Nobel laureate Paul Krugman compares the crypto craze to the housing bubble

Krugman warns digital tokens might be worthless

Paul Krugman compared the cryptocurrency craze to the mid-2000s housing bubble in a recent New York Times column. He warned the hype around digital coins resembled people’s unwavering faith in the US housing market before it tanked, sparking a global financial crisis.

Only a handful of investors — including Michael Burry of “The Big Short” fame and John Paulson — recognized that house prices had surged to unsustainable heights, and had the audacity and conviction to bet against ostensibly safe, mortgage-backed securities. Krugman, who won the Nobel Prize for economics in 2008, attributed the mass delusion affecting almost everyone else to the “incredulity factor.” Americans just couldn’t believe that house prices were as inflated as naysayers claimed, or comprehend that trillions of dollars of real-estate value might be eradicated, he said.

Yellen Says Terra Meltdown Shows Crypto-Stablecoin Dangers

Yellen calls for new regulation

Treasury Secretary Janet Yellen gave the US government’s most forceful response yet to the meltdown of TerraUSD, saying that the crypto stablecoin’s woes underscore the risks associated with the asset class. Stablecoins are cryptocurrencies where the price is designed to be pegged to a cryptocurrency, fiat money, or to exchange-traded commodities (such as precious metals or industrial metals)

Yellen said on Thursday that Terra’s spectacular tumble shows the dangers of tokens that purport to be pegged to the US dollar. She called for new regulations and added that Treasury was working on a report about the issue.

“I wouldn’t characterize it at this scale as a real threat to financial stability, but they’re growing very rapidly and they present the same kind of risks that we have known for centuries in connection with bank runs,” she told lawmakers on the House Financial Services Committee.

Concerns around the assets have also proliferated in the past week on Capitol Hill after TerraUSD, or UST, lost its peg to the dollar over the weekend. UST is a so-called algorithmic stablecoin, meaning that it’s not backed by assets like cash or cash-equivalents. Instead, it relies on trading and treasury management to maintain its value. In the most recent twist, one exchange-traded product tied to Terra saw its price almost evaporate in what may be the biggest ETP (Exchange Traded Product) wipeout ever.

IMF Warns That Crypto Could Help Russia Skirt Sanctions

Russian miners have captured  11 percent of total Bitcoin mining revenues last year

Crypto mining could enable sanctioned nations to evade punitive restrictions researchers the International Monetary Fund said.

Sanctioned nations could monetize domestic energy supplies, which cannot be exported abroad, by mining cryptocurrencies such as Bitcoin, an IMF report has revealed. While the magnitude of capital flows to sanctioned actors is “relatively contained,” the IMF said that it still presents “risks to financial integrity.”

“Regulators in the United States and United Kingdom, among others, have urged firms in their jurisdictions, including the crypto-asset sector, to increase vigilance with regard to potential Russian sanction evasion attempts,” the IMF wrote in a report. The IMF estimates that of total Bitcoin mining revenues, which last year reached $1.4bn, Russian miners could have captured close to 11 percent while Iranian miners captured three percent.

Why Shares of Silvergate Capital Are Rising

Silvergate Stock Price Could Rise 50%

Bank of America analyst Brandon Berman initiated a buy rating of Silvergate Capital and a $200 price target, implying about 45% upside from its current levels.

Silvergate Capital has built a real-time payments system that better facilitates cryptocurrency trading because parties on the network can send and clear transactions instantly at any time, whereas most of the U.S. payments system doesn’t operate in real time. Cryptocurrencies trade around the clock. Silvergate also earlier this year acquired the assets behind Meta Platform’s Diem and U.S. dollar stablecoin and is planning to eventually roll out a stablecoin later this year.

Berman likes Silvergate for several reasons. For one, he said the company “is one of the best-positioned companies to benefit from the expanding use of stablecoin for payment, commerce, and remittance.” He also thinks that Silvergate as a regulated bank is better positioned to operate in the uncertain regulatory environment. Finally, Berman believes Silvergate can grow its balance sheet much, much faster than atraditional bank.

NFTs as part of Ukraine’s crypto fundraising efforts

NFT backed by Pussy Riot member raises $6.7 million for Ukraine

An NFT of Ukraine’s flag has raised over $6.7 million for the country’s defenses as cryptocurrency donations continue to flood in following the Russian invasion.
Organized by UkraineDAO, an initiative backed by a member of the Russian activist group and feminist punk band Pussy Riot, the sale saw thousands of users bid for a share of the digital image. The fundraiser comes just days after Ukraine’s government  via Twitter that it is now accepting cryptocurrency donations. The country’s vice prime minister, Mykhailo Fedorov, has also called for online contributions while  cryptocurrency exchanges to block Russian users.

NFTs, or non-fungible tokens, allow buyers to prove ownership of a virtual asset — in this case, a digital version of Ukraine’s blue and yellow flag. Although the NFT was produced as a single edition on the Ethereum blockchain, bidders were able to take shared ownership of the item, with contributions ranging from 0.00001 ether (under $0.03) to 44 ether ($128,000), according to a listing  on NFT sale platform PartyBid.
The sale attracted over 3,200 individual contributions in 72 hours, amounting to just over 2,258 ether (equivalent to about $6.7 million at the time the auction concluded on Wednesday). Organizers said all the funds will go towards “Come Back Alive,” a campaign supporting Ukraine’s military.
Donors will receive tokens proportional to the size of their contribders, they will be able to vote on future sales of the NFT, although UkraineDAO said it hoped to “discourage” people from trading shares and urged owners to keep them “as a reminder of our world’s ongoing humanitarian needs.”

Bitcoin won’t be surpassed by competing cryptocurrencies

Fidelity : Bicoin is a ‘superior’ form of money

Bitcoin’s scarcity is among the characteristics that make the digital coin “good” money, and traditional investors should use it as an entryway into digital assets, said a Fidelity Investments subsidiary.

In a 26-page report published in January, Fidelity Digital Assets said bitcoin is fundamentally different from any other digital asset, and its first technological breakthrough was not as a superior payment technology “but as a superior form of money.”

“No other digital asset is likely to improve upon bitcoin as a monetary good because bitcoin is the most (relative to other digital assets) secure, decentralized, sound digital money and any ‘improvement’ will necessarily face tradeoffs,” it said.

The cryptocurrency possesses many “good qualities” of money  – “combining the scarcity and durability of gold with the ease of use, storage, and transportability of fiat (even improving on it),” wrote director of research Chris Kuiper and research analyst Jack Neureuter.

China to launch state-run NFT blockchain

The infrastructure will be entirely separate from cryptocurrencies

The Chinese state-backed blockchain deployment infrastructure platform Blockchain Services Network (BSN) is moving closer to supporting NFTS — under the condition that the NFTs aren’t connected to cryptocurrency or public blockchains.

According to the South China Morning Post, the BSN will offer Chinese companies and individuals the infrastructure to implement NFTs into personal user interfaces such as apps in exchange for Chinese yuan. This infrastructure will be called the BSN Distributed Digital Certificate, or BSN-DDC, and is expected to roll out by the end of January 2022.

Because of the regulatory restrictions on public networks within China, so the BSN is using “open permissioned blockchains” instead. Permissioned blockchains put governance in the hands of selected groups and actors.

Bitcoin, ether hit all-time highs

Momentum accelerates

Bitcoin and ether hit record peaks on Tuesday, with enthusiasm for cryptocurrency adoption and worry about inflation driving momentum and flows into the asset class. Though both virtual currencies pulled back from their highs in the U.S. session, their trajectory was clearly headed higher.

Bitcoin rose as high as $68,564.40 and was last down 0.1% at $67,325 while ether , the second-biggest cryptocurrency by market value, earlier hit $4,842.65 before trading down 0.7% at $4,774. Both have more than doubled since June and added nearly 70% against the dollar since the start of October.

“This move is a culmination of months of net outflows from exchanges and coming off the market, coupled with increasing demand,” said Martha Reyes, head of research at digital asset prime brokerage and exchange BEQUANT. “This creates a supply shock and we are far from levels where long-term holders, who make up a greater number of investors, start taking significant profits so $100,000 is on the horizon,” she added.

NFTs and the metaverse will make you an owner – not just a renter – on the internet

NFTs are the digital key to unlocking the metaverse

Headlines about the metaverse, blockchain, and NFTs are dominating the news, and you might be wondering how they’re all connected. What is the metaverse? Think of your physical world, the things around you, what and who you interact with. Now think of that physical world being digital. That’s it. That’s the metaverse. Cathy Hackl, who has earned the title of godmother of the metaverse, put it like this to Vogue in an interview in September: “It’s about the internet breaking free from the rectangles in our hands, desks and walls and being all around us.”

It’s like that Sims game so many grew up with, but better. Platforms like Decentraland and Cryptovoxels are already the social media of the metaverse in a way, said Andrew Steinwold, who hosts the crypto podcast Zima Red. There, “you can build a gallery; you can put photos of yourself, just like regular social media. You can get creative, scratch that itch. You can be social. You can go talk to your neighbors, go attend events.”

NFTs are the digital key to unlocking the metaverse, Shreyansh Singh, the head of Polygon’s NFT and gaming arm, wrote in a Decrypt article. An NFT, or a nonfungible token, is a unique digital asset stored on a blockchain, the same technology that underpins cryptocurrencies like bitcoin. The tokens give users ownership in the digital world.

“That was kind of the missing piece of the puzzle,” said Steinwold, who’s also a managing partner of NFT-focused firm Sfermion. “Now that that’s enabled, the metaverse is actually coming to fruition.”

First Crypto Fund in Japan

The diversification benefits of cryptocurrencies

Japanese financial conglomerate SBI Holdings Inc. hopes to launch the country’s first cryptocurrency fund by the end of November.

The fund could include cryptocurrency staples such as Bitcoin, Ethereum, XRP, Bitcoin Cash, Litecoin, and grow to several hundred million dollars. The fund aims for investors who understand risks associated with cryptocurrencies. Due to these risks, investors will likely have to put down a minimum of 1-3 million yen ($9,000-$27,000). President of an SBI affiliate Tomoya Asakura particularly emphasized the diversification benefits of cryptocurrencies, rather than their speculative qualities. Asakura even acknowledged this “overwhelming perception that cryptocurrencies are highly volatile and speculative,” in regard to his mandate.

PayPal to allow UK users to buy and sell cryptocurrencies

Payment platform offers service for bitcoin, ethereum, litecoin and bitcoin cash

PayPal is to allow users in the UK to buy, hold and sell cryptocurrencies through the payment platform for the first time.

The firm said it would allow customers to choose from four types of cryptocurrency – bitcoin, ethereum, litecoin and bitcoin cash – and that the service would be available via the PayPal app and its website. A crypto tab will be added to the platform, showing real-time currency prices as well as offering educational content to help answer common questions and learn more about cryptocurrencies, including the potential risks, PayPal said.

The payment company said it hoped that the move to embrace the currency would help improve knowledge and understanding of it.

NFT art: the bizarre world where burning a Banksy can make it more valuable

The blockchain art

A blockchain company has bought a piece of Banksy artwork and burnt it. But instead of destroying the value of the art, they claim to have made it more valuable, because it was sold as a piece of blockchain art.

The company behind the stunt, called Injective Protocol, bought the screen print from a New York gallery. They then live-streamed its burning on the Twitter account BurntBanksy.

But why would anyone buy a piece of art just to burn it? Understanding the answer requires us to delve into the tricky world of blockchain or “NFT” art.

It blends the niche subculture of cryptocurrencies with long running philosophical questions about the nature of art. No wonder people have difficulty explaining it all.