

Other firms have even sought to pay for their own sponsorship deals in crypto, which also makes sense: It’s easy and it makes headlines.

Some may argue that crypto transfers are still a gimmick or an oddity, but their speed and efficiency could ensure that one day they become an everyday occurrence.

Fan outreach & voting rights

Fan tokens are also becoming commonplace in modern football. Clubs tout them as a way to connect to their players and former legends, but the larger coins are traded on big crypto exchanges – some of them even enjoy relatively large market caps.

Although these currently only offer fans the right to vote on relatively menial matters such as the color of a club’s next uniform or where a pre-season friendly match should be played, even this small slice of fan power is better than nothing at all.

We are still in the early days of fan tokens. Perhaps the next generation of football fan coins – perhaps if they were issued by a club itself rather than an affiliate partner – will grant fans fractional ownership rights over stadiums and training grounds.

In that kind of world, fans could one day wield the collective power to, for instance, vote on the appointment of a new coach, chairperson or manager.

NFTs and collectibles

Collectibles have been a thing almost since the modern game of football was founded. From matchday programs and ticket stubs to scarves and replica uniforms, football fans have prized ownership.

This started to really take off in the late 1970s and early 1980s, when sticker albums became a thing. In the lead-up to World Cups, playgrounds around the world were full of children swapping rare stickers for the two or three cards they needed to complete their albums.

In the digital age, then, it seems that NFTs and football make a natural match. While people in many walks of life balk at the idea of paying hundreds of dollars worth of Ethereum (ETH) for a .jpeg or .gif, football fans get it. Rarity equals value – both sentimental if you are a fan, and monetary if you have an eye for a trade.

Clubs and players will continue milking the NFT for as long as there’s demand – we might as well get used to it.

Grassroots sports club funding in Japan

Beyond the worlds of big business and speculation, crypto is also finding a role in much smaller footballing endeavors – such as crowdfunding. You might think that only mega-clubs like Paris Saint-Germain and its PSG coin, as well as Barcelona and AC Milan could realistically put their names to fan tokens. But in Japan, that isn’t the case.

Using platforms like Japan’s Financie, which now even organizes its own cup competitions, newer clubs with tens, not thousands, of Japanese fans and local investors have been funding the very basics of building a local football team with fan tokens. New stadiums are being built, many of which feature token holder-only sections.

The lower leagues of Japanese football could be the starting point for a crypto-football revolution.

Elements of Controversy

There is no guarantee that football and crypto will prove successful long-term teammates. In Spain, one of the most notable football hubs in the world, regulators have voiced their concerns about advertising unregulated financial products.

The advertising commission has warned a number of teams about their relationships with crypto firms. And in 2020, AS reported that the regulatory National Securities Market Commission (CNMV) threatened that it might “put restrictions on La Liga club advertising” – warning that a “toxic” relationship between football clubs and crypto was developing. Similar rumbling have been expressed in the most lucrative league of all: England’s EPL.

Regulators are yet to really get started with policing the sector – but conventional gambling firms that once flocked to football sponsorship have already had their fingers burned.

Crypto and Football: An Own Goal or a Winning Team?

The truth is crypto and the footballing world are still getting to know each another.

It’s far too early to predict if this team-play will be a success in the long term. But one thing is certain. As the World Cup will doubtlessly prove later this year, crypto has already radically changed the footballing financial picture – both on the field and off the pitch.

What Would Be the Benefits and Drawbacks of a Digital Dollar?

Key Insights

  • Biden government has stepped up the pace of digital USD progress.
  • Some are reluctant to let China win a tech race.
  • Others are unsure if a digital dollar is desirable – or necessary.

Central bank digital currencies (CBDCs) have become the talk of the town this year: First came the Winter Olympics in Beijing – when China took the opportunity to showcase its digital yuan to the world for the first time. Next came the Ukraine crisis, with sanctions forcing Russia to ramp up its own efforts to create a digital version of the RUB.

And in the meantime, crypto adoption and bitcoin (BTC) advocacy just keeps gaining pace – forcing central and commercial banks to create solutions that can compete with crypto in the remittance, digitization, and cross-border transactions arenas.

But while the digital yuan is likely to make a nationwide rollout in the coming months and the likes of the European Central Bank, the Bank of England and the Bank of Japan have begun exploring their own CBDC options, the dollar has become the (analog) elephant in the room.

The greenback is the world’s reserve currency, and a digital version would change the way that the world’s biggest economy does business. A digital USD could also become a heavy-hitting international trade tool for the digital age.

But until recently, progress on a digital USD was positively glacial.

All that has changed in the past few weeks, however. In February, the Boston Fed and the Massachusetts Institute of Technology (MIT) revealed results from what they are calling “Project Hamilton” – a design for a high-performance, resilient transaction processor for a CBDC that, in two tests, handled 1.7 million transactions per second.

President Joe Biden’s recent Executive Order on “Ensuring Responsible Development of Digital Assets” also instructed agencies to produce reports on a digital USD – a sign that Washington is finally getting serious about possible CBDC issuance. But what positives – and negatives – could a digital greenback bring?

Why Issuing A Digital Dollar Would Be a Good Idea

The US needs to keep pace with China

China’s digital RMB is almost ready to come out of the oven. Some 8 million users of digital e-commerce platforms are already buying everything from takeout noodles to dumbbells using the CBDC in 11 major cities, with a glut of extra cities about to be added to the pilot.

Some American Senators are none too pleased that the US is nowhere near this kind of progress. Sherrod Brown last year urged the Fed to “lead the way” on CBDCs and noted that “some of our international counterparts are moving quickly to determine whether to implement a central bank digital currency.” Brown wrote:

“The United States must do the same. We cannot be left behind.”

The USD needs to compete with crypto

The fiercest opponents of crypto are often the most vocal advocates for CBDC adoption. They realize that conventional finance has a long way to go if it wants to compete with fintech and crypto.

Even in Russia, the Central Bank has repeatedly called for a blanket crypto ban and the urgent rollout of a digital RUB.

The Fed has long ago realized that it cannot really work with crypto and that decentralization essentially wrests power away from any kind of central financial hub. As such, all it can really do – some would say – is to regulate crypto to the point where it can do no harm to the USD, and then copy all of its “good” parts for use in a digital dollar.

The Fed should create a digital reserve currency for the Web 3.0 era

The greenback is still the currency the world goes to when it is spooked about local inflation or when international companies want to make trade deals. But CBDCs and – maybe one day – stablecoins could threaten that.

Meta/Facebook and its Libra/Diem plans may be dead in the water, but the idea of a tech giant releasing a fiatbacked global token petrifies regulators. As would a digital yuan if it proved a hit on the global stage.

Some, like the Twitter founder Jack Dorsey, speak about BTC’s potential to become the internet’s native currency. But if a digital USD that did away with the need for bank transfers, Swift and the rest were to appear tomorrow, trade firms would likely be all over it.

And Why it Might Not Be So Great After All…

A Digital USD Is Not Needed (Yet)

Some lawmakers are concerned that an American CBDC runs contrary to the tried and true US values of encouraging competition in the private sector. Senator Tom Emmer, one of the biggest critics of CBDC issuance has claimed that a CBDC could “put the Fed on an insidious path akin to China’s digital authoritarianism.”

Some Fed officials have stated that they don’t see an obvious need for a CBDC, while others have urged a wait-and-see approach. A Washington Post opinion columnist recently suggested:

The United States does not need to be first to issue a digital currency; it needs to be the best.”

The non-digital USD is still dominant, so why risk a digital dollar launch now?

Even if CBDCs launch elsewhere, there is scant evidence to show that this could lead to widespread de-dollarization. Sure, some economies such as Russia have been purging their currency reserves of the greenback and the likes of El Salvador and Honduras have been trying to chip away at their dollar dependence.

But when most people talk of hard currencies, they are talking about the USD and perhaps a select few others. Per a Fed report last year, the dollar “comprised 60% of globally disclosed official foreign reserves in 2021.”

The Fed added that “this share has declined from 71% of reserves in 2000. The chasing pack is miles behind: 21% of holdings are in the euro, with just 2% in RMB. Will a digital yuan – or ruble – really change this picture?

Can the US afford to sit and wait as the CBDC race gathers pace?

The UK banking giant Barclays recently claimed that its analysts had concluded that the Fed “should have few problems in achieving widespread use of a CBDC, at least domestically if it determined that there was a need for one.”

The bank claimed that this was due to the fact that “when it comes to legality, stability, and trust – the three main advantages of public-sector systems – the Fed and the dollar score highly.”

CBDCs are still unproven on the global stage, and while it may be galling for some to let China win a tech race, others will insist that it would be more prudent for Washington to keep its digital currency powder dry for the moment – and let others test the waters first.

Centralized Crypto Exchanges VS. Decentralized Exchanges

For the uninitiated, crypto can be complicated enough without worrying about whether an exchange is centralized or not. For people used to dealing in hard currencies and stocks, for instance, trying to understand how a token like Bitcoin operates on a blockchain protocol is enough of a mind-bender without having to think about whether the platform they use to buy it has a CEO and a head office or not.

But the further down the crypto rabbit hole you travel, the more you will come to notice that it does actually matter whether you choose a centralized exchange (CEX) or a decentralized exchange (DEX).

Crypto was born in 2009 with the release of the Bitcoin White Paper, but it was not until 2014 that companies and individuals began exploring the idea of creating DEXes. Arguably it took several years for DEXes to become what they are now. But suffice it to say that crypto communities willed DEXes into being because they wanted to match their decentralized coins with the key functions of an exchange – without having to bring brick-and-mortar businesses into the equation.

What Is a Centralized Exchange?

Most people would agree that crypto exchanges have four core functions:

  • Capital deposits
  • Order broadcasting
  • Order matching
  • Token exchange

As custodial bodies with business registrations, often complying with legal regulations – including those pertaining to the financial sector – CEXes attempt to provide a gateway into the crypto world for those who want to, well, basically buy some BTC or altcoins when prices are low and sell them when the markets rise.

Ideally, such a body is accountable to government regulators, conducts know-your-customer (KYC) customer monitoring and flags suspicious-looking transactions for possible money-laundering violations, and holds considerable token and fiat reserves of its own. Bigger platforms may also be insured against the risk of hacking events.

They usually have a customer helpline, chatbot assistants, business registration numbers and actual offices – some of which offer face-to-face customer services for people who’d rather speak to an actual in-the-flesh person about their crypto investments.

They also centralize all of the above-mentioned core functions through their platforms.

If you keep your crypto in the wallets they provide, your coins are either stored in their hot (trading, online) wallets or their cold (storage, offline) wallets.

They make their money, for the most part, by charging you transaction fees every time you make a trade or a transfer.

If you think these fees are too steep or think that the whole point of crypto is to avoid the kind of centralized, Big Brother monitoring you might experience with a tradfi bank, chances are you may have been thinking of making the DEX switch.

What Are the Benefits of Using a CEX?

CEXes are expensive to use and may well run counter to the spirit of blockchain technology, but they do have a number of key benefits, namely the following:

Liquidity

A big CEX makes its money from having enough fiat and assets in reserve to let you make instantaneous deposits and withdrawals. If you want to swap your BTC for USD, for instance, you would expect to be able to do that in seconds with a CEX…or you’d take your custom elsewhere.

Liquidity is a CEX’s trump card, some would argue – and that is why they put so much effort into providing customers with all the high-speed liquidity they could possibly need.

Security

Although high-profile hacks were once common in the world of crypto, it appears that many of the bigger exchanges are finally learning their lesson. While it’s certainly true that exchanges used to have almost laughably poor security systems, this is no longer true in most cases.

As such, the number of hacks executed on bigger crypto exchanges has fallen in recent years. Many also take out costly insurance policies that allow customers to recoup some or all of their lost funds in the event of a security breach.

Regulation

In many countries, crypto exchanges have to apply for operating permits and prove their stability and competence to financial regulators. These same regulators are keen to bring crypto under the same kind of regulatory umbrella as exists for tradfi institutions such as banks.

As such, they are monitored for irregular transactions and must implement investor protection measures. They also have to provide customers with risk notifications about the non-reversible nature of transactions and comply with government orders. If ensuring that your financial operations are conducted above-board and meet compliance standards, a CEX may be for you.

Easy-to-use

For most people, this is the real biggie. Creating user-friendly interfaces that even your grandmother could make her way around is a CEX’s priority. And because orders and custody are all centralized on their platforms, they let you make your trades in seconds. Sure, you pay more for that privilege, but if you just want to buy some BTC fast and don’t care about much else, a CEX usually has you covered.

What Is a Decentralized Exchange?

Put (perhaps overly) simply, a DEX can be like turning on advanced settings in an app. The app (the CEX in this metaphor) is set up to meet the needs of the most typical user who can’t be bothered over-thinking and interacting with their phone too much. But once you start tinkering with the settings and taking manual control, things get complicated – if sometimes better.

A DEX puts you in charge of your own tokens or fiat by letting you execute functions on a blockchain network directly. They do away with the central hub of the wheel so that there is no sole point of failure.

There’s no KYC here. And when it comes to prices, the DEX usually makes use of automated market maker technology that removes the need for a middleman body that regulates the price of coins. Algorithms – rather than employees – dictate how everything works.

You also need to take charge of your own private keys. A CEX usually handles this just like a bank manages your PIN. If you forget it, you can simply ask the CEX to send you a new one or reset it. If you are using a DEX and lose your private keys, your funds could become irretrievable – forever.

What Are the Benefits of Using a DEX?

DEXes can arguably bestow the following benefits on their users:

A better fit for decentralized tokens

Crypto runs on decentralized blockchain protocols, so it has long been an irony that trading them has been confined to centralized organizations that gate off direct blockchain access. If decentralized coins and decentralized finance (DeFi) are your thing, why would you want to involve something that resembles a tradfi bank or bureau de change in the picture?

No KYC

What governments like least about crypto is elements of anonymity: anonymous wallets, anonymous transactions – and exchanges that allow users to operate under the radar. Proponents of crypto claim that the internet needs a native currency, and one that does away with governments’ rights to monitor, block or freeze transactions. It might sound a bit anarchic or utopian to some, but others like the fact that DEXes don’t require users to prove who they are and submit selfies and copies of documents like passports to faceless tech giant firms.

Self-custody options

“Not your keys, not your coins” is the familiar battle cry of the crypto podcaster Antonio Pompliano. If you don’t control your own private keys, you can’t take charge of your custody. Your tokens may be sitting in a wallet attached to your login details and password on a CEX, but – like a bank – the funds you own aren’t actually in your possession. Do you trust yourself to look after your own assets or a tech company? The answer will likely determine whether or not you will use a DEX.

Lower fees

As there’s theoretically no middleman to pay with a DEX, you don’t need to worry about a platform’s bottom line. Ultimately, if a CEX becomes unprofitable for too long, it will go out of business. With a DEX, fees can often be much lower. Sometimes the liquidity problem means that DEXes have to team up with liquidity providers – a factor that can actually drive fees up. But for the most part, the lack of an intermediary does help reduce costs to traders in many instances.

A wider selection of tokens

CEXes are forever listing and delisting coins – again often due to regulations. In Japan, for instance, regulators get to approve or reject coins, a factor that leads to an often very narrow selection of tokens on centralized trading platforms. CEXes have a lot to lose if a token turns out to be a dud – and often have listing councils that spend days or weeks going through listing applications with a fine-tooth comb. That can ensure greater safety for users, but it can also hinder your ability to make your own choices in this regard. DEXes put the responsibility in your hands, again decentralizing the process.

So Which One Is Best for Me?

It would be great to end with a quick and easy answer, but as is the case with most things crypto-related, the answer is: it’s complicated.

Essentially, whether you choose a CEX or a DEX just depends on your needs: Do you want an easy, fuss-free system, or do you prefer advanced options and greater independence?

Crypto is divisive in many ways, and the choice of whether to use a CEX or DEX will inevitably put you on one side of the fence or the other – even if you have little interest in the CEX vs DEX controversy.

If you think you have better things to do with your time than fuss about with algorithms, blockchain networks and private key management, use a big, reputable CEX. But if you want deeper levels of control over the way you trade and want to explore a way to reduce your trading costs, maybe a DEX is worth looking into.

Could CBDCs, Crypto, Mining or the Digital RMB Save Russia from Sanctions?

Key Insights:

  • Crypto and crypto mining can’t protect Russia on a state level, but may help some individuals, experts say.
  • The digital yuan “isn’t a viable” way for Moscow to dodge sanctions.
  • The West is lagging behind Beijing, Moscow in the CBDCs race.

The West can not open fire on Russia in the battlefields of Ukraine, but it has certainly not held back in the economic sector, begging some to question whether World War III might be fought on balance sheets and across banking networks.

But just how heavily will Moscow suffer under a Swift ban – and could bitcoin, crypto mining, a digital ruble, or even a foreign CBDC help it overcome the coming economic maelstrom? Leading experts helped us to learn more.

The Swift Ban: A Swift Path to Economic Ruin?

Observers have warned that key Russian banks’ removal from the Swift network will hit the nation’s largest exporters, particularly those in the oil and gas sector, the hardest.

Alon Rajic, the Managing Director of MoneyTransferComparison.com, told FX Empire that without Swift access, banks “will have to rely on manual processes which are likely to result in severe delays on payments to and from Russia.”

He added: “These increased barriers to international trade will make Russian exporters less appealing on the international stage.”

And such delays could hit the Russian economy hard, he warned:

With large delays seen in payments, Russian exporters are likely to experience significant interruptions to their cash flow cycles. This could lead to increased borrowing at a time the Russian Central Bank has doubled its base rate to 20%, which has explosive potential for the Russian economy.

Kene Ezeji-Okoye, the Co-Founder and President of the UK-based digital finance infrastructure builder Millicent, explained that Swift bans can be highly effective – but suggested that there could be consequences for the countries issuing them.

He noted that a Swift ban was “largely regarded as being the key bargaining chip that led to the 2015 Iran nuclear agreement” but called “blocking key Russian banks from accessing Swift” a highly-effective short-term tactic, “in that it negatively affects everyday Russian citizens.” And this, he suggested, “makes the war more unpalatable to the Russian populace than it may have otherwise been.”

However, Ezeji-Okoye remarked:

It appears that the ‘financial nuclear option’, is working well. But nuclear bombs entail fallout, and this situation is no different – these sanctions may well result in unintended consequences for the West, including increased de-dollarization via the acceleration of CBDC issuance.

Ezeji-Okoye added that an “unintended effect” of previous Swift sanctions “was the opening of the world’s eyes to the economic sword of Damocles hovering above their heads.”

Swift alternatives

This economic sword did not go unnoticed in Beijing and Moscow, who have been quietly working on their own Swift alternatives in the shape of the Chinese Cross Border Inter-Bank Payments System (CIPS) and the Russian Financial Message Transfer System (SPFS).

The latter debuted in 2014, the year Russia annexed Crimea. The platform became fully operational in 2017. Although it has some 400 banking members, only a small fraction of these are foreign institutions.

However, as sanctions were announced, the Russian Central Bank’s governor last week reminded foreign banks that the SPFS is up and running, and open to overseas banks. This has not gone unnoticed in the few nations that have chosen to side with Russia over the conflict.

Andras Toth-Czifra, a Senior Analyst at Flashpoint Intelligence who specializes in European and Russian security and cybersecurity issues, claimed that both SPFS and China’s equivalent “have far less capacity than Swift” noting that “SPFS only operates on working days” for instance.

But the question remains: Will economic sanctions cripple or strengthen the resolve of those who feel the brunt of them?

Ezeji-Okoye stated:

This new volley of Swift sanctions only serves to remind the nations of the world that finance is now firmly in the domain of modern warfare, and that having an alternative to the Swift system is now a matter of national security.

Can Crypto Come the Kremlin’s Rescue?

Russians have reportedly been panic-buying crypto in a bid to ditch their ruble savings, but for some, crypto could provide more than a simple safe-have asset.

Rajic, the MoneyTransferComparison.com chief, claimed that “trading a major currency like BTC, ETH or the digital ruble could provide Moscow with “possible workarounds” to sanctions.”

But, Rajic conceded, this would require a major change in policy as Russia has been sending “mixed messages” on crypto adoption. Indeed, prior to the Ukraine crisis, the nation’s Central Bank had been at loggerheads with the Ministry of Finance over the issue. The latter favors “legalizing” cryptocurrencies, but wants to regulate them strictly. It also wants to legally recognize mining – and, crucially, tax the sector.

Putin has attempted to personally intervene in the standoff, and earlier this year noted that Russia’s surplus energy and its abundance of crypto and blockchain developers were assets that could aid adoption.

However, the only existing crypto-specific piece of legislation currently in existence explicitly bans the use of crypto as a form of payment. Moscow, thus, would need to enact a volte-face on this law to start allowing firms to pay using crypto.

Putin’s mention of Russia’s energy reserves has led some to consider Moscow’s possible pivot toward crypto mining as a source of income.

Jorge Pesok, the General Counsel for the United States-based compliance software company, Tacen, told FX Empire:

It’s certainly possible that mining could provide a taxable source of revenue for Russia – essentially limiting the intended effects of sanctions, although likely not to an extent that would make up for any of the severe economic impacts the country currently faces.

But with a diminishing customer base for its vast oil and gas reserves, could Russia put its energy resources to use by providing miners with more power to mine tokens, which could then be taxed?

Other states have previously gone further. The Venezuelan army, for instance, converted certain military facilities during 2020 into crypto mining data centers in a bid to boost the Treasury’s coffers.

Crypto adoption drives have led to the Venezuelan state, which has also been heavily sanctioned by Washington, reportedly amassing a vast stash of BTC and Ethereum.

Could the Kremlin follow Venezuela’s lead?

Pesok was skeptical, stating that he did not “foresee the unlikely strategy” of using Russian energy reserves otherwise earmarked for export to mine tokens. He added:

I expect the country to look to source income from taxing crypto platforms such as exchanges, intermediaries and over-the-counter desks, or other taxes on investments and income from crypto.

Toth-Czifra of Flashpoint Intelligence, concurred, explaining:

Even considering that the Russian government could legalize, tax and then ramp up this capacity, even with a tax rate close to 100%, even if the energy costs are disregarded and even assuming that Russia is still able to import equipment necessary for mining in the future, revenues from this would account for a negligible fraction of what the Russian economy is losing with the present sanctions regime.

A Russian decision to tax crypto mining, he added “would not make any tangible difference at all.”

What about the digital yuan?

Desperate times call for desperate measures. And while the digital ruble may only exist on the drawing board at this stage, one notable CBDC is much closer to rollout: the digital yuan.

Beijing, which has blamed the Western allies for the conflict, is in the latter stages of its own pilot. Onboarding the Russians would allow both nations to ditch the USD in their cross-border trade.

Rajic, meanwhile, added: “Questions would have to be raised as to whether importers would be willing to trade with Russia through a digital reserve currency from China. And it is not likely the idea would be appealing to most businesses and financial organizations.”

Pesok agreed, noting that even “short-term workarounds, such as cryptocurrencies and digital payment solutions for small amounts of sanctions evasion” were more appealing.

While Beijing may well welcome the idea of putting its digital token to the test on the international stage, it may think twice about the idea of debuting it in such a divisive manner. Already, the Asian Infrastructure Investment Bank, which is heavily backed by Beijing, has announced that it will freeze both Russian and Belarus lending. The bank claimed that it was acting in its “best interests.”

Toth-Czifra agreed that Beijing would likely back away from cozying up to Russia on the economic front for fear of a backlash, stating:

China has already signaled that it is wary of secondary sanctions. Chinese banks have already blocked the financing of Russian commodities sales. It is doubtful that Chinese entities would readily lend a helping hand to the Russian financial system, especially when the official position of the Chinese government is that Russia should revert to negotiations with Ukraine.

How about a digital ruble?

Rajic opined that a CBDC, and “the centralized control this would bring” was “likely to be much more appealing to the Kremlin” The Russian Central Bank is indeed working on a digital ruble, but this has not even appeared in pilot form. Rajic stated:

If the conflict was to end in a matter of weeks or months, I don’t think we’d see a Russian CBDC fast-tracked to this extent, but a couple of years down the line and this could be possible.

Although a digital ruble is unlikely to roll out in time to save Russia from the full force of Western and allied sanctions, the long-term effects of these moves could well end up changing the economic landscape – beyond recognition.

Ezeji-Okoye claimed that for many countries “diminishing the power of the dollar is an overt goal” even for nations such as Cambodia, which listed de-dollarization as one of its reasons for releasing its own CBDC, one of the world’s first digital bank tokens.

El Salvador’s President Nayib Bukele won’t admit that his own Bitcoin adoption drive was motivated by de-dollarization ambitions, but it has certainly emboldened him to effectively flip the bird at the global financial establishment.

And, Ezeji-Okoye remarked, the latest sanctions on Russia are “likely to have other central banks and governments thinking along the same lines” as countries that are trying to purge themselves of the dollar.

Russia itself has spoken openly about its desire to de-dollarize its economy and cross-border trade, with senior decision-makers repeatedly stating that removing the greenback is a “long-term strategy”.

Last year, Anatoly Aksakov, the Chairman of the Parliamentary Committee on Financial Markets and also the Chairman of the Council of the Association of Banks of Russia, called attempts to “phase out the dollar” part of Russia’s “long-term economic plan.”

Back in March last year, the Russian Foreign Minister Sergei Lavrov called on Moscow and Beijing to “reduce sanctions risks by bolstering our technological independence.” He urged that they prioritize “switching to payments in our national currencies and global currencies that serve as an alternative to the dollar.”

Lavrov added, “We need to move away from using international payment systems controlled by the West.”

For some, tools like crypto and CBDCs, both real-world tokens and early prototypes could provide nations with tools that could eventually allow them to break free from the constraints of the Washington-led financial system.

Kene Ezeji-Okoye summed the situation up thusly:

CBDCs aren’t inherently designed to be adversarial. But, much like SWIFT, they can be used as such, and will soon become increasingly important pieces in the geostrategic game of chess. The world has witnessed East vs West races for power in the past, but in this case, the East is years ahead of the West.

The bottom line

As the United States, the UK, and EU-led sanctions continue to pile up on Russia, the question of whether CBDCs, crypto and the like can come to Moscow’s immediate aid, the short answer appears to be “no.”

But in the longer term, both the Kremlin and its uneasy allies in Beijing will almost certainly look to speed up the rate of their digital currency progress. In the wake of the Russia-Ukraine conflict, most countries will likely look for digital ways to exit a Swift paradigm that allows Washington and its allies to pull the plug on national economies in a matter of days.

Who Will Be the Winners – and Losers – of a Digital Currency Revolution?

Key Insights

  • Some private-sector firms like Visa and Mastercard think they’ve prepared for CBDCs
  • Several Asia-based firms are already working on CBDC solutions with central banks
  • Commercial banks and crypto operators could feel the brunt of CBDC rollouts

Crypto and fintech are playing an increasingly large role in the lives of millions of people the world over – and central banks don’t like it one bit.

Their response to the fact that cryptocurrencies and digital payment solutions have exposed conventional remittance and cross-border transaction systems as slow, sluggish, expensive, and antiquated has been almost universal. It’s time, they have realized, to go digital.

The central bank digital currency (CBDC) paradigm is still something of a theoretical notion rather than a concrete reality in most parts of the world. But that picture is likely to change in the next few years, with central banks now looking to launch their own digital coins and bodies like the IMF championing their cause.

If China’s digital yuan rolls out – as expected – this year, the race could well be on to see which country is the first to follow Beijing’s lead.

Who would stand to benefit the most if CBDCs become commonplace in the future? And who would be in line to suffer the most from digital fiat issuance? It’s time to find out.

Potential Victors

Many companies have pinned their hopes on becoming early adopters in the new digital currency paradigm.

Some have invested small fortunes on CBDC technology – quite a leap of faith, considering nobody really knows quite what a CBDC would actually look like, what IT solutions it would make use of, and if it would really take off.

Few central banks in the world have fully committed to issuance, too – although the somewhat panicky speed of their pilot projects indicates that they have accepted that CBDC rollouts will one day become an inevitability.

Rather than lose more ground to crypto innovators, most are now either testing coins or exploring means of creating digital fiats with expert advisors.

In the private sector, this has been duly noted by the likes of Visa and Mastercard, who have already created CBDC platforms – and clearly have no intention of being bit-part players in the CBDC revolution.

Last month, Visa announced a partnership deal with Consensys that will allow Visa users to link their cards or digital wallets to CBDC networks and pay with a digital token anywhere Visa is accepted as a form of payment.

Visa’s biggest rival Mastercard has also been working on its own solutions, including a proprietary virtual testing platform for central banks to evaluate CBDC use cases and explore designs, as well as a card linked with one of the world’s only fully rolled out CBDC, the Bahamian sand dollar.

Both firms are continuing to invest and explore CBDC solutions, but they are not alone. Some private-sector firms are working directly with central banks on their pilots – and even issuances.

These include Japan’s Soramitsu, which worked directly with the Cambodian central bank on its own CBDC – and has since said it is “speaking with other” central banks elsewhere in the world about similar projects.

In South Korea, a consortium headed by the tech giant Kakao and comprising arms of the electronics behemoth Samsung is currently piloting the Bank of Korea (BOK)’s CBDC in tests that should be complete by the end of the first half of this year.

This should give them a huge head start in the CBDC game – although Kakao subsidiaries have been working on CBDC-related projects for many months in preparation.

Crucially, the BOK’s pilot CBDC runs on the Klaytn blockchain protocol, developed by the Kakao subsidiary GroundX. So if the BOK decides to use Klaytn, its CBDC’s destiny will be tied to that of the network.

Other South Korean tech titans are also closely linked. For instance, the Klaytn Governance Council comprises LG Electronics and another LG Group subsidiary. In addition, LG’s tech services arm LG CNS is also working on CBDC solutions – and last year launched a CBDC platform in conjunction with Shinhan, one of South Korea’s biggest commercial banks.

The BOK pilot is also significant in that it has seen the coin tested on Samsung mobile devices – with Apple edged out of the picture. This could give Samsung another edge, which is already trying to beef up its smartphone-based digital wallet solutions.

Some central banks, including the Bank of Israel, are looking to the Ethereum blockchain network for answers – which could mean that companies that work closely with Ethereum (such as the aforementioned Consensys) will likely play a key role in adoption drives.

As many crypto developers (think NFTs and many coin issuances, for example) seem to gravitate toward Ethereum naturally, there is cause to suspect that companies that manage to create a bridge between this protocol and CBDCs could well be on to a winner.

Ethereum developers, as well as the developers of rival protocols like Solana and Cardano, could be another group that ends up on the “winning side” of a fast-paced CBDC adoption revolution.

And Who Might Lose Out?

Who would stand to suffer the most in the event of an adoption drive? The obvious target is crypto and crypto firms. A quick look at China proves that central banks clearly do not like the idea of having to compete with decentralized competitors that they cannot bring to heel quickly. Outlawing crypto, mining, and exchanges would quickly ensure that the only horse in the race belongs to the central bank.

But some nations may not choose to take such a draconian course of action. And it could be the case that crypto and CBDCs find a way to co-exist.

Far more perilous, some might suggest, would be the situation for commercial banks, which could be cut out of the picture altogether by a CBDC or used as mere intermediaries for issuance.

In China, a central bank-run CBDC app is already in use, leaving commercial banks looking somewhat out of place in some cases.

Sure, many banks may suggest that lending and mortgages make up the core of their business anyway, but they will find it worrying if they don’t seem to have a clear role to play in the emerging CBDC picture.

Also potentially in the firing line are e-pay platforms, such as Apple Pay, Alipay, WeChat Pay, which are already being frozen out of the picture in Chinese pilots.

At the recent Winter Olympics, many athletes and journalists were stunned to discover that official Olympic venues did not accept any form of payment except Visa (the games’ official sponsor), the digital RMB, or (yuan) cash.

Alipay and WeChat Pay – which represent 15% of the entire Chinese payments market – have already had their wings clipped by Beijing in a number of other moves.

Again, this could be seen as a draconian measure by free market-loving democracies. But if the chips are really down for central banks and their CBDC projects, it’s worth ruling nothing out.

Crypto vs CBDCs – Will Only One Victor Emerge?

When it comes to making predictions about the future of finance, only fools rush in where angels fear to tread. Uncertainty reigns supreme. But it appears safe enough to say just one thing – whatever tomorrow has in store for money, the future of finance is certainly digital and online.

The internet has become an integral part of too many parts of the economy, business world and everyday life to continue for much longer without a “native” currency to rival the USD in the offline world.

Banking has stubbornly refused to keep up with the pace of IT development, leaving conventional cross-border transactions looking positively sluggish, prohibitively expensive and outdated compared to crypto-powered solutions.

To its credit, the industry has been trying to remedy this, but many find its glacial pace of progress frustratingly slow.

Regardless, uncertainty over the identity of the “killer” digital form of money continues to bug investors. Should we listen to people like the Twitter founder and Bitcoin bull Jack Dorsey? He stated in 2018, per CNBC:

“The internet is going to have a native currency so let’s not wait for it to happen. Let’s help it happen. I don’t know if it will be Bitcoin but I hope it will be.”

Bitcoiners and some others tend to see central bank-led projects as a perversion of the crypto dream.

Central bankers, however, have other ideas.

Some, like China and Russia’s central banks, favor stamping out all forms of crypto-related activity so they can clear a path for their own central bank digital currency (CBDC) projects.

Are they right? Is there only enough room in digital Dodge for one currency? Or could the two co-exist in the brave new world of digital finance?

To centralize or not to centralize?

The few existing CBDCs that are currently out there appear to be functioning in a similar manner to a payment platform like Apple Pay, WeChat Pay or Alipay – particularly China’s digital RMB. For customers, a CBDC appears at first glance to be just another way to use your smartphone (or offline smartcards, piloted at the Winter Olympics) to pay for goods, transport fees and services.

But the crunch comes when customers start thinking about where this money is being stored and who has access to their spending data. While some people are happy for the government to know every single detail of their financial behavior, others see this as a massive and dangerous breach of privacy. Some have even gone so far as to call the digital yuan a tool of espionage.

On paper, a cryptocurrency could be used in precisely the same manner as a CBDC. In fact, in El Salvador, the government is trying to prove this point with its Bitcoin Lightning Network adoption plans. But the big difference with cryptocurrencies is that there is no central issuing body. Are businesses and customers really prepared to deal with a currency where the buck stops…well, nowhere?

This may be a leap of faith for some traditionalists. But for Web 3.0 revolutionaries, decentralization is the very point of digital forms of money.

Just how far crypto advocates are prepared to go down the rabbit hole of decentralization, though, appears to be up for debate.

Could governments’ drives for “cashless” societies benefit or harm crypto?

Governments detest cash. In the past, banknotes and coins were a necessary evil. But while central bankers like to call crypto tools of money-launderers and criminals, the cleverest crooks would never go anywhere near most cryptocurrencies. Crypto (with the exception of privacy coins) leaves an uneditable, permanent trail on blockchain networks. Cash, on the other hand, is all but untraceable, and is much easier to launder.

Black markets thrive on cash, and crypto-based models, such as the now-defunct Silk Road marketplace, are easy targets for increasingly sophisticated cyber police forces. To truly stay off the radar, cash transactions are king. And that is why so many governments are now pushing relentlessly to adopt “cashless society” protocols.

CBDCs allow governments to actively pursue their dreams of a world without cash. And they are already bearing fruit. Earlier this year, two private Chinese banks (Zhongguancun and NewUp) announced that they would stop offering customers services that make use of banknotes and coins to focus on digital currency – before the e-CNY has even rolled out nationwide.

But while governments and central banks’ ideal scenarios involve CBDC as the only horse in town, there’s just one small problem with that – experts agree that most central bank-run coin projects are years away. And while governments attempt to purge their societies of cash, crypto is already here.

Some might suggest that consumers afraid of the volatility of crypto and unsure about the privacy concerns of a CBDC might actually play into cash’s hands. But it seems unrealistic to envision cash playing the same role it did in the 20th Century in the Web 3.0 era – that’s not how transactions work in 2022.

Far more likely is the following: Either the advocates of crypto and CBDCs learn to get along or they must fight to the figurative death. It is not impossible to imagine a world where, say Bitcoin, Ethereum or a leading altcoin becomes a store of value, while CBDCs are primarily used in retail and exchange.

Whichever path these parties choose, however, the time to act is now. As the age of Web 3.0 dawns, a financial vacuum is emerging – and failure to capitalize on the opportunity could spell victory for the side with the greatest momentum.

These Are the 3 Biggest Differences Between a Cryptocurrency and a CBDC

Central Bank Digital Currencies (CBDCs) have become a pressing concern for governments all over the world. Every central bank you care to mention, from Jamaica to Japan, is either talking about them, desperately trying to create them or currently trying to launch them.

The subcontinent’s central Reserve Bank of India could roll out its digital rupee as early as this year.

Meanwhile, in the world’s most populous country, the pace of progress is even faster. China, which is already piloting its digital RMB in 11 major cities – including the capital Beijing, as well as the economic powerhouses Shanghai and Shenzhen – has already begun onboarding its biggest commercial banks and tech firms to the new token.

Even the United States, the world’s biggest economy is mulling a digital greenback launch – with some in the sector calling an American CBDC “inevitable.”

Some say that the advent of crypto has forced central banks’ hands – pushing them to create their own answer to digital tokens like Bitcoin and Ethereum. But what are the biggest difference between CBDCs and coins like BTC?

CBDCs don’t have to use blockchains

Many central banks are building their pilot tokens on existing public blockchain protocols. For instance, South Korea is now testing its digital KRW prototype on the Klaytn blockchain (which uses the native Klay token). The latter was developed by a subsidiary of the domestic internet giant Kakao. Australia’s central bank is also looking at an Ethereum-powered solution.

The masterminds behind other leading CBDC projects, such as Sweden’s e-krona initiative, also say they will make use of blockchain and distributed ledger technology.

But unlike crypto – which is by its very nature decentralized – CBDCs don’t have to use blockchain. Case in point: the digital RMB. China’s leadership has championed blockchain technology but has decided to effectively eschew it in the creation of the e-CNY, currently being showcased to the planet at the Winter Olympics.

In theory, there are a plethora of ways a central bank could create a digital currency, and blockchain technology is just one of a number of tools bankers have at their disposal. The same cannot be said for crypto. Because, as any savvy crypto investor knows, a cryptocurrency without a blockchain is, ultimately, a scam.

CBDCs are the epitome of centralization, cryptos are the polar opposite

The above is a perfect example of the next biggest difference between coins like BTC and CBDCs. The central People’s Bank of China (PBoC) doesn’t need to use blockchain technology for its token because transparency and decentralization are not its main aims in creating its coin.

Some critics (including Washington-based senators) say that, in fact, the PBoC is creating its e-CNY in a bid to increase centralization.

Governments, Beijing included, hate cash because it is the de facto currency of the black market. They also hate the fact that tech firms currently have a stranglehold on payment platforms because big IT companies operate across borders and can grow extremely powerful.

Skeptics would argue that CBDCs, if successful, would let them kill two birds with one stone. By making a centralized digital currency that has no elements of anonymity built into it, they could (theoretically) do away with black markets, freeze criminals’ funds, and wrestle back control of payments from IT companies.

Centralization would essentially reposition central banks, currently at the fringes of daily economic activity, as the central, controlling bodies at the heart of domestic finance. Crypto, its advocates claim, seeks to do the exact opposite.

CBDCs are (still) largely theoretical and exist only in the planning stage

Crypto has an enormous head start over CBDCs. Although crypto pay incentives have never really taken off, crypto ownership has shot up in recent years. People may not want to spend BTC and altcoins, but they certainly seem keen to buy them.

You are no longer an outlier if you tell people you own Bitcoin, ETH, or altcoins. In fact, many mainstream financial advisors now tell their clients to keep a small amount of their portfolio in crypto – advice even some city treasuries are taking to heart.

By contrast, CBDCs aren’t even in their infancy yet. Except for a select few countries such as the Bahamas and Cambodia, CBDC rollouts are still years off, experts have told FXEmpire.

China’s progress is impressive, but the PBoC is still claiming to be in the “R&D phase” of its digital yuan project. Other nations, such as Israel, are claiming breakthroughs, but the truth of the matter is nobody really knows if, when, and how CBDCs will start launching, or how aggressively central banks will promote them.

In the meantime, crypto keeps on growing. And as central banks now have their hands full battling inflation – another factor that appears to be driving up crypto adoption in multiple regions – crypto advocates agree that CBDCs face an uphill battle in their quest to pass, and surpass, crypto.

Stablecoin Sector Can Use Regulatory Scrutiny to Its Own Advantage

Stablecoins have had a rocky start to the year. With Tether moving to freeze some $160 million worth of USDT in three addresses on the Ethereum blockchain earlier this month, Meta (formerly Facebook) offloading its ill-fated Diem stablecoin project to one of its former partners, and Washington-based politicians promising to regulate the sector, fiat-pegged coins badly need an injection of positivity.

Fortunately for the sector, some believe that the demand for stablecoins is about to bloom – with experts predicting a rosy future for coins backed by the USD, as well as other currencies.

One such expert is Simone Mazzuca, the CEO of Wallex Trust – the company behind EURST. The firm claims that it is the first live-audited USD asset-backed euro stablecoin on the market.

Speaking exclusively with FX Empire, he explains that while it is natural for token developers to gravitate to the USD in order to “cover as much market as they can,” some investors are looking for diversity.

Arguably, it is precisely this departure from the notion that all stablecoins must be pegged to the greenback that could help spark this growth.

This, Mazzuca suggests, is why Europeans might look for options that help them do business in a currency they are more familiar with.

He explains:

“The EURST is for all users, for traders, brokers, merchants with Europe and with European clients, and as well for individuals who want to protect their assets, or just to store funds in digital assets for their utilities.”

The token, Mazzuca suggests, will allow Europeans to “link to the international markets.”

Last year, the Japanese internet firm and crypto exchange operator GMO Internet announced the launch of the nation’s first yen-pegged stablecoin.

A second, rival JPY-pegged coin emerged shortly after, and the American stablecoin operator Circle last year announced its own plans to back a yen-pegged token. A number of South Korean firms are also thought to be weighing up their KRW-pegged stablecoin options should the country’s ban on domestic coin offerings be lifted in the coming months.

But Mazzuca suggests EUR-pegged coins could have a very different appeal, as JPY-pegged tokens could be “very restricted as an ecosystem.”

FX Empire: Do stablecoin projects pegged to the JPY and other currencies face the same kind of challenges as yours?

 

Simone Mazzuca: Stablecoins’ issuance, stability and challenges rely on various factors, not only the peg. It is equally, if not more important, how a stablecoin is issued, the engineering behind it and its features.

Adoption Drive

Mazzuca claims that coins like his firms could eventually help power cross-border trade, and even “provide an alternative” to the SWIFT payment networks and the EU’s single euro payments area (SEPA) initiative.

He explains that the global economy is “undoubtedly facing a shift” toward the “adoption of cryptocurrencies,” and opines that “stablecoins are the natural and secure bridge to” the crypto sector.

And while European central banks are working on their own digital token (CBDC) projects, stablecoin operators believe that slow progress on this front means that fiat-pegged coins can fill a large gap in the market.

FX Empire: Do you think that CBDCs will open a door for stablecoins? Or will they shrink the market for the sector?

Simone Mazzuca: We believe that CBDCs are a very good idea. However, they are far from becoming a reality for the next three to four years. In the meantime, the demand for stablecoins is already present.

Indeed, if crypto adoption does drive the market and people start to embrace what the CEO calls the “benefits of blockchain,” it is only “logical” that “merchants and businesses will start to accept stablecoins – in order to be competitive.”

Regulatory Challenges

But what of the elephant in the room? Some would suggest that regulators appear to have had the knives out for stablecoins right from the start. Politicians all around the world took a very dim view of Diem (formally Libra), dragging Meta/Facebook’s executives in front of House and Senate committees and demanding a climbdown.

The Securities and Exchange Committee (SEC) was also the body that effectively took down the Telegram TON project just weeks from its scheduled launch in 2020.

Arguably it was this kind of pressure that forced the tide of “global stablecoins” run by tech firms back. Since then, few other conventional companies have dared brave the regulatory storm, despite talk years ago of international banks and other big-name firms entering the stablecoin space.

In recent months, Gary Gensler, the head of the SEC, has taken aim at existing stablecoins, equating them to “poker chips at a casino” on numerous occasions, calling for the introduction of strict, bank-like policing – and summoning operators to face a grilling at the hand of US regulators.

Late last year, Japanese regulators also started talking about stablecoin regulation.

But what some may see as a threat, others see as a potential opportunity.

FX Empire: What regulatory challenges does the sector face, and how does it plan to address them?

Simone Mazzuca: “It’s far more important that the SEC has gathered stablecoin issuers for a hearing in order to understand and bring information on stablecoin-issuing mechanisms. I see this action as having major importance. It shows that regulators are open to understanding.”

As a large increase in market cap and stablecoin usage is now “happening,” Mazzuca opines, “it is necessary and inevitable to have certain regulations protecting the market.” He says:

“These regulations would enable a bridge between traditional finance and the crypto space.”

Such regulations, he suggests, could help do away with bad actors and coins that are “not properly asset-backed or transparent and possess risks for their users.”

He concludes that tokens like his own “can be accepted to regulators,” only by “satisfying certain requirements of transparency.”

With mechanisms in place like “mint and burn systems, transparent audited reserves in 100% fiat funds, held in escrow accounts with insurance,” Mazzuca and others like him believe, stablecoins can move out of the “Wild West” space Gensler believes they currently operate in – and into the limelight.

Three Essential Crypto Lessons Investors Can Learn from the OneCoin Scam

Scams are rife in the world of crypto. But OneCoin is arguably the most successful cryptocurrency scam in history. Between 2014 and 2016, the project raked in $ 4 billion from investors based all over the world. Despite the fact that it was never even listed on an exchange, it drew in cash from almost every nation you care to mention.

Its co-founder Ruja Ignatova, aka “Dr. Ruja,” disappeared without a trace in 2017 after spending millions of her investors’ dollars on luxury apartments and other assets. Its co-founder Sebastian Greenwood was jailed for wire fraud in the United States, while Dr. Ruja’s brother Konstantin, later the OneCoin CEO, has also been put behind bars.

Years later, police the world over are still chasing down OneCoin execs. It may take them decades to track them all down.

But this remarkable story – soon to become a major Hollywood movie starring Kate Winslet as Dr. Ruja – has some important takeaways for crypto investors who want to learn how to spot a scam

In the World of Crypto, if Something Looks Like an MLM Scam…it Probably Is

Contrary to what naysayers say about crypto, it’s not a pyramid scam. Last month, an FT contributor wrote that “calling Bitcoin a Ponzi scheme,” was “arguably being too kind.” But what the FUD brigade misses is that cryptocurrencies are the product of blockchains, which are immutable and uneditable in nature – due to the fact that they do not exist on a single database, but rather are a shared network that continues to exist even if an individual node goes offline.

Blockchains are a powerful financial tool: They are possibly the ultimate accounting tool, in fact, because anyone in the world with internet access can examine all transactions conducted on them at any given time. With the exception of privacy coins like Monero, you can see how many tokens an individual wallet owns, when coins left a wallet, where they went and so on.

A multi-level marketing (MLM) scam operates in the shadows, using fabricated records or inaccessible ledgers – just like OneCoin, which kept much of its accountancy a secret and didn’t even have a blockchain.

Instead, the sum total of its accounting appears to have been conducted on a bunch of PCs in a small office in Sofia, Bulgaria, that was hurriedly emptied one day in 2019.

In the world of bona fide crypto, nobody will ever try to “recruit” you. There are no “membership levels,” you don’t get “referral bonuses” or “guaranteed returns” on genuine exchanges. Sure, some protocols occasionally offer airdrops and exchanges offer promotional giveaways. But there is a clear line between marketing and outlandish MLM promises. When a “crypto” project starts trying to get you to press-gang your friends and relatives into “joining” something or other, it’s almost certainly a wolf in sheep’s clothing.

If Somebody Tells You Their Project’s the “Next Bitcoin” – Run the Other Way!

It is June 11, 2016. In London, “Dr. Ruja” takes to the stage in Wembley Arena, the UK’s premium concert venue. Flames shoot out of the stage as she enters, while “This Girl Is on Fire” by Alicia Keys blares on the sound system. Wearing a flowing red dress, Dr. Ruja tells the enthralled audience that OneCoin’s market cap is now second only to Bitcoin. In fact, she says, her protocol is the “Bitcoin Killer.”

“We don’t have far to go,” she enthuses. And if everyone just keeps on investing their money, “in two years, nobody will speak about Bitcoin anymore.”

While there is undoubtedly some competition among crypto communities – there are bitcoin-only folks like the Twitter founder Jack Dorsey and Ethereum advocates who champion their favorite coin among all others. But when it comes to token founders, animosity is rare. Even crypto celebs like Vitalik Buterin, the Ethereum co-founder and Changpeng “CZ” Zhao, the founder of Binance Coin, have admitted to holding Bitcoin and other tokens.

Solana is billed by proponents as an Ethereum “killer,” but the co-founder of the protocol, Raj Gokal, has shunned this kind of label.

Real high-worth protocols are not interested in being the only show in town. There is plenty of space in the industry for successful protocols and those trying to “catch” BTC and the rest are likely making pie-in-the-sky promises aimed at nothing more than filling their pockets with your cash.

Beware Charismatic “Leaders” – and Remember Crypto’s Supposed to Be Decentralized

Dr. Ruja was ostensibly the perfect antithesis to the Vitalik Buterins of this world. While the latter is a bookish, understated, nerdy, intellectual type, Dj. Ruja was the opposite: She was the last word in charm.

And while Buterin is only a cog in the Ethereum machine, Dr. Ruja was anything but. She actively sought out the limelight, making incredible promises of fabulous wealth.

But in the real crypto sphere, this kind of focal point is almost always a bad sign. Crypto’s big selling point is its decentralized nature – a factor that makes a protocol almost indestructible after it has grown to a certain size. The less you hear about the founder of a protocol, and the more you hear about a large community of busy developers’ plans to improve the network, the better.

Few people have dug up as much dirt on this scam as the British journalist Jamie Bartlett – the creator of the most famous exposé of OneCoin yet: the BBC’s “Missing Cryptoqueen” podcast. In summing up Dr. Ruja, Bartlett wrote that “most frustratingly of all, she correctly guessed that by the time we realized [the extent of her scam], she’d be gone, along with the money.”

Can Crypto Really Beat Inflation?

Crypto has been vaunted variously as an inflation-proof asset and a digital answer to gold. But just how accurate are these descriptions? With inflation on the rise, the answer could well be around the corner.

The Problem of Inflation

Everyone with fiat savings fears the dreaded “i” word. But after years of low or almost no inflation in many parts of the world, it suddenly seems we cannot escape talk of a coming inflationary storm.

Much of the economic talk in 2021 centered on inflationary hotspots in Turkey, Argentina, Venezuela and the like.

Source: https://dolartoday.com/indicadores/; http://www.bcv.org.ve/estadisticas/tipo-de-cambio
Graphic: Nicolas Perrault III

But while these were once seen as outliers, nations that have been living without inflation for decades are now posting worrying figures. In countries like the UK and the United States, central banks are now finding themselves under increasing pressure to raise interest rates to fight back.

However, the problem cannot be so easily swept under the carpet. Wages in the West are on the rise, food prices are shooting up worldwide and energy price hikes are becoming commonplace.

If inflation is now a given, it is only logical to expect fiat currency holders to respond. Pressures like these naturally push investors toward “safe assets” – traditionally blue-chip stocks and gold. But more recently, the “safe asset” category has a new member: crypto.

Does Crypto Work as a Store of Value?

Many major economists say they think so, with some calling Bitcoin and the like “digital gold.”

One notable example is the Visa CEO Alfred Kelly, who last year said: “We see all [cryptoassets] as digital gold. They are predominantly held as assets that are not used as a form of payment in a significant way at this point.”

Just as gold or “safe-bet” stocks often experience price volatility, they are simply too valuable to bottom out. They are also a safe distance from currency markets, meaning that they might get dragged into periods of fiat-related volatility, but can never (or so the theory goes) experience the same kind of hyperinflationary pressures that can cause a currency to collapse, à la Germany in the 1920s.

While the Turkish Lira and the Argentine Peso are not quite at the same level, they too are edging ever closer to inescapable currency chaos.

In both nations, crypto adoption is flying up. Turks make a million crypto transactions a day, Reuters reported last month. In Argentina, even the President has called crypto a “hard currency, somewhat,” with the power to “nullify inflation.”

Bitcoin prices over the past five years

Is There Really Any Truth to All This?

This month, Rio de Janeiro’s Mayor said that he intends for the Brazilian city to keep 1% of its treasury reserves in crypto. Other cities have taken a similar tack, while there is now no shortage of mainstream financial advisors speaking to media outlets like CNBC and Time about the benefits of buying crypto. Most now advise investors to keep at least a small portion of crypto (10% or less, mostly) in their portfolios.

It looks like global politicians are starting to take this advice to heart.

Could Crypto Actually Replace Fiat?

Most critics think that crypto’s weak point is its use as a form of payment. Visa’s Kelly is just one of those who have pointed out that people seem happy to buy, trade and hold crypto, but seem unwilling to spend their coins on goods or services.

High gas fees, slow and transaction prices are often cited as prohibitive factors, while crypto pay incentives have thus far failed to blossom. But micro-payment-friendly solutions have been mooted, including the Bitcoin Lightning Network, which has been championed by the Bitcoin-keen government of El Salvador’s President Nayib Bukele.

Bukele’s government last year adopted BTC as legal tender, and has since snapped up hundreds of tokens using public funds. That means that crypto is now being put to the test in the Central American nation as not only as a treasury reserve asset (a store of value), but also as a means of payment.

As these are perhaps the two key properties an asset needs to possess if aspires to be called a currency, perhaps we will find out very soon if crypto really has what it takes to go toe-to-toe with fiat!

3 Big Environmental Concerns About Crypto – What Can We Do About Them?

Some environmental activists and lawmakers have labeled Bitcoin (BTC) and the like “dirty” industries, reliant on vast quantities of power – much of it fossil fuel-based.

What – if anything – crypto developers and miners can do to clean up their act and win over the hearts and minds of an increasingly environmentally conscious public?

Problem #1: “Crypto Mining is Carbon-intensive”

Up until very recently, this statement was certainly very true. At one point, China was responsible for some 51% of the global BTC hashrate. And most major mining players in the country were masquerading as “Big Data” centers, usually using power from older coal-powered stations in poorer parts of the country.

In September last year, that all changed, however. Early in 2020, China committed itself to go carbon-neutral by 2060. A few months later, Beijing started to hit out at its most polluting provinces, which responded by marginalizing crypto miners. September’s crackdown followed. Many miners relocated to Eastern Europe and Central Asia.

But now these areas, many of which also rely on coal, oil, and gas, are also starting to shun miners after energy shortages, fuel price rises, and power outages. This is driving more and more pools to the Americas. “Green” crypto mining is on the rise in the USA, which is now the world’s de facto BTC mining center of gravity.

And further “green” initiatives could be on the cards in Latin America: Paraguay’s Senate has approved a bill that seeks to allow foreign miners to set up shop at locations such as the Itaipú Dam – the biggest hydroelectric facility in the world. Miners are also setting up shop in Costa Rica, a nation where fossil fuel consumption has been all but eliminated.

Problem #2: Crypto mining is just too energy-intensive

The proof-of-work and proof-of-stake debate has been raging for years in crypto communities. You can get a clearer idea of the differences between the two models of mining by checking out this article.

But, put very basically, proof-of-stake (POS) requires far less energy. The word on the grapevine is that Ethereum, the world’s second-biggest coin and one of the most important blockchain networks (most NFTs, for instance, are minted on the network), will migrate to POS in the months ahead.

The snag is, developers have been saying this about ETH for some time yet, and for environmentalists, the move isn’t coming quickly enough. Also, only a handful of blockchain protocols actually use POS.

The good news, perhaps, is that this small collective includes the likes of Cardano (ADA), one of last year’s breakaway coins and a self-proclaimed ETH competitor. If ETH can successfully make the shift this year, perhaps other developers on different networks will be inspired to follow suit.

Problem #3: Crypto Mining isn’t Worth it

Many eco-activists say that crypto should be shut down, so deep is its environmental cost. But crypto advocates counter that many industries use large amounts of power, but are simply thought to be “worth the environmental cost,” due to the fact that they provide society with so many benefits.

If crypto can provide us with a currency for the Web 3.0 era, might it not, argue some, be worth investing energy in?

This kind of reasoning is actually as old as Bitcoin itself – and can be traced back to none other than BTC’s founder, Satoshi Nakamoto. In 2010, Nakamoto wrote, in response to the accusation that “Bitcoin minting is thermodynamically perverse:

“The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. I think the case will be the same for bitcoin. The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be the net waste.”

NFT of Top South Korean Politician’s Pro-Crypto Social Media Post Sells for $2.5k

An anonymous buyer has forked out 2,000 KLAY tokens, worth over ($2,500), for a non-fungible token (NFT) of a leading former South Korean minister’s Facebook post that criticized the government’s hardline crypto policy.

The article was penned by the former Minister of Small and Medium-Sized Enterprises and Startups Park Young Sun, a key figure in the ruling Democratic Party. Park unsuccessfully ran as the party’s mayoral candidate of Seoul last year. She has also made a number of pro-business statements supporting the cause of domestic blockchain and crypto firms.

According to a report from the Korean-language publication Hanguk Kyungjae, the token was sold via the OpenSea platform on the Klaytn blockchain protocol – which was developed by a subsidiary of the chat app giant Kakao.

Park created the post back in January 2018 in response to comments from the then-Minister of Justice Park Sang-ki, who had claimed that closing all domestic crypto exchanges was the “only way” to calm “speculative fever” in the crypto markets.

Viral Post

At the time, Park was serving as a member of the National Assembly’s Planning and Finance Committee. In the Korean-language post, which went viral on a number of social media platforms in early 2018, Park wrote that there would be serious “side effects” from closing exchanges, namely that “money” would have “no choice but to flow abroad.” She added that the move would stifle innovation “for blockchain and cryptocurrency”-related firms working in “the era of Industry 4.0.”

And Park concluded that it would soon be “impossible to artificially block the circulation and markets for cryptocurrency.”

Park is a key supporter of the presidential candidate Lee Jae-myung, who will represent the Democratic Party when South Korea goes to the polls for March 8’s general election. Lee has made a number of pro-crypto manifesto pledges and was instrumental in driving the National Assembly to delay a proposed crypto tax law until 2023.

Crypto Donation

The former minister was quoted as explaining that she had paid a 2.5% commission fee on the sale, and that she “planned” to use the funds to make a “meaningful” “digital asset donation” to a cause that “strives to solve social problems.”

Park said, “I feel like I have taken the first step into a digital world where we can share values ​​with one another.”

Georgian Town Takes a Sacred Vow to Refrain from Crypto Mining as Power Outages Strike

Winter is beginning to bite for bitcoin and altcoin miners around the world: This week, Iranian miners have been told to shut off their rigs to preserve ailing energy grids, while industrial miners in Kazakhstan have been disconnected from networks. And now residents of a small Georgian town have turned to an ancient religious rite in a bid to stop the area from plunging into midwinter darkness.

In September, reports circulated, deals were struck that resulted in some 560,000 BTC mining rigs moving into the small Central European nation. Georgia began punching above its weight in the crypto mining world in the mid-2010s. University of Cambridge data from August 2021 shows that the country is responsible for just under 0.2% of the global bitcoin hashrate. But the same body also found that in 2018, only one other country in the world dedicated more of its national power consumption to mining tokens.

Industrial miners relocating from Mainland China appear to have put a strain on the network – and a rise in domestic mining is now being blamed for power outages in parts of the nation.

Residents’ Ire

One such region is the mountainous province of Svaneti. The Russian-language media outlet Vzglad reported that angry residents of the townlet of Mestia have staged protests “throughout the week” – demanding that mining centers in the province shut off their rigs.

They have also accused the local government of inaction and promoting crypto mining. The residents complain that not only have their lives been disrupted by power outages but also that the issue has hit the tourism sector – the main source of income for many Mestia residents.

Some, however, say that it is not industrial players who are to blame and that domestic miners running small numbers of rigs at home are causing the local grid to falter. Late last week, the Georgian-language media outlet Rustavi2 reported that the police uncovered a group of illegal crypto miners in a downtown hotel using “enough electricity to power 12-14 small villages” to keep their rigs running.

With fingers of blame now being pointed in all directions, the residents gathered at a famous church in the region – home to a sacred idol of St. George. The residents swore solemn oaths not to engage in mining over the ancient idol.

Holy Promises

In Orthodox Christianity, the dominant religion of Georgia and much of the former Soviet Union, idols play a central role in spirituality. But according to local tradition, anyone breaking an oath sworn over this particular idol will bring great dishonor to their soul – and to those of their relatives and ancestors.

Residents were quoted as “saying that there was no other way around the issue and that they “had been forced to take the oath as the last resort.”

Mobile phone video footage of the gathering was shared on social media by the media outlet Sputnik Georgia.

Bitcoin Mining Profitability Falling with More Drops to Come, Says Arcane

Mining profitability levels for bitcoin are finally on the decline, a new report has claimed.

China’s crackdown on BTC and altcoin mining – which began in early summer and intensified in September – took a heavy toll on the global hashrate (computer power on the BTC network). But the findings of an Arcane Research report suggested that Chinese miners defying the crackdown and miners based elsewhere in the world saw profits soar.

That growth appears to have continued until November, when profitability began to decline, Arcane noted.

November Peak Now Over

The profitability rate for BTC miners using the Bitmain Antminer S19 rig has now dropped to July levels. The cash flow per BTC 1 currently stands at $39,000, the researcher added. In November, profitability levels were almost double this figure, peaking at around $60,000 per coin.

Price drops in the bitcoin market were also partly to blame for the profitability decline.

But it appears that miners are happy to hold on to their coins and wait for price rises before making liquidity moves.

Earlier this week, the analytics service Glassnode remarked that the amount of bitcoin currently being held by miners stands at BTC 500 shy of the all-time-high figure set in December last year – at almost BTC 1.8 million.

Glassnode added that miners had “started HODLing significantly more” bitcoin beginning in March last year – apparently confident that more crypto price rises will soon be on their way.

Share Price Fall Outpaces Token Drops

Arcane, meanwhile, remarked that the “recent profitability decline” had “led to a reduction in the share prices of publicly listed mining companies.”

It noted that since early November, some players have seen a share price slide of over 55%, with rival players seeing 40% falls – despite the fact that bitcoin prices had “only” fallen by 32% “in the same period.”

The firm concluded that this slide downwards proves that “mining companies are more volatile than the bitcoin price.”

Arcane predicted a further drop in profitability in the near future, writing: “As more hashrate continue to come online, we expect the profitability of mining to continue trending downwards over the next months.”

Withdraw All Your Funds Now, Grime Finance Tells Users After $30m Hack

The platform’s operators posted on Twitter, where they urged: “We have paused all of [our] vaults to prevent any future funds from being placed at risk. Please withdraw all of your funds immediately.”

The protocol claimed that an “advanced attack” had seen the hackers exploit “five reentrancy loops,” a move that enabled the attackers to create five fake deposits in one of its vaults while the protocol was processing an initial deposit on a “malicious token contract.”

Grim Finance wrote that as the “exploit was found in the vault contract,” “all of” its “vaults and deposited funds are currently at risk.”
But the attackers could still be traced, the protocol indicated, adding that the “[attackers’] address has been identified” – and that the hack had originated externally. Grim Finance wrote that it had contacted Circle, the mastermind of the USD Coin, as well as “DAI and AnySwap” “regarding the [attacker’s] address” in a bid to “potentially freeze any further fund transfers.”

Grim Finance is a self-styled “compounding yield optimizer,” and makes use of sophisticated vault strategies to offer its users high liquidity yields.

The news will come as a major blow for DeFi advocates, who are already reeling from a crippling attack on the BadgerDAO protocol. Earlier this month, that protocol was the subject of a $120 million hack that forced decision-makers to pause smart contracts on the platform.

One prominent Twitter-based observer called the BadgerDAO raid a “nasty front-end attack.”

Over the weekend, BadgerDAO announced, also on Twitter, that “all recoverable assets” had been “returned to the wallets from which they were taken, although it admitted that “this represents close to 40% of all affected users.” In a post, it claimed it was now time to “turn the lights back on” at Badger.

The hackers reportedly attacked the BadgerDAO protocol on the Ethereum blockchain network on one of its contract addresses.