Author: Dale Warburton

Dale is a former attorney turned passionate Bitcoiner with an interest in investments, macro, geopolitics, innovation, tech, nature, wildlife, MMA and Bitcoin (of course).

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Bitcoin Crypto News

90% of BTC’s Supply Has Been Mined, 119 Years Left to Mine Remaining 10%

Bitcoin has reached a historic milestone, with 90 percent of the entire 21 million hard cap supply already issued. It took 12 years to mine the first 90 percent and it is estimated that the following five percent will take another four years. Remarkably, the last five percent will take north of 100 years to be issued.

Bitcoin issuance and inflation. Source: Glassnode

Growing Scarcity

As of the morning of December 13, Bitcoin’s scarcity was highlighted as it eclipsed the 90 percent issuance rate at block 714,000, with 18,899,910.25 Bitcoin mined.

Its scarcity is further amplified considering a 2020 report by Glassnode which established that around 78 percent of Bitcoin was held by illiquid entities – HODLers who have no intention of selling it.

This appears to have continued into 2021, at least according to an October report, also by Glassnode, which found that 70 percent of supply hadn’t moved in five months. Other factors that serve to further entrench Bitcoin’s scarcity in the long run include growing institutional and retail adoption, as well as increased levels of HODLing by miners.

21 Million or Less?

Despite 90 percent of Bitcoin being mined, it is well-known that a material amount has been lost, stolen, or sits in otherwise unrecoverable wallets. Estimates vary, but on all accounts the numbers are significant.

A 2019 report found that at least 1.5 million bitcoins were assumed to be lost or stolen. A 2021 Chainalysis report found that as many as four million bitcoins were owned by accounts that couldn’t access them.

Others, such as this Reddit user, suggest that 3-5 million bitcoins are lost, stolen or otherwise inaccessible:

Estimates of 3-5 million [bitcoin] are out there. You can see onchain metrics showing how much bitcoin hasn’t moved [in the] last decade but that would be the highest possible, and there are some that just haven’t moved even though they possess the keys. I believe it’s around 3 [million], but we will very likely never know and it will continue to slightly go up. We also have a delay factor in the data because people within 10 years may have lost as well. It’s just assumed [for the] first couple of years [the] biggest losses occurred, so we key in on that data.

Fickle_Mix_3847, Reddit user

Whatever the true amount, one thing is for certain, as Satoshi himself said: “Lost coins only make everyone else’s coins worth slightly more. Think of it as a donation to everyone.”

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Bitcoin Markets

Bitcoin Rises Amid US’s Highest CPI Inflation in 39 Years

For much of 2021, the Federal Reserve claimed that inflation was “transitory”, linked to pandemic-related supply chain bottlenecks. But since it finally admitted that inflation is here to stay, things have gone from bad to worse, as the latest consumer price index (CPI) shows inflation running red hot, its highest level in 39 years. Bitcoin shot up on the news.

Bitcoin price action. Source: Trading View

Energy Costs Soar

On Friday, December 10, the US Bureau of Labor Statistics published CPI data for the 12 months ending November, measuring 6.8 percent, the largest 12-month increase since the period ending June 1982.

November CPI print showing 6.8%. Source: US Bureau of Labor Statistics

Energy proved to be one of the main contributors to the dramatic increase with costs rising by close to 60 percent. That, coupled with soaring house prices and increased food costs (6.1 percent), has left many US consumers under increased financial pressure, a phenomenon unlikely to change in the near-term. Given that the recent increase is 0.6 percent higher than October’s CPI numbers, some commentators have warned that December is likely to be even worse.

Bitcoin, the Inflation Hedge

Despite rising above US$50,000 upon news of the latest CPI data, Bitcoin has since pulled back, and at the time of publication is trading at US$46,997.

As Michael Saylor continues his mission to “orange pill” the corporate establishment, one of his most recent successes appears to be Tucker Carlson of Fox News. Reacting to the latest inflation news, Saylor posted a clip of Carlson which encapsulates Bitcoin’s “why”.

When people say that Bitcoin is an inflation hedge, critics are often quick to point to short-term volatility as evidence to the contrary. The reality is that in the short term, Bitcoin often acts as a “risk-on” asset, like equities. However, over the long run, it is “risk-off” (like gold) and best considered as default insurance on a basket of fiat currencies. Argentinians certainly hold this view, given that recent inflation has exceeded 50 percent.

As President Joe Biden raised the US’s debt ceiling once again on December 11, the sentiment among many Bitcoiners was inevitable, summed up in Kenny Florian’s take:

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Australia Banking CBDCs Crypto News Regulation

RBA Wholesale CBDC Trial ‘Project Atom’ Heralded a Success

While the Reserve Bank of Australia (RBA) has been investigating central bank digital currencies (CBDCs) for some time, its policy position has not always been clear. However, in a report released this week, there are signs that wholesale CBDCs may indeed be around the corner.

Project Atom Forecasts Efficiency Gains

Project Atom was a collaborative research project undertaken during the past year exploring the potential use and implications of a wholesale CBDC using distributed ledger technology (DLT). The CBDC itself is intended to be used by wholesale market participants (ie, banks and other financial institutions) for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.

According to the RBA, the results of the trial demonstrated that “the digitisation of syndicated loans on a DLT platform could provide efficiency gains and reduce operational risk by replacing highly manual and paper-based processes”.

Other aspects of the trial involved exploring the programmability of CBDCs that “could improve efficiency and reduce risk in transactions”.

Project Atom demonstrated the potential for a wholesale CBDC and asset tokenisation to improve efficiency, risk management and innovation in wholesale financial market transactions. The project also demonstrated the benefits of collaboration in advancing our knowledge in this area. The bank will continue its research on CBDCs as part of its strategic focus area on supporting the evolution of payments.

Michele Bullock, Assistant Governor (Financial System), RBA

Overall, despite noting potential improvements in efficiency, risk management and innovation, the RBA noted that more detailed policy work was required before the introduction of any CBDCs.

Retail CBDCs?

As reported by Crypto News Australia in February of this year, the position then was that there was no strong case for issuing retail CBDCs. And this, more or less, appeared to be the case until mid-November, but as of this week things have seemingly moved in the opposite direction, as noted by ABC business reporter David Taylor:

This shift in direction is not entirely unexpected, as CBDCs naturally confer more powers on those in control. They represent programmable money, a behavioural finance innovation enabling central bankers to use the tools at their disposal to target specific individuals, groups or demographics to drive whatever consumer behaviours they are looking to achieve.

Perhaps this is why Edward Snowden, a known privacy advocate, regards them as a tool for financial surveillance. It’s also a reason why many are turning to Bitcoin, a truly decentralised alternative.

Categories
Crypto News Cryptocurrencies Ransomware Regulation

CIA Head Confirms Rumours: We Are Working on Crypto Projects

Conspiracy theorists were vindicated yesterday when Central Intelligence Agency (CIA) director William Burns admitted at the Wall Street Journal‘s CEO Summit that the CIA was indeed involved in various crypto projects.

Details Are Murky, Obviously

One of the oldest conspiracies out there, at least in the crypto space, is that the CIA is responsible for creating Bitcoin. For the most part, that view is widely discredited and in the end is irrelevant, as Spencer Schiff pointed out.

While the CIA didn’t invent Bitcoin, it has however confirmed that it is involved in the crypto industry across various projects, although details of what that specifically entailed were absent from the discussion.

Burns, who was only recently appointed, responded to a question about whether the intelligence agency was equipped to handle ransomware attacks and the like, particularly those emanating from abroad (such as the Colonial Pipeline attack earlier this year).

Speaking about his predecessor, Burns noted that:

He [likely to be David Cohen, but unclear] had set in motion a number of different projects focused on cryptocurrency and trying to look at second- and third-order consequences as well, and helping with our colleagues in other parts of the US government to provide solid intelligence on what we’re seeing.

William Burns, CIA director

CIA Focused on Ransomware Attacks

Details as to what Burns and the CIA were doing remain opaque. One plausible theory is that they are establishing networks in order to understand them with a view to targeting and disrupting others. Another theory is that they are looking to undermine crypto networks’ credibility to quash a growing sentiment that the US dollar’s hegemony is drawing to a close.

One clue, however, was something Burns said, suggesting that criminal activities, specifically ransomware attacks, were one of the main focuses:

One of the ways of getting at ransomware attacks and deterring them is to be able to get at the financial networks that so many of those criminal networks use, and that gets right at the issue of digital currencies as well.

William Burns, CIA director

Of course, Twitter has been rife with speculation, ranging from genuine concern to satire. One user even joked that perhaps the CIA was behind NFT sensation the Bored Ape Yacht Club.

One thing’s for sure – when it comes to the CIA, things will never quite be what they seem.

Categories
Australia Crypto Exchange Crypto News Crypto Wallets

Australian Exchange MyCryptoWallet Goes into Liquidation

MyCryptoWallet, an Australian exchange claiming to be the first to offer zero fees trading, has collapsed and gone into liquidation. This has left some users with a sinking feeling after being have been unable to access their accounts to withdraw their investments.

Not the First Issue?

Earlier this year, Crypto New Australia reported that alarm bells had been raised when the Australian Securities and Investments Commission (ASIC) had been called in to investigate complaints from several MyCryptoWallet users claiming they were unable to access their crypto assets. But this wasn’t even the first complaint.

According to the Sydney Morning Herald, the Melbourne-based exchange is said to have signed up over 20,000 users in its first three months of operation, after launching in late 2017. However trouble arose in 2019 following a dispute with NAB which resulted in the company’s accounts being frozen.

Later that year, the company once again ran into difficulties, this time with its technology partners, leaving users unable to withdraw funds from the exchange. Thereafter, the complaints continued with some users being unable to access their accounts, others unable to trade using 2FA systems or some, not being able to load the company’s website at all.

Jaryd Koenigsmann, former CEO MyCryptoWallet. Source: MyCryptoWallet

A Bitter Ending for MyCrypto Wallet – Liquidation

This past Friday, December 3, the company’s 28-year-old chief executive Jaryd Koenigsmann called in administrators, according to documents lodged with the corporate regulator.

Shortly after, Terry van der Velde of SV Partners was appointed as liquidator of the company. While it is too early to establish how many creditors there were and how much is owed, a report is expected to be filed December 17.

To help creditors recover at least a portion of their investments, Mr Van der Velde is now on the hunt to find a buyer for MyCryptoWallet’s technology infrastructure.

SV Partners will be formally releasing an Expressions of Interest Memorandum by approximately 10 December for an opportunity to purchase the technological infrastructure of the business.

Terry van der Velde, SV Partners

Much like in the past, the exchange’s collapse has left an unknown number of aggrieved customers unable to access their funds. The writing appears to have been on the wall for some time as as users have been unable to get in touch with anyone from MyCryptoWallet.

Mr Koenigsmann too appears to have foreshadowed what was coming, having reportedly listed his Melbourne home for sale in July with an asking price of A$1.3m.

The story of MyCryptoWallet, although unfortunate, is a cautionary one. It provides a timely reminder that investors must conduct a due diligence into the credibility and track record of a crypto exchange, or any crypto company for that matter. Bad customer service and blocking withdrawals are just two of the red flags users should be looking out for.

Categories
Bitcoin Crypto News Ethereum Markets

Crypto Markets See Red Following $2.5 Billion in Liquidations Over the Weekend

Over the weekend of December 4-5, a confluence of factors led to a dramatic crash in crypto markets. Against an uncertain macro backdrop of potential tighter monetary policy, surging inflation and fears over the new Omicron variant of Covid-19, derivative markets added fuel to the fire resulting in some US$2.5 billion in liquidated positions in 24 hours.

Longs liquidated. Source: Cryptorank

Double-Digit Drawdowns Across the Board

As the NASDAQ dropped 2 percent on December 3 against a broader risk-off sentiment, crypto markets tanked, resulting in all of the top 20 cryptocurrencies by market cap, save for stablecoins, posting double-digit losses within 24 hours. BTC dropped 18 percent within 24 hours, while ETH faired slightly better, dropping 17 percent in the same period.

According to CoinGecko, the market cap of the entire crypto market dropped by 15 percent to US$2.34 trillion, down from a high of over US$3 trillion when bitcoin soared above $US$69,000.

Commentators have suggested that large institutional selling triggered a broader market shift, with reports indicating that one institution alone sold over US$500 million in bitcoin. This, the report continues, triggered “aggressive liquidations” in the crypto derivatives market:

The other factor driving the sharp declines across the board was that, comparatively speaking, the market was “thin” as it occurred outside of typical trading hours.

Leveraged Liquidations, Nothing New

By definition, leveraged trading amplifies both gains and losses. When the market is bullish, traders tend to go long and pile on the leverage. This works well until the market moves against you. When that happens, traders need to post more collateral to maintain the margin requirement, or face forced liquidation. At scale, a failure by traders to meet their maintenance margin creates a cascading liquidity flush, creating rapid double-digit declines as seen in April this year.

Following April’s meltdown, many exchanges reduced leverage available to traders from 100x to 20x. Notwithstanding, bloodbaths such as those experienced over the December 4-5 weekend remain largely driven by leverage.

Will Clemente, a leading on-chain analyst who is known in the community for “calling it like it is”, pointed out the benefit of flushing liquidity and maintained his overall bullish view toward Bitcoin.

Justin d’Anethan, Hong Kong-based head of exchange sales at cryptocurrency exchange EQONEX, believes many investors will view this recent decline as an opportunity:

If anything, this is the opportunity to buy the dip for many investors who might have previously felt like they missed the boat.

Justin d’Anethan, head of exchange sales, EQONEX

Following the meltdown, crypto markets have recovered to a limited extent. At the time of publication, both ETH and BTC are up from the weekend’s low. ETH is up 11 percent, trading at US$4,122, while BTC is up only 5 percent, trading at US$48,656.

Categories
Banking Crypto News Gemini Regulation

CBA Account Holders May Soon Get Interest on their Crypto

Last month, the Commonwealth Bank of Australia (CBA) became the first in Australia to offer crypto to its customers. Now the country’s largest bank is moving to offer customers the ability to earn interest on their crypto.

CBA Leans on Gemini for Crypto

In addition to partnering with Gemini for its crypto offering, CBA also recently invested in the exchange’s first external fund raise, suggesting that the relationship went a lot deeper than initially suspected.

Now, according to a report by The Australian, CBA and the New York-based crypto services provider are planning to launch a “crypto interest account” to Australian customers whereby they would receive a fixed interest rate for lending their digital assets into the broader market.

Speaking about the Australian market, Andy Meehan, chief compliance officer for Gemini Asia Pacific, suggested that:

We think CBA broke the mould in your market, which is an attractive market – in fact is it a highly developed investment market that has a long tradition of people being very quick to take up new finance technology when it arrives on the scene.

Andy Meehan, chief compliance officer, Gemini Asia Pacific

He went on to say:

CBA has forced the regulators to move much faster than they might have naturally desired, but you’ll see every one of your banks offer crypto services very soon.

Andy Meehan, chief compliance officer, Gemini Asia Pacific

CBA, the First Domino to Fall?

With most Australian banks offering negative real interest rates on savings, investors are becoming increasingly drawn to alternative investments such as crypto.

CBA has been a trailblazer in the space and competitors are no doubt working behind the scenes to catch up. CBA chief executive Matt Comyn recently told Bloomberg that banks needed to be involved in the adoption of technology underpinning crypto and the insatiable demand from customers to trade them. He was also quoted as saying “we [CBA] see risks in participating, but we see bigger risks in not participating”.

It remains to be seen how the regulators will respond to CBA’s crypto interest product. Presumably they will draw guidance from Gemini itself, which as a New York-registered exchange is one of the most heavily regulated entities in the space. If it aligns with Gemini’s offshore product, you’d expect depositors’ crypto to be lent to institutional investors and for the customer to receive different rates for different cryptos, depending largely on the demand and use of such digital assets.

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Banking Bitcoin Crypto News Regulation

SEC Chairman Admits: Bitcoin Competes With the US Banking System

At the Digital Asset Compliance and Market Integrity Summit held in New York on December 1, Securities and Exchange Commission (SEC) chairman Gary Gensler finally admitted that Bitcoin is a competitor to the US banking system and its worldwide consensus.

Regulation at the Heart of Discussion

At the event, Gensler joined former SEC chairman Jay Clayton for a broad discussion of the burgeoning crypto sector. Gensler saw his responsibility as mitigating risks of a “spill in Aisle 3”, which may be caused in his view by a financial instability event, stablecoins, the lending sector, or “by the investing public getting hurt by fraudsters or good-faith actors promoting and raising money”.

Gensler repeatedly referred to the sector as the “Wild West” and argued that “whether it’s a trading platform or token, [they] are not going to evolve well outside of the tenets of public policy”. His main concern articulated related to the asymmetry of information:

At the core of our bargain in the securities markets is: investors get to decide what risks they want to take. But the people raising the money, the issuers, should share full and fair disclosure.

Gary Gensler, SEC chairman

On Bitcoin

In his conversation, Gensler drew a distinction between Bitcoin and digital assets, recognising that in the case of the latter, many projects exhibited securities-like qualities.

Repeating prior comments, he reiterated his position that Bitcoin’s innovation was real in that it was “about money and ledgers” and enabled 24/7 instantaneous, transparent and final settlement. He then went on to describe Bitcoin as an “off-the-grid” alternative to the traditional financial system:

We layered over our digital money system about 40 years ago with money laundering and various sanctions and regimes around the globe; we layered that over a digital currency system called our banking system. In 2008, Satoshi Nakamoto wrote this paper in part as a reaction, an off-the-grid type of approach. It’s not surprising that there’s some competition [Bitcoin] that you and I don’t support but that’s trying to undermine that worldwide consensus.

Gary Gensler, SEC chairman

When Gensler was appointed, Bitcoiners were optimistic as he seemed to appreciate the distinction between bitcoin and altcoins.

However, even if his latest pronouncement is disappointing to Bitcoiners, it’s difficult to argue that Bitcoin isn’t threatening US dollar hegemony. Gensler’s sentiment is also shared by Hillary Clinton, who recently described Bitcoin as “undermining the dollar“.

Shifting towards a “Bitcoin Standard”, like El Salvador, is what broadcaster Max Keiser has termed a “speculative attack against the US dollar”.

So far it seems to be working. And perhaps for that reason, Gensler’s concerns are well-founded.

Categories
Bitcoin Crypto News Social media

Jack Dorsey Going All-In on Bitcoin After Resignation from Twitter?

Running a public company is challenging enough but up until yesterday, Jack Dorsey was running two – Twitter and Square. After resigning from Twitter with immediate effect, the platform he helped create was abuzz with rumours as to what he had planned next.

Dorsey Leaves the Company He Created

In a tweet characteristic of his laid-back and often understated approach to doing business, he elected to make his resignation email public to the broader community:

Dorsey noted that he felt that being “founder-led” was “severely limiting and a single point of failure”. Parag Agrawal, a former engineer who had worked his way up the ranks over the past 10 years to become CTO, became CEO with immediate effect.

Aside from stepping away from operations, Dorsey also committed to resign from the board to “give Parag the space he needs to lead”.

I’ve decided to leave Twitter because I believe the company is ready to move on from its founders. My trust in Parag as Twitter’s CEO is deep. His work over the past 10 years has been transformational. I’m deeply grateful for his skill, heart, and soul. It’s his time to lead.

Jack Dorsey

Speculation as to Dorsey’s Plans

It has been well-known that Dorsey is a massive advocate for Bitcoin, having uttered the now-famous words at the Bitcoin 2021 conference: “I don’t think there is anything more important in my lifetime to work on”.

From running his own Bitcoin node to rolling out Bitcoin tips on Twitter, to putting Bitcoin on Square’s balance sheet and investing in solar-powered Bitcoin mining, Dorsey is clearly inspired by Bitcoin and its potential to drive change in the world.

Despite this, some have speculated that Dorsey is looking to move into the Web 3.0 space, particularly in light of Twitter’s recent “Blue Sky” decentralised social media project.

Others, however, reckon it’s pretty obvious that he will be working on Bitcoin-related projects and initiatives:

Whatever the case may be, Bitcoin or crypto, the common thread seems to be that Dorsey’s central mission has now shifted towards decentralisation – whether that is of money, applications, or the internet itself.

Categories
Banking Bitcoin Crypto News Markets

Bitcoin Slides After Hitting All-Time High in Turkey Amid Currency Crisis

Turkey is in the grip of a crippling currency crisis as the Turkish lira continues its freefall. The sell-off was sparked after President Recep Tayyip Erdoğan demanded the Central Bank of Turkey cut rates for a third consecutive month from 19 percent to 15 percent.

Shortly after, Bitcoin printed a fresh all-time high against the weakened lira, suggesting that perhaps, Bitcoin fixes this.

The Turkish lira has lost a third of its value in November. Source: Bloomberg

What is Happening in Turkey?

The Turkish lira has been steadily weakening against the US dollar for the past decade, but this week saw the currency collapse over 15 percent in a single day, a historic event for any G20 country.

In a historic event for a G20 country, the Turkish lira is in free fall and making the case for a bitcoin hedge.
Turkish lira/USD exchange rate. Source: TradingView

To make economic matters worse, Turkey’s Consumer Price Index (CPI) has been accelerating over the past two years and is now just under 20 percent.

In a historic event for a G20 country, the Turkish lira is in free fall and making the case for a bitcoin hedge.
Turkey’s CPI. Source: FRED

With growing inflation, reducing real rates and limited USD foreign exchange reserves, the picture is looking bleak for ordinary Turkish citizens. To make matters worse, US$13 billion in debt is set to expire this month and next.

In a historic event for a G20 country, the Turkish lira is in free fall and making the case for a bitcoin hedge.
Source: Bloomberg

Typically, during periods of high inflation, central banks will look to raise interest rates. However, Erdogan, who has fired three central bank chiefs in two years, has pushed for lower interest rates to increase economic growth and exports as well as decrease unemployment.

Yet it is the Turkish citizen who faces a severe decline of purchasing power at an unprecedented rate during a period of soaring prices and political instability.

A former Turkish central bank deputy governor, Semih Tumen, has criticised the policy for annihilating the purchasing power of ordinary Turks, describing the move as an “irrational experiment, which has no chance of success”.

Bitcoin Responds

Following the currency sell-off, Bitcoin did its thing, soaring against the Turkish lira to reach an all-time high of ₺735,432/BTC.

Turkish lira/BTC. Source: TradingView

On November 26, as news of a new Covid-19 variant spooked markets, Bitcoin retreated by 7 percent, however in Turkey it remains up 70 percent over three months and 220 percent year-to-date.

Bitcoin has been viewed as an inflation hedge and this crisis in Turkey is no doubt an opportunity for it to shine. Earlier this year, Bitcoin rose as the Argentine peso collapsed, with the current CPI in the South American nation sitting at over 50 percent. And it’s not just developing nations experiencing inflationary periods – just two weeks ago, Bitcoin catapulted on news of the US’ highest CPI print in over 30 years.