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Bitcoin’s bid to become the ‘one chain to rule them all’

The Bitcoin 2022 conference brought over 25,000 attendees to Miami last month to discuss the future of the world’s largest cryptocurrency. The event,…

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The Bitcoin 2022 conference brought over 25,000 attendees to Miami last month to discuss the future of the world’s largest cryptocurrency. The event, which attendees have described as “extravagant” and compared to a bacchanal, featured a now-notorious keynote speech by Peter Thiel in which the venture capitalist rallied Bitcoin supporters against a list of people whom he described as Bitcoin’s enemies, including Warren Buffet and Jamie Dimon.

While Thiel’s speech grabbed a lion’s share of the attention surrounding the conference, many investors, developers and founders in the Bitcoin community convened at the same event to discuss a threat that could prove far more pressing than the aforementioned personae non gratae — competition.

Even as the overall crypto market has plunged this week, Bitcoin remains the most valuable crypto asset in the world, with a market capitalization of around $589 billion as of May 9. Its status stems, in part, from the advantage of having been the first cryptocurrency token on a public blockchain. 

But as new blockchains continue to spring up, and after last year’s “DeFi” summer that brought new traction to Ethereum, Bitcoin investors have had to start watching their backs. Now, the blockchain’s backers are pouring capital into efforts to ensure it can maintain its dominance as a form of money and expand into other use cases through decentralized apps (dApps) to keep up with competitors like Ethereum and Solana.

Bitcoin’s payments edge

Bitcoin’s edge has typically been described as its value as an asset to hedge against inflation, much like gold, because of its fixed supply. Bitcoin supporters, including Thiel, ARK Invest’s Cathie Wood and MicroStrategy’s Michael Saylor, all spoke at Bitcoin 2022 about its ability to act as a store of value when central banks relax their policies and let inflation run hot, as has been the case in the United States throughout the majority of the COVID-19 pandemic. 

The reality has not been so simple, as Bitcoin has oftentimes traded down amid periods of rising inflation in the U.S. But Bitcoiners argue that its value is more clearly visible in developing nations, especially those experiencing hyperinflation or with sizable proportions of underbanked individuals. They view it as a relatively safe asset that can enable faster, more efficient payments both within and across borders.

The Bitcoin network itself only supports about five transactions per second, according to crypto exchange Binance. Bitcoin has integrated with a layer-two protocol called the Lightning Network to increase its speed and efficiency while lowering transaction costs, a piece of infrastructure used by the nation of El Salvador and major crypto exchanges such as Kraken.

Startup Lightning Labs, which raised a $70 million Series B round last month, is at the forefront of developing Bitcoin’s Lightning Network. It is building infrastructure for the Bitcoin Lightning Network akin to Visa’s payments network, Lightning Labs CEO and co-founder Elizabeth Stark told TechCrunch. 

Elizabeth Stark, chief executive officer of Lightning Labs. Image Credits: Eva Marie Uzcategui/Bloomberg via Getty Images

The Lightning Network can execute hundreds of thousands of transactions per second by settling transactions off-chain in a separate ledger, thus freeing up space on the layer-one Bitcoin blockchain while still adhering to its underlying protocol, Stark explained.

“People want access to Bitcoin, the asset … When you’re looking at stability, security and the global payments use case, and the global transaction aspects, that’s where Bitcoin and the Lightning Network will shine,” Stark said.

Lighting Labs recently announced a proposal to build Taro, a protocol that would allow individuals without bank accounts to send and receive money in the form of stablecoins that represent their domestic fiat currency through mobile applications. 

“If I were Visa, I’d be scared, because there are a lot of people out there that have mobile phones, but now don’t need to tap into the traditional system, and then the merchants don’t need to pay the 3% fee plus 30 cents [for a transaction]. You can have fees that are dramatically lower than the legacy system,” Stark told TechCrunch.

Startup Moon, in fact, partners with Visa to enable users to buy goods and services with Bitcoin through the Lightning Network at any U.S.-based e-commerce site using Visa’s rails. 

While Lightning Labs is focused on optimizing global payments through the Lighting Network, trading platform Robinhood has found the network useful in keeping network fees low on its new crypto offering, which it rolled out to users last month, Robinhood’s crypto CTO, Johann Kerbrat, told TechCrunch.

“We will support Lightning on the [Robinhood] app, so you will be able to connect it to pay merchants directly with the Lightning Network,” Kerbrat said. “It also means that you will be able to kind of create a channel between people using Robinhood outside of Robinhood and be able to exchange Bitcoin for almost zero fees.”

More than just an asset

Bitcoin’s low fees, enabled primarily by the Lightning Network, and early widespread adoption mean the blockchain has become synonymous with payments. Its closest competitor by value, Ethereum, is notorious for high network fees and is still worth less than half as much as Bitcoin by market cap. Newer challengers such as Solana offer lower transaction fees but are considered to be less secure. 

But despite Bitcoin’s dominance in the payments realm, other blockchains are developing capabilities far beyond simple monetary transfers. As an open source blockchain, Ethereum lets developers easily build decentralized applications, or “dApps” on top of it, enabling use cases such as minting NFTs and offering DeFi lending products through which investors can earn interest. 

As a result, Ethereum has been able to amass the largest ecosystem of tools, apps and protocols in the crypto world, and even competitors such as Polkdadot, Cosmos and Solana have more developers working on their blockchains than Bitcoin does, according to venture firm Electric Capital’s 2021 Developer Report.

Bitcoin, meanwhile, ranks just fifth by number of developers, below Cosmos and Solana. Its backers are trying to give Bitcoin a boost and attract developers to work on new projects in the ecosystem.

“A lot of [discourse] has been just about Bitcoin as an asset, and not necessarily Bitcoin as the network. And now I think we’re starting to see that paradigm shift, where people are looking at it more as an infrastructure,” Alex Chizhik, head of listings at crypto exchange Okcoin told TechCrunch.

Chizhik co-chairs Bitcoin Odyssey, an initiative launched in March by Okcoin in conjunction with venture firms including Digital Currency Group, GSR and White Star Capital, to deploy $165 million into projects that will “supercharge Bitcoin adoption,” according to the group

Indeed, $165 million is a lot of money, but seems like a drop in the bucket for the world’s biggest blockchain. Venture capitalists deployed more than $30 billion into web3 last year, much of which flowed to projects on chains that innately enable smart contracts, unlike Bitcoin.

Stacks, formerly known as BlockStack, plays a crucial role in expanding use cases for Bitcoin. Its open source network allows custom smart contracts to be built on Bitcoin, enabling developers to use the Bitcoin blockchain to create dApps. DApps built on the Bitcoin network with Stacks include CityCoins, a token protocol through which local governments can raise money from investors, and NFT exchanges such as Hey Layer and STX NFT.

“Ethereum definitely is leading the way in what can be done with things like DeFi and asset ownership, like NFTs, but that’s largely probably in the past three years. I think Bitcoin now has this opportunity to kind of catch up, take some of the best lessons learned, and really unlock the value and the base layer chain,” Brittany Laughlin, executive director of the Stacks Foundation, told TechCrunch. 

Muneeb Ali, co-founder of Stacks. Image Credits: Alex Flynn/Bloomberg via Getty Images

The Stacks Foundation is a nonprofit arm within Stacks that supports governance, education and grantmaking to improve infrastructure within the Bitcoin network. 

“Our role is really how to support growth of the network and make sure that we can fulfill our promise, which is a user-owned internet powered by Bitcoin,” Laughlin said.

Laughlin explained that without the Taproot upgrade implemented on the Bitcoin network late last year, which makes it easier and faster to verify transactions, the growth of Bitcoin as an ecosystem would have been much more limited. She noted that the Bitcoin community is generally hesitant to change anything about the protocol, and that even the Taproot upgrade was met with some internal resistance and conflict before it was finally implemented three years after it was first proposed. Still, she said, Taproot doesn’t solve all of the challenges Bitcoin faces, and further changes may be needed to continue building out the network.

Ultimately, though, Laughlin believes that Bitcoin will prevail in the long-run against other layer-one blockchains because of its first-mover advantage. 

“Anyone who’s holding $100 of Bitcoin, from El Salvador to New York City, if they want to take a loan against that [$100], or if they want to secure an asset with it, they could do that [with dApps on Bitcoin],” Laughlin said.

Laughlin compared Bitcoin’s race against other blockchains to Apple’s competition with Android, wherein Apple often launches products significantly later than Android does, but has a greater focus on the user experience. 

“Bitcoin is going to be like Apple, and secure the brand recognition, compatibility and ease of use — all of that comes to mind when I think of Bitcoin.”

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6 Questions for Alyssa Tsai of Panony

We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and throw in a few random zingers to keep them on…

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We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and throw in a few random zingers to keep them on their toes!


 

This week, our 6 Questions go to Alyssa Tsai, founder and CEO of Panony an incubator, investor and adviser for blockchain and Web3 business.

My name is Alyssa Tsai, and Im the founder and CEO of Panony. There are three pillars of businesses under our group umbrella. PANews is one of the earliest crypto media outlets in Greater China and South Korea. It has published over 20,000 articles, with an average of over 5 million page views per month. At Panony, we invest in blockchain projects worldwide and consult Fortune 500 companies for integration and expansion into the industry, spanning the entire spectrum of the blockchain industry from solution providers and exchanges to public chains, protocols and DApps. Im also a limited partner of NGC Ventures, the Animoca Metaverse Fund and the Delta Fund.

Before falling down the rabbit hole of crypto, my prior work experience included Cond Nast, Isentia, Ogilvy and a high-tech law firm. I also actively speak at and moderate global blockchain conferences.

 


1 What is the main hurdle in the way of the mass adoption of blockchain technology?

The industry is still in its infancy. We should be aware of the many challenges, though its already a buzzword in the tech world. The scalability problem is directly related to adoption and blockchain implementation. This question is about whether the system can operate smoothly as demand increases, which inevitably determines mass integration.

Its also important to address that the complexity of blockchain technology limits mass markets ability to appreciate the benefits. The entry barrier is high, so people need to make an effort to understand, not to mention having to keep up with the rapid changes and disruptions. Now they might as well use an adequately good solution for their needs, like regular financial services.

Thats why I feel like Im doing a meaningful job every day. Its early for blockchain and never too early for us. There are so many things to do and so many people we can support through education. The future is now.

 

2 Which countries are doing the most to support blockchain, and which ones will be left behind?

Since Im based out of Greater China, I can share whats happening here from my perspective.

Chinese President Xi Jinping once stated that the country needs to seize the opportunities given by blockchain technology. Following that principle, China has been developing a platform, known as the Blockchain-based Service Network, aimed at making blockchain technology implementation easier for businesses. Many governments are experimenting with a CBDC a central bank digital currency, which has blockchain at its core and China is piloting its digital yuan.

In recent years, the nation has issued statements supporting the development of blockchain tech across several sectors, with an ambition to consolidate the technology into its financial and growth strategies. We also appreciate its intention to build up industrial norms, or tariff incentives to support blockchain-based businesses.

Hong Kong has a robust system that has given birth to Animoca Brands, Crypto.com, BitMEX and many other exceptional companies in the industry. And on a global scale, Switzerland has SEBA Bank, the first regulated crypto bank in the country. In 2016, Zugs local government became the first municipality in the world to accept taxes in Bitcoin; and in 2020, the Swiss authorities allowed citizens and companies based in Zug to pay their taxes in either Bitcoin or Ether.

Other countries such as the United States, Singapore, Japan, South Korea and South Africa also play significant parts in the blockchain ecosystem.

 

3 What would you like to see tokenized? When, if ever, do you expect this to happen?

The history of art in museums, like the Dunhuang Murals. I visited years ago and learned that many experts and scientists are working tirelessly to discover a solution to slow down the oxidation of wall paintings caused by light and air exposure. Tokenizing these could help bring in more money for research and democratize art investment by making art pieces accessible to the general public. It could happen at any time.

In addition, charity work and support for research would be great to see tokenized, especially under the shadow of COVID-19.

 

4 What makes sense to you, and what makes no sense whatsoever?

Gender equality. As a young female entrepreneur who originates from the East and connects to the West, I plead for more investment and education around women. I have met so many powerful women of diverse backgrounds, and they are just as smart and hard-working as men. In reality, challenges remain: There is discriminatory legislation, societal practices persist, and women continue to be underrepresented in leadership at all levels.

Speaking of education, children being taught to learn for the sake of their parents pride does not make sense to me. We should pay attention to personal growth.

 

5 Which alternate movie universe would you most like to live in, and why?

Marvels. It dawned on me at the very beginning of the COVID-19 pandemic that we really could have a mighty superhero who could save thousands of lives. Furthermore, the films are about incredible, exciting voyages through time and space. Id love to discover new worlds. For the time being, Ill have to settle on crypto as my wild new world to explore.

 

6 Think of a favorite poem or musical lyric. What is it, and why does it speak to you?

From Bring in the Wine by Li Bai of the Tang Dynasty: When hopes are won, oh, drink your fill in high delight; And never leave your wine cup empty in the moonlight! Heaven has made us talents; were not made in vain. A thousand gold coins spent; more will turn up again. For people who might be interested in the original version

I learned this classical Chinese poem during middle school, and it was eye-opening for me at the time how people living thousands of years ago could live their life to the fullest even when excluded from a position working for the emperor. I guess thats how I learned about resilience and not being afraid of challenges.

Even today, I still remember every single word of this poem that inspires and empowers me its like Im encouraged to be someone like Li Bai, who continues to push forward despite the difficulties and stay truthful. I just keep on doing things I believe in, even when feeling down.

 

A wish for the young, ambitious blockchain community:

Be aggressive and inclusive. Get to know your community, and listen to your community. Lift and add value to one another through collaboration and fair competition.

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Visualizing A Decade Of Population Growth And Decline In US Counties

Visualizing A Decade Of Population Growth And Decline In US Counties

There are a number of factors that determine how much a region’s population…

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Visualizing A Decade Of Population Growth And Decline In US Counties

There are a number of factors that determine how much a region’s population changes.

If an area sees a high number of migrants, along with a strong birth rate and low death rate, then its population is bound to increase over time. On the flip side, as Visual Capitalists Nick Routley details below, if more people are leaving the area than coming in, and the region’s birth rate is low, then its population will likely decline.

Which areas in the United States are seeing the most growth, and which places are seeing their populations dwindle?

This map, using data from the U.S. Census Bureau, shows a decade of population movement across U.S. counties, painting a detailed picture of U.S. population growth between 2010 and 2020.

Counties With The Biggest Population Growth from 2010-2020

To calculate population estimates for each county, the U.S. Census Bureau does the following calculations:

      A county’s base population → plus births → minus deaths → plus migration = new population estimate

From 2010 to 2020, Maricopa County in Arizona saw the highest increase in its population estimate. Over a decade, the county gained 753,898 residents. Below are the counties that saw the biggest increases in population:

Phoenix and surrounding areas grew faster than any other major city in the country. The region’s sunny climate and amenities are popular with retirees, but another draw is housing affordability. Families from more expensive markets—California in particular—are moving to the city in droves. This is a trend that spilled over into the pandemic era as more people moved into remote and hybrid work situations.

Texas counties saw a lot of growth as well, with five of the top 10 gainers located in the state of Texas. A big draw for Texas is its relatively affordable housing market. In 2021, average home prices in the state stood at $172,500$53,310 below the national average.

Counties With The Biggest Population Drops from 2010-2020

On the opposite end of the spectrum, here’s a look at the top 10 counties that saw the biggest declines in their populations over the decade:

The largest drops happened in counties along the Great Lakes, including Cook County (which includes the city of Chicago) and Wayne County (which includes the city of Detroit).

For many of these counties, particularly those in America’s “Rust Belt”, population drops over this period were a continuation of decades-long trends. Wayne County is an extreme example of this trend. From 1970 to 2020, the area lost one-third of its population.

U.S. Population Growth in Percentage Terms (2010-2020)

While the map above is great at showing where the greatest number of Americans migrated, it downplays big changes in counties with smaller populations.

For example, McKenzie County in North Dakota, with a 2020 population of just 15,242, was the fastest-growing U.S. county over the past decade. The county’s 138% increase was driven primarily by the Bakken oil boom in the area. High-growth counties in Texas also grew as new sources of energy were extracted in rural areas.

The nation’s counties are evenly divided between population increase and decline, and clear patterns emerge.

Pandemic Population Changes

More recent population changes reflect longer-term trends. During the COVID-19 pandemic, many of the counties that saw the strongest population increases were located in high-growth states like Florida and Texas.

Below are the 20 counties that grew the most from 2020 to 2021.

Many of these counties are located next to large cities, reflecting a shift to the suburbs and larger living spaces. However, as COVID-19 restrictions ease, and the pandemic housing boom tapers off due to rising interest rates, it remains to be seen whether the suburban shift will continue, or if people begin to migrate back to city centers.

Tyler Durden Sat, 07/02/2022 - 21:00

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Airline stocks have been beset by external problems but could now be a good time to invest in a sector many think is in crisis?

It’s fair to say it has been a tough couple of years for the commercial aviation sector and investors in airline stocks. In 2019 the sector enjoyed record…

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It’s fair to say it has been a tough couple of years for the commercial aviation sector and investors in airline stocks. In 2019 the sector enjoyed record passenger numbers and 2020 was expected to be better yet. Low cost airlines were expanding aggressively, as they had been for years, and national carriers, in response, had made strides in cutting costs and introducing other efficiencies.

Then the Covid-19 pandemic struck, devastating the sector. Over the early part of the pandemic when international travel was severely restricted, airlines operated skeleton schedules. Severely reduced capacity, and schedules regularly interrupted by new lockdowns and shifting government policies bedevilled the sector for the next two years.

Even over the past few months which have seen most pandemic-related travel restrictions drop, a spate of new problems has hampered the sector’s recovery. Staff shortages, the result of a combination of the continuing need for those that become infected with Covid-19 to isolate and a tight labour market, have been a major headache. London-listed easyJet recently cut its capacity forecasts as a result of staffing issues.

And last week over 700 Heathrow airport staff voted to strike over the peak summer period, which promises chaos, and hundreds of cancelled flights, if an agreement can’t be reached over pay in the meanwhile. Staff at three Spanish airports are also calling for industrial action this summer and strikes are a threat elsewhere around Europe’s favourite holiday destinations.

Sky high fuel costs will also put pressure on margins this summer and potentially well into next year and a growing cost of living crisis sparked by inflation levels at 40-year highs will not help demand.

Airline share prices have predictably slumped since the onset of the pandemic. EasyJet’s valuation is down over 50% in the past year and over 75% since summer 2018. Its shares haven’t been worth as little as they currently are since early January 2012.

easyjet plc

Hope on the horizon?

But despite the fact the immediate future still looks tough for airlines, there are a number of reasons why investors might consider dipping into their stocks now or in the months ahead.

The first is that the bulk of the problems that have crushed airline valuations over the past couple of years have been external factors outwith control and unrelated to the underlying quality of companies. They are also all problems that are expected to be temporary and will ease in future. Covid-19 restrictions are, with the notable exception of China, no longer a big issue and hopefully won’t return. And even China recently reduced its mandatory quarantine period for anyone arriving in the country from two weeks to seven days.

That’s still problematic but a sign that an end to the dark cloud of the pandemic may finally be in sight. Most airlines were forced to either take on significant new debt or raise cash through equity issues that diluted existing shareholders, or through mechanisms such as selling and leasing back aircraft.

It will take time for that gearing to be unwound and balance sheets brought back to health. But the sector will eventually recover from the pandemic which should see higher valuations return, providing a buying opportunity at current depressed levels.

Airlines that have come out of the pandemic in the strongest positions will also likely gain market share from weaker rivals, improving their future prospects. British Airways owner IAG, for example, currently has access to more than £10 billion in cash after raising capital to cover losses over the pandemic. EasyJet has access to £4.4 billion. That means both should be well placed to cover any continuing short term losses until passenger numbers return to 2019 levels and push their advantage over less well-capitalised rivals.

Both IAG and easyJet have also seen their passenger capacity improve significantly in recent months. Over the all-important summer quarter to September, the latter expects its passenger capacity to reach 90% of 2019 levels despite the ongoing operational challenges. IAG expects to return to 90% of 2019 capacity over the last quarter of the year.

A full recovery to 2019 levels is possible by next year even if higher costs are likely to mean ticket price increases are inevitable. That does pose a risk for near-term leisure travel demand but there is confidence that remaining pent-up demand from the pandemic period will help soften the impact on discretionary spending on international travel that might have otherwise been more pronounced. Western consumers have also, the pandemic period apart, become so accustomed to taking foreign holidays that some analysts now question if they should still be considered discretionary spending rather than a staple.

Despite the transient and external nature of the problems that have hit easyJet’s valuation, not all analysts are convinced the current share price offers good value even despite its depressed level. They still look relatively expensive given the risks still facing the sector at a forward price-to-earnings ratio of close to x160.

iag

IAG could offer better value, currently trading at a price-to-earnings ratio of just x5.8 for next year. It is also expected to reverse return to a healthy profit by 2023. The company also has exposure to the budget airline market through Vueling and Aer Lingus and while it abandoned its move to take over Air Europa late last year it shows it has ambitions to further expand in this area. And it has plenty of capital available to it to make major acquisitions that could fuel growth when the sector recovers.

IAG’s cheap valuation does reflect the risks it faces over the next couple of years but for investors willing to take on a little more risk the potential upside looks attractive.

A dollar-denominated airline stock play

On the other side of the Atlantic, American airlines also suffered during the pandemic but are now recovering strongly. For British investors, dollar-denominated U.S. stocks also offer the attraction of potential gains in pound sterling terms as a result of a strengthening U.S. dollar. The Fed’s more aggressive raising of interest rates compared to the ECB or Bank of England is boosting the dollar against the pound and euro and it is also benefitting from its safe haven status during a period of economic stress.

One U.S. airline that looks particularly interesting right new is Southwest Airlines, the world’s largest low cost carrier. The USA’s domestic travel market has recovered so strongly this year that Southwest expects its Q2 revenues to be 10% higher than those over the same three months in 2019. It’s already profitable again and earnings per share are forecast to come in at $2.67 for 2022 and then leap to $3.84 in 2023. It’s a much more profitable operator than easyHet.

It also, unusually for an American airline, hedges a lot of its oil. That’s expected to see it achieve much better operating margins this year, predicted to reach 15.5% in Q2,  than other airlines being hit by much higher fuel costs. The company isn’t immune to the risk of the impact the inflationary squeeze could have on leisure travel but is seen as one of the most resilient airlines in the sector. It could be a better bet than either of its two London-listed peers.

The post Airline stocks have been beset by external problems but could now be a good time to invest in a sector many think is in crisis? first appeared on Trading and Investment News.

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