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Blockchain Can Disrupt Higher Education Today, Global Labor Market Tomorrow

Blockchain Can Disrupt Higher Education Today, Global Labor Market Tomorrow

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Blockchain can play its part in the education sector — record-keeping in 2–3 years and then adoption by the labor market?

In the post-pandemic world, individuals will need to seize ownership and control of their educational credentials — documents like degrees and transcripts — from schools, universities and governments. That notion received key support last week from the American Council on Education in a study funded by the United States Department of Education focusing on the use of blockchain in higher education.

“Blockchain, in particular, holds promise to create more efficient, durable connections between education and work,” wrote Ted Mitchell, the president of ACE, in the foreword to the study published on June 8, adding: “In the wake of the COVID-19 crisis, learners will be more mobile, moving in and out of formal education as their job, health, and family situations change.”

A key theme of the report is personal data agency — i.e., how “distributed ledger technologies [DLT] can ‘democratize’ data and empower individuals with agency over their personal information.” The report noted:

“Currently, when individuals need to prove their education and work history, they rely on institutions and past employers to verify education and workforce records. However, the institutions or employers may not be available, the records could have been lost or destroyed, or in the case of higher education, individuals may be required to pay fees. The inability to access or control their records can inhibit opportunities and keep them in the dark about what information is actually in their records.”

Education credentials have been typically stored on centralized systems. The problem with this, explained the report, is that data can be changed, deleted and shared without consent or knowledge of the individuals who created that data. By comparison, blockchain technologies “are inherently more transparent, persistent, immutable, and secured by encryption,” noted the report. 

Will digital academic credentials be commonplace in 2–3 years?

Kim Hamilton Duffy, an architect for the Digital Credentials Consortium, told Cointelegraph that the COVID-19 pandemic has accelerated the demand for digital credentials, adding: “Because of that and existing educational blockchain-related pilots, I expect these credentials will be commonplace over the next 2–3 years.”

A promising end-to-end pilot program demonstrating learner-controlled digital diplomas and degrees on a blockchain will run later in 2020, and a second will demonstrate digital transcripts, she said. Current pilots involve both permissioned blockchains — with credentials stored directly on the chain — as well as public blockchains with credentials stored off-chain that make use of blockchain-anchored identity registries.

One interesting detail: The decentralized identifiers/verifiable credentials architecture used in some of the most recent projects was designed with no privileged roles, Christopher Allen, the principal architect of Blockchain Commons — an open infrastructure corporation — told Cointelegraph, which means that anyone can be an issuer, adding: 

“This makes it possible for there to be P2P [peer-to-peer] competency credentials, from fellow students, teachers, co-workers, clients, contractors, employers — not just educational institutions.”

For example, Allen could personally make a verifiable claim that “Kim has a mastery level of competence in leading international level technical standards processes,” which is something that no educational institution would be willing to claim, but given Allen’s history and reputation as a co-author of the successful SSL/TLS specification, that attestation would arguably convey important information to Kim’s future employers, clients and collaborators. “These types of claims, I believe, will be an important part of the future of educational credentials,” Allen, who’s also a former co-chair of W3C Credentials CG, told Cointelegraph. 

Is the system broken?

Meanwhile, the current system is untenable in the view of many. Fraudulent diplomas abound, Hans Pongratz, the chief information officer at the Technical University of Munich, told Cointelegraph: “There are diploma mills and online shops around [...] — you can even select the right paper thickness and seals.” Roman Beck, a professor at IT University of Copenhagen, told Cointelegraph that the diploma system is “failure-prone and subject to all kinds of fraud,” clarifying further: 

“Securely mapping certificates with humans claiming to be the holder is not always easy as well, as birth certificates or identity cards are missing. Documents are not only photoshopped but also hard to verify as there are many institutions issuing certificates, diplomas and other work-related documentation. And finally, paper-based documents can get lost, which makes it impossible for the holder to prove that she or he actually has a certain education or qualification.”

Recently, through the standardization of verifiable credentials and in-progress pilots involving the T3 innovation network (U.S.-led), European Digital Credentialing Initiative (E.U.-led) and OpenCerts (Singapore), “we are reaching better E2E demonstrations of fitness,” Duffy added. 

But there are still obstacles to overcome, some technical. “What if you lose the private key that allows you to prove control [over the credentials]?” asked Duffy. In the worst case, it can be re-requested, “but then you are still bound to the issuer.”

Cross-border interoperability and cross-chain cooperation in conveying digital credentials between different national DLT systems is also an issue, added Beck, and the OECD Blockchain Policy Expert Group is working on policy recommendations in this area. 

Still, technology is not the main bottleneck, he emphasized: “It is the socio-technical integration of rules-based, autonomously operating DLT systems in complex social environments.” Alex Grech, a managing partner of Strategyworks, agreed that the more daunting challenges may be non-technological in nature, telling Cointelegraph: 

“Even within the European Blockchain Services Infrastructure project, the Commission may develop or fund the most sophisticated blockchain infrastructure available to EC member states and provide for free. But it will not maximize its potential until a raft of policymakers and education institutions decide to ‘buy into’ the solution since they are likely to be locked into existing technologies and procedures.”

There is already some history to learn from. “Small states like Malta and the Bahamas have been using Blockcerts to notarise education credentials since 2017,” said Grech. According to the ACE report, there are three major themes where DLT can be applied to advance social equity: “personal data agency, lifelong learning, and the power of connected ecosystems.” 

As an example of the need for “connected ecosystems,” Duffy referenced the aforementioned Blockcerts, an open standard for creating, issuing, viewing and verifying blockchain-based certificates, which she co-created several years back with J. Philipp Schmidt of the MIT Media Lab. However, the issue stands that the hiring managers and others will have to learn to trust the system, according to Duffy:

“With Blockcerts, we considered it a success that the learner can control their credential. But even though the recipient has a copy of the credential, will a relying party trust it? Do they understand the verification process? The E2E trust in the process was underemphasized.”

Can blockchain change the labor market?

The traditional education sector may just be the beginning. One can imagine all kinds of credentials — beyond academic degrees that could have a lasting impact on the labor market. “We need to go much further than ‘flat’ credentials like diplomas,” Duffy told Cointelegraph, adding: “What if you attended college but didn’t finish your degree? Today, you don’t have anything to show for it.”

Traditional education is just a small part of what a person learns and can do, she continued. “You are constantly learning but have little evidence to back that up.” There are efforts afoot today to “represent competencies” even before a conventional course of study is completed.

For example, Talent Cloud, led by Valerie Thomas, is an initiative developing new models for recruiting and mobilizing talent in Canada’s Public Service sector. It works with employers to shift flat job descriptions, like a banal “rock-star full stack developer” to something much more useful like “competency-based descriptions that can be more precisely matched up with skills/competencies,” said Duffy. 

This sort of work is a prerequisite to a more significant shift in the global labor market. As Duffy believes: “This is the really exciting part — it can help employers discover talent in their existing workforce and empower learners from non-traditional backgrounds.” on the matter, Beck told Cointelegraph: 

“Many believe that blockchain-based systems could liberate citizens, giving control back to the owner of the personal data. The EBS is not only aiming for securely conveying diplomas and other credentials of students across borders but also to support them later in starting a business, managing taxes or health records.”

Current events are spurring change. “The problem is especially evident with the increasing number of migrants that either have lost their credentials or for whom it is impossible to tell if their documents are valid,” added Beck. Therefore, moving, working and studying abroad have guided the development of a single digital market like the European one, where credentials can be universally recognized and accepted across the region.

The aim of the recent EBSI initiative, which has 30 signatory countries, is to allow studying and working in different countries while giving back to citizens control over their credentials, said Beck. This will make migration easier and increase workforce mobility. Grech told Cointelegraph:

“I think the entire nature of labor will change irreversibly because of COVID-19 and the ensuing collapse of the global economy. There has been more change in the past three months within education institutions and the labor market than in the past five years — and not all of it is negative.” 

Blockchain has been described as a hammer in search of a nail. If so, academic credentialing appears to be as obvious a nail as one can find. The current international trade in fake academic degrees, after all, is “staggering,” as the BBC reported, and with a global labor market increasingly mobile, the world could badly use a decentralized, borderless, tamper-free ledger of verifiable credentials — both for education and the broader labor market.

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Bitcoin mining revenue mirrors 2021 lows, right before BTC breached $69K

The key to survival for Bitcoin miners boils down to the delicate balance between the revenue and the operating cash flow.
Bitcoin…

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The key to survival for Bitcoin miners boils down to the delicate balance between the revenue and the operating cash flow.

Bitcoin (BTC) visiting the $20,000 range after one and a half years made mining — the most important job of the ecosystem — a costly affair. However, if history were to repeat itself, BTC investors may witness another epic bull run that previously helped Bitcoin reach an all-time high of $69,000.

Changes in Bitcoin prices directly impact the miners’ income, who earn fixed block rewards and transaction fees in BTC for running their mining operations. In June 2022, the total mining revenue dipped below the $20 million range, with Blockchain.com data recording the lowest dip of $14.401 million on June 17.

Total miners revenue over time. Source: blockchain.com

As shown above, the recent dip in Bitcoin mining revenue was last seen one year back when the total value tanked to $13.065 million on June 27, 2021 — back when BTC traded at roughly $34,000. What followed after that was Bitcoin’s five-month-long epic bull run, which was supported by pro-crypto initiatives such as El Salvador’s BTC acceptance and crypto-friendly regulations across the globe. 

Despite mixed sentiments about the recovery of the crypto ecosystem, small-time investors are found to have increased their investment efforts amid the bear market as they fulfill their long-term dream of owning one full BTC (1 BTC). Global recession, geopolitical tensions, falling crypto economies like Terra and the ongoing COVID-19 pandemic currently hold the Bitcoin ecosystem from unleashing its true potential.

Monthly operating cash flow vs. mining revenue. Source: Arcane Crypto

A report shared by crypto-focused financial services firm Arcane Crypto revealed that potential of several public Bitcoin miners to survive the ongoing bear market. The key to survival for Bitcoin miners boils down to the delicate balance between the revenue and the operating cash flow. 

Based on the report, Argo, CleanSpark, Stronghold, Marathon and Roit are the best-positioned miners to sustain the crypto winter. At the same time, major player Core has nearly matched its operational costs to its total revenue.

Related: Compass Mining loses facility after allegedly failing to pay power bill

Bitcoin mining hardware and hosting company Compass Mining lost one of its Maine-based hosting facilities after failing to pay the electricity bills.

Dynamics Mining, the owner of the mine hosting facility, alleged that Compass Mining has six late payments and three non-payments related to utility bills and hosting fees, stating “all you had to was pay $250,000 for 3 months of power consumption.”

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Is Bitcoin Really A Hedge Against Inflation?

The long-standing claim that bitcoin is a hedge against inflation has come to a fork in the road as inflation is soaring, but the bitcoin price is not.

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The long-standing claim that bitcoin is a hedge against inflation has come to a fork in the road as inflation is soaring, but the bitcoin price is not.

This is an opinion editorial by Jordan Wirsz, an investor, award-winning entrepreneur, author and podcast host.

Bitcoin’s correlation to inflation has been widely discussed since its inception. There are many narratives surrounding bitcoin’s meteoric rise over the last 13 years, but none so prevalent as the debasement of fiat currency, which is certainly considered inflationary. Now Bitcoin’s price is declining, leaving many Bitcoiners confused, as inflation is the highest it’s been in more than 40 years. How will inflation and monetary policy impact bitcoin’s price?

First, let’s discuss inflation. The Federal Reserve’s mandate includes an inflation target of 2%, yet we just printed an 8.6% consumer price inflation number for the month of May 2022. That is more than 400% of the Fed’s target. In reality, inflation is likely even higher than the CPI print. Wage inflation isn’t keeping up with actual inflation and households are starting to feel it big time. Consumer sentiment is now at an all-time low.

(Source)

Why isn’t bitcoin surging while inflation is running out of control? Although fiat debasement and inflation are correlated, they truly are two different things that can coexist in juxtaposition for periods of time. The narrative that bitcoin is an inflation hedge has been widely talked about, but bitcoin has behaved more as a barometer of monetary policy than of inflation.

Macro analysts and economists are feverishly debating our current inflationary environment, trying to find comparisons and correlations to inflationary periods in history — such as the 1940s and the 1970s — in an effort to forecast where we go from here. While there are certainly similarities to inflationary periods of the past, there is no precedent for bitcoin’s performance under circumstances such as these. Bitcoin was born only 13 years ago from the ashes of the Global Financial Crisis, which itself unleashed one of the greatest monetary expansions in history up until that time. For the last 13 years, bitcoin has seen an environment of easy monetary policy. The Fed has been dovish, and anytime hawkishness raised its ugly head, the markets rolled over and the Fed pivoted quickly to reestablish calm markets. Note that during the same period, bitcoin rose from pennies to $69,000, making it perhaps the greatest-performing asset of all time. The thesis has been that bitcoin is an “up and to the right asset,” but that thesis has never been challenged by a significantly tightening monetary policy environment, which we find ourselves at the present moment.

The old saying that “this time is different,” might actually prove to be true. The Fed can’t pivot to quell the markets this time. Inflation is wildly out of control and the Fed is starting from a near-zero rate environment. Here we are with 8.6% inflation and near-zero rates while staring recession straight in the eyes. The Fed is not hiking to cool the economy … It is hiking in the face of a cooling economy, with already one quarter of negative gross domestic product growth behind us in Q1, 2022. Quantitative tightening has only just begun. The Fed does not have the leeway to slow down or ease its tightening. It must, by mandate, continue to raise rates until inflation is under control. Meanwhile, the cost-conditions index already shows the biggest tightening in decades, with almost zero movement from the Fed. The mere hint of the Fed tightening spun the markets out of control.

(Source)

There is a big misconception in the market about the Fed and its commitment to raising rates. I often hear people say, “The Fed can’t raise rates because if they do, we won’t be able to afford our debt payments, so the Fed is bluffing and will pivot sooner than later.” That idea is just factually incorrect. The Fed has no limit as to the amount of money it can spend. Why? Because it can print money to make whatever debt payments are necessary to support the government from defaulting. It’s easy to make debt payments when you have a central bank to print your own currency, isn’t it?

I know what you’re thinking: “Wait a minute, you’re saying the Fed needs to kill inflation by raising rates. And if rates go up enough, the Fed can just print more money to pay for its higher interest payments, which is inflationary?”

Does your brain hurt yet?

This is the “debt spiral” and inflation conundrum that folks like Bitcoin legend Greg Foss talks about regularly.

Now let me be clear, the above discussion of that possible outcome is widely and vigorously debated. The Fed is an independent entity, and its mandate is not to print money to pay our debts. However, it is entirely possible that politicians make moves to change the Fed’s mandate given the potential for incredibly pernicious circumstances in the future. This complex topic and set of nuances deserves much more discussion and thought, but I’ll save that for another article in the near future.

Interestingly, when the Fed announced its intent to hike rates to kill inflation, the market didn’t wait for the Fed to do it … The market actually went ahead and did the Fed’s job for it. In the last six months, interest rates have roughly doubled — the fastest rate of change ever in the history of interest rates. Libor has jumped even more.

(Source)

This record rate-increase has included mortgage rates, which have also doubled in the last six months, sending shivers through the housing market and crushing home affordability at a rate of change unlike anything we’ve ever seen before.

30-year mortgage rates have nearly doubled in the last six months.

All of this, with only a tiny, minuscule, 50 bps hike by the Fed and the very beginning of their rate hike and balance sheet runoff program, merely started in May! As you can see, the Fed barely moved an inch, while the markets crossed a chasm on their own accord. The Fed’s rhetoric alone sent a chilling effect through the markets that few expected. Look at the global growth optimism at new all-time lows:

(Source)

Despite the current volatility in the markets, the current miscalculation by investors is that the Fed will take its foot off the brake once inflation is under control and slowing. But the Fed can only control the demand side of the inflationary equation, not the supply side of the equation, which is where most of the inflationary pressure is coming from. In essence, the Fed is trying to use a screwdriver to cut a board of lumber. Wrong tool for the job. The result may very well be a cooling economy with persistent core inflation, which is not going to be the “soft landing” that many hope for.

Is the Fed actually hoping for a hard landing? One thought that comes to mind is that we may actually need a hard landing in order to give the Fed a pathway to reduce interest rates again. This would provide the government the possibility of actually servicing its debt with future tax revenue, versus finding a path to print money to pay for our debt service at persistently higher rates.

Although there are macro similarities between the 1940s, 1970s and the present, I think it ultimately provides less insight into the future direction of asset prices than the monetary policy cycles do.

Below is a chart of the rate of change of U.S. M2 money supply. You can see that 2020-2021 saw a record rise from the COVID-19 stimulus, but look at late 2021-present and you see one of the fastest rate-of-change drops in M2 money supply in recent history. 

(Source)

In theory, bitcoin is behaving exactly as it should in this environment. Record-easy monetary policy equals “number go up technology.” Record monetary tightening equals “number go down” price action. It is quite easy to ascertain that bitcoin’s price is tied less to inflation, and more to monetary policy and asset inflation/deflation (as opposed to core inflation). The chart below of the FRED M2 money supply resembles a less volatile bitcoin chart … “number go up” technology — up and to the right.

(Via St. Louis Fed)

Now, consider that for the first time since 2009 — actually the entire history of the FRED M2 chart — the M2 line is potentially making a significant direction turn to the downside (look closely). Bitcoin is only a 13-year-old experiment in correlation analysis that many are still theorizing upon, but if this correlation holds, then it stands to reason that bitcoin will be much more closely tied to monetary policy than it will inflation.

If the Fed finds itself needing to print significantly more money, it would potentially coincide with an uptick in M2. That event could reflect a “monetary policy change” significant enough to start a new bull market in bitcoin, regardless of whether or not the Fed starts easing rates.

I often think to myself, “What is the catalyst for people to allocate a portion of their portfolio to bitcoin?” I believe we are beginning to see that catalyst unfold right in front of us. Below is a total-bond-return index chart that demonstrates the significant losses bond holders are taking on the chin right now. 

(Source)

The “traditional 60/40” portfolio is getting destroyed on both sides simultaneously, for the first time in history. The traditional safe haven isn’t working this time around, which underscores the possibility that “this time is different.” Bonds may be a deadweight allocation for portfolios from now on — or worse.

It seems that most traditional portfolio strategies are broken or breaking. The only strategy that has worked consistently over the course of millennia is to build and secure wealth with the simple ownership of what is valuable. Work has always been valuable and that is why proof-of-work is tied to true forms of value. Bitcoin is the only thing that does this well in the digital world. Gold does it too, but compared to bitcoin, it cannot fulfill the needs of a modern, interconnected, global economy as well as its digital counterpart can. If bitcoin didn’t exist, then gold would be the only answer. Thankfully, bitcoin exists.

Regardless of whether inflation stays high or calms down to more normalized levels, the bottom line is clear: Bitcoin will likely start its next bull market when monetary policy changes, even if ever so slightly or indirectly.

This is a guest post by Jordan Wirsz. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

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Final Capitulation — 5 reasons why Bitcoin could bottom at $10,000

Bitcoin. The bottom. Are we there yet? Several higher timeframe metrics suggest BTC’s real bottom will be somewhere around $10,000.

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Bitcoin. The bottom. Are we there yet? Several higher timeframe metrics suggest BTC’s real bottom will be somewhere around $10,000.

Bear markets have historically been challenging to navigate for traders and the conventional set of "reliable" indicators that determine good entry points are unable to predict how long a crypto winter might last.

Bitcoin’s (BTC) recent recovery back above the psychologically important price level of $20,000 was a sign to many traders that the bottom was in, but a deeper dive into the data suggests that the short-term relief rally might not be enough proof of a macro-level trend change.

Evidence pointing to the need for caution was provided in a recent report by cryptocurrency research firm Delphi Digital, which suggested that “we need to see a little more pain before we have conviction that a market bottom is in.”

Despite the pain that has already been felt since Bitcoin’s price topped in November, a comparison between its pullback since then and the 2017 market top points to the possibility of further decline in the short-term.

BTC/USD price normalized since all-time high (Current vs. 2017 peak) source: Delphi Digital

During previous bear markets, the price of BTC fell by roughly 85% from its top to the eventual bottom. According to Delphi Digital, if history were to repeat itself in the current environment it would translate into “a low just above $10,000 and another 50% drawdown for current levels.”

The outlook for Ether (ETH) is even direr as the previous bear market saw its price decline by 95% from peak to trough. Should that same scenario play out this time around, the price of Ether could drop as low as $300.

ETH/USD price percent drawdown (current vs. prior ATH). Source: Delphi Digital

Delphi Digital said,

“The risk of reliving a similar crash is higher than most people are probably discounting, especially if BTC fails to hold support in the $14K–16K range.”

Oversold conditions prevail

For traders looking for where the bottom is in the current market, data shows that “previous major market bottoms coincided with extreme oversold conditions.”

As shown in the weekly chart below, BTC’s 14-week RSI recently fell below 30 for the third time in its history, with the two previous occurrences coming near a market bottom.

BTC/USD weekly price vs. 14-week RSI. Source: Delphi Digital

While some may take this as a sign that now is a good time to reenter the market, Delphi Digital offered a word of caution for those expecting a “V-shaped” recovery, noting that “In the prior two instances, BTC traded in a choppy sideways range for several months before finally staging a strong recovery.”

A view of the 200-week simple moving average (SMA) also raises question on whether the historical support level will hold again.

BTC/USD price vs. 200-week SMA and 14-week RSI. Source: Delphi Digital

Bitcoin recently broke below its 200-week SMA for the first time since March 2020. Historically speaking, BTC price has only traded below this level for a few weeks during the previous bear markets, which points to the possibility that a bottom could soon be found.

Related: Bitcoin price dips under $21K while exchanges see record outflow trend

The final capitualation

What the market is really looking for right now is the final capitulation that has historically marked the end of a bear market and the start of the next cycle.

While the sentiment in the market is now at its lowest point since the COVID-19 crash of March 2020, it hasn’t quite reached the depths of despair that were seen in 2018.

According to Delphi Digital:

“We may need to see a bit more pain before sentiment really bottoms out.”
Crypto Fear & Greed Index. Source: Alternative

The weakness in the crypto market has been apparent since the end of 2021, but the real driving force behind the market crumbling include run-away inflation and rising interest rates.

BTC/USD vs. Fed funds rate vs. Fed balance sheet. Source: Delphi Digital

Rising interest rates tend to be followed by market corrections, and given that the Federal Reserve intends to stay the course of hiking rates, Bitcoin and other risk-off assets are likely to correct further.

One final metric that suggests that a final capitulation event needs to occur is the percentage of BTC supply in profit, which hit a low of 40% during previous bear markets.

BTC/USD price vs. percentage of supply in profit. Source: Delphi Digital

This metric is currently at 54.9%, according to data from Glassnode, which adds credence to the perspective that the market could still experience another leg down before the real bottom is in.

The views and opinions expressed here are solely those of the author and 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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