News Updates November 19, 2022
1. Is Solana Next to Enter Cryptocurrency Graveyard? The cryptocurrency market is made up of cycles of projects that claim to be killers of giants. In the early history of Bitcoin (BTC), for example, altcoins that were said to be practice for everyday money emerged. All these cryptos were based on the argument that they were faster and had lower fees than BTC, but this did not allow these projects to gain great prominence. Litecoin (LTC) and Bitcoin Cash (BCH) confirm this fact. Both altcoins made it to the top 10 but failed to maintain their popularity - either because nobody needs a new Bitcoin, or because they could not follow the evolution of the market and present relevant attractions to be accumulated
The altcoin that, in fact, managed to make a difference to the crypto environment was Ethereum (ETH). By not focusing on being a "Bitcoin killer," the cryptocurrency introduced the blockchain world to smart contracts that enabled important industry trends, decentralized finance (DeFi) and non-fungible tokens (NFTs).
At the beginning of Bitcoin, Ethereum had some difficulties when it was widely used, as it also presents slowness and high fees when its network is forced. As a result of this, many ETH killers emerged, and one of them is Solana (SOL). Solana: The great Ethereum killer Solana was designed to be a star of decentralized finance, but its biggest breakout in the blockchain space has been in the NFT arena. Its network manages to facilitate the creation of decentralized applications, dApps. The cryptocurrency has a hybrid model of consensus, proof of stake (PoS) and proof of history (PoH), to ensure scalability. Additionally, it has a low transaction cost, as it is designed to keep fees low for apps with billions of users. Without a doubt, these qualities would place Solana as a strong competitor for Ethereum. However, once again, history is seen repeating itself, and a project that declares itself to be a “killer” of its predecessor does not stop losing its market share.
Is crypto graveyard welcoming Solana? Like other cryptocurrencies, Solana underwent a sharp correction in 2022. The altcoin is down more than 90% since its all-time high reached in November 2021. However, unlike some projects, factors involving the Solana ecosystem itself contributed to this sinking. As observed during the cryptocurrency's months of life, network outages have become frequent on the smart contracts platform. Since its launch in 2020, the altcoin has experienced eight network outages, as of this writing. For this reason, the community is increasingly indignant, pointing out that the fragility of the Solana ecosystem is a big "Achilles heel" for the cryptocurrency, preventing it from skyrocketing and showing the potential to overcome Ethereum. “The reality is that SOL is not innovative at all! It’s just the first major blockchain to be so reckless in its fundamental design while pretending this is innovative (to attract investors),” said Justin Bons, cryptocurrency researcher and founder of Cyber Capital.
2. Bitcoin scarcity rises as bad exchanges take 1.2M BTC out of circulation
Historical data around crypto crashes revealed that 14 crypto exchanges, together, were responsible for the loss of at least 1,195,000 BTC, representing 6.3% of the 19.2 Bitcoin currently in circulation.
One of the biggest factors differentiating Bitcoin (BTC) from fiat currency and most cryptocurrencies is the hard limit of 21 million on its total circulating supply. However, the demise of numerous crypto exchanges over the last decade has permanently taken out at least 5.7% (1.2 million BTC) of the total issuable Bitcoin from circulation.
The lack of clarity around a crypto exchange’s proof of reserves came out as the primary reason for their sudden collapses, as seen recently with FTX. Historical data around crypto crashes revealed that 14 crypto exchanges, together, were responsible for the loss of 1,195,000 BTC, which represents 6.3% of the 19.2 Bitcoin currently in circulation.
An investigation conducted by Jameson Lopp, co-founder and chief technology officer of Bitcoin storage platform CasaHODL, revealed that Mt. Gox maintains the top position when it comes to exchanges losing BTC holdings.
While the scarcity of Bitcoin is directly related to its value as an asset, Lopp pointed out that fake Bitcoin offerings currently threaten the ecosystem, adding that “Bitcoin will not be a great store of value if most people are buying fake bitcoin.” Investigations confirm that at least 80 crypto assets have “Bitcoin” in their names, aimed purely to mislead BTC investors.
As a result, investors purchasing fake Bitcoin assets negatively impact the price appreciation of the original Bitcoin.
80+ crypto assets have the word "bitcoin" in their name.
14 have a market cap over $1,000,000.
3 claim to be Bitcoin.
1 is Bitcoin.
3. Indian central bank on track to launch retail CBDC pilot next month
The retail e-rupee, which will be interoperable with existing payment methods, will be hosted by the National Payments Corporation of India.
The Reserve Bank of India (RBI), the country’s central bank, is finalizing the rollout of the retail digital rupee pilot, the Economic Times of India (ETI) reported on Nov. 19.
The RBI initiated the wholesale central bank digital currency (CBDC) pilot on Nov. 1 to test its usage in settling transactions in government securities. At the time, the RBI had said that the retail digital rupee pilot would be launched within a month.
According to the ETI report, the digital rupee is meant to complement, rather than replace, existing payment methods. Additionally, the report noted that the retail CBDC had been designed to be interoperable with current payment systems, citing sources familiar with the matter.
The report noted that the CBDC platform will be hosted by the National Payments Corporation of India (NPCI) and will be similar to the NPCI’s unified payments interface (UPI) system.
UPI has emerged as a popular payment method in India, enabling users to instantly transfer funds directly to and from bank accounts through a UPI address. The UPI addresses, similar to email addresses, are linked to the bank accounts.
An anonymous source with knowledge of the project told ETI:
“Just like we have a common library for UPI, the technology for CBDC is similar to that and it is being hosted by NPCI, it will be interoperable with the current payment platforms.
The e-rupee will be stored in a wallet, the denominations will be available as per the customer’s request, just like you request cash from an ATM. Banks are launching this only in select cities.”
The RBI wants each bank participating in the pilot to test the retail CBDC among 10,000 to 50,000 users, per the ETI report. The banks participating in the retail CBDC pilot include State Bank of India, Bank of Baroda, ICICI Bank, Union Bank of India, HDFC Bank, Kotak Mahindra Bank, Yes Bank, and IDFC First Bank. According to the report, the CBDC project will eventually be extended to the entire banking system.
4. Ohio Investment Manager Arrested for Allegedly Running a $10M Cryptocurrency Ponzi Scheme
The U.S. CFTC had previously taken legal action against the man.
Rathnakishore Giri, a 27-year-old investment manager living in New Albany, Ohio, was arrested on Friday on criminal charges for alleging running a cryptocurrency investment scam that raised at least $10 million from investors, according to a Department of Justice press release.
Giri allegedly misled investor by promoting himself as an expert cryptocurrency trader with a specialty in bitcoin derivatives. According to the indictment, Giri falsely promised investors lucrative returns on the money they invested with him, with no risk to principal. In reality, he used funds from previous investors to pay off new investors in a classic Ponzi scheme set-up.
5. This Week in Coins: Bitcoin Avoids Heavy Losses as FTX Contagion Spreads
This week saw continued FTX fallout week as many crypto companies confessed the extent of their exposure to the collapsed empire.
This being week two of the FTX disaster story, crypto investors can expect things to get worse before they get better. However, the two market leaders, Bitcoin and Ethereum, no longer appear to be in freefall.
Bitcoin (BTC), the largest cryptocurrency by market capitalization, only dropped 1% over the past week and trades at $16,655. Ethereum (ETH), the No. 2 cryptocurrency, shaved off about 4% of its value and trades for $1,210 at the start of the weekend.
Both of them appeared to rebound on Tuesday after fresh data from the U.S. Labor Department's latest PPI (Producer Price Index) report showed a decline in the cost of goods excluding food and energy. Many took it as a sign that U.S. inflation could finally be calming down, which would give the Federal Reserve some encouragement to relax its tightened fiscal policies. Stocks also rebounded at the news.
