MyCryptoParadise | Crypto News | Weekly 8

September 5, 2020

Reading Time: 5 minutes

What happened this week in the Crypto world?

Over the last few months, digital assets such as COMP and LINK have become popular amongst speculators. The market cap between the coins, as mentioned earlier, has amassed billions of dollars, and interestingly several other digital assets such as YAM are emerging in the market seeing aggressive market movements.

Experts suggest the aggressive increase in investments for newer emerging coins has traits that closely align with the crypto craze of 2017. However, at this time of the year, the introduction of DeFi platforms, interest from traditional transactional giants, and the popularity of crypto exchanges could translate into a newer, more substantial price movements in the crypto market.

These competing movements can be found all over the market. The world’s largest stable coin, Tether, has once again taken over the emerging altcoin XRP. Tether has worked it’s way up on the cryptocurrency rankings by market cap over the years. Currently, ranked third, Tether has successfully become the second-largest altcoin after Ether.

On the other side of the spectrum, countries around the world are competing for the control of the crypto mining industry. In contrast, China has been at the forefront of leading mining operations due to rewarding factors such as low labor cost, access to units, and lower cost of energy, especially during the raining season.

The competition of control shall continue as countries around the world accept cryptocurrencies. Chinese citizens have reportedly moved over $50 billion worth of cryptocurrencies out of the country amidst clashes between the US and China uncover newer horizons. Over the year, in response to China’s plummeting economy due to trade wars and the yuan’s devaluation, over $50 billion worth of cryptocurrencies have found its way into foreign waters.

Top News

Bitcoin

Bitcoin has peaked over $12,000 on Monday as investors continued their search for inflation hedges. Bitcoin swept over the $12,000 ceiling on Monday and stayed adamant in its position as investors continued to hunt for unorthodox assets. The Digital asset peaked at $12,476 over the day, seeing its highest rise since July 2019.

Experts speculate the surges in price attributes to the stock market, closing in on record highest while investors look for landing into safe-haven assets. However, Bitcoin has still yet to overcome it’s 2017 record of $20,000 per coin. Critical psychological thresholds are yet to be rallied past for Bitcoin to soar to newer heights. Moreover, the digital asset’s price constitutes real yields in light of the Fed’s plan to hold rates near zero in the near future.

Ethereum

Gas costs are at record highs on the Ethereum blockchains. The rising gas costs are attributed to the rise of decentralized platforms; however, experts suggest differently. At the same time, exchanges advocated using multisig platforms to secure their digital assets and digital economics, when multisig was glorified to prevent private keys from being breached.

Despite the emerging adoption, flaws in the platforms gave way to rising problems. Moreover,  multisig platforms primarily weren’t supported on the Ethereum blockchain. Instead, platforms had to utilize smart contracts that implemented the multisig mechanism.

Creating smart contracts to secure clients’ exchange involved gas fees, which often cost millions of dollars. This mechanism led to cost over 1 million gas units for implementing multisig wallets as smart contracts with each deposit or withdrawal constituting over 100,000 gas units in costs.

The emergence of Defi protocols on Ethereum amassed over $6 million in network processing fees yesterday. Ethereum gas costs have surged around 100% over the past day as transaction experiences surpass the previous high of $3.27.

Tether

The largest stablecoin by market cap, Tether has reclaimed its position after surpassing the major altcoin, XRP. Tether has reclaimed its position as the third-largest cryptocurrency by market capitalization, becoming the second-largest altcoin after Ether (ETH).

As cryptocurrencies continue to compete in light of newer adoption, Tether has surpassed a market cap of about $8.8 billion compared to XRP’s market cap of $8.6 billion. Experts suggest that the rise of Tether may attribute to Chinese citizens using the platform to move money.

Stablecoins such as USDT represent fiat currencies like USD and ensure stable prices, which has allowed Chinese citizens to move over $50 billion worth of cryptocurrencies out of the country as they break capital flight limits amidst tensions between the United States and China.

Chinese citizens have been resorting towards breaching capital rules, as the Chinese governments allow Chinese citizens to move around $50,000 out of the country per year. However, in light of the plummeting Chinese economy in response to trade wars and the yuan’s devaluation, citizens have moved over $50 billion worth of cryptocurrencies into foreign waters.

Reports suggest that citizens have been using Tether to move money out of the country. Tether’s rise may attribute to the Chinese government crackdowns on direct exchanges, causing Tether to be used as the primary fiat model for Cryptocurrency users. The rising tension between the two superpowers has escalated over several clashes in opinion and legislations.

Crypto Mining Space

Countries are competing to capitalise on the Blockchain space, especially in mining operations. Countries worldwide compete for control of the crypto mining industry in light of the global diversification of crypto hash rates.

While China has been the hub for crypto mining operations because of rewarding factors such as low labor cost, access to units, and lower cost of power during rainy seasons; however, amidst the recent government crackdowns by Chinese authorities, rising issues have made it difficult to rely on China for digital mining.

Crypto mining operations are capital intensive. They require stability over longer periods to ensure stable ROIs as turmoil at any level of politics in the country usually causes existing operators to recuperate. Interestingly, Competitors such as Iran, Ukraine, Canada, and Kazakhstan has shown interest in controlling the crypto mining industry.

North Korea

The Justice Department has ruled two hacks of virtual currency exchange against North Korean actors. According to reports, the actors have stolen millions of dollars worth of cryptocurrencies and laundered the funds through Chinese cryptocurrency traders. Interestingly, the Justice Department continues to seek to recover the funds.

Binance

After introducing an upcoming blockchain in early April, Binance has successfully launched the mainnet of its Smart chain, a blockchain run by smart contracts running in parallel to the Binance Chain.

The Binance Smart Chain is compatible with the powerful Ethereum Virtual Machine, allowing Solidity developers to transition into the new chain with almost no friction. Moreover, the new blockchain will be interoperable with Binance Chain.

The cryptocurrency exchange platform has promised cheap transaction fees as low as 1 cent. Moreover, Binance has also reported a 3 second block time. The Binance smart chain uses an iteration of the Proof of Stake model called the Proof of Staked Authority. The voting power is proportional to the BNB held.

Binance has always been ambitious about diving into Defi territories, often advocating BNB adoption as a collateral asset. However, the lack of easy interoperability and market demand translated into lesser adoption of BNB. Interestingly, the launch of the Smart chain appears to bring DeFi to BNB.

While the smart chain is still nascent, experts keep a close eye on the competing potential with Ethereum’s network effects.

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