According to renowned physicist Professor Stephen Hawking, one day, Artificial Intelligence could develop a ‘will of its own,’ becoming one of the greatest threats to humanity.

Professor Hawking issued a warning saying that artificial intelligence could become so advanced that it may develop a will of its own, which could conflict with that of humanity.

This could result in dangerous and powerful autonomous weapons, as he called out researchers to further study Artificial Intelligence and its possibilities.

However, Professor Hawking also said that if we do our homework and research enough, we could avoid potential dangers, which could result in a better way of life, saying that Artificial intelligence may help humanity ‘finally eradicate disease and poverty,’ he added.

Professor Hawking spoke at the launch of The Leverhulme Centre for the Future of Intelligence, which aims to research and explore implications in the fast development of artificial intelligence.

The Leverhulme Centre for the future of intelligence is a collaboration between several universities in the United Kingdom and the United States.

Their ultimate mission is to “create an interdisciplinary research community” which will work in close collaboration with business and government and try to determine, among other things, “the risks and benefits in the short and long-term” of artificial intelligence.

The director of the Leverhulme Centre for the Future of Intelligence. Huw Price said that the creation of intelligent machines is a milestone of humanity and this center will try to make “the future the best possible.”

Among other things, the Centre will analyze the consequences of the rapid development of intelligent machines, such as robots or driverless cars which, while offering solutions to challenges of everyday life, also pose risks and ethical dilemmas for humanity since many people fear artificial intelligence could surpass human intelligence and take over.

‘I believe there is no deep difference between what can be achieved by a biological brain and what can be achieved by a computer. It, therefore, follows that computers can, in theory, emulate human intelligence – and exceed it.’
Professor Hawking stated that the potential benefits are great, and such a technological revolution could help mankind undo some of the damage we have done to our planet.

“In short, success in creating AI could be the biggest event in the history of our civilization,’ said Prof Hawking. “But it could also be the last unless we learn how to avoid the risks. Alongside the benefits, AI will also bring dangers, like powerful autonomous weapons, or new ways for the few to oppress the many. It will bring great disruption to our economy.And in the future, AI could develop a will of its own – a will that is in conflict with ours.”

“In short, the rise of powerful AI will be either the best or the worst thing, ever to happen to humanity. We do not know which, said Professor Hawking.”

“That is why, in 2014, I and a few others called for more research to be done in this area. I  am very glad that someone was listening to me,” concluded Professor Hawking.

Featured image by Julian-Faylona

This content was originally published here.

Payments in bitcoin worth more than US$500,000 were made to 22 different virtual wallets, most of them belonging to far-right activists and internet personalities, before the storming of the U.S. Capitol, cryptocurrency compliance startup Chainalysis said on Friday.

The payments, made by a French donor, of 28.15 bitcoins were made on Dec. 8, the New York-based startup, specializing in countering money laundering and fraud in the digital currency space, said in a blog post.

Chainalysis said it now has evidence that many alt-right groups and personalities received large bitcoin donations as part of the single transaction.

“We have also gathered evidence that strongly suggests the donor was a now-deceased computer programmer based in France,” Chainalysis said in the report.

Nick Fuentes, who was permanently suspended from YouTube last year for hate speech, received 13.5 bitcoins, worth about $250,000 at the time of the transfer, making him by far the biggest beneficiary of the donation, according to the blog post.

Donald Trump

In this Jan. 6, 2021 file photo rioting supporters of U.S. President Donald Trump climb the west wall of the the U.S. Capitol in Washington. (AP Photo/Jose Luis Magana, File)

This content was originally published here.

It’s kind of weird to say this, but after more than a decade of Bitcoin’s existence, there’s finally some consensus about what it is.

Hardcore Bitcoiners liken it to “digital gold” — a safe-haven asset whose primary use case is holding. And even people who aren’t so into it more or less accept that narrative. Barely a day goes by where we don’t hear from some legendary investor opining on TV, saying something like, “We believe Bitcoin is an emerging store of value, which, like gold, can play an important role in a diversified portfolio.” 

Nobody even talks about how it’s not used in day-to-day transactions. Or how it’s too slow or too volatile to be a useful currency. That all may be true, but those are old talking points. By and large, the HODLer narrative has won.

Of course, people still scoff at the idea that something so volatile could possibly be considered a haven. After all, it’s had numerous drawdowns of 50% or more, including quite recently.

But on the other hand, you have to give it some credit. A nearly $1 trillion asset has been memed into existence, despite being backed by nothing.

(This is where someone jumps in and says I’m wrong, and that Bitcoin is backed electricity and math! But that is wrong. The Bitcoin network is secured by electricity and math. Being secured is not the same as being backed. You’re not entitled to redeem your Bitcoin for anything.)

The fact of the matter is that there’s nothing fundamentally underpinning the value of Bitcoin other than the belief among some people that space on the network is valuable. (The blockchain can be likened in some sense to a big, decentralized spreadsheet and a “coin” could be said to represent some space on it.)

I mentioned above that Bitcoin’s value has been memed into existence. And of course, when it comes to memes and coins, people think about Dogecoin. But Bitcoin is also a memecoin. It’s just that digital gold is probably one of the best memes out there.

Bitcoin also has plenty of absurd memes, like the Magic Internet Money wizard.

Bitcoin shares other properties with gold, beyond just a good meme, though:

Again, you can agree or disagree about Bitcoin’s haven properties. But that’s how more and more people see it and use it.

Diverging Views

Of course, differences of views have always been part of Bitcoin and crypto more broadly. Within Bitcoin, there have been numerous schisms about where it should go and how it should be used. And of course over time, tens of thousands of more coins have been launched, all with ostensibly different aims or goals.

The last really big Bitcoin battle was from 2015 to 2017 — The Blocksize War —  when one faction wanted to make a change in the code to make it more of a spending currency. Without getting too technical, there’s a fairly hard limit to how many transactions the network can process at the base layer, every second. Numerous miners, exchanges and other companies fought to make base-layer transaction throughput faster and cheaper by expanding the size of each Bitcoin block.

That seems innocuous enough, but if you’re trying to be “digital gold”, pushing through big changes is risky. Imagine tweaking gold’s atomic structure to make it even more shiny. That might look good, but then is it really still the same gold that people have trusted for thousands of years? More concretely, adding more capacity was seen by many in the community as a threat to the decentralization of the network.

How is more transaction capacity a threat to decentralization? Well, one core tenet of the community is that anyone anywhere in the world should be able to run a full Bitcoin node, which can download and monitor the entire network. That way, any individual can verify independently what’s going on, how many coins are out there, what transactions have been made, and so on. This can currently be done on basically any cheap computer right now. But if the base layer were to get too heavy (i.e., if too many transactions pile up), it might become prohibitive for anyone to download and watch, meaning only those with stronger computing capabilities could monitor it, thus limiting the breadth of the nodes. 

It should be said that while this was a technical fight, there were also political elements, with suspicion on both sides that some players were attempting to control the network for their specific purposes. Anyway, in the end, Bitcoin basically stayed unchanged. Some tweaks were made, but nothing immediately drastic. In general, the core Bitcoin development philosophy is extremely conservative and resistant to change. It’s kind of the exact opposite of Silicon Valley’s “move fast and break things” ethos. It’s not about constant iteration at all. Again, if your goal is to just be gold, this is probably sensible.

Of course, there are people in the world who are drawn into Satoshi’s breakthrough — which for the first time established the ability to create decentralized scarcity online — and who want to do more than just create something to hold. Some people want to do something with this technology. It’s understandable to be honest. 

One of the people who wanted to do something with this technology was Vitalik Buterin, who published the Ethereum white paper in 2013, arguing that with some modifications, a blockchain could do so much more than just be a money database. His vision included serving as a repository for identities, decentralized file storage and financial derivatives, among others. Basically a lot of what people are excited doing today with DeFi, NFTs, DAOs, etc. (all of which we’ll get back to) were spelled out pretty explicitly in that paper.

And it’s here that we get to a real schism in the crypto world, one that’s leading two very different ideas about what all this technology is actually for… 

Cryptocurrencies vs. Tokens

There is a sense in which both Bitcoin and Ethereum could both be described as the official currencies of two distinct digital tribes. A lot of people obviously own both currencies. And what you’re about to read is a gross generalization. But there is something to it.

Bitcoiners tend to place a high value on adversarial thinking. Trust nobody. Did you buy your Bitcoin on an exchange? Get it off there immediately, and move it to your private wallet so that you don’t have any counterparty risk. Run your own node so you can monitor the network directly. Over the last several months, Bitcoiners on Twitter have adopted the laser-eyes meme.

As the influencer Anthony “Pomp” Pompliano put it recently, it’s “Bitcoiners vs. The World.” Bitcoiners distrust banks. They really distrust central banks. Hardcore Bitcoiners say that you should treat everyone like they’re a scammer. It’s crucial to the Bitcoin project that Satoshi disappeared, because if he were still around then some people would trust his judgment. Bitcoiners also eat a lot of meat. That’s not really related to trust, it’s just a distinct fact about the tribe. That’s not universal by any stretch, but it is a thing

Ethereans are different. Their founder is still alive and highly influential. Vitalik Buterin doesn’t have laser eyes. But he has been photographed several times wearing T-shirts with kitties on them. Rather than eating meat, he eats a lot of coconut, dark chocolate, nuts and avocados. The biggest decentralized crypto exchange on Ethereum is called Uniswap, and it’s got a whimsical unicorn-themed motif. No macho bro stuff. After Pomp’s tweet about Bitcoiners vs. the world, some Ethereans responded saying their mission is to be for the world, not vs. the world. It’s a different vibe all around.

Here’s a photo of Vitalik eating avocado toast wearing a T-shirt with kitties and rainbows on it. It captures it all pretty nicely.

I dunno man, I’m just busy chillin with my friends in New York City, New York eating avocado toast. pic.twitter.com/q5pFnu4oBo

— vitalik.eth (@VitalikButerin)

Again, of course, these are all generalizations. The world is big. Lots of people are part of both scenes. But if there are any anthropologists out there, I’d recommend someone really dig into this and write a book about it, because the difference is noteworthy.

What’s interesting for our purposes is that in addition to being a cryptocurrency, Ethereum is also a token. What’s a token? Well, the easiest metaphor, frankly, is to just think about a token at a Chuck E. Cheese. It’s a kind of money that’s redeemable for goods and services within a very specific environment. At Chuck E. Cheese, obviously, the tokens let you play videogames and pinball and Skee-Ball and whatever else.

In Ethereum world, the currency (ETH) lets you pay a network of computers to run various applications that are built on top of it. One of the biggest applications running on top of the Ethereum network is the aforementioned exchange Uniswap, where you can trade different coins for each other. Each time you place a trade, you have to pay a “gas fee” (denominated in ETH) to the network of computers that processes the transaction. So Uniswap, in this analogy, is like one of the games in the arcade.

There’s something important that happens when you move from being a currency to being a token, which is that the necessity of pure belief starts to fade. If someone hands you $100 worth of Chuck E. Cheese tokens, you might be annoyed, and you might find them to be completely useless. But you probably accept the premise that if you drive to a Chuck E. Cheese, then you’ll be able to use them to play the games. You might not want to. You might not have any use for it. But you know that you can. You don’t have to subscribe to any Chuck E. Cheese ideology.

For Bitcoin to have value, you kind of just have to accept that it has value. Either you believe or you don’t. With a token, there’s less faith involved. If you want to use an app that is built on top of Ethereum, then you have to use it. If someone sends you Ethereum, you know you’ll be able to use it within the overall environment.  You might be skeptical of the whole thing and think it’s all speculative games. But as with the Chuck E. Cheese token, it works and it’s necessary if you want to participate in that world.

So what’s it all for? 

So once you’re in the realm of tokens, you don’t need faith, but you still need a point. It’s fun to trade coins on a decentralized exchange, but presumably at some point the things you’re trading need to produce real-world value beyond just more trading of coins. Otherwise it all implodes eventually. So where does it all go? Here are three possibilities.

The first possibility is that it all implodes. This really can’t be ruled out. This is basically what happened in 2017 with ICOs. You needed to buy Ethereum to buy into ICOs, and those got tons of hype at the time, but that mania fizzled out. A bunch of the projects went on to be total flops. And beyond that, a lot of these were just IPOs but with a different currency, and so they were unregistered securities offerings that fell foul of the law. That all collapsed (along with a bunch of other stuff in crypto). And the public lost interest for awhile. Crypto winter.

The second possibility is that new modes of social coordination emerge. You might think NFTs seem kind of dumb. (Disclosure: I think NFTs are kind of dumb.) But obviously a lot of people think differently. People continue to pay real money for the right to claim ownership of some piece of digital content. It definitely seems kind of faddish, but there are more experiments in the space being done all the time. And even if it’s not NFTs per se, it’s possible that a new type of easily programmable money network might spawn modes of activity that we’re just not used to.

In this conception, perhaps Ethereum ends up as the substrate for a new type of decentralized social network: It has games (like digital horse racing), it has artwork (like Beeple), it has publishing and more. Since the beginning, people have been fascinated by the concept of a DAO (a decentralized autonomous organization) where people pool their money together in a way that’s kind of like a corporation, but also kind of different, with a new mode of governance that’s maybe more like a co-op. It’s hard to say where it all goes. The point is that there are examples of “real-world activity” that these tokens enable that don’t have a perfect analog to things that were done before. They’re just new.

A third possibility is that DeFi becomes something that matters for Fi. In the last few months, you’ve heard a lot about the rise of so-called DeFi or “decentralized finance.” This is a term that encompasses many different things. There are venues where you can stake your coins in a liquidity pool and collect trading fees from other participants. Other models involve posting coins as collateral in order to borrow more coins. There’s a ton of money in this space — the decentralized lending protocol AAVE has over $20 billion in locked-up funds — and a lot of people are excited about the prospect of disrupting traditional finance. So far, however, the main use case (as many participants will admit!) is just… speculation on more coins. People lend money to people who want to go long more coins.

If you squint hard you can kind of glimpse a future where DeFi becomes more than just a gambling game. From a tech perspective, it’s exciting to think that anyone can write some code and launch a de facto bank into the world that matches borrowers and lenders in some novel way. It’s also already possible on Ethereum to represent some kind of “real-world” asset on chain. For example, there are dollar-denominated stablecoins that exist as Ethereum tokens (in a format known as ERC-20). There’s an Ethereum coin backed by physical gold. And in theory, a stream of cash flows from a business or household borrower could be turned into a token.

Currently, all the lending and borrowing that happens on these platforms is overcollateralized. So you might post $110 worth of Ethereum and get $100 worth of a stablecoin back, which you can use to speculate on more coins. This type of lending is easy for a smart contract to handle because the collateral liquidation can be automated if the price of Ethereum goes down. This kind of model makes sense for speculative purposes, because lots of people have coins and want to borrow money against them to buy more coins.

Building a DeFi lending model for, say, getting a mortgage, is way more complex. The chain can’t judge your creditworthiness. The chain can’t just evict you if you stop paying. The chain can’t go out and do an appraisal. The chain doesn’t know if the market price of your home has gone down or anything like that. For all of that, you need actual humans.

People are working to solve all of the above, but it’s complicated and legally kludgy. Right now, they involve a hybrid of DeFi capital with human agents. There’s a startup, for example, called Centrifuge, which lends money into a Special Purpose Vehicle, which then goes on to finance small real estate investments. The income stream from that SPV then gets turned into an Ethereum ERC-20 token, which is then used as collateral in a protocol called Maker, which backs a stablecoin called Dai. Centrifuge is allowed to mint Dai (which it can then sell for actual dollars to an OTC crypto trading desk), and in theory this allows for real-world investment to be financed on-chain.

The degree to which this is actually going to work at any kind of scale is far from settled. And it’s also not clear what kind of edge these projects will have over traditional finance. (Centrifuge claims that its cost of capital is cheaper this way, and that the system can be used to finance projects that are too small for bigger banks to worry about.)

Another startup called Maple is doing something similar, building a platform that (theoretically) makes it very easy for anyone to create a lending portfolio, where an individual or team sources qualified borrowers, with funding drawn from decentralized pools of capital. The main pitch is basically that DeFi platforms are incredibly simple and elegant, with fewer middlemen and paperwork and so forth.

So people are, in fact, trying to solve the “what for?” question. There are active efforts to make this all something beyond just people borrowing money to buy more coins.

Whether they actually scale up and become useful is a separate question. 

The other huge question is whether governments end up being cool with people launching apps that are basically banks or lending institutions or stock markets or synthetic derivatives exchanges, all without adherence to existing financial regulations.

Like right now you can go to Uniswap to connect your Ethereum wallet, and trade it for a token that will track the price of Apple. Check it out yourself

There’s no registering for an account at Uniswap. They don’t have your name. There’s no KYC/AML or anything like that. All they have are the numbers and letters that constitute the Ethereum address you’re using to connect.

The general bet for DeFi at this point seems to be: Regulators will be cool with all this. Or: If they did want to stop it, they couldn’t because it’s just open-source software and that even if the companies were to go away, the software will live on. We’ll see about all that.

And again there’s the question about how well it all scales if it goes after under-collateralized lending, which is necessary if DeFi will actually be responsible for credit creation. If you need actual humans to underwrite loans and sue delinquent borrowers in court, that raises some significant costs. You might just end up doing fintech, but with ambiguous rules and a clunky database. (Blockchains are necessarily going to be clunkier and costlier than a standard database, since that’s the price you pay for achieving decentralization, lack of transaction censorship, and a permission-less system where anyone is allowed to build for any purpose.)

Meanwhile, TradFi capital is pretty cheap right now, so cutting into traditional financial activities may not be so easy in a space where part of the attraction for lenders is the fat yields. The point is though there’s a lot of techie optimism in DeFi that may at some point run into some serious headwinds (legal, scaling, etc.) that don’t have an easy software fix. But anyway, let’s set aside all these questions aside.

The problem with being used for something

So, the problem with being a coin that’s actually used for something is that it has to be good at its job. Bitcoin is slow, inefficient and transactions are costly, but nobody really expects anything more from it.

(Also: Yes, to be clear there are projects that already exist that create ultra-fast payments and smart contracts on top of the Bitcoin network. I’m acknowledging them here because otherwise someone is going to freak out and say that Bitcoin has solved these problems. They remain pretty niche. And more importantly, even if they don’t take off, Bitcoin’s digital gold application narrative would remain intact).

Ethereum, as it currently stands, has more or less the same problems as Bitcoin when it comes to scaling. It’s fairly slow and transactions are expensive. Slow and expensive is fine if you’re gold. It’s not great if you’re trying to power financial services. Let’s go back to the arcade analogy for a second. One difference between Ethereum and Chuck E. Cheese is that the price of a game isn’t fixed. It’s a little bit like surge pricing. When lots of people are suddenly trading (during a spike in volatility), your fees go up, as the system can only process so many transactions at a time and traders compete with each other for scarce block space. So if you’re playing digital racehorses, and suddenly there’s a market crash and transaction fees surge, that’s not ideal.

Here’s something that actually happened: A few weeks back, the cost of using the Ethereum network surged because someone made a parody coin of Dogecoin, and it was briefly so popular that everything else got slowed down or more expensive. Because there’s a finite amount of Ethereum transaction capacity, anyone else using the network either had to wait their turn in the back of the line, or pay more to jump ahead of the dog token traders.

This dumbass token SHIB and all exchanges listing it really set a bad precedent. Now these new SHIB copycats are quite literally rekting Ethereum’s gas fees. Look at the most recent blocks and transactions with the highest gas. It’s all these meme tokens pic.twitter.com/F7T3bOpKHw

— Larry Cermak (@lawmaster)

There are theoretical fixes to all this. Ethereum also has so-called Layer-2 solutions designed to make transactions faster and cheaper and more reliable and all that. But building these things take time, and people have been working on them for awhile. In the meantime, you have to accept that if market volatility spikes or there’s a meme token mania again, everyone has to pay higher fees or accept sluggish service.

The other thing is that once you’re measured on performance, another platform can come along and theoretically offer superior performance.

Around the end of May, Kyle Samani of the crypto fund Multicoin Capital wrote a blog post arguing that DeFi is the killer app of blockchain technology. Bitcoin had its day, he says, but now we’ve found a much better use. What’s interesting is that his argument isn’t a ringing endorsement of Ethereum per se. Instead it talks about Multicoin’s bullish case on Solana, which is totally separate platform which competes with Ethereum to power decentralized finance applications. The basic gist of his piece is, simply, that Solana has better specs than Ethereum, that it’s already scaling better with sufficient levels of censorship resistance and decentralization. Solana launched in March 2020 with the specific purpose of creating a high-speed blockchain platform aimed at financial services.

Others can debate whether it’s actually better or not, but the point is, when you read Kyle’s post, it reads like an evaluation of two different software projects, like someone comparing AWS to Azure or Oracle. There’s not much talk about culture or any of the things that have characterized Bitcoiners and Ethereans. The argument is basically that this can get the job done now in a powerful way, and that it doesn’t have the roadmap ambiguity that Ethereum currently has. In a tweet reply (to me), Samani says that he’s intellectually short Bitcoin (not literally short it) and that the most valuable cryptocurrency will end up being the native token of whichever network ends up winning. 

Anyway, the big picture is that this thesis is radically different than the original Bitcoin vision. Nothing about Solana requires any faith or mystical belief or culture like Bitcoin. If decentralized finance takes root, and one chain or another becomes the dominant platform for it (whether it’s Solana, or Ethereum or some other chain we’re not even talking about) then its native token will have value.

Going back to the Chuck E. Cheese analogy, in addition to there being tokens and games, there are also the tickets you win from Skee-Ball, and the knick-knacks (real world assets) for sale in the gift shop in exchange from tickets. Presumably, the implied markup of those sales of stuffed animals, alarm clocks and stickers in the gift shop was egregious. But in a sense, their existence anchored the value of the other assets inside the arcade, the tokens and the tickets.

You can theoretically imagine an open-source arcade, where everyone is free to build a game and place one inside the Ethereum (or some other network) universe and when you play it, you get some kind of ticket that has rights to real world assets or cash flows. Again, you don’t need faith or culture to make the assets have value. There’s enough real world activity to anchor them.

Wall Street And Silicon Valley get ETH-pilled

Let’s zoom out for a second. All blockchain-based systems share two basic ideas. The first is that for the first time you can have a thing online that can be provably yours. A coin, a token, an NFT… whatever it is. You have it and control it and no third party has any say. Alice can own something and then send it to Bob. Alice doesn’t have it anymore and Charlie can’t interfere. The other core idea is that part of achieving this involves a sufficiently decentralized network of computers, such that no individual, company, or government has a say in what goes on.

But this is where the fork in the road emerges. The Bitcoin vision is to create a new form of money outside the authority of any central issuer. The DeFi vision inverts this, and takes the money creation part for granted. After all, you can spend a dollar on the Ethereum network using a USD-backed stablecoin, so why reinvent the wheel? Instead, the DeFi based vision is to build unstoppable blockchain-based software and services that then do something with this money. 

A couple weeks ago, I wrote that Wall Streeters are increasingly getting ETH-pilled and the above is why. There’s a certain concreteness to the value proposition. If a decentralized network of computers can match borrowers and lenders in some powerful and novel way, then the software and the tokens that power it should be valuable. And in general, this vision jibes much more with the Silicon Valley ethos. Trying to create a new form of money? That’s not really a thing you learn about at Stanford. Writing software to disrupt traditional financial services? That they get. Furthermore, Bitcoin frustrates many people in tech because of the community’s move slow and don’t break things approach.

All this being said, all these different factions and visions… they remain something of an inside game. It’s not clear how much your average crypto investor is paying attention to any of these different modes and models. If you look at the coins, you’ll mostly see a high degree of correlation. Either they’re all going up at the same time or down at the same time. This includes Bitcoin and Ethereum and Solana, but also a bunch of other coins that don’t map to a trendy narrative. (For example Litecoin is still one of the world’s biggest coins despite its founder having peaced out from the project in 2017, and neither has a store-of-value narrative nor a DeFi narrative or anything else really.)

Here’s a chart of Ethereum, Bitcoin, and Litecoin going back to the summer of 2017. You can see, everything just kind of rises and falls at the same time.

The market strongly gives off a vibe of people wanting to get into crypto and then placing their chips on a bunch of different squares without too much thought. Maybe they buy a few that they’ve heard of, maybe they buy a few with a low nominal coin price because it’s fun to have a lot of coins and maybe they buy a few that just seem interesting. That still seems to be how flows work in the space. And as long as this is all the case, we’ll probably still have these generalized boom-bust cycles where coins rise and fall together along with the animal spirits of investors and traders.

But the differences in approach and philosophy between different coins and projects is very real. The stuff tech people are hyped about right now is radically different from Bitcoin, in both its assumptions and in its purpose. And eventually as this space matures, returns should become less correlated and more distinct, as different approaches win out over others.

This content was originally published here.

Bitcoin mania has been dealt a heavy blow today with the world’s favourite speculative “asset” crashing $US6000, or 33 per cent from its record high to $US13,280.

In nominal terms the latest correction in the bitcoin bull market rally is double previous falls, which means much greater nominal cash losses for those late to the speculative frenzy.

Bitcoin peaked at $US19,666 four days ago, but it has entered a fully fledged bear-market correction with a $US3000 loss alone today after crashing through technical support levels.

The sell-off has accelerated as the short-lived price premium seen in bitcoin futures tumbled, leaving the CME futures price in line with the bitcoin spot price.

Finance News Presenter Meilin Chew explains what blockchain can do and why it is gaining recognition in the financial world.

Finance News Presenter Meilin Chew explains what blockchain can do and why it is gaining recognition in the financial world.

Signs of panic set in today amid numerous reports of people struggling to sell their cryptocurrency holdings on exchanges where transaction volume levels are nowhere near those on equity market exchanges.

Writing on Twitter, respected technical analyst Peter Brandt said the “bubble has been popped” after the bitcoin price broke below the the steep trend-line in place since December 13.

Support was expected around $US13,000, and if that level broke it could fall to $US8000.

But putting the fall into perspective, the price has only retreated back to levels first hit on December 12, and it was still up about 1480 per cent over the past year.

Most other cryptocurrencies have also fallen, with etherium down almost 19 per cent as broad selling set-in ahead of the Christmas long weekend when making hard currency payments for crypto currencies will be difficult.

The fastest growing bubble in history began faltering this week with heavy selling in Asian time following news five South Korean exchanges had been hacked.

This content was originally published here.

In the United States, the IRS treats virtual currency, which includes bitcoin, as well as other cryptocurrencies, as property. This means bitcoin is taxed in a manner similar to stocks or real property.

“At a basic level, the taxpayer’s basis in the bitcoin is what the taxpayer purchased it for, and when the taxpayer sells or exchanges that bitcoin, it is a taxable transaction,” explained Jon Feldhammer, a partner at law firm Baker Botts and a former IRS senior litigator.

“The taxpayer’s income or loss is determined by taking the sales price and subtracting the taxpayer’s basis,” he said.

So let’s say the taxpayer purchases one bitcoin for $10,000 and sells it for $50,000. This individual would face $40,000 of taxable capital gains. A second passport doesn’t automatically solve their tax problems.

“If a taxpayer has a green card, is a U.S. citizen, or is a U.S. resident alien, the taxpayer owes U.S. tax on any crypto gains they have no matter where the crypto or the taxpayer is located,” explained Feldhammer. “It also doesn’t matter if they are dual citizens; if they are U.S. citizens, they owe U.S. tax on their worldwide income.”

This is why Ananina says that many of her American clients either plan to renounce their U.S. citizenship or are considering this option for later in life.

One Plan B Passport customer, who spoke to CNBC on the condition of anonymity, said he has spent the last decade traversing southeast and central Asia, and he is seriously considering ditching his U.S. passport once he’s officially a citizen of Saint Kitts. He said the $180,000 cost was totally worth it, as it represents only 1% of his net worth, and the capital gains taxes on his crypto holdings would amount to millions.

This person opted for the “premier” Caribbean passport, as he describes it, since it is the oldest and most reputable of the programs and offers the most visa-free travel.

But he warns those who are interested in applying to brace themselves for a months-long process with a lot of paperwork, including police checks and medical checks.

Would be emigrants should also note that the U.S. charges citizens a fee to cut loose.

“When a U.S. taxpayer expatriates, they are generally subject to the ‘exit tax,’ which is essentially a tax equal to what the taxpayer would be subject to if they sold all of their property the day before they gave up their citizenship,” according to Feldhammer.

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The price of Bitcoin, the world’s most popular cryptocurrency, appreciated by 16.06 per cent in the last 24 hours, touching $40,000 mark after experiencing a sharp fall in the past 30 days due to market sentiments.

The currency is exchanged for $39,771.38 per BTC at 08.52 PM Nigerian time, data from coinmarketcap.com showed.

According to data posted, the digital currency has experienced an intraday low of $34,312.83 and a high of $40,499.68 in the past 24-hour period.

The price of the digital currency plummeted by 38.68 per cent after touching an all-time high of $64,863.10 on April 14, three months ago.

The unusual price swings of Bitcoin, noticed since the beginning of the year, have also prompted critics to suggest it is not suitable to be an effective and sustainable currency for adoption as a fiat due to it’s high volatility and anonymous mode of transactions.

A string of positive reports in recent days has helped the currency regain some momentum for the first time since May.

Last week, Tesla boss Elon Musk said the carmarker would likely resume accepting bitcoin once it conducts due diligence on its energy use. Tesla suspended the payments in May, according to Reuters.

Jack Dorsey also said that Bitcoin is a “big part” of Twitter’s future. On Sunday, London’s City A.M. newspaper reported, citing sources, that Amazon is looking to accept bitcoin payments by year’s end.

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Bitcoin’s awe-inspiring surge to record highs has investors racing for exposure to the rally — even if it means paying an absurdly high markup.

As the largest cryptocurrency rocketed above $23,000 for the first time this week, the mania pushed the price of the Bitwise 10 Crypto Index Fund (ticker BITW) as much as 650% above the value of its holdings and is currently trading near 350%, according to data compiled by Bloomberg. Meanwhile, the premium on the Grayscale Bitcoin Trust (ticker GBTC) swelled to 34% amid the rally.

Such dislocations mean that large institutional investors and mom-and-pop traders alike have to pay up massively to purchase shares, versus buying the underlying holdings outright. But as Bitcoin’s 200% year-to-date rally attracts feverish attention and stokes fears of further missing out on the gains, demand for anything with a crypto wrapper is booming. For those investors looking for access to Bitcoin but who are reluctant or unsure how to get direct exposure, the ease of buying products like BITW or GBTC through a brokerage platform trumps the extra cost.

“The answer isn’t as simple as ‘does it make sense to pay for that?’ in a vacuum. It makes absolutely no sense to pay that premium,” said James Seyffart, a Bloomberg Intelligence ETF analyst. “But I think some level of premium is justified, and if you want access to Bitcoin, there really aren’t better options.”

BITW has soared 165% since its debut earlier this month, far outpacing the gains in Bitcoin and Ether. GBTC has climbed roughly 40% over that time period. That outperformance creates the gap between the products’ prices and the net asset value of their underlying holdings.

Those dislocations occasionally appear in the $5 trillion exchange-traded fund universe — particularly in periods of heightened volatility, as in March — but rarely surpass 3% or so. When they do, specialized traders known as authorized participants step in to arbitrage the gap away by creating or redeeming shares of the ETF.

However, given that the Securities and Exchange Commission hasn’t yet approved the ETF format for cryptocurrencies, no such intermediaries exist for the Bitwise and Grayscale products. Neither vehicle allows for redemptions, meaning that a fixed number of shares are issued, though secondary offerings are allowed by GBTC for institutional investors who contribute Bitcoin. Even so, that can create staggering discounts or premiums when supply and demand imbalances arise.

Companies that dabble in crypto-related industries have served as a proxy for exposure since the Bitcoin bubble of 2017. Investors took that to a new extreme when business-intelligence firm MicroStrategy Inc. moved its treasury holdings into the cryptocurrency in August, prompting its shares to more than double.

The premiums showcase “overwhelming investor demand to obtain Bitcoin exposure through means other than direct ownership or via crypto exchanges,” said Nate Geraci, president of the ETF Store, an investment advisory firm. “It’s absolutely mind-boggling that regulators allow retail investors to access these products, but won’t allow a Bitcoin ETF which would easily solve the premium issue.”

A rough back-of-the-envelope calculation suggests that at a 34% premium, investors are paying the equivalent of $30,522 if Bitcoin’s price is $22,800 per coin. At BITW’s 358% premium — which doesn’t just hold Bitcoin — that sum balloons to $104,424.

But still, for investors looking for crypto exposure in retirement accounts or other portfolios, buying shares of BITW or GBTC is likely seen as the easiest way outside of using a digital-asset trading platform, according to Seyffart.

“If you want Bitcoin in your existing brokerage IRA, the simplest way is through GBTC,” Seyffart said. “That’s not to say advisors can’t learn how to use crypto apps or Cash App, but if you want to get Bitcoin in existing legacy financial systems — where almost all the money is — you need something that works in that system.”

— With assistance by Vildana Hajric

This content was originally published here.

Warren Buffett’s Berkshire Hathaway sold bank stocks to buy a gold mining company, which will indirectly boost the price of Bitcoin, investors say.

Berkshire Hathaway, the $503 billion conglomerate led by Warren Buffett, sold Goldman Sachs for a Canadian company Barrick Gold. Max Keiser, the founder of Heisenberg Capital and an early Bitcoin investor, says it could help buoy BTC to $50,000.

The quarterly shareholder filing of Berkshire Hathaway shows Buffett trimmed his position on most major banks, Fortune reported on Aug. 15. The firm sold a substantially large portion of its shares in JPMorgan Chase, Wells Fargo and PNG.

What Buffett’s decision to enter a gold position over banks shows about Bitcoin

Buffett’s decision to completely close Berkshire’s position on Goldman Sachs follows the bank’s second-ever highest quarterly trading revenue of $13.3 billion. It suggests Buffett is not comfortable in betting big on the banking industry in the long-term.

Instead, Buffett purchased a single stock in Barrick Gold, whose stock has reflected that of gold in most of 2020. The firm is a gold mining company based in Canada, which recorded a 45% increase year-to-date. Following Berkshire’s investment, the stock rose by 8.11% in after-hours trading.

Max Keiser, an avid Bitcoin investor who has invested in companies like Kraken and Bitfinex, believes Buffett’s gold investment could benefit Bitcoin. He said the positive sentiment around gold implies a higher valuation for Bitcoin, which some consider as “digital gold.” Keiser said:

“Global $100 trillion fund management biz is less than 1% invested in Gold. With Buffett now moving into Gold. Expect global allocation of 5% AU min. Implies $5,000 Gold. Expect a 1% BTC global allocation ($1 trillion). This implies $50,000 for Bitcoin Expect PTJ ups to 10%.”

The weekly price chart of Bitcoin. Source: TradingView.com

A former L/S equities portfolio manager and Ikigai Fund founder Travis Kling echoed a similar sentiment. Referring to Buffett’s skeptical statement in 1998 around gold saying it doesn’t have utility, Kling said:

“Today it was announced Berkshire Hathaway just bought its first gold stock ever. The reasons are self-apparent at this point. Just in case you’re wondering what the coming years are going to look like for Bitcoin, this was Buffett on gold in 1998.”

BTC has shown some correlation with the precious metal as of late

Although Bitcoin has outperformed gold since April, the price trend between gold and BTC has shown some correlation. Data from Skew show the two assets have increased in tandem throughout the past four months.

The correlation between Bitcoin and gold. Source: Skew.com

The simultaneous rally of Bitcoin and gold since the global market crash in late March hints that more investors are starting to consider BTC as a store of value.

Most recently, MicroStrategy, a $1.4 billion intelligence conglomerate, purchased $250 million worth of Bitcoin. The firm said BTC would act as the company’s primary treasury asset, acknowledging Bitcoin as a store of value and a potential safe-haven asset.

This content was originally published here.

Payments Provider Clear Junction Stops Processing Payments for Binance

On Monday, the global payments solutions provider Clear Junction announced it ceased processing transactions for Binance. The move by Clear Junction was brought on by the Financial Conduct Authority’s (FCA) recent warning, according to a blog post written about the decision.

Clear Junction Ceases Processing Payments for Binance Citing the Recent FCA Warning

  • “We have decided to suspend both GBP and EUR payments and will no longer be facilitating deposits or withdrawals in favour of or on behalf of the crypto trading platform,” the blog announcement explains further. “Clear Junction acts in full compliance with FCA regulations and guidance in regards to handling payments of Binance.”

What do you think about Clear Junction explaining that it won’t process payments for Binance? Let us know what you think about this subject 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.

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The Senate on Wednesday said that the Ministry of Communications and Digital Economy had established a centre where artificial intelligence and robots would be deployed to fight crime and criminality in Nigeria.

The Senate stated this during the consideration of a report on ‘the spate of growing insecurity in Nigeria.

The report was submitted by the Joint Committee on Legislative Compliance and Communications led by Senator Adelere Oriolowo, during plenary.

Oriolowo (APC, Osun West), in his presentation, further revealed that the SIM registration exercise by the Ministry of Communications and Digital Economy, which makes the provision of the National Identity Number compulsory, has drastically reduced the use of phones by kidnappers for the purpose of negotiations.

According to him, the earlier successes of the SIM registration were compromised by the numerous agents recruited by the communications companies that register SIM card owners across the 774 local government areas of Nigeria.

He, however, explained that this led the Ministry of Communications and Digital Economy to seek Presidential approval for the temporary suspension of the sale of SIM cards in Nigeria and for the merger of all SIMS to the National Identity Numbers of their respective owners.

He added that the Joint Committee also found that there were other programs and projects by the Ministry and its agencies to support security agencies in fighting crime.

Oriolowo disclosed that a total of twenty-three Emergency Communication Centres using the 112 code have been commissioned, with an additional twelve (12) almost ready for commissioning.

He said, “The goal, according to the Minister, is to have at least one Emergency Communication Centre in every State of the Federation, by the first quarter of 2022”, the lawmaker said.

“The Emergency Communication Centres, are supposed to be multipurpose Centres for emergencies and platforms for Nigerians to access and connect to relevant institutions like the Fire Service, National Emergency Management Authority and the Police, as well as other security agencies.

“These emergency lines are toll-free lines and their effectiveness has been well reported across the country, including its usefulness, during the COVID-19 lockdown”, Oriolowo added.

He lamented that the inability of the Ministry of Communications and its agencies to provide necessary information from the phone database in cases of crime such as kidnapping stems from its lack of statutory mandate to do so, except after due request and application for such information by security agencies.

The Senate, while adopting the recommendations of the Joint Committee, urged the Federal Ministry of Communications and Digital Economy to submit a proposal for legislative action to any Section(s) of the extant laws of any of its agencies towards reducing the nation’s security challenges.

It also urged security agencies such as the Ministries of Defence, Interior, Police Affairs, the Office of the National Security Adviser, the Economic and Financial Crimes Commission, the Department of State Security Services, the Nigeria Police Force, Nigeria Customs Services, and the Nigerian Immigration Service to collaborate with the Federal Ministry of Communications and Digital Economy by contracting its when a crime has been aided and abetted through the use of SIM cards.

It explained that putting the Ministry in the loop would also give it the ability to monitor the regulators and their compliance with the directives to provide the full profile of any subscriber that is being investigated for crime(s) by security agencies.

This content was originally published here.