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“I’m often asked why we didn’t take a more traditional route of building a payment system on top of existing rails, instead of the more ambitious route we’ve chosen. I tried to find a good concise write-up about the advantages of a new core network to move money around, and couldn’t find one, so I thought it would be a good idea to take a stab at it.”
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A confusion of theories have surfaced to explain the cause of the savage decline, yet a compelling one is that it was fuelled—perhaps not started—by a series of liquidations and margin calls on 100x leverage crypto derivatives giant BitMEX.
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The Bitcoin (BTC) network’s hash rate suffered a mysterious flash crash on Sept. 23, in a sudden intraday plummet from 98,000,000 TH/S to 57,700,000 TH/s. By press time, levels have recovered back to 92,800,295 TH/S— yet remain shy of their recent record of 102,848,135 on Sept. 18.
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According to Byte Tree, a transaction from a private wallet to an exchange worth $1.2 billion triggered the dip. The scale of funds at involved sparked a panic selling session.
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The lion’s share of Bitcoin derivatives trading volume is on unregulated exchanges that don’t operate as clearinghouses and offer leverage up to 100X.
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The U.S. SEC has begun proceedings to determine whether it should approve a proposed bitcoin ETF. It has begun evaluating the proposed rule change to allow NYSE Arca to list and trade shares of Wilshire Phoenix’s Bitcoin and Treasury Investment Trust.
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“All things considered, Libra has undoubtedly been a wakeup call for central banks and policymakers. Global “stablecoin” initiatives are the natural result of rapid technological progress, globalisation and shifting consumer preferences. The demand for fast, reliable and cheap cross-border payments is bound to grow further in coming years. Policymakers and central banks should respond to these challenges.”
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“Bitcoin is like backing Apple when it was on the edge of going bust: do you believe in the future or not? If you do, you hold forever and buy the dips. The only thing you mustn’t do with the position is let that put your finances at risk or hurt your sanity.”
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A key question for adherents of DLT is why it offers benefits beyond traditional settlement mechanisms. Whelan suggested “smart contracts” could be one answer – contracts written in computer code that can be fulfilled automatically when certain conditions are met. He said such contracts had proven “extremely powerful” in trials.
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The efforts are similar to the multi-level marketing programs involving supplements, cosmetics and kitchen items, where you recruit others to earn income rather than actually selling the products. While the programs have long raised eyebrows, they’re playing a greater role in the crypto world.
Kiffmeister’s Fintech Daily Digest 09/25/2019
