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虛擬貨幣

What are the differences between a digital currency and a cryptocurrency?

cryptocurrency Central bank-backed digital currencies, such as the potential digital euro and digital yuan, may become a reality in the coming years. Unlike cryptocurrencies such as Bitcoin and Ethereum, these currencies promise less volatility and greater security. In addition, they will have the support of their respective monetary institutions, responsible for ensuring financial stability.

cryptocurrency

Centrally issued currencies backed by central banks

Unlike these two cryptocurrencies, which also have DLT (distributed ledger technology), officially backed digital currencies will be issued centrally and will be backed by their central banks. “One of the differences between a digital euro and a Bitcoin is the way they are issued. While the operations, in the case of the euro, are centralized and the only one that can issue it is the ECB, in the case of a Bitcoin it is totally different,” says Alberto Muñoz Cabanes, Professor at the Department of Applied Economics and Statistics at the National Distance Education University (UNED).

cryptocurrency

Cryptocurrencies backed by corporations

It is also worth mentioning that digital currency projects not backed by central banks, but by corporations are subject to regulation, such as Libra, now Diem, the cryptocurrency project backed by Facebook. “There are other types of solutions that seek to combine the innovative functionalities found in cryptocurrency networks with greater guarantees for users,” says Español.

These types of currencies are backed by an asset reserve of the institution that issues them and can be less risky than cryptocurrencies as a means of payment. “However, we must bear in mind that, given the novelty of these proposals, the authorities are currently analyzing them and, where appropriate, adapting financial regulation to accommodate these types of solutions,” explains the BBVA economist.

Español also stresses that “these types of solutions, when they have a global reach and a large number of users, pose significant challenges to financial stability due to their systemic importance.”

In search of primacy in digital currencies

The People’s Bank of China, the equivalent of the ECB in Europe, has been running tests of its digital currency since April with the help of four banks in the country. Given the strength that the two Asian technology giants, WeChat and Alipay have acquired in the digital payments environment, China wants to take control from now on, seeing how well these means of payment have worked in the country. Their aim is to have the digital yuan be fully operational by 2022. In the longer term, the Chinese government plans for its digital currency to replace its physical currency across the country.

At an international level, the Asian giant is looking towards a hypothetical scenario in which its digital yuan would become the world´s preferred currency. “The fact of being the first to launch your digital currency allows you to eliminate internal problems, such as ´black money,´ while increasing your fiscal efficiency, since tax payments would be immediate. It would also allow the speeding up of trade, because payments are instantaneous,” explains Muñoz, who underlines the importance that a currency of this type could have on international transactions. The convenience of this type of digital payment could act as a stimulus for rapid adoption by those involved.

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Uncategorized

Tether-Growing Regulatory Pressure on Tether

The growing appeal of stablecoins in the cryptocurrency industry has been leading to increases in regulatory scrutiny. Tether, the leading stablecoin by market valuation, has been attracting much scrutiny. In response, other fiat-pegged currencies have been attempting different approaches to avoid using the banking system altogether.

Tether

Tether Is King In Many Ways

When glancing over the stablecoin segment in cryptocurrency, ignoring Tether (USDT) is impossible. It is the world’s leading stablecoin by market capitalization and overall trading volume. At a current market cap of over $80 billion, Tether is only behind Bitcoin (BTC) and Ethereum (ETH) in these rankings. That makes the project more “valuable” than thousands of crypto assets, including Ripple (XRP), Dogecoin (DOGE), Binance Coin (BNB) and many others. 

Additionally, Tether commends the highest trading volume of all stablecoins. With over $45 billion in daily volume — primarily across Bitcoin, Ethereum, USD, and Circle (USDC) pairs — it is a dominant force in the industry. Unfortunately, that success also attracts ample scrutiny, as many people have started to question the company’s operations. More specifically, Tether claims it has the financial reserves to keep the USDT supply at its current level.

The problem here is how there has never been an audit of Tether’s reserves by an independent party. As a result, regulators have begun to pay much closer attention to Tether and how the company operates. The commercial paper reserves held by the company are especially of great interest. Figuring out which reserves the company holds is crucial in determining whether the company needs to be regulated in the future. 

A recent unveiling by Tether of its reserves indicates not all USDT is backed by paper reserves. Instead, other vehicles are used to issue the asset, including bonds, secured loans and cryptocurrency. While the company will commit to a thorough audit in the coming months, many questions remain.  

Not Tether’s First Tangle With Controversy

Since its inception in 2014, Tether has been at the forefront of attention and speculation. The project, formerly known as Real coin, initially promised that every Tether would be back 1-to-1 by traditional currency. That changed in 2019, when the company rephrased it to “100% backed by our reserves, including traditional currency.” Moreover, there is a mention of “including assets and receivables from loans made by Tether to third parties and affiliates entities.”

That latter part stirred much controversy, as there has been wild speculation as to how the same people run Bitfinex and Tether. While they are separate business entities, there is a significant overlap in personnel per the Paradise Papers. To this date, Bitfinex and Tether claim they operate independently from one another. 

Tether’s dominant position has not changed despite these tussles and increasing regulatory scrutiny. There is no shortage of alternative stablecoins either, including USDC, BUSD, UST, DAI, FRAX, TUSD, USDP, etc. Most of these stablecoins pursue a similar strategy to Tether: Keep funds in a bank account to issue digital assets pegged to the U.S. Dollar. However, there are alternative options that may continue to build momentum. 

Creating Different Types of Stablecoins

Besides fiat-backed stablecoins, developers have shown an appetite for experimenting with other concepts. The first solution is a commodity-backed stablecoin, relying on interchangeable assets, including precious metals, real estate, oil, etc. While it lets holders exercise ownership over real-world assets, it is not a very popular option among crypto enthusiasts today. The best-known commodity-backed stablecoin is Digix Gold, commanding a market cap of just under $1.3 million. 

A second option comes in the form of crypto-backed stablecoins. It may seem unusual to issue a stablecoin tied to the most volatile assets in the world. However, such assets are also trustless and provide better transparency, even if they may require over-collateralization. Several such assets exist, including DAI, Wrapped Bitcoin, etc. These currencies do not necessarily represent the value of $1, but that of the underlying asset.

The last option is algorithmic stablecoins. Unlike any of the above, these currencies do not require assets to provide value. Instead, they use an algorithm to control the supply and its “peg” to $1. If demand rises, the supply goes up to bring the price back to normal. When the demand dwindles, outstanding coins are purchased back from the market to reduce the circulating supply. 

Growing Demand For Tether Alternatives

Regardless of how the stablecoin is issued, a demand for alternative currencies to Tether’s USDT is inevitable. The fiat-backed approach remains popular for USDC and BUSD, with market caps of $52.7 billion and $17.7 billion. However, there is a strong increase in circulation for TerraUSD (UST), a currency that leverages an algorithmic peg. Users can swap $1 worth of LUNA – Terra’s native currency – for 1 UST and vice versa at all times. Its market cap has risen from $1.7 billion to $15.5 billion in the past year, confirming strong demand.

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質押

DeFi cannot circumvent Russia financial sanctions: MAS

DeFi

DeFi-The regulator said appropriate measures will be taken for FIs who will breach these sanctions.

The Monetary Authority of Singapore has reaffirmed that financial sanctions on Russia cannot be circumvented through cryptocurrencies or decentralised finance (DeFis) as financial institutions are required to comply with the ordered sanctions regardless of whether transactions are facilitated using traditional financial channels, or through cryptocurrency exchanges or “decentralised finance” protocols.

This was in response to MP for Bishan-Toa Payoh GRC Saktiandi Supaat who asked whether Singapore’s regulation of cryptos and DeFi will prevent sanctioned individuals and companies from using non-traditional forms of finance to circumvent it and whether MAS has plans to introduce or revise its regulations.

MAS said the sanctions by the Singapore government will apply to all FIs in Singapore, including digital payment token (DPT) service providers.

“MAS requires all FIs to ensure compliance with the measures, regardless of whether transactions are facilitated using traditional financial channels, or through cryptocurrency exchanges or “decentralised finance” protocols. To guard against circumvention, these financial measures specifically prohibit DPT transactions that may be used to facilitate any prohibited activity or transaction. In short, FIs will not enable sanctioned parties to use non-traditional forms of finance to bypass the measures,” Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS said.

Shanmugaratnam added that all FIs are required to demonstrate their compliance with the financial measures to MAS and are subject to MAS’ scrutiny and inspection. 

“MAS will take appropriate regulatory actions against FIs found to have breached these financial measures,” Shanmugaratnam said.

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比特幣

Bitcoin Can Weather Any Loss of Peg to Stablecoin

Do Kwon, the founder of Terraform Labs, which powers the Terra blockchain, said the Bitcoin market is “liquid” enough to handle any potential de-pegging of its stablecoin.  

Bitcoin

1.Bitcoin

“People need to have a little bit more faith in crypto,” the South Korean entrepreneur said during an interview Monday on Bloomberg Quicktake. “If you look at Bitcoin, it turns over more than $20 billion per day and I think with time, it’s going to be even more liquid.”

2.

Terra has been the talk of the cryptocurrency market since Kwon announced last month that it will eventually buy $10 billion in Bitcoin to serve as a reserve to back its decentralized stablecoin. The coins are used to facilitate trading on exchanges by minimizing the volatile price swings seen by most cryptocurrencies. Kwon’s Singapore-based Luna Foundation Guard has helped purchase more than $1.4 billion of Bitcoin so far. 

3.

“Even if a stablecoin were to de-peg over time and those reserves would be used to defend that peg,” Kwon said. “I think [the Bitcoin market] would more than easily be able to absorb the Bitcoin that enters the market.”

The UST stablecoin, now with a market value of more than $16 billion, is not backed by a fiat currency like centralized stablecoins such as Tether. It has been able to maintain its peg to the dollar by issuing and destroying Luna tokens, Terra’s native cryptocurrency. For every new UST created, $1 worth of Luna is burned on the Terra blockchain. A Bitcoin reserve is designed to help improve UST’s ability to keep its dollar peg.

After an initial $3 billion “bootstrap” Bitcoin purchase, Kwon said the reserve will add Bitcoin through seigniorage, or the using of the profit made while issuing a currency because of the difference between the face value of the currency and the production cost. For every UST minted, funds will be used to purchase more Bitcoin for the reserve, he said.

“The important thing to remember about Terra is that is a decentralized stablecoin in the sense that it has no issuer,” Kwon explained. “If you were holding some sort of centralized collateral…bonds, Tether stablecoin, or [Circle’s USDC], in that case, whoever is holding the largest amount of these reserves would be subject to censorship, and would defeat the entire purpose of having decentralized stablecoin in the first place.”

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blockchain

blockchain-A new stage in the evolution of the game space

blockchain-In the traditional gaming space, guilds have served as informal communities to support players, and GameFi guilds have been instrumental in the development of the GameFi realm as they help lower the barrier to entry for newcomers and create new opportunities for investors. The potential of GameFi guilds is endless.

blockchain

blockchain-Esports and gameplay monetization

The development of streaming and esports has added a new dimension to these guilds – monetization. With the advent in 2011 of Twitch, the popular live streaming platform for gamers, gamers have the opportunity to stream their gameplay online and generate income at the same time.

In addition, at a competitive level, monetized esports became popular in the 2010s with the release of massively multiplayer online fighting games (MOBAs) such as League of Legends (LoL) and Defense of the Ancients 2 (DOTA2). Many of these early gaming opportunities came from competitive video games in online or offline tournaments, which often offered cash prizes. Live streaming has added legitimacy to these competitions, which have attracted sponsors, ad revenue and new ways to make money.

blockchain-Play2Earn games 

blockchain

Play2Earn games have provided players with an even easier and more affordable way to make money through gameplay. New gaming communities have formed around Play2Earn games as players begin to pool knowledge and resources. As more players joined the industry and the prices of gaming assets continued to rise, new players had to spend quite large sums just to start playing. This led to the emergence of the first Play2Earn guilds, where players united in order to help each other, as well as to maximize their own income.
Play2Earn games give players the opportunity to earn cryptocurrency as well as own elements of the game itself through the use of non-fungible tokens (NFT), which usually take the form of in-game characters, lands, items, etc.

What problems do GameFi guilds solve?

Many Play2Earn games require an NFT purchase. As the popularity of these games grows, so does the cost of the required NFTs. In the early days of Axie Infinity, they could be purchased for a small fee, but due to the popularity of Axie Infinity, new players now have to shell out nearly $ 300 for just a few starting Axies.

This is exactly the problem GameFi guilds are trying to solve. Guilds bring together investors and players for the benefit of both. Investors wishing to make money on Play2Earn games can purchase NFT and other in-game assets. If NFT owners do not have the time or desire to play, or they simply no longer need a certain set of assets, they can provide these NFTs to players through guilds.

However, this does not mean that fellows do not pay for renting NFTs from guilds.Players usually have to pay a certain percentage of their future income to the guild in exchange for these NFTs. In addition, certain games allow players to “pump” their NFTs as they play, thereby increasing the potential profit from these assets. This creates a double benefit for guilds that generate income while increasing their portfolio of more powerful assets through NFT leases.

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