Autor Cointelegraph By Francisco Rodrigues

Crypto inheritance: Are HODLers doomed to rely on centralized options?

Crypto inheritance: Are HODLers doomed to rely on centralized options?

Uverejnil používateľ | máj 23, 2022 |

Self-sovereignty is a core principle in the cryptocurrency space: Investors need to rely on a trustless, decentralized network instead of a central entity that has been known to devalue the holdings of others. One shortcoming associated with self-sovereignty, however, is inheritance.An estimated 4 million Bitcoin (BTC) has been lost over time and now sits in inaccessible wallets. How many of those coins belong to HODLers who passed away without sharing access to their wallets with anyone else is unknown? Some believe Satoshi Nakamoto’s estimated 1 million BTC fortune hasn’t been touched for this very reason: No one else had access to it.A study conducted in 2020 by the Crenation Institute has notably found that nearly 90% of cryptocurrency owners are worried about their assets and what will happen to them once they pass away. Despite the concern, crypto users were found to be four times less likely to use wills for inheritances than non-crypto investors. The seeming lack of a solution does not seem to be widely discussed, however. Speaking to Cointelegraph, Johnny Lyu, CEO of crypto exchange KuCoin, said that crypto inheritance is still “poorly understood” because most crypto holders are young and, as such, aren’t thinking about their death or inheritance.Moreover, Lyu states that we have not yet “come across a legislative precedent in this matter.” As such, there isn’t enough experience “in resolving inheritance disputes as, for example, in matters of theft and return of cryptocurrencies.” To Lyu, crypto inheritance “comes down to providing relatives with private keys.” He added that it can be managed through private keys in a cold wallet that is then stored in a safe and held with a notary:“If the owner does not want to transfer the cryptocurrency before the moment of death, then they need to think of drawing up a will and an inventory of the contents necessary for their heirs to open the wallet.”The CEO added that investors that want to pass on their assets must “solve the problem of maintaining anonymity until the moment when the heirs can come into their own.” At the same time, he conceded, transferring access credentials can “compromise the safety or anonymity” of holders.To Lyu, the best crypto inheritance option out there was developed by Germain notaries and consists of a flash drive with a “master password, which already contains account passwords.” That flash drive is kept by the assets’ owner while the notary holds the master password, he said.Lyu’s proposition does, however, come with a caveat: a lack of self-sovereignty. Trust is sacrosanct if someone else has access to our funds.Recent: Indian government’s ‘blockchain not crypto’ stance highlights lack of understandingKeys and trustShould crypto holders share keys with trusted third parties? The question is hard to answer. To some crypto enthusiasts, if someone else controls the keys to a wallet with crypto assets in it, they are essentially co-owners. If no one else knows how to access funds, the assets may be lost in the case of a holder’s untimely death.Speaking to Cointelegraph, Mitch Mitchell, associate counsel of Estate Planning at Trust and Will — a firm specializing in estate planning — said that cryptocurrency investors should share their private keys with trusted family members “for the simple reason that, if they do not, their knowledge of the private key dies with them.”Alfred Nobel’s will, which established the Nobel Prize. Mitchell added that when or how they should share their private keys is a point of contention. Max Sapelov, co-founder and chief technology officer of crypto lending startup CoinLoan, told Cointepegrah that sharing private keys is a “debatable question,” as it depends “on the depth of the relationships” and the trust investors have in third parties. Sapelov said that there are two main threats to consider before sharing private keys:“Firstly, in an extraordinary situation, even the closest family members can turn their back when it comes to money and wealth. Secondly, managing private keys (or recovery seed phrase) is a challenging task.”Without appropriate knowledge, he said it’s “easy to lose access” to private keys due to improper backup procedures or to attacks from hackers looking to steal crypto.It’s worth noting that prominent crypto community members have openly admitted to simply sharing their private keys with family members to ensure that they have access to their funds. Hal Finney, the recipient of the very first Bitcoin transaction, wrote in 2013 that Bitcoin inheritance discussions are “of more than academic interest,” and that his BTC was stored in a safety deposit box, to which his son and daughter had access.To some, however, sharing private keys isn’t a solution. If not for lack of trust, for a potential lack of security. Self-custody isn’t for everyone, so much so that many crypto users don’t even move funds off of exchanges.Related: What is Bitcoin, and how does it work?Holding crypto on exchangesAnother solution often considered when it comes to cryptocurrency inheritance is simply holding assets on a leading cryptocurrency exchange. The strategy may at first seem risky, taking into account the number of trading platforms that have been hacked over the years, but as the market matures, some have managed to stay afloat even after suffering security breaches.To Mitchell, users may store their wallet files in a portable hard drive instead of holding funds in a cryptocurrency exchange and treat it as a bearer bond, meaning it belongs to whoever holds the drive. It may, however, be prudent to store an encrypted backup on the cloud to provide a dual layer of protection, he added.The advantage of storing on exchanges like Coinbase or Binance, Mitchell said, is that they are more user-friendly for family members looking to recoup funds. Sapelov pointed out that major exchanges “have one of the highest levels of security” in the space and are by law required to “have account inheritance processes in place.”Coinbase, for example, allows a family member to access the account of a deceased relative after providing a number of documents, including a death certificate and last will.For beneficiaries to gain access to funds locked in cryptocurrency exchanges, they will certainly have to jump through hoops, while having direct access to a drive with the keys would allow them to instantly access the funds.An alternative would be cryptocurrency inheritance services. To Sapelov, whether someone decides to pay for such a service “depends on the person’s preference,” as it’s a new industry that is “definitely gaining popularity” but doesn’t “have a proven track record yet.” Instead, he suggests that users should contact the customer support teams of the exchanges they use to explore inheritance options before it’s too late.Conversely, cryptocurrency exchanges or inheritance services may shut down over time or lose access to funds themselves. While the possibility is remote, it’s still worth considering when considering how to pass on cryptocurrency investments.A technical solution There is, nevertheless, one more solution to consider: special cryptography.Speaking to Cointelegraph Jagdeep Sidhu, lead developer and president of peer-to-peer trading blockchain platform Syscoin, said that it’s possible to set up a solution in which a users assets automatically transfer to another wallet, which can be used for inheritance purposes:“What is possible is to do ‘timed’ encryption. Special cryptography where you can encrypt a message containing a private key that is only decryptable after some time.”Crypto holders can also set themselves as the beneficiary of such transactions, or set up a larger number of beneficiaries, as “there is no limit to how many times you can encrypt your key.” Sidhu said that crypto inheritance can be arranged while maintaining self-sovereignty with this method.He further stated that a service can be set up which requires a user to remain interactive to prove he is still around. If the user fails to respond after a specific period of time, then a “timed encryption message is created to all of your beneficiaries.”Recent: UST aftermath: Is there any future for algorithmic stablecoins?The solution is nevertheless fairly technical and would require cryptocurrency users to remain interactive or risk accidentally sending their assets to beneficiaries. The confusion that would arise from such a setup could be troublesome.Overall, the way crypto HODLers go about their will has to vary from person to person. Some may prefer to go the decentralized way and self-store their funds while creating their own inheritance solutions, while others may prefer to trust institutions with their funds and their wills.What’s important is that at the end of the day, users set up a system that allows their beneficiaries to access their cryptocurrency holdings in case anything happens to them. After all, life-changing money isn’t really life-changing if nothing can be done with it.

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Question of centralization faces growing crypto insurance industry

Question of centralization faces growing crypto insurance industry

Uverejnil používateľ | máj 9, 2022 |

Cryptocurrency markets have been maturing over the last few years, making demand for crypto insurance solutions larger as more advanced players dip their toes into the nascent ecosystem.Investopedia reports that cryptocurrency insurance is seen as a “big opportunity,” with a spokesman from one of the world’s largest insurers, Allianz, saying that the company has explored product and coverage options in the cryptocurrency space as it becomes “more relevant, important and prevalent on the real economy.”The cryptocurrency ecosystem is still seen as dangerous and volatile, where funds aren’t completely secure even on leading cryptocurrency exchanges. While some platforms, including Coinbase, have revealed they have hot wallet coverage via specific insurers, most don’t publicly promote whether assets deposited there are insured.The industry poses specific challenges for insurers. For one, premiums are often defined with the use of historical data, which in the cryptocurrency industry is slim at best and absent in newer areas including nonfungible tokens (NFTs).Demand for insurance in the space is nevertheless present, as crypto exchange Crypto.com hasexpanded its insurance program to cover $750 million in 2021, and decentralized solutions based on decentralized autonomous organizations (DAOs) like Nexus Mutual have been created.Speaking to Cointelegraph, Tony Lees, chief product officer at digital payment platform Wirex, said one of the key blockers for “true mainstream adoption over the last few years” has been the thought that the cryptocurrency space is “untrustworthy and insecure.”To Lees, most users feel that their funds are unsafe and that an investment in crypto assets is riskier than an investment in the traditional stock market. Industry-standard compliance and other regulations, Lees added, have helped platforms showcase how users’ funds are safe. Lees said:“Corporate-level insurance coverage with custodial platforms such as Fireblocks has enabled companies like Wirex to demonstrate that robust systems and controls are in place in order to give the user peace of mind.” Michael Vogel, CEO of Coinstream and founder of Canadian crypto exchange Netcoins, echoed Lees’ thoughts, telling Cointelegraph that crypto represents a “very different risk paradigm” than what investors are used to, as no consumers ever worry “about their shares in Tesla going missing from an online brokerage account.”Many users, Vogel said, aren’t comfortable with the responsibility of handling the security of their coins themselves. As a result, the market has been developing “custody-type solutions, where a trusted company acts as a form of crypto bank.”Insurers could provide clear guidelines that custodians need to follow to qualify for insurance here, he said. The move could provide familiarity to investors in the space. As Lees said, most are aware of the Financial Services Compensation Scheme of up to $104,000, or 85,000 Great British pounds in the United Kingdom, or the Federal Deposit Insurance Corporation’s coverage of up to $100,000 in the United States.These schemes, Lees said, help investors feel comfortable leaving their funds in banks. Crypto insurance covering users’ holdings in a centralized platform would provide “that familiar, traditional coverage against hacks or cyber-attacks.”Centralized entities like Allianz entering the space would only further support the notion of familiarity. Johnny Lyu, CEO of cryptocurrency exchange KuCoin, told Cointelegraph that while the crypto ecosystem needs insurance, in its early stage of development most participation will come from centralized institutions.As the industry develops, Lyu said that decentralized alternatives are gradually improving. Whether these platforms can be truly decentralized, he said, will “depend on the development and improvement of the crypto environment at large.” For now, both centralized and decentralized entities have challenges to overcome.Fire insurance contract of 1796.Confidence to operate with cryptoOvercoming these challenges could give more investors the confidence to invest in cryptocurrencies and gain exposure to the nascent asset class.According to Vogel, fraud is a major challenge for insurers in the cryptocurrency space. Using house insurance as an example, Vogel noted that the “tangible benefit to insurance is that your house can be rebuilt if it burns down.” The net result, he said, is that at the end of the day, people will still have a house.On the other hand, obfuscation on the blockchain could lead to specific types of fraud. Vogel added:“A crypto-insurance fraudster could double dip, hide or obfuscate their coins plus an insurance payout.”To Lees, the biggest challenge the cryptocurrency industry has faced so far is “providing traditional services to a new unknown sector, especially regarding the technology.” Lees echoed Vogel’s sentiment, saying that funds being hard to trace on the blockchain have “created a nervousness for insurance firms.”Recent: Mixing reality with the Metaverse: Fashion icon Phillip Plein goes cryptoIn recent years, he added, robust Know Your Customer (KYC) checks have been “paramount to crypto providers,” whose work with blockchain forensics firms like Chainalysis and Elliptic has meant “that transactions made between crypto addresses have been much easier to track.”Lees now expects the overall risks within the industry to further be reduced, ensuring “it is much easier for insurers to understand and underwrite.” Ultimately, he said, insurers will “play an important role in realising a fully digital economy in the future, by giving both consumers and businesses the confidence to operate in the space.”This type of confidence would, at first, come from centralized players in the insurance space, as decentralized solutions aren’t still widespread and may have to improve further before going mainstream.Smart contract risksDecentralized insurance solutions have been active over the last few months. Popular decentralized insurance provider Nexus Mutual, for example, currently covers over $400 million in Ether (ETH) across a number of projects, while rival protocol InsurAce claims to have covered over $340 million.Speaking to Cointelegraph, Lior Lamesh, CEO and co-founder of blockchain security firm GK8, said the crypto ecosystem needs insurance for decentralized protocols and end-users. Wile Lamesh noted that “automatic, decentralized insurance tools could indeed come in handy,” he suggested they themselves could need insurance.As decentralized insurance tools are part of the protocol layer and rely on smart contracts, which could fail over human error, they could have “vulnerabilities open for hackers to exploit.”Lamesh suggested a potential flaw could be in the protocol covering its own failure after it causes losses for users, “making for a lucrative selling point for potential users.” He added:“Hypothetically, we could still end up in a loop of smart contracts insuring other smart contracts, but I would expect that centralized insurers would likely get involved at some point.”As a result, the crypto CEO expects more centralized insurers to enter the market as they better grasp blockchain technology and remain in the lead “while decentralized insurance solutions will likely take some time to evolve and figure out the best approaches for the industry.He added that, currently, hacks in the decentralized finance (DeFi) space occur “every week, if not every day” and, as such, it’s hard for decentralized insurance protocols to operate, as these protocols themselves can become lucrative targets for hackers. Once the industry matures, he said, decentralized insurance “will take off.”A growing industryThe cryptocurrency insurance industry has been growing over time. To Lamesh, its current challenge is for experts to “wrap their heads around the technology involved,” as blockchain “can be confusing enough for its own people without degrees in computer science.”Recent: Eager to work: Bitcoin switch to proof-of-stake remains unlikelyCrypto insurance deals with DeFi protocols, which require “a lot of specialist knowledge.” Lamesh noted, however, that the crypto insurance industry may have a bright future ahead, saying:“The future may be stunning, of course, with blockchain entering mainstream insurance, and decentralized protocols tapping AI-driven data oracles to offer us tailored insurance plans and packages for anything we need.”Lees noted the crypto insurance industry has “become more established over the last 12-18 months,” with traditional firms entering the space and offering coverage on “certain digital assets based on how they are stored and the compliance levels of wallet providers.”As the overall crypto industry grows, he said, Lees can “only see the crypto-insurance industry following suit, given the sheer volume of new crypto wallets being opened every month.” To Lees, the standards crypto firms meet will have a “traditional feel, giving insurers peace of mind that they can underwrite holdings.”The challenges crypto insurers face could be a significant source of revenue for the insurance industry, as centralized providers may move in with products that exclude specific types of common risks in the space such as hacks or smart contract failures.While these risks are likely what most users are after, the peace of mind of a centralized platform offering them insurance they can rely on may be enough to persuade them into entering the crypto market.

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Crypto portfolios: How much of a stablecoin allocation is too much?

Crypto portfolios: How much of a stablecoin allocation is too much?

Uverejnil používateľ | apr 13, 2022 |

Cryptocurrencies are well-known for being volatile assets, which means that experienced traders have plenty of opportunities in the space. Investors can expect to be taken on a wild ride if they plan on holding for a long time.Stablecoins, a class of cryptocurrencies that offers investors price stability pegged to the value of fiat currencies, offer investors a safe haven when market turbulence hits but may represent missed opportunities over time.Speaking to Cointelegraph, several experts have stated that retail investors should approach cryptocurrencies with a “pay yourself first” attitude and that an allocation of up to 5% in crypto should be relatively “safe” while allowing for “marginal return.”Stablecoins are entirely different: No “marginal return” can be expected from simply holding an asset tied to the value of the United States dollar, although yields can reach double-digit annual percentage rates (APRs) using decentralized finance (DeFi) protocols. These protocols, however, lead to higher risk.Different stablecoins, different risksNot all stablecoins are created equal. The largest stablecoins on the market — USD Coin (USDC), Tether (USDT) and Binance USD (BUSD) — are backed 1:1 by cash or assets with similar value by centralized companies. This means that for every token in circulation, there’s a dollar in cash, cash equivalents or bonds in custody.For example, other stablecoins like Dai (DAI) and TerraUSD (UST) rely on different mechanisms. DAI is crypto-collateralized and ensures it can maintain its peg by being overcollateralized. It includes economic mechanisms that incentivize supply and demand to drive its price to $1.UST, on the other hand, is a non-collateralized algorithmic stablecoin. An underlying asset doesn’t back it, as it works through algorithmic expansion and supply contraction to maintain its peg. Terra, the blockchain behind UST, has notably been building up reserves for the stablecoin. So far, it has already purchased nearly 40,000 BTC worth over $1.6 billion and over $200 million in Avalanche (AVAX).Marissa Kim, general partner at Abra Capital Management — the asset management arm of crypto investment firm Abra — told Cointelegraph that the firm views “USDC and other U.S.-regulated stablecoins as safe as keeping reserves in a bank account,” as these are “required to prove on a regular basis that they are fully collateralized.”To Kim, decentralized stablecoins like DAI and UST may “pose other risks,” as volatile markets could see DAI lose its peg to USD. She added its governance “is by the MakerDAO community, and nobody knows who holds and governs this protocol and where voting power may be concentrated.”Speaking to Cointelegraph, Adam O’Neill, chief marketing officer at cryptocurrency trading platform Bitrue, said that the “role of USDC and USDT” in the cryptocurrency space is “synonymous to the role of the U.S. dollar in the traditional financial ecosystem.”O’Neill added that investors should use stablecoins “as a go-to hedge when trading and storing their assets.” He added:“The security outlook of stablecoin should not be compared, as both the centralized and decentralized versions are secure in themselves. However, it is not uncommon to find hackers exploit the frailty in protocols built to offer products bothering both classes of stablecoin tokens.”To O’Neill, how much investors should allocate to stablecoins is a decision that is up to them and depends on their investment goals. Kent Barton, tokenomics lead at ShapeShift DAO, told Cointelegraph that while every stablecoin has its own risk profile, there are a few things investors should keep in mind.For one, centralized stablecoins like USDC and USDT can be easily converted back into USD, but the entities behind these coins could “potentially blacklist certain addresses, for instance, in response to demands from legal entities.” Barton added that while there are long-standing concerns regarding USDT’s backing, it has maintained its peg so far:“USDT has the advantage of being time-tested: It’s the stablecoin that’s been around the longest. It has deep liquidity across centralized exchanges and many DeFi platforms.”Decentralized stablecoins like DAI and USDT, Barton said, are more transparent because of the nature of the blockchains they are built on. Still, there are other risks out there, including volatile markets threatening DAI’s over-collateralization.To Olexandr Lutskevych, founder and CEO of crypto exchange CEX.io, the security of each stablecoin depends on how security is defined. In terms of code, technical audits should cover the risks of more susceptible stablecoins, while in terms of reliability of moving funds from A to B, most have been known to fit the purpose.As for stablecoins’ ability to maintain their peg against the dollar, Lutskevych said how that peg is maintained should be the main focus on investors’ minds.Stablecoin DeFi yields: Too good to be true?While merely holding stablecoins ensures cryptocurrency investors aren’t dealing with the market’s volatility, it also means they aren’t really making any type of return unless they put their stablecoins to work.There are several options when it comes to stablecoins such as lending them out on centralized exchanges or blue-chip decentralized finance protocols lead to relatively small yields — often below 5% — that are relatively safe. Moving to riskier protocols, or employing complex strategies to boost yield, could lead to higher returns and imply more risk.For example, it’s possible to find yields above 30% for Waves’ Neutrino USD (USDN) stablecoin, which has recently broken its peg and fallen below $0.80 before starting to recover.When asked whether investors should lend their stablecoins or add them to decentralized exchanges’ (DEXs’) liquidity pools to earn yield, ShapeShift DAO’s Kent Barton pointed out that DeFi protocols bring in smart contract risks to the equation, which need to be considered.One-month USDN/USDT chart showing when the token broke its peg. Source: TradingViewTo Barton, protocols that have been around for “more than a few months and have a track record of protecting billions of dollars in value are fairly secure.” However, there’s “no guarantee of future security and stability.” Protocols with higher rewards, he said, tend to be riskier.Lutskevych suggested investors should first understand exactly what they’re putting their money into:“Just because it is DeFi, the investment principles do not change. And, one of the foundational investment principles is: Before proposing any strategy, you should thoroughly understand one’s risk preferences and individual circumstances.”To Lutskevych, investors’ capital, time horizon, goals and risk tolerance should also be weighed when considering staying put or moving stablecoins to earn yield. To O’Neill, it is “generally advisable that stablecoins should be deployed to harness yields from lending platforms,” although investors should also “be ready to jump at any investment opportunity.”Stablecoins, partly thanks to the DeFi space, offer investors a plethora of opportunities across a wide number of blockchains. Using them outside of centralized exchanges may require some specific knowledge, without which investors may end up losing their funds by, for example, sending them to the wrong type of address.Risk tolerance and sophisticationSpeaking to Cointelegraph, Carlos Gonzalez Campo, research analyst at investment product issuer 21Shares, said that stablecoins provide investors with access to a “global network of value transfer similar to how the internet gave rise to a global and open network for information.”Campos stated that February’s Consumer Price Index (CPI) data in the United States revealed a 7.9% year-over-year rise, meaning people are losing their purchasing power at a rate that hasn’t been seen in four decades.What investors do with their stablecoins, the analyst said, depends on their risk aversion and level of sophistication as the “user experience is still lacking today” in DeFi platforms that let users earn passively on their holdings. Campos added:“The clearest example is seed phrases, which are impractical and probably won’t achieve mass adoption. That is why leaders in the industry such as Vitalik Buterin have emphasized the need for wide adoption of social recovery wallets, which instead of relying on seed phrases, rely on guardians.”Abra Capital Management’s Marissa Kim seemingly echoed Campos’ thoughts, as she said bugs and other exploits are possible in DeFi protocols which often pay higher yields in the protocol’s native tokens. They are “often highly volatile and may not be very liquid.”To Marissa, some investors may be willing to take on the added risk, although others will be “more concerned with principal preservation.”Whichever strategy investors choose to employ, it’s clear that stablecoins are a major part of the cryptocurrency ecosystem. More risk-averse investors may find they only trust the most transparent centralized stablecoins that offer limited opportunities, while more venturous investors may prefer higher yields and higher risk.Over time, stablecoins’ influence in the cryptocurrency space is only set to keep growing, so it’s important that investors understand what they are dealing with and the risks involved with the stablecoins they choose to HODL and what they choose to do with them.The views and opinions expressed here do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Colorado accepts tax payments in crypto: Was it just a matter of time?

Colorado accepts tax payments in crypto: Was it just a matter of time?

Uverejnil používateľ | mar 24, 2022 |

The governor of Colorado, Jared Polis, announced in February that the state government plans to allow residents to pay taxes in cryptocurrencies as early as the summer of 2022. To some experts, the move is both legitimizing for the crypto asset class and was expected to come in due time. In an interview, Polis said crypto holders in Colorado could have the option of sending tax payments in digital currency, with the state converting the funds back into fiat as soon as the payments were received through an unnamed intermediary.Colorado is already a leader in Crypto with our first in the nation Chief Blockchain Architect, hosting ETHDenver and other blockchain hackathons. It was great to sit down with CNBC to discuss the initiatives Colorado is taking on cryptocurrencies. pic.twitter.com/p5WtlF2E0r— Governor Jared Polis (@GovofCO) February 17, 2022Polis added that after the rollout this summer, the state could accept cryptocurrency payments for things “as simple as driver’s license or hunting license” within a few months. The governor said at the time he was “not at all” concerned about the potential volatility of cryptocurrencies like Bitcoin (BTC), given the state does not plan on holding the coins for long.Shortly after taking office in 2019, Polis signed the Colorado Digital Token Act into law, aiming to exempt tokens with a “primarily consumptive purpose” from some securities regulations. The governor also said that State Senator Chris Hansen was working on a bill that would “allow state-created digital tokens to be utilized for state reserve purposes.”Speaking to Cointelegraph, Senator Hansen said the bill “introduces extra security, saves on costs, diversifies the pool of investors, and the potential to lower interest rates paid by the state.” Hansen said:“We need to ensure that every Coloradan can equitably participate in and benefit from investment in our state. By expanding beyond institutional investors and commercial banks, we invite millions of Coloradans to share in the financing of new capital assets.”The senator stated that he is looking forward to seeing how the state will help “communities rebound from the pandemic, improve their quality of life, and address inequities that have kept everyday folks from fully prospering from our economy.”Money as a representation of debtMoney was initially concocted as a physical representation of debt, according to anthropologists such as the late David Graeber. Governments, Graeber pointed out, utilized money to standardize the payment of tributary obligations and facilitate the maintenance of their workers.Speaking to Cointelegraph, Brian Pasfield, chief technology officer at Fringe Finance — a decentralized lending platform — cited Graeber’s work to suggest cryptocurrency is being legitimized by moves like Colorado’s. Pasfield said:“Seeing governments recognizing cryptocurrencies as a viable medium of payment for taxes speaks lengths about a mindset change in the way we view these currencies.”Pasfield added that accepting crypto for tax payments will “inevitably lead to governments having to manage and hold these currencies within their Treasuries,” which can help reduce the volatility crypto assets are known for.He added that if a large federal government like that in the United States were to finalize the regulation of cryptocurrencies, it would be a logical step for it to “accept [cryptocurrencies] as a legitimate form of one of the oldest social technologies: money.”Russel Starr, CEO at DeFi Technologies — a technology company with products for investing in decentralized finance — told Cointelegraph he believes a government’s treasury should be denominated in the currency it uses to pay for services, meaning that if it’s going to pay employees in dollars, its crypto income should be converted to dollars.However, Starr said that any entity should “have diversified investment holdings,” which should “absolutely include cryptocurrency and other decentralized financial products.”Per the CEO, the “growth potential of cryptocurrency would make it an attractive asset in any carefully balanced portfolio, especially in that of the Mile High State.” This growth potential could also mean that governments accepting cryptocurrency for tax payments was a long time coming.Governmental adoption “only a matter of time”In February, California State Senator Sydney Kamlager introduced a bill that would amend the state’s code in order to accept cryptocurrencies for certain civic payments.The bill proposed authorizing a state agency to “accept cryptocurrency as a method of payment for the provision of government services.” Back in 2018, Ohio became the first U.S. state to accept Bitcoin for taxes but dropped the crypto tax payment program in 2019, citing legal issues.Colorado State Capitol building and surrounding grounds.Jaideep Singh, co-founder and CEO of artificial intelligence tax engine firm FlyFin, told Cointelegraph cryptocurrencies are slowly getting regulated. Per Singh, crypto regulations started with reporting on crypto transactions for U.S. tax filers before government agencies shifted to tracking cryptocurrency transactions.Tracking cryptocurrency transactions reduces their anonymity and “furthered a trend that we will see over the next several years” involving more transparency, tracking technology and increased regulatory requirements for crypto:“It is the responsibility of governments to make sure that its citizens are not defrauded, criminal activity is curtailed, and that taxes are not being circumvented. So, this new development happening in Colorado was only a matter of time.”Singh sees the U.S. leading the world when it comes to cryptocurrency acceptance, with other countries following, as “we will almost certainly see the adoption of blockchain and other cryptos by central banks.”Ben Weiss, chief operating officer at Bitcoin ATM operator CoinFlip, told Cointelegraph he believes Colorado’s move will “likely create a chain reaction, with other states in the country following suit — especially if the rollout goes as planned.” To Weiss, this could be a “major step towards consumers recognizing crypto as a legitimate form of currency.”Weiss added that the move could further boost cryptocurrency use cases among government services:“This advancement may also encourage crypto transactions to be implemented in other places statewide, such as at a local DMV [department of motor vehicles]. This is a great opportunity for Colorado to build its reputation as a tech hub and mark its place on the forefront of a digital revolution.”Weiss said that U.S. states could consider holding crypto assets because of their potential to appreciate, as the extra money gained through it can “be utilized to improve roads, clean parks, and help finance other underfunded areas of the local government.”Speaking to Cointelegraph, Patrick White, co-founder and CEO of crypto asset tax and accounting software provider Bitwave, said he loves seeing states such as Colorado and California moving to accept crypto for taxes but “not for the reason one might think.”White added that working with crypto assets requires “muscle memory; it requires understanding how to on-ramp and off-ramp, learning to do the tax and accounting, figuring out custodianship, and more.” He added:“It’s a huge step for the industry that multiple states are having to really understand crypto, makes rules around pricing digital assets for real tax purposes, and more.”Weiss hopes the U.S. federal government is next in line and that government bodies end up keeping “some of the assets on the balance sheet instead of just selling it right off.”Even if governments do not keep crypto assets on their balance sheets, demand for cryptocurrencies that they accept as payment could surge. One way demand for fiat currencies is maintained is through their use in tax payments: People need to hold fiat so they can meet their tax obligations at the end of the month or year.If cryptocurrencies are to be used to pay for taxes, the need to hold fiat currencies is greatly affected, even more so because paying for goods and services with crypto is becoming increasingly easier with the use of crypto debit cards.

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Crypto at the Olympics: NFT skis, Bitcoin bobsledders and CBDC controversy

Crypto at the Olympics: NFT skis, Bitcoin bobsledders and CBDC controversy

Uverejnil používateľ | feb 15, 2022 |

The 2022 Winter Olympics, officially called the XXIV Olympic Winter Games, kicked off on Feb. 4 in Beijing with crypto being a major part of the event, partly because of the Chinese government’s digital currency ambitions.The cryptocurrency community hasn’t had strong ties to the Olympics over the last few years. The last major headline-grabbing interaction was when the Dogecoin (DOGE) community helped fund the Jamaican bobsled team in 2014 so they could attend the event in Sochi.The 2022 Winter Olympics, however, are making history due to the presence of nonfungible tokens (NFTs), Bitcoin- (BTC)-supported athletes, the launch of the world’s first major central bank digital currency (CBDC) and their potential use as a payment method in a country that has effectively banned cryptocurrency trading and mining last year.China’s digital yuan controversyThe 2022 Winter Olympics were supposed to be a sort of coming-out party for the digital yuan, China’s CBDC. The People’s Bank of China, China’s central bank, has been trialing the digital yuan in several areas for years now and started allowing foreigners to use the digital currency for the first time during the event.The digital currency can be used through the government’s mobile app, e-CNY, or through mobile payments platforms developed by private sectors including Tencent Holdings’ WeChat, China’s messaging application with over one billion users.The app’s launch was reportedly stymied by COVID-19 restrictions that saw athletes, officials and journalists be largely separated from the rest of China in a quarantine “bubble” meant to prevent the spread of various strains of COVID. This bubble, combined with the government limiting the number of in-person spectators, has seemingly seen the number of people testing the digital yuan drop significantly.However, other reports suggested that more transactions were made using the digital yuan on the day of the opening ceremony than through Visa.Transactions using the digital yuan have totaled more than $13 billion since its launch with roughly 10 million merchants activating digital wallets by November 2021. That figure is dwarfed by Visa’s $12.5 trillionvolume for the 12 months ending June 30, 2021. Speaking to Cointelegraph, Fergus Hodgson, director of financial consultancy firm Econ Americas, said that the Olympics have “have become a marketing opportunity for governments, usually one that loses money,” and added:“A digital yuan is just another fiat currency that deserves to be outcompeted by private currencies or at least sovereign currencies not built on the backs of slave labor and totalitarianism.”The perceived threat of a digital yuan on dollar hegemony has seen United States Secretary of State Antony Blinken and Treasury Secretary Janet Yellen warn against the digital yuan’s rollout at the Olympics, as it could supposedly threaten U.S. interests. In July, a group of three senators sent a letter to the U.S. Olympic and Paralympic Committee claiming that the Chinese Communist Party could use the CBDC to surveil visiting athletes.China’s digital currency is expected to give the country’s government new tools to monitor its economy and control a larger share of the global digital economy.David McCarville, director at law firm Fennemore, seemingly agreed, telling Cointelegraph that Chinese authorities have “cracked down on the crypto industry as a threat to their natural security,” as “the decentralized nature of crypto assets” undermines the Chinese government and its need to “censor data and monitor financial transactions for economic surveillance purposes.”McCarville noted that there is “evidence that the Chinese authorities are intent on using the digital yuan to expand their economic surveillance activities,” adding:“By utilizing the digital yuan, a user is susceptible to ongoing surveillance in addition to potential malware and virus exposure. Without a clear understanding of the closed source coding used to create the digital yuan, it is almost impossible to make an informed decision.”To Eli Taranto, chief business development officer at digital bank EQIBank, China’s crypto crackdowns may not be related to its CBDC. He told Cointelegraph:“Crypto represents a sort of grassroot revolution that is changing some balances that were in place until recently. Clearly, not everyone is in favor of these kinds of transformations but, in the long run, they won’t be able to stop them no matter how hard they try.”NFTs at the OlympicsWhile China’s CBDC has been making headlines, nonfungible tokens have been used to captivate fans and art lovers.Several NFT projects have been launched to engage with fans at the Olympics. One of the more significant initiatives came from the International Olympic Committee (IOC), which collaborated with NFT marketplace and game studio nWayPlay to launch the Olympic Heritage Collection of Olympic NFT pins.These Olympic NFT pins are essentially digital versions of physical collectible and tradable pins that celebrate the past Olympic Games through posters, emblems, pictograms and mascots from the last 125 years.[embedded content]On top of that, the IOC released a play-to-earn (P2E) multiplayer video game developed by nWay called Olympic Games Jam: Beijing 2022. The game lets players compete in a series of Winter sports to earn Olympic NFT digital pins.These NFTs can be traded on the nWayPlay marketplace and boost players’ power-ups, grant them special avatar skins and sporting equipment. The app is notably not available in China where the Olympic games are being held.The British Olympic Association that represents Great Britain and Northern Ireland, Team GB, has also moved into the NFT space through the so-called Gold Lion Club NFT community. The project is meant to engage fans and was launched in partnership with commerce provider Tokns.Purchasing Gold Lion Tokns allows fans to gain access to signed merchandise, athlete experiences and an upcoming immersive clubhouse in the Metaverse.Moreover, Chinese tech giant Alibaba has launched four NFTs called “digital collectibles,” featuring sports at the Winter Olympics. These NFTs will feature traditional Chinese ink painting style and depict speed skating, aerial freestyle skiing, figure skating and slopestyle.Alibaba’s NFTs are available on its Tabao and Tmall marketplaces during the course of the Beijing 2022 Winter Olympics. Given the Chinese government’s stance on the subject, Alibaba has made it clear owners of these NFTs are “barred from using the digital collectibles for any commercial purpose.”Taranto told Cointelegraph that NFTs are a “great way to manage sentiment and build long lasting loyalty” and added a Chinese proverb to offer insight into digital assets’ current status in China: “Good Medicine Always Tastes Bitter,” which encourages short-term sacrifices for long-term gains.To Taranto, NFTs are “no different” and crypto assets “will be allowed in China and this ban is probably temporary:” The rules, he said, are likely going to be relaxed “as soon as CBDC testing is complete and nationwide adoption is a virtual certainty.”US bobsledder’s orange pillOlympic bobsledder Johnny Quinn was the latest sports star to swallow the orange pill and become a Bitcoin proponent. On social media, Quinn shared resources that could help his fans learn more about the flagship cryptocurrency and warned them they should “under no circumstance” take orders from “the mainstream” as “they are confused.”As a Class of 2021 #Bitcoin-er, I would like to unofficially-officially welcome the Class of 2022. Buckle up for a legacy impacting journey. First things first: it is critical that you to develop a proper framework regarding #BTC. Attached is your required reading list. Thread — U.S. Olympian Johnny Quinn (@JohnnyQuinnUSA) February 2, 2022The athlete told his fans to “start small” and take their time reading and understanding Bitcoin as money, as a payments network and as a store of value. He backed his comments with a barrage of media reports showing how large institutional players — including JPMorgan and Goldman Sachs — made a U-turn on BTC with time.Quinn suggested that applying a dollar-cost averaging strategy to a Bitcoin investment with a long time horizon is the best strategy for those interested in gaining exposure to it. The American bobsledder joined other sports stars in promoting the cryptocurrency, with some even taking their annual salaries in BTC.He is notably not the first Olympian to support cryptocurrencies. Cameron and Tyler Winklevoss, the founders of the Gemini cryptocurrency exchange, were both Olympic rowers.The United States’ national governing body for the sport of figure skating, U.S. Figure Skating, also enabled donations in cryptocurrencies like Bitcoin after partnering with donations platform Engiven.Taranto applauded that crypto and blockchain products “have taken center stage and are a part of the global debate” during the Olympics and predicted that:“Whether it’s NFTs, Bitcoin or DeFi today — it is only a matter of time until the Olympics take place in the Metaverse tomorrow.”Crypto’s growing presence at events like the 2022 Winter Olympics shows the space’s influence is growing, so much so that it’s becoming impossible to ignore. With companies like FTX, Coinbase and Crypto.com advertising during the Super Bowl and new partnerships with sports clubs filled with fans, crypto awareness may explode this year.

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