We tend to think of the world as the past, present and future, and as these distinguished moments in time. However, we intuitively know that this is not the case. Instead, we are always in a state of flux, this slow progressive evolution in order to suit humanitys growing needs, knowledge and demands. However, with change comes adjustment, and what we are facing right now is an adjustment to the digital realm, the world of Bitcoin and our digital identity: a crossing of the chasm, a state of change away from the physical realm of traditional finance, legacy structures and the world as we know it. This article is meant to highlight some of these critical hurdles brought up by Raoul Pal and Robert Breedlove in an effort to get the collective consciousness thinking about how we can transition to this digital realm with minimal volatility and entropy.

One thing Raoul and Breedlove bring up many times throughout the talk is the metaverse. Therefore, lets first ensure we are on the same page when it comes to the metaverse. We often hear the metaverse is the future; however, what most deep down the rabbit hole may argue is that the metaverse has been blossoming into existence since the birth of the internet. However, we are only just starting to define it now. Lets go deeper ...

Most of us tend to interpret the metaverse as this digital environment where we hang out in a virtual world- the world Mark Zuckerberg is pushing with his Facebook ads, i.e., Meta. But, I would argue that the metaverse is not this virtual world that it is made out to be, but rather a digital interface to ones digital self. It is our digital identity where we interact with our online social community, manage our digital possessions and store our digital wealth, to name a few aspects which are currently easy to identify. With that being said, this osmosis into the metaverse is not a movement of people away from the physical world into the digital world, but rather a transfer of wealth and identity from the physical realm to the digital realm. Although many people already do and will continue to spend time in digital worlds in video games and social platforms, most of us will still very much be rooted in the physical world for the time being.

Building on this idea, what will happen to physical assets? An assets value is subjective and is worth something usually because it provides value to us in some way or another. At the moment, our physical assets offer greater perceived value than our digital assets. This explains the discrepancy between the value of physical versus digital assets globally, e.g., real estate is worth over $300 trillion while the complete cryptocurrency market cap sits at $2.5 trillion (recently as high as $3 trillion). The question now is, how does this value shift over into the metaverse? This, I believe, is a demographic shift. As our population ages, those in earlier generations with limited exposure to the digital realm (i.e., digital identity, digital assets or digital possessions), will slowly bequeath their wealth to their offspring, which will find greater value as technology evolves in the metaverse. However, it should be noted that you will find utility and value in different areas and offerings within the metaverse depending on your age, values, interests, gender and location. Some people may choose to stay primarily in the physical world if the metaverse doesnt seem to provide ample value to them. Others may dive in headfirst.

Where are we now? We are currently in a state of limbo, one toe in the digital plane and the rest of the body out. Most of us have exposure to the metaverse when it comes to our digital identity, but only a handful of us find greater value in digital assets over physical assets, although this is quickly changing. However, as we see greater adoption, we will also encounter greater hurdles (technological, political, financial etc.). Taking this into account, this shift towards the metaverse isnt something that will happen overnight. As previously mentioned, it is a generational demographic shift that has been underway since the invention of the internet. The transition from handwritten letters to email and social media was just the start. Now we should continue to see the transition of wealth, jobs, and identities to the digital plane.

When can we safely say the metaverse is our reality? Just like inflation impacts everyone differently, as it is dependent on your consumption habits, what you classify as the metaverse is unique to you. There are many ways to measure your presence in the metaverse, i.e., by time, wealth, reputation, interests, job, hobbies or knowledge. With that in mind, some people may argue that we are already in the metaverse due to the amount of time we spend engrossed in technology. On the other hand, others may say we havent reached that inflection point just yet, or that the metaverse will become our reality when:

- We spend more time connected to the digital realm than the physical realm - When digital wealth surpasses physical wealth

- When were able to vote for our politicians in this digital world

- When the majority of jobs are in the digital plane

- When we can digitally upload ones consciousness

...and some will say the metaverse will never become our reality.

My personal belief is that the metaverse is supplemental to our physical existence, and it is not one or the other. The metaverse eases our physical existence by dematerializing our limitations and constraints, such as distance, time, aging, wealth, connection, etc. However, there is and will continue to be an abundance of value in the physical world. But ultimately, this decision of whether we are or arent or what is versus what isnt the metaverse is not for me to decide. Ill pass that one onto you.

Opinions aside, although the definition of what constitutes the metaverse may be subjective, what's not so subjective is that we are and will continue to face hurdles as we see greater adoption.

Chart Source

Every new technology has to cross the chasm to reach mainstream adoption (the chasm is detailed in the image above). During this crossing of the chasm, we see creative destruction take hold, where legacy systems collapse and new technology changes the way we interact with theworld. All new technology has some form of disruption. Its just that some technology is more disruptive than others.

With the introduction of the digital camera, we witnessed the dismantling and disruption of the traditional film market. But from this, we saw the boon of photography and documentation. However, when it comes to cryptocurrencies, we have only just started to scratch the surface of what is possible. Here is an example of some of the sectors this new technology has the potential to disrupt:

- The financial system (banking, remittances, micropayments, credit markets, to name a few) - Social media and digital interaction

- The internet (our digital footprint)

- Voting

- Insurance

From everything mentioned so far, it should be evident that we are in the middle of a major global state change, a transfer of identity, wealth, possessions and interactions from the physical realm into the digital realm. As Raoul and Robert eloquently explain, with this state of change in place, we have to overcome some major hurdles. We need to ensure we are heading in the right direction collectively. Therefore, we should ask ourselves, how do we get there safely, without a consolidation of power or the crippling of our economy? These are a few key questions we have to figure out before conquering the chasm of adoption. Lets touch on a few key hurdles we have to face:

If an asset, such as bitcoin, is our primary currency and store of value and it is wildly outperforming the majority of other investment opportunities, then we will be disincentivized to transact and spend with it. Yes, there will be occasions here and there, but in general, the majority of the world we know will be starved of capital. This will push central banks to intervene and over-regulate in order to stop this capital flight from traditional assets to digital assets, but in doing so, itll only lock people into our failing system, delaying the inevitable and amplifying its negative effects down the line.

Eventually, if we can predominately move across into the digital realm, this problem of capital flight will be solved. At this point, bitcoin will reach market saturation, similar to gold today, where it protects purchasing power but is no longer an asymmetric bet on technology and a failure of the current system. But in the interim, how do we take advantage of bitcoins positive properties while also promoting the exchange of bitcoin between one another?

In the short term, if we were to see a seismic shift of capital away from traditional assets and into digital assets, this starvation of capital from traditional assets would create sizable losses. Suppose traditional assets start facing major losses, while at the same time, there is a lack of transacting in digital assets, creating a reduction in realized gains; then wed have a problem on our hands. We could see a significant decrease in capital gain revenue and an increase in capital losses, further eroding the tax base. This could push policymakers to implement overbearing regulation, resulting in measures such as taxation on unrealized gains. This would stifle the prosperity in the metaverse and limit the transition of individuals to the digital realm.

In the long term, if we embrace a currency such as bitcoin as a legal tender:

1. The government will no longer receive capital gains tax from any appreciation in the value of bitcoin. This would be in line with the fact that a countrys legal tender is not subject to taxation if/when it appreciates/depreciates.

2. We live in an inherently deflationary world, whereby technological advancement allows us to get more for less. Over time this advancement increases productivity and efficiency, causing the cost of goods, services and assets to decline slowly. However, this is only possible under a currency with a fixed money supply (such as bitcoin). The lack of monetary expansion causing dilution would allow the currency to capture these technological gains. This may sound positive; however over time, most assets may decline in price, resulting in increased capital losses, reducing tax revenue.

With that being said, one could argue that by adopting a currency such as bitcoin, the government will no longer be spending in a currency that loses purchasing power one day to the next. Therefore, all tax revenue will go further, making up for this reduction in tax revenue. If that is the case, then this may all come out in the wash. However, we should still be conscious of these potential taxation issues. With that in mind, how do we ensure that assets such as bitcoin are taxed appropriately, but as not to restrict their potential as a solution to our fragile system? And, how do we take into account an increase in capital losses?

We are in the middle of one of the biggest revolutions in human history, and alongside this revolution, we face an assortment of immense deflationary forces such as:

- Demographics (an aging population with limited purchasing power)

- Our major debt burden consuming productive capital

- Technologies such as artificial intelligence (AI) and robots consuming jobs

- Competition in the workforce due to overcrowding of what jobs remain

- Currency debasement, destroying our purchasing power

- Monetary intervention suppressing interest rates and traditional asset returns - Capital flight into the digital realm putting strain on the traditional system

As these forces become more pervasive, it becomes harder and harder for the lower- and middle-income segments of the population to survive. This is a big issue! The majority of the population is under immense pressure as they are being squeezed from all angles. How do we give them a voice, meet their needs and stop them from revolting?

One potential option Raoul proposes is embracing central bank digital currencies (CBDCs), allowing easier implementation of fiscal stimulus such as universal basic income (UBI). By doing so, we could redirect the flow of the capital away from asset owners and into the hands of the most at-risk individuals. This will aid in bridging the gap between the physical and the digital realm for the lower- and middle-wealth percentiles, allowing them to support themselves as these deflationary pressures take hold.

My worry with this view is that CBDCs have the potential to give governments globally immense power and control. If this power is used in the ways mentioned above, then I am all for it. However, if CBDCs are used with the interests of the few in mind, this will only further consolidate wealth and power and could potentially end this utopian decentralized vision of the metaverse. Therefore, is there a way to implement CBDCs but somehow define the boundaries for which they can be used, preventing misuse and the centralization of power?

However, regardless of which route we chose to bridge the chasm, Raoul does bring up a good point: if we are able to transition over to a decentralized metaverse and democratize this incredible technological boon in productivity and innovation, then we may be able to implement a natural form of UBI, where we could monetize our own digital identity. Although this is currently not possible, as our online corporations current structure is to capitalize off of our data by monetizing our every move, a decentralized metaverse shifts this power and revenue generation into the hands of the user.

As technology advances, we are and will continue to see robots and AI replacing our jobs. Additionally, as energy costs slowly trend to near zero, we should see the cost of living slowly decline. Adding in the fact that we are witnessing a giant demographic shift where people have fewer children due to the costly environment we live in, this should cause gross domestic product (GDP) per capita to skyrocket. This could mean we are about to face one of the most productive periods in human history.

However, with costs slowly working their way to near zero and jobs being replaced by technology, resulting in more time on our hands, will this considerable increase in productivity bring about:

1. A decentralized open-source world where we push for equality of opportunity and where technology is shared freely? If so, this could result in a renaissance period with a focus on culture, art, and science leading to immense prosperity, innovation, and growth;

Or,

2. A darker, more centralized productivity boon where the vast majority of the patents pertaining to this powerful technology that now governs our lives is under the control of a few key players? In this case, we would most likely see significant poverty and some of humanitys more challenging times ahead due to the centralization of power and wealth.

On top of all that, we are currently seeing major global exploitation of our digital identities. Not only are we seeing our online data being used in for-profit activities, but we are also seeing targeted media leading to psychological manipulation allowing these large monopolistic entities to sway the population.

Unfortunately, with everything mentioned above, the free market isnt going to solve these hurdles we face in the way we want. It is going to solve them with the total accumulation of wealth in the hands of the few. Therefore, what can we do to ensure this powerful technology of the future is in the hands of the people while also promoting the continuation of free markets?

With all that being said, how we approach these tough questions will define our future. Will crossing the chasm result in a:

a) Decentralized Metaverse? This would be a bright future where creative destruction is encouraged: Where there is a dispersion of power within a decentralized metaverse, brought about by rules and regulations that prevent the destruction and manipulation of the free markets, all while suppressing the overbearing powers of monopolies that asphyxiate competition. It should be noted that we may still have nation-state fiat currencies, but globally, wed embrace an immutable decentralized asset as our world reserve currency. This would lower the cost of living and democratize technology and finance, reducing wealth inequality. But more importantly, it would restrict the centralization of power with a technology that complements our deflationary world.

b) Centralized Metaverse? This would look similar to the current state of play, where a handful of large corporations have overwhelming control over our data and access to vast sums of capital, allowing them to lobby, protect their interests, and influence politics. In addition to the suppression of creative destruction, will we follow in Chinas footsteps and see the rise of CBDCs and social credit scores? This would give the government unfettered access to all our personal data, laying the foundation for the destruction of free markets and suppression of capital flows into any technology that poses a threat to the governments power.

Or will we walk the middle ground just like we have done many times throughout history, experiencing a give-and-take between centralization and decentralization?

We tend to think that when new technologies, such as Bitcoin and the metaverse appear, we all jump on board, and everything is hunky-dory. However, the reality is, if certain events had not happened the way they did, we might not have many of the innovations and advancements we see today. These technologies dont just appear. They are years in the making, a culmination of previous technological progress and human endeavours. They emerge from our experiences, needs and desires, and they are a byproduct of decisions we made ten, fifty, one hundred years ago. With this in mind, coming together as a collective, and understanding the unintended consequences of our choices will help guide us in making more efficient and productive decisions for the future.

The future is bright if we make it.

This is a guest post by Sebastian Bunney. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

See the original post here:
Facing The Chasm: The Future Of Bitcoin And The Metaverse - Bitcoin Magazine

U.S. Senator Ted Cruz (R-TX) addresses a news conference on Capitol Hill in Washington, October 6, 2021.

Evelyn Hockstein | Reuters

AUSTIN, TEXAS The Texas power grid is struggling with fluctuating energy prices and sporadic service, but the state's growing bitcoin mining community believes it can help fix it.

Republican Sen. Ted Cruz agrees. "A lot of the discussion around bitcoin views bitcoin as a consumer of energy," said Cruz at an event in October. "The perspective I'm suggesting is very much the reverse, which is as a way to strengthen our energy infrastructure."

The grid is called ERCOT short for the Electric Reliability Council of Texas, which is the organization tasked with operating it and it's fussy and temperamental.

ERCOT powers about 90% of the state, but to run smoothly, it requires a perfect balance between supply and demand. Having too much power and not enough buyers is just as bad as everyone wanting to fire up their AC units on the same day in July.

Maintaining that balance has proven to be a real challenge this year, and Texans are feeling it.

The price of power per hour is all over the place, routinely going negative. Rolling blackouts at moments of peak power consumption no longer come as a surprise. A lot of people lost faith in the grid altogether after a winter storm earlier this year resulted in a multi-system meltdown that "was within minutes of a much more serious and potentially complete blackout."

Crypto enthusiasts believe the fix to this problem is actually to add another electricity consumer into the mix a buyer who will take as much power as they're given, whatever the time of day, and are just as willing to power down with a few seconds' notice. These flexible buyers are bitcoin miners.

Mining for cryptocurrencies is the computationally intensive process by which new tokens are created and transactions of existing digital coins are verified.

At the Texas Blockchain Summit in October, Cruz pointed to the ability of bitcoin miners to turn their rigs on or off within seconds a feature that is hugely beneficial during times when energy needs to be shifted back to the grid to meet demand.

"If you have a moment where you have a power shortage or a power crisis, whether it's a freeze or some other natural disaster where power generation capacity goes down, that creates the capacity to instantaneously shift that energy to put it back on the grid," Cruz said of the ability of bitcoin miners to shut down their operations within seconds.

But not all are convinced that bitcoin miners are the solution.

"Miners are a strain on the grid, not a help," said Ben Hertz-Shargel of Wood Mackenzie, a provider of commercial intelligence for the world's natural resources sector. Hertz-Shargel is concerned that bitcoin mining would only raise peak demand, ultimately adding stress to the system.

ERCOT has a heartbeat. That may sound like a romantic metaphor, but it actually gives off a hum like when a guitar isn't properly plugged into an amp.

It's the sound of 60 hertz, a frequency common to all grids in North America. A steady tone means there's as much electricity going onto the grid as there is coming off it. If the power supply surpasses customer demand, the beat speeds up. If customers use more power than what's available on the grid, the heartbeat slows down.

The grid can manage small gyrations to its heartbeat, according to Shaun Connell, the EVP of power at Lancium, a Houston-based energy tech company that specializes in bitcoin mining. But Connell tells CNBC that when ERCOT's grid pulse falls to 59.4 Hertz or below for more than nine minutes, machines start to protect themselves by automatically shutting off and disconnecting from the grid. In some cases, that might mean power plants going dark.

If the heartbeat falls even farther than that, it could trigger a "heart attack" scenario. Think grid-wide blackout and a hard restart of the whole system.

These fluctuations also correspond to the grid's volatile price swings. Connell tells CNBC that in 2020, the price of energy in West Texas was negative between 10% and 20% of the time. The price dips below zero when supply outpaces demand.

So far this year, the price of power per hour has been negatively priced 9% of the time, while 5% of all hours this year have peaked above $100.

Extreme tails like the ones shown in the chart below aren't a good thing.

Keeping a steady heartbeat is tough for ERCOT for a couple of reasons.

For one, the Texas grid functions as its own isolated and deregulated electrical island. Unlike the rest of the continental U.S., which belongs to either the Eastern or Western interconnection (the names of the two American power grids linking states), 90% of Texas runs on ERCOT. This means ERCOT cannot quickly turn to neighbors for help when large generators trip offline or renewables do not deliver as expected. This can prove especially problematic when there's a natural disaster, like the winter storm in early 2021.

ERCOT's market-driven approach to energy planning shows up in another feature and occasional shortcoming of the grid: Its "just-in-time" delivery model. At the best of times, this saves everybody money. No one needs to hoard backup fuel when Texas' elaborate underground maze of wells and pipes can deliver it on demand. But February laid bare the worst-case scenario, when the state's natural gas production (burning natural gas is a major source of electricity for the state) fell by almost half during the cold snap.

Third, Texas is flush with renewables and rapidly onboarding these inherently unstable sources of power to its grid. While this is helping to decarbonize ERCOT by replacing less environmentally friendly power sources like coal and natural gas with wind and solar, renewable energy is unpredictable. At any given hour, it could be breezy and sunny, or it could be cloudy with no wind, meaning the grid has to brace for all renewable energy to go offline at any point and have a backup power source on deck.

Finally, the state's biggest population centers are often far from where power is generated. For example, low-cost renewable energy sites stretch across West Texas, hours from major hubs like Dallas and Austin.

Or take the rural town of Rockdale. It was once home to the largest aluminum plant in the world, run by Alcoa. But starting in 2008, it began to shut down its operations. That energy capacity was going to waste, as it would've been prohibitively expensive to build the transmission capacity necessary to carry it to major population centers. The arrival of crypto miners helped to resolve that imbalance by consuming the surplus energy.

To ensure grid reliability at all times, demand must be even with supply. ERCOT operators can tinker with the supply side, spinning natural gas turbines up or down on short notice to make up for the volatility of renewables, but typically, grid operators aim to reduce customer demand to maintain balance.

Through established "demand response" programs, ERCOT will actually pay major industrial users to cut power. If that curtailment does not prove sufficient, the grid can also request that residential buyers conserve their power use voluntarily. And when all else fails, ERCOT can run rolling blackouts, shutting down different parts of the state in quick succession but with no one patch suffering an outage for an extended period of time.

The problem with that first and best option is that many of these arrangements between ERCOT and energy buyers require response times of ten to thirty minutes. But because ERCOT is going it alone, the grid requires a much faster reaction, sometimes in the range of sub-seconds, according to Lancium's Connell.

This is where bitcoin mining comes into play. Miners function as "interruptible load," meaning they are able to turn off all of their machines with a few seconds' notice when the grid is in a pinch and needs the extra power. Bitcoin has no uptime requirement, nor is the gear worn down by regularly powering off and on.

It also makes good economic sense for the miners. Miners commit to buying a certain amount of power,and either use it for mining if the grid doesn't need it, or sell it back at a profit if the grid demands it.

Transmission towers are shown on June 15, 2021 in Houston, Texas. The Electric Reliability Council of Texas (ERCOT), which controls approximately 90% of the power in Texas, has requested Texas residents to conserve power through Friday as temperatures surge in the state.

Brandon Bell | Getty Images

"Imagine how much you would have to pay Amazon to say, 'Hey, there's too much demand for power. Please power down your data center,'" said bitcoin mining engineer Brandon Arvanaghi, who now runs Meow, a company that enables corporate treasury participation in crypto markets.

"But it can do that with bitcoin very easily, because all you have to do is pay the miners slightly more than what they would have made mining for bitcoin that hour," continued Arvanaghi.

Even bitcoin miners that haven't cut a deal with ERCOT sometimes voluntarily power down at times of peak consumption when prices shoot higher.

Lancium is building bitcoin mines where wind and solar are abundant and the transmission system is constrained, meaning that power wants to flow down the line, but the lines are full.

As Lancium Chief Executive Officer Michael McNamara describes it, these sites act like a large power station but in reverse. The mines will absorb abundant renewable energy at times when supply outpaces demand, thereby monetizing these assets when there are no other buyers. And on the flip side, the mines will incrementally ramp down their energy intake, as demand on the grid rises.

In a sense, you can almost think of bitcoin miners as temporary buyers keeping these energy assets operational until the grid is able to fully absorb them.

"In times of scarcity, our data centers will go down, and those lines can carry the renewable energy to Houston, Dallas and Austin where they need the energy," said McNamara.

McNamara tells CNBC the net effect of this is retiring coal and gas faster, while rapidly adding wind and solar at the same time, essentially making bitcoin mining a fundamentally decarbonizing technology.

Bitcoin can also be used to unlock the state's sequestered deposits of natural gas.

For years, oil and gas companies have struggled with the problem of what to do when they accidentally hit a natural gas formation while drilling for oil. Whereas oil can easily be trucked out to a remote destination, gas delivery requires a pipeline.

If a drilling site is right next door to a pipeline, they chuck the gas in and take whatever cash the buyer on the other end is willing to pay that day. But if it's 20 miles from a pipeline, things start to get more complicated.

More often than not, the gas well won't be big enough to warrant the time and expense of building an entirely new pipeline. If a driller can't immediately find a way to sell the stash of natural gas, most look to dispose of it on site.

One method is to vent it, which releases methane directly into the air a poor choice for the environment, as its greenhouse effects are shown to be much stronger than carbon dioxide. A more environmentally friendly option is to flare it, which means actually lighting the gas on fire.

But flares are only 75% to 90% efficient, according to Adam Ortolf, who heads up business development in the U.S. for Upstream Data, a company that manufactures and supplies portable mining solutions for oil and gas facilities. "Even with a flare, some of the methane is being vented without being combusted," he said.

This is when on-site bitcoin mining can prove to be especially impactful.

Ortolf says that when the methane is run into an engine or generator, 100% of the methane is combusted and none of it leaks or vents into the air.

"But nobody will run it through a generator unless they can make money, because generators cost money to acquire and maintain," he said. "So unless it's economically sustainable, producers won't internally combust the gas."

Bitcoin makes it economically sustainable.

"50% of the natural gas in this country that is flared, is being flared in the Permian right now in West Texas. I think that is an enormous opportunity for bitcoin, because that's right now energy that is just being wasted," said Cruz in October.

Hertz-Shargel from Wood Mackenzie predicts that bitcoin could more than double demand growth in ERCOT's territory, but unlike Cruz, he doesn't think that additional demand is a good thing.

"The analogy I like to use is that if you start smoking two packs a day and then cut back to one pack on holidays, that doesn't make smoking good for your health," he says.

"The net impact is a very large addition of load onto the grid," agrees AdrianShelley, who runs the Texas branch of Public Citizen, a consumer advocacy and lobbying group. Shelley suspects that not all of that consumption is concentrated during times where there is a surplus of energy.

"I don't know that it would be the case that they would only use energy that there otherwise wasn't demand for," Shelley told CNBC.

Hertz-Shargel argues that ERCOT should be focused on grid improvements to make it easier to get power from solar and wind farms to big consumption centers, and that bitcoin miners aren't the right way to deal with demand fluctuations. Instead, he argues, "the intermittency of renewables should be met with demand response from societally-beneficial loads, like industrial facilities, commercial buildings, and residential air conditioners or energy storage."

But ERCOTinterim CEO Brad Jones thinks bitcoin miners can be helpful.

Jones has been touring the state and hosting public events to answer questions from Texans about the electric grid. Besides winter weather, the impact of cryptocurrency mining on the grid is a common question.

"I'm pro bitcoin...but I'm too risk averse to be an investor in bitcoin," Jones told a crowd of residents in Frisco, Texas on Wednesday night. The ERCOT chief went on to explain the mutually beneficial relationship between the grid and bitcoin miners.

"A lot of these solar and wind can produce power down to a negative power range, negative $23 per megawatt hour," Jones said. "These bitcoins see that as a great opportunity. They can get paid to use power. And that's why they're coming to the state. But that's not necessarily bad."

Jones makes the point that negative power isn't healthy for the market. Bitcoin miners "soak up" some of that negative power, and when the cost of electricity gets slightly higher than what they're willing to pay for it (around $100, according to Jones), they shut off.

"So I think it's really a valuable potential resource for us."

Continued here:
Bitcoin miners say they're helping to fix the broken Texas electric grid and Ted Cruz agrees - CNBC

A recent paper authored by members of several universities, including Sydney and Macquarie, argues that recent changes in Ethereum monetary policy are making it a better store of value than bitcoin. The deflationary effect that the EIP-1559 proposal has caused in the issuance of the currency is said to be the main cause of this.

A new paper released by members of Australian universities last month is putting the spotlight on Ethereum and its possible future as a store of value. The paper, titled Better than Bitcoin? Can cryptocurrencies beat inflation?, is authored by Ester Flez-Vias of the University of Technology in Sydney and other academics, and compares the issuance of Bitcoin with the new issuance model of Ethereum, that is making the currency deflationary.

The paper states:

We show that following the recent change in its transactions protocol, the digital currency Ethereum displays a significantly lower net issuance rate of tokens than Bitcoin, achieved by destroying the feesassociated with each transaction.

This has to do with the activation of EIP-1559, a proposal that burns Ethereum in a proportional way to the usage of the network. While this proposal had some opposition when it was presented mainly from miners and mining pools it is now contributing to this new appreciation of Ethereum as a possibly deflationary currency in the future.

The implementation of EIP-1559 has caused the network to burn a significant amount of Ethereum in fees. This change has led to more than one million ETH being put out of circulation after just three months of its implementation on mainnet. Regarding this, the study remarks:

In many cases the amount of Ethereum burned outpaces the networks creation of new tokens, resulting in Ethereum potentially becoming the worlds first deflationary currency. We argue that this provides better inflationary hedging properties than Bitcoin, and Ether may therefore offer a superior long-term value storage than Bitcoin.

Other cryptocurrency projects are adopting similar burning schemes hoping to recreate the same effect. Binance coin recently activated an update to its network that also implemented fee burning. However, Binance coin and Ethereum are fundamentally different: The latter has no cap on its issuance, while Binance coin does have a hard issuance cap.

What do you think about the Better than Bitcoin? Can cryptocurrencies beat inflation? paper and its conclusions? Tell us in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Excerpt from:
Ethereum Might Dethrone Bitcoin as Best Crypto Store of Value, Study Argues Bitcoin News - Bitcoin News

Before debating whether to ban private cryptocurrenies, it is prudent first to understand what cryptocurrencies are

Virtual currencies created using blockchain technology have been the subject of great speculation and discussion in recent times.

Legendary investors Charlie Munger and Warren Buffet have gone as far as to call Bitcoin and other cryptocurrencies rat poison.

Before debating on whether to ban private cryptocurrency, it is prudent first to understand what cryptocurrencies are.

Cryptocurrencies are digital encrypted tokens that can be transferred between two parties without the need for a centralised regulator.

The facilitators of the transaction work to verify a transaction individually and maintain a public ledger open for anyone to see.

The elimination of a centralised entity is why we see the word decentralisation being thrown around very often. Cryptocurrencies are not untraceable as most believe; in fact, it happens to be more traceable than currency notes due to the public ledger leaving a clear trail.

In addition, when discussing the merits of cryptocurrencies, one must understand that it possesses no intrinsic value. Stocks provide partial ownership of a firm that produces goods and services, bonds provide a steady source of income, and gold has inherent metal value. Cryptocurrencies are non-productive assets that are merely traded because there is demand for it.

Ex-RBI Governor Raghuram Rajan had stated recently in a TV interview that a lot of cryptos have value only because there is a greater fool out there willing to buy.

Cryptocurrencies are eerily similar to the tulip mania of 1636, when tulips were being traded for the sake of turning a profit. Another essential point to note is that although theoretically there is a scarcity of Bitcoin and other cryptocurrencies, that does not mean anything in terms of economics because there needs to be a particular purpose that will sustain demand for the asset.

Some claim that Bitcoin and other private cryptocurrencies are a new revolution in currencies and the monetary system. No central bank or government around the world would be interested in relinquishing power over the money supply. Private cryptocurrencies being adopted as a legitimate currency in the nation will spell the end of regulation and economic intervention by the central bank. This is because central banks require the ability to manipulate the money supply to intervene during a crisis. Private cryptocurrencies strip the central bank of this power, leaving the central bank effectively unable to set interest rates and control the money supply efficiently. In a crisis such as the COVID-19 pandemic, it would become challenging for monetary regulators to step in and aid a wounded economy.

Therefore, it is improbable for any notable government to favour and encourage private cryptocurrencies for these reasons. Moreover, due to speculation, cryptocurrencies ensure that they can never act as a measure of the value of goods and services. For a cryptocurrency such as Bitcoin to be accepted as a currency, it has to price goods. Bitcoin, an extremely volatile cryptocurrency (like its counterparts), cannot act as a currency in a stable economy.

Although a particular country can choose to ban private cryptocurrencies, that this does not mean anything to the asset as a whole is untrue. The significant advantage which cryptocurrencies pose, which is decentralisation, leads to its downfall. Any government with large enough pockets can decide to take down the cryptocurrency by destroying its monetary value. The incentive for miners and other participants to maintain the system is financial.

If the price of a cryptocurrency such as Bitcoin were to drop to 0, it would be devastating. The act of a significant government announcing its intention to take down cryptocurrencies would leave a considerable dent in the price. Additionally, cryptocurrency mining takes up a substantial amount of a countrys resources which could be put to more productive uses.

It is crucial for governments worldwide to decide on a course of action regarding this growing technology and equip themselves accordingly.

The longer it takes for regulators to implement a plan, the greater there is to lose as the amount of money being channeled into the asset grows further. Unfortunately, all bubbles come to an abrupt end leaving many financially distraught.

Those who invest in cryptocurrencies need to understand that they are speculating rather than investing. It follows that while speculating, one takes comprehensive care to know what they are getting into. Therefore, it is vital that an individual does not stake their financial security upon this novel asset.

(Anand Srinivasan is a consultant and Sashwath Swaminathan is a research associate at Aionion Investment Services)

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Be aware of bitcoin, other cryptocurrencies - The Hindu

Cathie Wood, founder and CEO of Ark Invest, is bullish on Bitcoin and has sold stocks in China.

Cathie Wood, the wildly successful money manager known for making a huge bet on Tesla, weighed in on her support for Bitcoin, explained why her Ark Invest firm has sold nearly all the Chinese stocks it previously owned and talked about what her firm is buying now during an appearance on a panel Thursday. Heres what Woodwho appeared on Forbes list of Americas Richest Self-Made Women in August, with an estimated net worth of $400 milliontold the panel, moderated by angel investor and entrepreneur Jason Calacanis at PreMoney, a conference put on by venture capital firm 500 Global in Miami Beach, Florida.

BITCOIN

In September, Wood predicted that the value of Bitcoin would rise to $500,000 in five years. She remains a staunch supporter of Bitcoin, despite some in the crypto world losing their affinity for it. Theres a sense that the Web3 world is evolving away from Bitcoin and Ether into cheaper, faster cryptocurrencies, she said. But they forget that the more features and the more centralization you have youre talking about recreating Visa. That is, recreating an old structure in a new form. Wood said shed been hearing that Bitcoin is so yesterday. I think thats a big mistake. Look at whats going on in El Salvador.

Calacanis asked in response: You believe that dictator? You dont think hes a bad actor?

Wood replied that theyre giving $30 in each Chivo account [the digital wallets created for each citizen in El Salvador]. Pre Chivo, only 1.2 million people had bank accounts. Now 3 million out of 4 million eligible people in El Salvador have banking services.

Calacanis followed up: Most tech doesnt last more than a decade. Why would Bitcoin last any longer than that?

Wood answered: This is the most secure blockchain technology out there. Whats going on right now would have been [Nobel Prize winning economist] Robert Mundells dream: to introduce a global monetary system not under anyones control. (Wood explained that she studied under supply side guru Arthur Laffer an economist famous for the Laffer Curvewho was influenced by Mundell.) She elaborated: Look at Turkey. The Turkish people have lost half their purchasing power since February. Wouldnt it be nice to have a little Bitcoin?

CHINA

The topic turned to China, and the moves the Chinese government has made thisCK year regarding digital assetsbanning cryptocurrency exchanges and outlawing the mining of cryptocurrency. Wood said her firm had owned shares of Chinese e-commerce giant Alibaba, but had sold them along with other Chinese stocks. We own very, very few stocks there [in China] because theyre unpredictable. They are grappling with what most governments are grappling with: the gap between rich and poor. Wood added that 75% of consumer savings in China is held in real estate, and real estate values are starting to fall. Her analysis: That the Chinese government is willing to risk the decline in real estate values in order to address the wealth gap.

Calacanis put it this way: I think the mad king is circling his wagons because he feels threatened. Im talking about Xi Jinping.

Woods response: I think its to the benefit of the U.S. if China isolates itself. They are less likely to become the global superpower.

WHAT WOOD IS BUYING NOW

Wood said Ark has been buying Robinhooda stock that has fallen nearly 40% since its IPO in Julybut didnt elaborate on why. Also: Were looking for the digital wallet: Coinbase, Squares Cashapp, Paypals Venmo less so, she said. Most analysts are focused on banks, which we think are being hollowed out by defi and digital wallets. So shes staying away from traditional banks.

Two other stocks shes buying: video communications tool Zoom and cloud communications company Twilio, both part of a new wave of telecom tools. What I dont think people recognize is that we have not had a refresh cycle [in telecom] in 30 years. She explained: Im thinking about Cisco ... and the old telecom stack. Covid, she said, has inspired a new crop of options.

Calacanis asked about electric automakers (possibly Rivian, though he didnt specify), saying, Speaking of fraud, should a company thats sold zero cars be worth $150 billion?

Woods answer: Investing is about the future. Its not fraud, its perhaps misvaluation. I dont call that fraud at all. Regarding the crop of publicly-traded electric automakers with little to no revenues, Wood said: We called out Nikola. We knew what he [former chairman Trevor Milton] was saying was wrong. We knew that there was trouble. (In July Milton was charged with securities fraud by the U.S. Attorneys office in Manhattan; he pleaded not guilty). Wood also mentioned Rivian and Lucid, saying Ark doesnt own either stock. Why? They are going after niche markets. She said Ark has spoken to both companies about autonomous driving, which theyre not focused on. Woods take: Without autonomous drivers, neither can scalethough Rivian may be helped by its ties to Amazon, which owns a chunk of the company and has pledged to switch to electric delivery vehicles.

Her bearish take isnt exactly surprising, given the big bet shes made on those companies biggest competitor. Wood pointed out that ARK discloses its holdings at the end of each day and has done so since 2014. Its single largest holding, by far: Tesla, where Ark is sitting on a $2.4 billion stake.

Continued here:
Investor Cathie Wood On Bitcoin, Why She Sold Stocks In China, And What Her Firm Is Buying Now - Forbes

The CEO of crypto lending platform Celsius does not think that Bitcoin (BTC) has the correct properties to become a suitable payment option.

In a new interview on Coin Stories, Alex Mashinsky offers a contrasting picture between the qualities of the US dollar and the leading cryptocurrency.

Id much rather be in a scenario where the dollar remains as the reserve currency but Bitcoin continues to do very well

The dollar is a phenomenal form of payment. Its a horrible store of value and Bitcoin is a phenomenal store value, but its a pretty bad form of payment.

Mashinsky highlights that it is not a great idea to use Bitcoin to pay for goods and services as he says that people who have done so in the past often regret making the transaction.

If you fell for Elon Musks deal where he gave you a Tesla for two or three Bitcoins, obviously you hate driving that Tesla because you would in a second go back and take those three Bitcoins and return the Tesla, which lost value during the same period of time.

Anything you bought with Bitcoin in the last 10 years, you rather have the Bitcoin back and would have paid in US dollars. Thats really the crux of the matter that you cannot use it as a form of payment or cannot use it in a way that makes you happy about the transaction.

I

Featured Image: Shutterstock/laskoart/Andy Chipus

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Bitcoin Doesnt Work as a Form of Payment, According to Celsius CEO Alex Mashinsky Heres Why - The Daily Hodl

Anyone who has studied bitcoin for a while knows that proof-of-work in bitcoin mining is the key to the security and to the unforgeable nature of the protocol. Bitcoin mining in 2021 requires that miners use purpose-built computers [called ASICs] to convert real-world energy [more than 50% of which is renewable and stranded energy] into encrypted digital monetary energy.

By using this proof-of-work and following consensus rules, bitcoin miners (and node operators) secure this decentralized network one block at a time approximately every ten minutes. Some have even called it triple-entry bookkeeping. And the system is designed to work in a way that makes forgery, hacking, theft, cheating or double-spending coins all but impossible. One metaphor that is used to describe this is adding a block to the bitcoin timechain is like adding a floor to a skyscraper. To fully understand how this works is far beyond the scope of this article but the key design of this system requires the use of real-world energy so you cant cheat or game the system. By contrast, Jay Powell at the Federal Reserve Board can increase the U.S. money supply by the trillions, with a few keystrokes.

Ive served as a business relationship coach for over 30 years. To clients this meant I was an executive coach, their business development coach, their leadership coach, their time management coach or their performance coach. One of my dearest friends and colleagues David Lerner taught me an idea from his coach training that he called completing a unit of work. His unit of work in coaching is similar to proof-of-work in bitcoin mining. The idea as a coach (or leader charged with getting stuff done through others) is to complete at least one unit of work with the client or direct report during every meeting. Too often I see leaders in organizations fail to make their conversations with employees a unit of work or a conversation for action. (In the old days, wed hear the expression There is no such thing as a free lunch.)

In my business model, that meant the client would learn and apply at least one concept or be willing to experiment with one new action, approach or skill on every call. And wed follow up on how it worked in the next call. Rinse and repeat. When clients complete at least one unit of work during every meeting or call during a three- or six-month stretch they are amazed at how much their performance improves. Sometimes this involved clients getting over self-limiting beliefs that held back their performance and other times it involved learning how to effectively delegate work that was better handled by another person in their organization. In all cases, the focus was on deepening the relationship my client had with one or more people. Unlike most people in the business world, I tend to see an organization through a relationship lens not just a financial lens. At its core, every organization is no more or less than the relationships it cultivates within and outside. Strengthen the relationship and communication between the CEO and their chief financial officer and the numbers will almost always work out well.

In the past three decades, Ive held over 20,000 meetings and phone calls with clients where completing at least one unit of work was my proof of work. Ive never added up data on it (I have notes of almost every call and meeting) but it was the rare call or meeting that didnt end with the client agreeing to at least one action step. That meant we had proof of work. The action step could be an awareness exercise as simple as keep track of how many times you said yes when you wanted to say no. Or the action step might be as specific as I will call Charlene as soon as we end this call and invite her to speak at our next conference or practice group meeting.

What Ive learned from these cumulative experiences and my study of Bitcoin mining is that it pays handsome dividends for any organization to have a proof-of-work system. Your performance and that of your peers and colleagues will transform when you operate with a proof-of-work system. For example, those in construction can visibly see the progress they make every day. I worked as a carpenter during summers between college and law school, and our daily progress was always quite visible.

Admittedly, determining proof of work in an office or service business is more difficult and requires thought. One way to learn how a client defined proof of work was to ask them this question at the start of our work together: What will success look like from our work together? Sometimes their answers were vague and other times they were very detailed and insightful. Often wed develop a set of metrics based on those answers which gave them a way to keep score on a daily or weekly basis. Hitting those metrics was their proof of work. For example, if you are aiming to expand your network of high net worth people your metric might be to add one new high net worth person to your network each week. There is no one-size-fits-all way of determining proof of work, but bitcoin raises the bar on what is possible.

This entire industry is filled with people who get stuff done. Instead of thinking that only bitcoin miners or world class athletes need to do proof of work, ask yourself how you might gauge proof of work in your company? What does proof of work look like in your company? If you have one youre willing to share with Bitcoin Magazine, please reach out! Wed love to hear from you.

This is a guest post by Mark Maraia. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Continue reading here:
How Proof-Of-Work Is Useful Beyond Bitcoin - Bitcoin Magazine

Two days ago on November 30, the price of bitcoin (BTC) tapped a high that day reaching $59,250 per unit, but it has since dropped close to 5% in value to just above the $56K region. Onchain statistics indicate that whales and long-term holders (LTHs) have been spending over the last month and blockchain parsers have witnessed enormous movements in recent days.

On the first two days of December, there have been some massive bitcoin (BTC) whale movements stemming from long-term bitcoin holders. On Thursday morning, the creator of the web portal Btcparser.com explained that significant amounts of bitcoin were taken out from cold wallets and moved to active exchanges.

The onchain action was caught by the blockchain parsing tool Btcparser 3, a tool that analyzes each and every new bitcoin block by getting detailed information about all transactions within it. The bot uses groups of 100 blocks and identifies all wallets that sent or received a total exceeding 1,000 bitcoins during that time, explains the parsing tools website.

On December 1, Btcparser 3 caught some major onchain action, which saw the movement of thousands of bitcoins during the course of the day. For instance, on Wednesday the parser caught the movement of 15,074 BTC or $849 million, 6,970 BTC moved, and thousands more BTC spent as well.

Then the following day on December 2, monster-sized bitcoin transactions were caught by Btcparser 3. This transaction on Thursday saw a whopping 36,645 BTC deposited and 10,547 BTC left the wallet. Thats more than $2 billion worth of bitcoin in USD value, and the address spent more than $28.2 billion in bitcoin (BTC) during its lifetime. At 1:59 a.m. (EST) on Thursday, Btcparser 3 caught 15,074 BTC or $849 million move.

In addition to Btcparser 3 catching two days worth of major whale movements, Glassnodes most recent insights report, Week Onchain 48, establishes that long-term holders (LTHs) are spending some of their holdings. Glassnodes report notes that this action has been prominent during the last 30 days.

Shifting our focus to [LTHs], Glassnodes report details. We can see that there has been a reasonably continuous rate of spending over the last month. From the peak of 13.5M BTC in holdings, LTHs have spent (assumed distributed) 150K BTC, equivalent to around 5.8% of the volume accumulated since March 2021.

Crypto advocates have been discussing major whale movements on forums and bitcoin whale commentary is littered all over social media. The crypto analytics firm Santiment also tweeted about this past months whale action on November 23.

Bitcoins key active whale addresses that hold between 100 to 10K BTC are content after accumulating a total of ~40K more BTC on last weeks dip, Santiment said. The company also shared its weekly report as well, which discusses whale action and the growing bearish sentiment (& why its a good thing).

What do you think about the recent bitcoin price action, whale movements and the current bearish sentiment? Let us know what you think about this subject in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons, Btcparser.com, Glassnode onchain report,

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Monster-Sized Bitcoin Whale Transfers: Blockchain Parser Catches Significant Amounts of 'Cold BTC' Moved to Active Exchanges Featured Bitcoin News -...

The gold standard was shrugged off by the United States a long time ago. However, the precious metal has remained a primary hedge, not just for personal investors, but also for sovereign funds. While the United States dollar has acted as an exchange standard for most countries since, a depreciation in its value due to rising inflation has led to many looking for an alternative avenue. Thats where the top cryptocurrency Bitcoin steps in.

Many believe that the dependence on gold will first have to be eradicated for Bitcoin to reach its full potential. However, CoinMetricss Nic Carter has suggested a strategy for their co-existence. During a recent interview, the investor opined that BTC and Gold belong to the same ideological family while sovereign currencies are from a different genus. Thus, a tussle between the two assets seems unnecessary.

Bitcoin has its own merits like transmissibility, auditability, fractionalizability, and easier storage options. Golds momentum comes from its ownership by most sovereigns. Therefore, according to Carter, completely doing away with it might include a multi-decade transition phase.

In the meantime, countries should start preparing for a global Bitcoin standard, the exec said, before adding,

Buy the equivalent amount of Bitcoin that you hold in your official gold reserves all you need to do is hedge against a world where theres a Bitcoin standard.

He also opined that this will leave countries in a similar position as they are now, where where gold is the de facto monetary good the governments hold.

Carter also suggested a strategy for the U.S, which currently owns around 4% of the total gold that has ever been mined. According to him, such a ratio would require it to acquire less than a million BTC out of the total 21 million that will ever be in circulation. This will cost the country less than $50 billion.

Now thats a pretty cheap option to get into the future.

The Castle Island Ventures exec believes that this process has already been started by several countries, albeit in a coveted fashion as it will keep their costs basis in check. He argued,

Any government that is acting on a decades-long time frame and is secretly hedging their exposure by getting access to Bitcoin in whatever method, they have no incentive to talk about it.

However, reports of several governments, often despotic or autocratic, secretly acquiring Bitcoin have already started to surface. It has been alleged that state-sponsored North Korean hackers have been stealing billions in cryptocurrency for the government to build its treasury.

Similarly, while imposing restrictions on citizens, the Venezuelan army began crypto-mining last year to generate un-blockable income that can bypass U.S sanctions.

Read more:
How the govt. can 'hedge against a world where there's a Bitcoin standard' - AMBCrypto News

After the recent cryptocurrency market correction, Bitcoin and Ethereum both rebounded sharply. Most cryptocurrencies only registered single-digit percent losses, with some seeing bullish momentum. At the time of writing, Bitcoin price continuously shows strong support at $48,000 as it attempts to breach the $50,000 level once again.

The recent crypto market pullback erased over $600 billion from the global cryptocurrency market cap. When it comes to the reason behind the recent bearish move, some will cite the spread of Covids Omicron variant, while others will blame the Fed for recently suggesting higher interest rates.

With news of the Omicron variant spreading across the US, the market action is reminiscent of Julys crash when information regarding Covids Delta variant spread.

The good news is, were seeing similar market action to what happened in July, with crypto markets rebounding sharply only a few days after the crash.

Another reason for this weekends bearish momentum could be the Fed raising interest rates, discouraging investors from putting their money in crypto and stocks.

According to Coindesk, in November, Federal Reserve Chair Jerome Powell announced that the Fed would start scaling back on purchasing Treasury bonds and mortgage-backed securities. The program is scheduled to be depleted in mid-2022 to reduce inflation.

In addition to the above two factors influencing Bitcoins recent price, the House Committee announced that crypto CEOs would testify on December 8th in a hearing on digital assets.

According to a tweet posted by Jeremy Allaire, Co-founder & CEO of Circle, the committee will discuss crypto and national economic competitiveness for the United States.

While calling CEOs to discuss the challenges and benefits of financial innovation is not bearish news in and of itself, the potential increase in regulation resulting from that meeting could be detrimental to crypto markets overall.

The United States is already behind China when allowing traders to invest in ICOs, IDOs, and more. For example, Binance is not available to users in the US, and some of the hottest and most influential projects are first available on Binance. The restriction means US investors are excluded from a large crypto sector and dont even get an opportunity to participate in high ROI presales.

The good news is, crypto markets are holding the current support level quite well, With Bitcoin currently trading at $48,684 and Ethereum at $4,100.

Bitcoin is inching towards the $49,000 $50,000 level, looking to establish new support. While the recent pullback may seem drastic to some, a 20-30% loss isnt a reason to panic for most crypto holders.

While December is known to be Bitcoins hottest month, a pullback before a bull run is not uncommon. If Bitcoin can establish $50,000 as support in the short term, chances of dropping below $40,000 are slim. However, if Bitcoin cannot breach the $50,000 resistance, dont be surprised if we see another correction.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency.

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Top 7 Metaverse Coins With a Unit Price of Under $0.1

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Bitcoin Showing Strong Support at $48000, Why Did the Price Drop? - The VR Soldier