How to Survive the Crypto Winter? 5 Tips From Financial Experts

How to Survive the Crypto Winter? 5 Tips From Financial Experts

The crypto winter has already affected most cryptocurrency investors and holders as the prices of digital assets continue to fall. What’s even worst, many projects have been tumbling, and a few have almost disappeared in a matter of hours. 

After the huge collapse of UST and the Terra ecosystem, others have been faced with liquidations. After several weeks of difficulty, Three Arrows Capital, a crypto hedge fund based in Singapore, was ordered to liquidate. BlockFi and Voyager Digital, both crypto exchanges, took out large lines of credit in order to survive the crisis. Voyager Digital had also been involved in funding Three Arrows. Their creditor was Sam Bankman-Fried, founder of FTX, who stated that he believes that many crypto exchanges are “secretly insolvent.”

Recently, Voyager Digital’s shares were temporarily halted from trading on Toronto Stock Exchange after they filed for bankruptcy. The shares were also halted in U.S. over-the-counter exchanges.

These problems were caused by Coinbase’s announcement (COIN) that crypto brokerage investors don’t have the same insurance and liability protections as traditional banks or brokerages.

More investors in the crypto space

More individuals and institutions want to access crypto, and investment funds are slowly incorporating digital asset management and investing into their practices. However, these trends cannot be reversed, regardless of how asset prices fall.

While financial advisors have very different opinions on the topic of digital assets, they all seem to agree that they don’t need to like crypto to be able to offer it to their clients. Crypto is trading more like a technology stock because institutions are increasingly involved in it. They buy and sell according to the volatility. However, investors who wish to reap the benefits of crypto’s growth must be able to endure the swings. They will miss the growth if they wait for crypto to become a safe investment.

Since we are all experiencing the crypto winter and the effects of a highly volatile asset have been shifting financial trends, it might be a good idea to stop and carefully consider every trade. Here’s a list of methods that financial advisors recommend applying when you find yourself in utter panic and fear.

1. Don’t panic

Don’t forget that we’re talking about highly risky digital assets that present much greater volatility than any other financial assets. The global economy was expected to enter a new recession as a decade passed from the last one. For this reason, many analysts were expecting a “crypto winter.”

Investors should be well-diversified and prudently positioned to weather any downturn in crypto asset values. If you have the cash and a healthy appetite for risk, you might consider buying more crypto at lower prices.

2. Be aware of the risks

We are used to hearing financial advisors comfortably talking about risk in equities and real estate. But we must talk about cryptocurrencies and digital assets in the same way. There is a low risk involved whenever you decide to invest in volatile assets, and cryptocurrencies are top of the list. Another risk of crypto that all investors should be aware of is the custody of the assets.

Some platforms allow you to buy it with a simple account, and they also offer custody of it. But in this case, you are not really the owner of the digital assets, as they are not exactly in your wallet. If the platform goes down, your assets go down with it. If you want to invest long-term in crypto, consider learning more about self-custody crypto wallets and transferring your digital assets to such a wallet. There are many options available out there, from browser wallets to hardware wallets. 

3. Know your risk tolerance

Some people have a higher risk tolerance than others. That’s why some investors are more interested in crypto in the first palace, while others prefer to stay away from volatile assets. 

All financial advisors suggest that you should invest according to what you’re willing to lose. If you find that your risk tolerance is small, then consider diversifying your investments. Yes, the most direct way to invest in a crypto is by buying the assets directly from an exchange and then holding it in your crypto wallet. But there are other ways that might leave you with less exposure to the market. 

You might want to consider crypto ETFs (Exchange-Traded Funds), crypto trusts, hedge funds, and even invest indirectly in crypto by choosing mining and blockchain stocks. 

4. Wait for the dust to settle (or don’t)

Investors who are more comfortable taking on risks may choose to follow Warren Buffett’s advice to “buy when the blood is in the streets.” However, you will need to conduct further research to learn how to allocate your funds and what assets to choose. However, during a “crypto winter,” nobody can tell you when prices have hit bottom or if they can further drop. That’s a risk you’ll have to accept or wait until the trend changes to start investing. 

5. Wait for the “crypto spring”

Again, nobody can tell you when the trend will change. However, there is a lot of innovation happing in the crypto space, even in this “crypto winter.” Following projects that build useful services during a bear market is always a good idea. The future is reserved for those who create utility and value. 

The metaverse is still being built. NFTs are still a very valuable idea, and those projects (e.g., FootballCoin) that bring utility will survive the bear market. The rails for institutional participation in crypto and digital assets remain under construction despite the downturn.

Smart money expects a “crypto spring.” Investors who practice patience will reap the benefits of a possible future rebound in the crypto space.

Small Investors Can Now Own 1 Full BTC

Small Investors Can Now Own 1 Full BTC

Small-time investors have the opportunity to realize their dreams of owning at minimum 1 Bitcoin, with BTC trading in the $20,000 area for the first time since 2020.

Bitcoin trading in the $20k range

Investors around the world have been chasing one of the total 21 million BTC since the early days of Bitcoin (BTC). This massive hysteria has been caused by the phenomenal interest in the cryptocurrency and the widespread acceptance of the internet in the last few years.

After hitting another all-time high in November 2021, when bitcoin’s price reached almost $69,000, the leading cryptocurrency has been declining in value ever since. In May 2022, the bear market has been confirmed, and it involves not only the cryptocurrency market, but the most important financial markets. The crypto market is now more tied to the stock market than ever, as more institutional investors have joined in 2021. 

While many online celebrities have been raising concerns and painting a gloomy future for bitcoin, some see it as an opportunity to become a bitcoin owner. 

BTC trading in the $20,000 area for the first time since 2020 gives small-time investors the opportunity to realize their goal of owning a minimum of 1 BTC. According to Glassnode, there has been a significant increase in the total number of Bitcoin addresses containing 1 BTC or more. These have increased by over 13,000 in June. 

Small Investors Can Now Own 1 Full BTC

The total number of addresses that hold 1 BTC has seen an immediate decrease in the days ahead, but the Reddit crypto community continues to welcome new crypto investors who have worked hard to become wholecoiners.

New investors become wholecoiners

Some Reddit users even share their stories about how they saved enough to accumulate 1BTC and share screenshots of their achievements. 

This Reddit user, arbalest_22 said that he spent approximately $35,000 to accumulate 1 BTC. He continues to support the Bitcoin ecosystem by pledging to procure Satoshis and sats until his total of 2 BTC. The ultimate goal of this user, and those who contributed to the discussion is to have tax-free income. 

Other users say that they were able to become wholesalers by using the dollar-cost-average strategy. This dollar-cost-averaging (DCA) requires investors to regularly buy smaller amounts of BTC over a longer time.

According to Glassnode data, the total number of Bitcoin wallet addresses that hold more than 1 BTC increased is around 800,000.

Although falling BTC prices can be seen as an opportunity for investment, Google search trends highlight the tendency of other investors to speculate about its future.

Is it time to buy the Bitcoin dip?

After weeks of unrelenting selloffs, the Google search results show that cryptocurrency markets are experiencing peak anxiety.

After the comments of the United States Federal Reserve on the inflation outlook, nerves were high in crypto markets. The sell-off began at the beginning of June 2022. 

Bitcoin lost the $20,000 psychologically significant mark. It also crosses another negative milestone, as it kept falling below the previous halving cycle’s highest for the first time ever in its history.

BTC/USD suffered 37% losses in the first two weeks, making June 2022 the worst month for Bitcoin.

The pair has traded almost 60% lower year-to-date. This is 70% less than the record high of $69,000 set in November last year.

According to cryptocurrency analysts, Bitcoin needs a higher volume and volatility to match volume levels from previous bear market bottoms, at the 200 MA (200-week moving average), a key lifelong support line.

The US stock market seems to recover and the S&P had its second-best week of 2022, which indicates a modest relief across risk assets. Everyone is looking at Bitcoin’s 200-week MA, which is the major indicator that gives the average price of Bitcoin over the last 200 weeks, hoping to surpass this support lever soon. 

JPMorgan Is Tokenizing Assets and Brings Trillions to DeFi

JPMorgan Is Tokenizing Assets and Brings Trillions to DeFi

JPMorgan plans to develop a way for decentralized finance (DeFi) developers to harness the yield-generating potential non-crypto assets.

What are tokenized assets?

Asset tokenization refers to the process where an issuer creates digital tokens of a physical asset. These digital tokens are created on the blockchain. This way, the ownership of the tokenized asset is immutable. 

Tokenization allows fractional ownership as well as proof-of-ownership. Companies worldwide are already using blockchain technology for tokenizing almost any asset. This includes traditional assets such as bonds, stocks, commodities, and real estate property, and even exotic assets such as racehorses, celebrities, and sports teams. Most tokenize-able assets fall into one of the following categories: 

  • Asset. Anything that can be converted into cash.
  • Equity: Shares can be tokenized, and can be purchased on stock exchanges.
  • Investment Funds. These tokens can be used to represent an investor’s share of the fund. Services. Tokens are a way for investors to buy goods and services from the supplier.

The benefits of asset tokenization are:

  • Increase liquidity
  • Fair prices
  • Reduced costs (management, operational)
  • Transparent process
  • Secure identity

How will JPMorgan tokenize real-world assets?

Tyrone Lobban, from JPMorgan’s Onyx Digital Assets, described the bank’s institutional-grade DeFi plans in detail and pointed out the value of tokenized assets.

Lobban stated that tokenizing U.S. Treasury’s money market fund shares could be used to provide collateral for DeFi pools. He stated that the overall goal was to get these trillions of assets into DeFi so we can use these new mechanisms of trading, borrowing, and lending – all at the scale of institutional assets.

However, institutional DeFi is generally imposing strict KYC (know-your-customer) restrictions on crypto’s permissionless lending pool. This is the general policy across all projects, including Aave Ark and in a newly announced project that involves SCB (Siam Commercial Bank) through the Compound treasury. Aave Ark is a permissioned liquidity pool specifically designed for institutions to maintain regulatory compliance in the decentralized finance (DeFi) space.

JPMorgan plans to include the tokenization of traditional assets on a larger scale. Through Onyx Digital Assets, they aim to bring bank-grade DeFi to life. The first component is the collateral settlement system, which is blockchain-based. As of May 2022, this system was extended to include tokenized versions of BlackRock’s money-market fund shares. This mutual fund invests in cash and high-liquid short-term debt instruments. This type of application to the Onyx Digital Assets blockchain is settled using the bank’s digital token, JPM coin, which has seen $350 billion in trading volume.

The second component needed for the tokenization of traditional assets is Project Guardian. This is a recent pilot that is being led by the Monetary Authority of Singapore and includes JPMorgan, DBS Bank and Marketnode. It tests institutional-friendly DeFi using permissioned liquidity pools that are made up of tokenized bonds and deposits.

DeFi’s ventures will use public blockchains. They have a permissioned structure that is similar to Fireblocks and Aave Arc. Lobban pointed out that verification of customer information in Project Guardian is done by large financial institutions rather than DeFi platforms or crypto-native protocols. For instance, a JPMorgan trader must prove that he is authorized to trade on behalf of the Wall Street bank.

How will tokenized bonds work?

They will work similarly to the way lending and borrowing work now on DeFi, but at a larger scale. Let’s say a bank has $100,000 worth of XYZ tokenized bond, but it needs to borrow money temporarily. It deposits $100,000 as collateral and locks it on the blockchain, in a smart contract. They can borrow up to $75,000 but must pay interest.

Multiple depositors may want to earn additional interest on tokenized cash. They deposit millions of dollars in a liquidity pool, and they earn interest on the $75,000 borrowed.

The algorithmic calculation of the interest rate for borrowing is based on supply/demand. The interest rate on borrowing will be lower if tokenized cash is being lent out in small amounts. However, borrowers who have significant demand for the loan will pay a higher rate. The interest rate and loan to collateral ratio should be affected by the bond’s risk rating.

W3C verifiable credentials

JPMorgan has been quietly exploring digital identity within the context of digital assets and blockchain for the past two-and-a-half years.

W3C verifiable credentials are an innovative approach to permissioned DeFi that uses digital identity building blocks.

Verifiable credentials (VCs)  can be used to represent information that may be found in physical credentials such as a passport, license, or new things like ownership of a bank card. They offer many advantages over traditional credentials, including interoperability and increased privacy.  

The head of Blockchain Launch at Onyx, Tyrone Lobban, stated that verifiable credentials are needed to prove identity. This is a different model than the Aave model. Verifiable credentials can be used to give access to these pools at scale without having to keep a whitelist of addresses. Verifiable credentials don’t need to be stored on-chain. This means that you don’t have to pay for gas prices or write this type of information to the blockchain.

Lobban stated that JPMorgan is still deciding which DeFi platforms it will use and with what counterparties, but it will be one of the most recognized offerings. They haven’t decided yet, but it will be battle-tested with high TVLs (total value locked). 

Lobban stated that “If we can put this identity layer in front of DeFi that enables KYC-based access, then each of those protocols should just naturally be able to support institutions without necessarily having to make too many changes to what they’re doing,” 

We still don’t have answers to these questions, and institutions might have to create separate permissioned pools. But maybe some of the existing protocols can be modified to suit the institution’s needs. There’s still research to be made. 

How Terra’s Implosion Affected the Entire Cryptosphere

How Terra’s Implosion Affected the Entire Cryptosphere

What happened after the Terra LUNA implosion?

Terra’s dramatic fall began on May 7th, 2022, when UST, Terra’s stablecoin lost its peg to the USD dollar. Stablecoins are designed to keep a steady value, and investors will always get alarmed if the value of a stablecoin goes off track. In the case of Terra’s UST stablecoin, the value dropped to $0.35 by May 9th, which cause the entire ecosystem to collapse in a matter of hours. It was only downhill from there, with some occasional small price spikes, whenever the official Terra Twitter account or its founder tweeted something new. 

What caused the Terra LUNA implosion and the subsequent death spiral?

It’s important to note that UST is an algorithmic stablecoin. This means that the asset isn’t collateralized by the same value of fiat in some bank account, or by any other crypto, such as BTC or ETH. An algorithmic stablecoin is a digital asset that is designed to preserve a certain value at all times, by incentivizing users to sell it or buy it, when its price fluctuates. 

At the same time, the stablecoin is a rebase token and the algorithm needs time to adjust its total supply, based on the action of the users. In the case of the Terra blockchain, the stablecoin (UST) was adjusting its price by using another asset, LUNA, the native coin of the Terra blockchain. When the price of UST began to wobble, there was huge pressure on the blockchain, as users started to take advantage of the design of the blockchain – the very system that was supposed to keep it afloat. 

Simply put, Terra would always allow users to trade 1 UST for $1 of Terra and vice-versa. The massive selling of UST for Terra caused unprecedented inflation on the Terra blockchain. The total Terra supply raised from 350 million Terra to over 6.5 billion in a matter of hours. During this death spiral of Terra LUNA, investors saw their life-saving shrinking to pennies in a blink of an eye. There were reported cases of suicide. This is a lesson to be remembered and a sign that the world is not yet ready for these imperfect algorithmic stablecoins. 

According to the on-chain analytics firm Nansen report, the reason the UST stablecoin de-pegged was a number of entities that reduced their UST allocations:

“We refute the popular narrative of one ‘attacker’ or ‘hacker’ working to destabilize UST. The de-peg of UST could instead have resulted from the investment decisions of several well-funded entities, e.g., to abide by risk management constraints or alternative to reduce UST allocations deposited into [lending protocol] Anchor in the context of turbulent macroeconomic and market conditions.”

The Terra implosion in numbers

At the beginning of 2022, Terra’s LUNA token had a market cap of $31 billion. Its stablecoin, UST, had a market cap of $10 billion. On April 5th, 2022, the old Terra LUNA, now called Terra Classic (LUNC), reached its all-time high at $119.18

Now, both have a virtual value of $0.

Shortly after the fall of the entire ecosystem, the damages of the Terra implosion were estimated at around $40 billion. According to LFG (Luna Foundation Guard), the network had vast reserves of over-2 billion dollars worth of bitcoin, but not even selling that was able to save all those UST and Terra investors. 

UST has remained de-pegged from the US dollar since 9th May 2022 and it was trading at $0.015 at the end of May 2022. 

According to DeFi Llama, the TVL (Total Value Locked) on the Terra network dropped from $29 billion at the beginning of May, to $15 billion at the beginning of June. 

How Terra’s Implosion Affected the Entire Cryptosphere

The Terra blockchain revival plan

The largest token collapse in crypto history could not simply let investors without hope. After Terra’s UST collapse, LUNA’s value was going lower by the hour. At some point, on May 12th, Terra validators halted block production to implement a new blockchain update that would prevent new actors staking on the Terra blockchain. 

Everyone was waiting for an update from Do Kwon, the blockchain’s founder, as the market was hitting lower values each hour. As of June 2022, his Twitter account has turned private. 

Terra LUNA imposion How Terra’s Implosion Affected the Entire Cryptosphere

On May 16th, Do Kwon, Terra’s founder proposed several versions of a revival plan, and the original plans included handing over the ownership of Terra to its community.  

The revival plan that passed the governance vote with a 65% approval rate introduces the Terra 2.0 blockchain, which is a hard fork from the original blockchain. The new Terra blockchain will hold onto its name, while the old blockchain will be renamed Terra Classic and its coins will be called LUNA Classic (LUNC) and UST Classic (USTC). 

The plan was to take a snapshot of the Terra blockchain and airdrop to Terra’s LUNA holders the new coin, which will also use the name LUNA. The snapshot took place on May 26th, 2022. 

The plan specifies that smaller holders would get their tokens much faster, than large holders who would have the power to destabilize the market if they would get the new coin and sell it from the start. 

To prevent immediate selling of the new LUNA coin and entering a new death spiral, investors who held over 10,000 LUNA before the collapse of the ecosystem, will receive the new coins over a vesting period. Initially, 30% of their tokens will be unlocked, and the remaining coins will be unlocked over the next two years. 

Moreover, crypto wallets that hold more than 1 million LUNA or UST prior to UST’s de-pegging from the U.S. dollar would have to wait more than a year before receiving any of the new tokens, with a four-year vesting period. 

Terra 2.0: the launch of a new blockchain 

On May 28th, 2022, Terra 2.0 was launched. The new blockchain is a hard fork from the now-called Terra Classic blockchain. All those who held Terra at the moment of the snapshot received the new LUNA token via airdrop.  

While some investors already received a part of their new tokens, other larger wallets will have to wait. 

As the new LUNA coin launched, its price saw huge volatility on exchanges. LUNA’s price reached $19.54 on the day of its launch but has been falling ever since. 

The crypto market is now in a bearish trend. Some argue that the recent Terra LUNA implosion (Terra Classic) and its algorithmic stablecoin have made investors lose confidence in cryptocurrencies and in stablecoins. 

Crypto Volatility Can Affect People’s Mental Health

Crypto Volatility Can Affect People’s Mental Health

Volatility is the name of the game when talking about anything involving cryptocurrencies. Most projects are especially prone to crypto volatility, especially as they are just starting out. They can experience dramatic price swings and fluctuate by double-digits within a single day. 

On one hand, wild price swings can be a great way to make profits (if you are lucky enough). But others will lose those funds at the same time and that can trigger some unexpected and intense emotional reactions from investors who are affected by this crypto volatility. 

While most of our daily activities don’t account for too much for it, mental health plays a huge part in establishing a well-balanced lifestyle. However, we shouldn’t ignore it and it is required to always pay attention to any emotional responses that our day-to-day interactions might make us feel. For instance, financial events play a key part in our emotional well-being. Considering the current bear market, the constant despair from the volatility of crypto markets can cause serious mental health damage.

Most of the time, crypto investors hide behind faceless Twitter accounts and unknown blockchain addresses. But in May 2022, when the Terra ecosystem collapsed when the UST stablecoin depegged, all of those involved were affected. Having to see your life’s saving dissolve in a matter of hours is not something our brain can easily comprehend and, unfortunately, there were many suicide cases that followed. 

There is no way to predict where this bear market will take us, but we know for sure that we can’t control the crypto volatility. However, one thing we can control is the state of our mental health and the ways to improve it. 

What is affecting mental health?

Sometimes, you might not even know that what you’re experiencing might be a normal emotional response to an outside event. Actually, professional traders know this and spend years training to ignore their emotions when trading assets. 

But even with all the knowledge, if you are still new in the crypto trading space, you will be under emotional pressure at some point. And that’s when you will make poor trading decisions. 

Trading requires more than technical and fundamental analysis. A trading mindset is crucial. It’s a known fact that anyone can make disastrous decisions under the pressure of emotions. This can lead to serious financial losses. 

The best thing you can do is to know (and stay away from) the exact moments and situations that might affect your mental health: 

  • Premature exit. Beginners are more likely to take quick profits after a successful transaction and then close the deal too soon. They lose part of the potential profits they might have made.
  • Dependence on market participants. Many traders are influenced by signals and opinions from established market participants. However, to reap the greatest benefits, you must be independent of these factors. One such example is Dogecoin and Elon Musk’s tweets.
  • Losses are difficult to accept. The cryptocurrency market is highly susceptible to emotional trends. The price of cryptocurrency will react immediately to various statements and rumors. It is not possible to eliminate the emotional influence.
  • Euphoria after the first deal. A positive emotion that comes with the first profit can make the trader lose control.
  • Gambler syndrome. This leads to taking uncalculated risks. For instance, investors may enter large transactions without really thinking about them.
  • FOMO (Fear Of Missing Out). FOMO is a fear of missing out on potential deals. 

And as if that’s not enough to make you lose your reason, there are other external factors that might affect your trading positions. Hackers are a major concern in the crypto industry. Besides volatility, crypto assets are more susceptible to hacking and other scams due to their digital, anonymous, and decentralized nature.

What can you do about it?

Remember that it’s not all doom and gloom when it comes to trading crypto. In fact, you can still be involved in the crypto space and make money with crypto without a big (is any) upfront investment. 

However, not all crypto investors are mentally affected by crypto’s volatility. Most people do not become addicted or emotionally engaged in trading digital assets. Remember that trading cryptocurrencies can have serious consequences for your mental health and general well-being. It is crucial that investors decide how much risk they are willing to take to limit the psychological effects of cryptocurrency stress.

Cryptocurrency Sees Massive Adoption in Retail Payments

Cryptocurrency Sees Massive Adoption in Retail Payments

According to crypto experts, cryptocurrencies will have a greater impact on the retail industry in the future as more people invest in digital currencies.

Although the cryptocurrency market appears to be in a bear market right now, it’s not hard to see that the industry has grown tremendously over the past few years, especially when looking at adoption.

According to a recent study by Insider Intelligence, digital assets will be used more often by Americans to make daily purchases. The study suggests that we will see a 70% increase in the use of digital assets for purchases by the end of 2022. This is a significant increase from 1.08 million users (in 2021) to 3.6 million users. The global crypto transaction volume is expected to hit $10.4 billion this year. 

The volatility of the crypto market is decreasing due to the increased use of stablecoins as well as central bank digital currencies (CBDCs). This will lead to more people considering these digital assets to be legitimate payment options. According to the research, 12.8% (33.7 million people) of the US population will hold crypto by the end of 2022.

This number could rise to 37.2 million by 2023. This is a realistic figure, especially considering that the number of investors who have entered the global crypto market has nearly doubled in the past 12 months, particularly when you consider that there are many countries such as India, Brazil, and Hong Kong that have seen a significant increase in their investment. 

Cryptocurrency Sees Massive Adoption in Retail Payments

It’s time to see massive crypto adoption in retail payments

Max Krupyshev, CEO of CoinsPaid, a crypto payments processor, believes that cryptocurrency payments will experience exponential growth over the next three years:

“I think we will be able to talk about tens of millions of users in the United States alone by 2025. The American market is a fertile ground for any innovative solutions. Another factor driving crypto’s adoption as a day-to-day transactional currency is that it is becoming increasingly easier to buy, spend these assets with global brands.”

He also stated that Asia could surpass America when it comes to crypto payments. The region is flexible in accepting new and upcoming technologies. We should also be aware of the increasing popularity of cryptocurrency in African countries. There is a high demand for crypto apps as well as alternative investment tools with a low entry threshold.

Brandon Dallman, the chief marketing officer of the DeFi ecosystem Unizen, believes that the cross-border remittance and retail payments ecosystem had been dominated for a long time by a few players such as Western Union, PayPal, and Stripe. With the rise of cryptocurrency in popularity, people can now bypass issues such as middlemen and high fees: 

“Fast blockchain networks are suitable rails for CBDCs like the digital dollar, euro etc. The blockchain that is able to cater to the demand put forward by financial institutions like stock exchanges and clearing houses will win the battle. We are seeing banks of all sizes dip their toes in the water to see how they can start to interact with the new digital world in front of them, driven by a growing fear of being left behind.”

But crypto may not be for everyone

However, not everyone is on the same page when it comes to the crypto adoption perspectives. The head of research and strategy at cryptocurrency exchange AAX, Ben Caselin, stated that although we might see custodial stablecoins being adopted in the near future, it is highly unlikely that we will be heading toward a massive crypto payments society.

“With increased integration, we can expect more vetting and regulation which will not bode well at all for crypto. There might be some venues where particular tokens may be the currency of choice, for example, a Bored Ape-themed restaurant is likely to accept payments in ApeCoin. But, other than that, I’m of the view that ultimately, real-world payments and store of value utility will converge on Bitcoin, although this does not discount the continued growth of online and offline micro-economies.”

However, he agreed that it was encouraging to see mainstream people get a better understanding of money. He noted that if merchants and corporations can actually hold the crypto assets they are paid with, this could be very exciting.

What cryptocurrency is suitable for retail payments?

Some of the top condensers for the role of retail crypto payments are Solana (SOL) and Bitcoin (BTC). Some believe that Solana (SOL) can easily accommodate everyday transactions, as it offers high speeds and low gas fees, making it more accessible. Bitcoin (BTC) is a bit more controversial, but it was already chosen as a legal tender in some countries (El Salvador and the Central African Republic), which may lead to a more mainstream approach and increase in popularity. 

Many of those already working in the crypto space believe that Bitcoin will be a more popular method of payment than any stablecoin even though most products and services are denominated using U.S. dollars. Some supporters say that Bitcoin (BTC) has proven its viability, having survived multiple crises and more than one crypto winter. Bitcoin seems to be working well for larger transactions, but can also become more viable for smaller transactions as a result of advances in solutions built on top of the Lightning Network.

However, it is unlikely that BTC-centric payments will be implemented at a mass scale over the next few years. This is due in large part to the fact production costs are still paid using fiat currencies. They are typically tied to the U.S. Dollar, Euro, British Pound, yen, or yuan.

Besides Bitcoin (BTC), Ether (ETH) could also be a strong contender for the go-to global payment crypto for retail businesses, due to its market dominance and popularity among investors. 

There is also no doubt that the most used and held cryptocurrencies will gain the most ground in the payments market. As transactional currencies, the 20 largest coins in market capital will prevail. And stablecoins will surely be part of that market. 

Mainstream and big companies are already accepting crypto payments

The popularity of crypto assets has increased rapidly, with many famous brands now accepting digital currencies. Microsoft accepts Bitcoin crypto payments for its various services, including Xbox Live, Microsoft Apps, and games.

Overstock, an American online furniture retailer, appears to be the leader in crypto shopping. The reason is that the company currently accepts a variety of digital tokens including Bitcoin, Litecoin (LTC), Ether (ETH), and Monero (XMR ). Home Depot, America’s largest hardware store chain, accepts Bitcoin payments via Flexa’s checkout system. This is a crypto payments ecosystem supported by Gemini.

Starbucks also has partnered with Bakkt futures exchange, which allows users to pay for their coffee and other digital goods using digital assets. This is also true for American supermarket chain Whole Foods. Recently partnered with SPEDN, allowing users the ability to purchase all their groceries using BTC or LTC. SPEDN does not only apply to Whole Foods. It also allows users to use their digital holdings at Jamba Juice, Jamba Juice, Regal Cinemas, and Baskin Robbins.

AT&T, the first American telecom provider, has offered its clients crypto payments. BitPay is a third-party payment portal that allows users to access the company’s services and offerings using Bitcoin.

Other than the ones listed above, there are many other notable brands that accept crypto payments. These include entertainment company AMC, travel booking agent Travala and American department store franchisee JCPenney (through gift cards). GameStop is also accepting crypto payments.

We are moving into a future in which digital currencies will continue to grow in popularity at an alarming rate. It will be fascinating to see how crypto integrates into the global retail landscape, particularly in terms of competing with or complementing existing fiat payments systems.

The Digital Euro Could Be Launched by 2026

The Digital Euro Could Be Launched by 2026

According to Fabio Panetta, a senior official at the European Central Bank (ECB), a digital euro could be issued within the next four years by the European Union (EU). A potential first use would be peer-to-peer payments.

Due to concerns about Russia’s war against Ukraine and the rise of private stablecoins such as Facebook’s now-abandoned Libra, the timeline for the central bank digital currency (CBDC), has been moved back and forth.

What would the digital Euro be used for?

At an event at the National College of Ireland, Fabio Panetta, an executive board member of the European Central Bank, or ECB, has said: “The idea would be that let’s say, four years from now, we will be ideally ready to issue the digital euro,” and also expressed his optimism that the CBDC could be launched within the next four years, although it will be a complicated process that hasn’t been done before. 

Panetta suggested that a peer-to-peer (P2P) payment solution, which allows transactions between friends, could be the first test ground for the new technology before it spreads to other areas such as online payments or business payments such as physical and online shops.

He said that a P2P payment system that covers large numbers of users in the whole euro area could be a fertile ground for the adoption of a digital currency. Research has shown that the application would have the greatest impact on early adoption.

The ECB began a two-year investigation phase in October to examine issues such as which use cases should be prioritized. However, the ECB is still not sure if it will issue a digital currency. Panetta previously stated that the realization stage, which is due to begin late next year, could last for three years.

Christine Lagarde, President of the ECB, stated in March that the sanctions imposed by the war in Ukraine were a reason to accelerate the plans. However, other EU officials Monday suggested that they are letting their feet off the pedal.

We also have to note that Jurgen Schaaf, an ECB advisor, stated that the EU’s research and experiments on a digital euro are not a guarantee that they will launch a CBDC.

Why is the EU researching a CBDC?

After an industry consortium led Facebook suggested its own cryptocurrency, Libra, the idea of the EU issuing its very own CBDC was born. The Libra project was later renamed Diem and abandoned.

Mairead McGuinness (EU’s financial-services Commissioner) said that there was a feeling of urgency back some time ago, due to the fears of what might happen with private providers. McGuinness said that they will not hurry the research process. They want to move fairly quickly, but  “not hastily.”

Panetta stated that recent declines in the crypto market private may be another reason to continue the project.

Stablecoins lack the regulatory safety net that banks have and are, therefore “vulnerable to runs”, he stated. He cited the crash of TerraUSD (UST) from May 9th-13th. The supposedly stablecoin was issued and backed up by the Luna Foundation Guard.

Another example of an unregulated stablecoin is Tether (USDT), which also lost its peg to the USD dollar during the same week. Luckily, the USDT quickly recovered. 

Another reason for EU’s urge to research and regulate cryptocurrency is the war between Russia and Ukraine. Following the invasion of Ukraine, the EU and U.S. implemented severe sanctions against Russia. However, there are many concerns over the role of crypto in evading sanctions. This has prompted regulators around the world to accelerate their efforts to regulate the sector.

At the same time, U.S. President Joe Biden issued an executive order regarding crypto Wednesday encouraging federal agencies to adopt a common approach when regulating the sector. He asked the government to evaluate the benefits and risks of creating a digital currency.

UST Stablecoin Loses Dollar Peg But Terra Strives to Bring It Back Up

UST Stablecoin Loses Dollar Peg But Terra Strives to Bring It Back Up

According to the latest price estimates from CoinMarketCap, Terra’s stablecoin, UST has lost its USD peg as it fell to $0.36 on Wednesday, May 11th.

According to CoinMarketCap, the price of UST’s sister token, LUNA, has fallen over 96% to $1.17, following UST’s dramatic price drop. The online community is referring to this event as the #LunaCrash.

What is UST?

UST is a so-called algorithmic stablecoin. It works with LUNA in order to maintain a price at $1 by using a series of on-chain minting and burn mechanics. These mechanics are supposed to allow traders to swap $1 worth UST for $1 worth of LUNA. Luna has a floating price, and serves as a shock absorber to UST’s price.

Luna’s market cap falls below that of UST due to its price drop, reaching $763 million compared to $5.43 billion market cap of TerraUSD (UST). This could put at risk the entire stabilizing mechanism of UST. It means that Terra bank runs could result in some users not being able to redeem $1 of UST for $1 LUNA.

This is not the first time that the UST has been “de-pegged” from the $1 value that a stablecoin should have at all times. 

When a stablecoin isn’t stable anymore

The UST de-pegged that started at the beginning of May 2022 has urged the Luna Foundation to find a solution to this crisis and help the UST bounce back to its normal value. Luna Foundation Guard (LFG) announced on Sunday night that $1.5 Billion of its huge Bitcoin (BTC) reserves would be “loaned out” to professional market makers in order to proactively protect UST’s dollar peg.

However, the market cap of UST did not recover. 

Terra seemed to have emptied all funds (approximately $1.3 billion) from its verified bitcoin address.

Do Kwon, Terraform Labs’ CEO, posted a few minutes later on Twitter: “Deploying more capital — steady lads!”

According to reports, professional market makers use the BTC reserves to protect UST’s dollar peg in protocols such as Curve. Curve allows users to swap between UST (and other currencies) like the USDC and Tether stablecoins.

There is currently no link between Terra’s LFG reserves and Terra’s on-chain mint and burn mechanism. Although there are plans to bake Terra’s bitcoin reserve into its underlying smart contract, users currently have no option to redeem UST and LUNA for bitcoin.

This is a question that will remain unanswered, as the reserves appear to have been almost completely drained.

Terraform Labs CEO works to help UST regain its peg to the US dollar

Do Kwon, founder of Terraform Labs, said that the company supports a community proposal to help TerraUSD (UST), a stablecoin pegged with the U.S. Dollar, regain its peg.

Algorithmic stablecoins such as UST are backed with a range of assets like Terra’s LUNA and bitcoin (BTC). One UST can be redeemed for $1 worth of LUNA, so it is easy to keep its value.

However, UST lost the peg and dropped to $0.66 Monday, but it didn’t stop there. Although it recovered it’s value on Tuesday, when it reached $0.90, before falling to $0.35 during Asian hours on Wednesday. LUNA also dropped sharply.

Kwon, who has been unusually silent on Twitter over the last few days, said there was a plan for UST to be brought back to its original position.

Kwon explained how UST works in a tweet: “The price stabilization mechanism is absorbing UST supply (over 10% of total supply), but the cost of absorbing so much stablecoins at the same time has stretched out the on-chain swap spread to 40%, and Luna price has diminished dramatically absorbing the arbs.”

You can find the entire Twitter thread that Kwon wrote here.

Arbs is a term that refers to crypto arbitrage.

To try to bring UST’s peg down to $1, additional LUNA will be minted and would be sold on the market. This is in addition to a separate proposal that aims to offer a lower yield to users of Anchor.

The proposal states: “By allowing more efficient UST burn and LUNA mining, [which] will in short term put pressure on LUNA prices, but will also be an effective method to bring UST back to its $1 pegged-value, which will eventually stabilize LUNA prices.”

The story is still developing. Check the price of UST on Coinmarketcap

Dogecoin’s Price Surges as Elon Musk Agrees to Buy Twitter for $44 Billion

Dogecoin’s Price Surges as Elon Musk Agrees to Buy Twitter for $44 Billion

The famous meme coin, Dogecoin (DOGE), surged by 9% after reports that Elon Musk closed the deal with Twitter, and acquired the social media giant for $54.20 per share (a total of $44 billion).

As the news started to surface on social media, and especially on Twitter, the price of Dogecoin (DOGE) jumped up to $0.17, from $0.12, in only a couple of hours. That represents a 25% price increase on a 24-hour timeframe. 

The stock price of Twitter (TWTR) also rose around 6.86% on Monday, April 25, from Friday’s closing price, reaching $52.29. 

However, Dogecoin’s price soon droped to around $14.30. 

Elon Musk buys Twitter for $44 billion

The world’s richest man, owner of Tesla and SpaceX, gains control over Twitter, the favourite social media channel for cryptocurrency projects.

At first, Twitter and its advisors weren’t sure how serious Elon was about this proposal. On April 14, Elon Musk made an offer price of $54.20-per share, which some considered a joke because it included the number 420. This number is a popular insight joke that refers to smoking marijuana. However, Elon Musk submitted financing documents last week to support his bid. They were signed on April 20.

These references are reminiscent of his 2018 tweet “Funding Secured” in which he stated that he was looking to privatize electric car maker Tesla Inc for $420 per share. Musk and Tesla agreed to each pay $20 million to settle allegations that he deceived investors.

Musk claimed that he rounded up the price to $420 after learning about its significance in marijuana culture and thinking his girlfriend would find it humorous, according to a U.S. Securities and Exchange Commission complaint filed at that time.

However, discussions with Twitter became serious when Twitter’s advisors in San Francisco, including Goldman Sachs Group Inc, JPMorgan Chase & Co and Allen & Co began poring over Musk’s financial documents that supported his $44 billion bid.

According to Reuters, Morgan Stanley, Bank of America Corp and Barclays Plc committed to lending $25.5 billion to Elon Musk. Some of this was secured against Twitter stocks, and some tied to Musk’s Tesla stock. Musk also committed $21 billion of cash.

After Musk had submitted it to them with very little detail one week prior, the board of Twitter went into hyperdrive. Five months into his tenure as chief executive of Twitter, Parag Agrawal was already completing an analysis to assign a price to its standalone plan. It also asked its bankers for a triple-check to see if any other bidder could offer more than Musk. But there was nobody else. 

Why does Elon Musk want to buy Twitter?

Musk stated that he didn’t care about the economics of the social media platform. He stated before that he wants to use Twitter to promote free speech. He was disillusioned with many of its platform moderation decisions.

Elon Musk and Dogecoin

Although it may seem like it, the price of Dogecoin and Musk’s impending Twitter takeover are not directly related. Some analysts believe that Musk’s repeated endorsements of the memecoin draw speculation from crypto investors looking for Dogecoin to become part of Twitter’s long-term plans.

Musk has a long history of promoting Doge as a payment method. Tesla started to accept Doge as a payment method for some of its merch since November 2021. 

Will Solana NFTrees save the rainforests?

Will Solana NFTrees save the rainforests?

Paraguay’s untouched rainforest can cost as little as $300 for one hectare. Buying it will protect it from being bulldozed, cut down, and used for cattle ranching. With today’s technology, this land can become available to anyone, regardless of where you live. 

GainForest, a decentralised fund that uses artificial intelligence, has partnered up with Paraguay’s Ministery for Environment to protect thousands of hectares of forest within Paraguay’s Gran Chaco Americano. This area is one of the main carbon sinks and most at risk from climate change.

Blockchain saves the planet

Many voices blamed blockchain for its negative environmental effects. However, not all blockchains are created equal. The blockchain and cryptocurrency industries can be a major player in renewable energy, and help drive sustainable, objective change. It has inherent technological advantages that can outperform traditional companies in their efforts to combat climate change.

For instance, GainForest’s goal is to raise cryptocurrency donations in order to buy the forest from landowners, expand national parks, and thus prevent deforestation. GainForest combines blockchain-based smart contract technology with satellite imagery, drone photography, and data science. It has grown steadily since winning the Hack4Climate contest at United Nations COP 23 in 2017.

According to David Dao, GainForest’s co-founder, GainForest is now the first government-backed green cryptocurrency project. He said that the initial results would be presented at UN COP27 Egypt.

How to use crypto for good causes

The alarming rate at which deforestation is occurring around the world is well-known to most people. The annual loss of rainforests absorbs nearly the same amount of carbon as the annual emissions from large industrialized nations like the U.S. and China.

Dao said that the cost of stopping deforestation is still “insanely low”, especially in Paraguay, where land was purchased for as low as $20 per hectare in the 1980s.

According to GainForest’s co-founder, David Dao, a hectare of virgin forest land costs between $300 and $500. The upfront cost for landowners to construct infrastructure is $1,000 per hectare. The goal is to try to reach them before they make the decision to build a cattle ranch. Hopefully, the landowners will understand that this $1,000 investment is not worth it and that Paraguay can do more.

Dao and his associates, who have backgrounds in artificial intelligence, use the Solana blockchain for crypto donations. The Solana blockchain is a proof-of-stake network and it was chosen because of its low-carbon footprint. 

These crypto donations are tied to high-accuracy drone and satellite data that charts areas of forest. The Filecoin Green project allows for decentralized data storage. Donors receive data drops and wildlife camera photos. They can also be connected to native tribes using non-fungible tokens (NFTs), which in this case are referred to as Solana NFTrees.

The algorithmic mapping of each forest project’s activities removes any uncertainty that comes with traditional carbon offset. This involves planting trees, but leaves those who give only guessing about the impact of their green investment.

Money can solve the issue of deforestation 

GainForest cannot buy land. However, there can be found some workarounds. For instance, David Dao suggested that GainForest could create a legal contract so the landowner gets paid periodically provided they don’t deforest. He pointed out that there are several studies that estimate that a global deforestation stoppage could be achieved by paying out between $1 to $2 billion annually.

According to GainForest, deforestation could be stopped in two years, if there is enough money. People need financial sustainability opportunities to make forest conservation economically viable. This could reduce the global temperature by up to 0.2 Celsius degrees. It would also allow our society to find the right way to decarbonize the planet. That could be a valuable time for our mother Earth.