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Bitcoin White Paper Anniversary – How the Future of Finance Is Faring

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The Bitcoin White Paper was first released on 31 Oct., 2008 by the pseudonymous Satoshi Nakamoto. In 13 years, the coin took the world by storm, rising in value from $0 to around $67,000 in the last quarter of 2021.

But What Has Changed in 14 Years?

Apart from the exponential growth in Bitcoin’s price, the digital asset’s perception has also changed over the years since the release of “Bitcoin: A Peer-to-Peer Electronic Cash System.”

From an investment point of view, Bitcoin has been debated as a hedge in the alternative asset class category, digital money for exchange, framed as “digital gold” by several crypto proponents, and equated to a risk asset due to its correlation to tech stocks.

All this while regulators raise financial stability, security, and money laundering concerns in the virtual asset sector.

Regardless of where one stands on the coin, it can be agreed that Bitcoin became the poster boy for blockchain technology. So much so that its origins even reminded people of the late 90s and early ’00s era of the internet, or dot com.

In the White Paper, Satoshi described Bitcoin as “a purely peer-to-peer version of electronic cash.” Not only did the paper propose “a solution to the double-spending problem,” the technology created a tamper-proof system of recording transactions with timestamps.

An Idea for the Digital World

Bitcoin also introduced an idea of a limited digital supply of 21 million coins to control inflation. The process is also accompanied by its four-year halving strategy to cut mining rewards in half, controlling supply.

And with everything introduced back in 2008, Bitcoin still maintains a dominance ratio of over 40% in the crypto-verse.

At the time of writing, Bitcoin has a market cap of under $400 billion, with volumes hitting $24.7 billion at a price close to $20,600, remaining the top crypto by market capitalization.

Experts even pointed out that Bitcoin has glittered like gold in the market downturn, no more volatile than the equities or the British pound.

However, the innovation also has several critics. One of the significant opponents includes economist Peter Schiff who has maintained that BTC will not be the saving grace amid a potential recession.

On the contrary, BTC influencer and former marketing chief of crypto exchange Kraken, Dan Held, tweeted last year that BTC is massively undervalued against its utility.

Growing Need for King Coin

In 2022, the world can hate or love Bitcoin; they most definitely can’t ignore it. In the crypto market, Bitcoin is known to be the most decentralized asset, essentially having the first-mover advantage.

The Layer 1 protocol also initiated many Layer 1.5 and Layer 2 projects after the release of the BTC White Paper. Stacks, for instance, is another open-source network of decentralized apps built on Bitcoin.

Last year, El Salvador became the first country to make Bitcoin legal tender, drawing the attention of global watchdogs. The IMF has continuously warned of the risks associated with the private crypto market.

While Bitcoin has accelerated a conversation of digital money owned by a community, the Bank for International Settlements (BIS) has been collaborating on wholesale and retail central bank digital currencies (CBDCs).

When the globalized world is looking for cheaper and faster cross-border transfers, the gap is majorly filled by P2P crypto transfers seen by remittance data in the developing world. 

Satoshi stated, “Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers,” elevating Bitcoin to become more than a secure medium to exchange value.

It became a competition to the existing, centralized payment system leading apex banks to update digital transfers.

Bitcoin Criticism Despite its Milestones

Despite the achievements, Bitcoin has increasingly come under critical evaluation for its proof-of-work mechanism that puts pressure on energy demand. Another feature of Bitcoin that worried regulators was its level of privacy and anonymity with the algorithmic firewalls.

The worry emerged for the emerging technology with its anonymous creator. Over the years, several known names have been speculated as the pseudonymous Satoshi Nakamoto.

Businessman and data scientist Craig Wright is another self-proclaimed contender for being Satoshi. However, a significant section of the industry dismisses his claims.

Crypto enthusiast Jim Basko recently claimed that he discovered Satoshi’s oldest Bitcoin code which is a reminder of over a decade-long history of Bitcoin.

The first known crypto’s genesis in 2009 as a result of the sub-prime crisis, followed by the infamous Bitcoin Pizza incident in 2010 that promoted it as a digital medium of exchange.

 In the post-pandemic world in 2022, another round of debates around Bitcoin use cases during economic uncertainty has ignited, keeping the idea of Bitcoin alive 14 years on. 

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US Treasury Sanctions Hit Russian Arms Dealer’s Crypto Wallets

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The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed full blocking sanctions on 22 individuals and entities across several countries, including Russia and Cyprus, as part of its sanctions evasion network that supports Russia’s military-industrial complex.

The sanctions were imposed under Executive Order 14024 and are part of the U.S.’s strategy to target sanctions evasion globally, close key channels, and limit Russia’s access to revenue for its war in Ukraine.

US Treasury Goes After Russian Arms Dealer’s Cryptos

The U.S. Treasury’s sanctions were imposed by the Russian Elites, Proxies, and Oligarchs (REPO) Task Force, a multilateral effort to identify, freeze, and seize assets of sanctioned Russians worldwide. This task force leverages information from international REPO partners and key data from Treasury’s Financial Crimes Enforcement Network (FinCEN) to share information, track Russian assets, and sever Russian proxies from the international financial system.

The REPO Task Force aims to maximize the impact of multilateral sanctions while preventing opportunities for Russia to evade or circumvent U.S. and partner sanctions.

The primary target of the sanctions is a Russian sanctions evasion network led by Russia and Cyprus-based arms dealer Igor Zimenkov and his son Jonatan Zimenkov. The Zimenkov network has been involved in projects related to Russia’s defense capabilities, including supplying a Russian company with high-tech devices after Russia’s full-scale invasion of Ukraine. They have also supported sanctioned state-owned Russian defense entities, Rosoboroneksport OAO and State Corporation Rostec, which are critical components of Russia’s military-industrial complex.

Igor and Jonatan Zimenkov have worked closely together to enable Russian defense sales to third-party governments and have engaged directly with Rosoboroneksport’s potential clients to facilitate sales of Russian defense material. Igor Zimenkov has also supported the Belarusian military-industrial complex by enabling the sales efforts of State Owned Foreign Trade Unitary Enterprise Belspetsvneshtechnika in Latin America.

Today, Igor Zimenkov was designated for operating in the defense and related materiel sector of the Russian Federation economy, while Jonatan Zimenkov was designated for having materially assisted, sponsored, or provided financial, material, or technological support for Igor Zimenkov, Rosoboroneksport, and other sanctioned entities.

The Zimenkov network used front companies to funnel money and maintain a lawful appearance. Singapore-based Zimenkov network shell company Asia Trading & Construction PTE Limited and its director, Serena Bee Lin Ng, have sold helicopters to clients in Africa on behalf of the Zimenkov network. Additionally, Cyprus-based Zimenkov network shell company Lobster Management Limited and its director, Mikhail Petrov, have facilitated sanctions evasion by providing support to sanctioned entities.

The Treasury’s OFAC continues to work with its international partners to coordinate information sharing and enforcement and to travel the world in pursuit of sanctions evasion. The sanctions imposed today are a clear signal to Russia and its military-industrial complex that the U.S. and its partners are committed to tightening sanctions enforcement and preventing the evasion of international sanctions.

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Digital Wallet Growth Will Enable More Closed-Loop Transactions

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Crypto and fintech investment firm Ark Invest has made bold predictions about digital wallets, estimating that more than half the world will soon be using at least one.

In its Jan. 31 ‘Big Ideas 2023’ research report, Ark Invest revealed that digital wallet global population penetration is currently 40%. This equates to around 3.2 billion users, the firm added.

However, the research suggests that the number of online wallet users will increase at an annual rate of 8%. The firm predicted that this will result in a global population penetration of 65% by 2030:

“Having onboarded billions of consumers and millions of merchants, digital wallets could transform the economics associated with traditional payment transactions, saving them nearly $50 billion in costs.”

It also noted that digital wallets were gaining market share in online and offline transactions. Cash is definitely in decline, accelerated by government initiatives to go digital, as recently seen in Nigeria.


Payment method trends - Ark Invest
Payment method trends – Ark Invest

Digital Wallet Growth to Continue

Ark reported that digital wallets were scaling faster than accounts at traditional financial institutions. Furthermore, U.S. digital wallet adoption rebounded in 2022, surpassing previous highs following a COVID-induced dip.

The firm estimates that U.S. digital wallet users will increase by 7% annually during the next eight years. This will be a growth of around 160 million in 2022 to more than 260 million by the end of the decade.

Digital wallet user growth - Ark Invest
Digital wallet user growth – Ark Invest

Furthermore, online wallets are enabling “closed-loop” ecosystems. This is where consumers and merchants can transact directly, cutting out the middleman. 

“Digital wallets are onboarding millions of merchants to platforms that enable direct consumer-merchant transactions that disintermediate traditional financial institutions,” it noted.

In this closed-loop environment, wallet providers capture more value per transaction, enabling savings to be shared with merchants and consumers.

Open and Closed Lopp transactions - Ark Invest
Open and Closed Lopp transactions – Ark Invest

Additionally, Ark noted that closed-loop transactions could boost the margin structure of wallet providers.

It used Block Inc. (formerly Square) as an example, stating that it paid around 60% of customer transaction fees to third parties in 2022. The fees were paid for interchange, assessment, processing, and bank settlement fees. Block’s net take rate could more than double if customers transacted directly with merchants.

Block Inc. fee structure - Ark Invest
Block Inc. fee structure – Ark Invest

Closed Loop Transactions Could Top 50%

Finally, Ark predicted that these closed-loop transactions could account for over 50% of digital payments by 2030.

It used China as an example where wallets and merchants are largely internal or domestic only.

Closed loop cost savings - Ark Invest
Closed loop cost savings – Ark Invest

In conclusion, digital wallet growth is set to continue. Cutting out the intermediary which they facilitate is beneficial to both the consumer and merchant.

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Strike Launches Lightning Remittances in the Philippines

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Bitcoin fintech giant Strike rolled out its Lightning Network money transfer service Send Globally in the Philippines, a $35 billion remittance market.

Send Globally launched in the Southeast Asian country on Jan. 31, 2023, enabling businesses and tourists to receive international money transfers in the Philippine peso. The country receives $35 billion in remittances globally.

How Strike’s Send Globally Service Works

“Remittances are a broken system and Strike delivers an incredibly empowering experience for people to send money around the world in nearly an instant,” Strike CEO Jack Mallers said.

According to a press release, Strike’s remittance service converts a sender’s fiat into Bitcoin and sends the Bitcoin to a Strike partner in the destination country using the Lightning Network, which in the case of the Philippines, is Pouch.ph. Pouch.ph then converts the Bitcoin to the recipient’s fiat currency and credits their bank or mobile money account, with Strike shielding both parties from the tax implications of handling Bitcoin directly.

Bitcoin’s Lightning Network is a layer-two solution on the Bitcoin blockchain that allows micropayments between nodes over a payment channel. Unlike traditional payment networks, Lightning’s low fees enable almost zero-cost remittances.

Recently, Mallers announced a trial to bring Bitcoin Lightning Network payments to retailers through a partnership with Fiserv’s point-of-sale solution Clover Commerce. The trial allows any application with Lightning capability to pay Bitcoin for goods and services at Clover merchants.

Philippine Smartphone and Internet Adoption Auger Well for Strike

Send Globally rolled out to Strike users in Ghana, Nigeria, and Kenya on Dec. 6, 2022, where it has reportedly gained rapid traction.

However, mainstream adoption in the Philippines will depend heavily on network effects, driven by smartphone and internet penetration.

According to Statista, the number of smartphone users will increase from 85 million in 2022 to 87 million by 2023. Additionally, forecasts suggest smartphone users will increase to 91.5 million in 2025, representing roughly 83% of the island nation’s population.

Smartphone Adoption in the Philippines
Smartphone Adoption in the Philippines | Source: Statista

Additionally, Statista predicts that about three-quarters of the population will have internet access by the end of 2023. Growing internet access increases the chance of Strike’s success, since it helped drive adoption of crypto game Axie Infinity.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

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