Central Banks Concerns About Rising Crypto Adoption. Report Paradoxically Depicts Bullish Outcome For Crypto

Crypto adoption is on the rise, and it may well be argued that the central banks don't like that fact. Recently, the BIS, monikered as the so-called ‘Bank for Central Banks,’ published a report claiming that crypto adoption causes financial instability in developing countries, where adoption is happening the most. 

Central banks of the United States, Mexico, Brazil, and other major Latin American countries conducted the report. Their concerns about crypto adoption paint a surprisingly bullish picture. This article provides an overview of this report, explains the significance of what's being said, and tells you what it could mean for the crypto market.

The report summarized here is titled “Financial Stability Risks from Crypto Assets in Emerging Market Economies.” It was published by the Bank for International Settlements (BIS) in August 2023. The report begins with a foreword that analyzes crypto adoption in developing countries. It includes recommendations on how to keep crypto under control. 

Source: Cointelegraph

BIS member central banks of Argentina, Brazil, Canada, Chile, Colombia, Mexico, Peru, and the United States wrote the report. The representatives set up a task force led by the BIS Americas Office as the secretariat. It seems to claim that crypto adoption in developing countries is high because these countries generally have low financial literacy. This starkly contrasts with a recent study by a U.S. university, which found that crypto adoption actually increases financial literacy. This makes sense, considering that you must understand crypto before adopting it. 

About The Report

The report's first section provides a summary of the key findings. The authors are hyper-focused on the rise and fall of the crypto market. They don't seem to care about why people are adopting crypto but simultaneously acknowledge the reasons why. For example, As quoted, “Proponents of crypto assets claim that they offer lower transaction costs, faster payments, no intermediation, anonymity, and potentially high returns on investment. Whether they deliver on these claims is another matter.” 

The second part is surprising, as they refuse to argue against it. Moreover, it states, “For some users, crypto assets provide an alternative to limited investments and savings instruments, while for others, they offer a seemingly safe haven against volatile domestic currencies.” 

Now, this conflicts with what the authors implied in the forward. They know those adopting crypto are informed. In other words, they know exactly why people in developing countries embrace crypto; because their fiat currencies suck. Instead of addressing these shortcomings, the authors essentially conclude that something must be done to keep crypto under control because of supposed financial stability risks. 

The authors then highlight several risks, in particular, market risks due to volatility, liquidity risks due to a lack of transparency, credit risks due to a lack of governance, AKA control, operational risks due to cyberattacks, currency substitution risks, and capital flow risks, due to crypto’s use in cross-border payments. 

The irony is that many assets are more volatile than crypto. The existing financial system is even less transparent than the crypto industry, traditional finance (TradFi) has exponentially more credit risk than decentralized finance (DeFi), and cryptos are more resilient to cyber-attacks because they're more exposed; they are literally tested every day. This underscores the fact that the only risks the authors are concerned about are currency substitution and capital flows. 

To address these risks, they claim that “Authorities can consider selective bans, containment, and regulation,” a classic starting point for these BIS reports. For those interested, here is a summary of another crazy BIS report from last year.

The report begins with an introduction where the authors explain cryptos and how they work. They then divide crypto into two categories for their analysis: stablecoins and unbacked crypto assets, which means everything else: Bitcoin, Ethereum, et al. For context, central banks hate stablecoins, probably because they’re direct competitors to Central Bank Digital Currencies (CBDCs). Interestingly, governments seem to like stablecoins because they're backed by government debt. This means they can use stablecoins to subsidize their spending. 

The authors explain that this report builds on recent work by the Financial Stability Board (FSB), a subsidiary of the BIS. Notably, the FSB’s crypto recommendations become regulations in its member countries, namely the G20. The work the BIS is building on is a crypto framework put together by the FSB, which can be seen in the image below. This infographic is ironic because it notes that stability risks only flow from crypto to TradFi. As we've seen with the banking crisis, the stability risks come from TradFi, not crypto.

Source: BIS Papers: Financial stability risks from crypto assets in emerging market economies.pdf

Before breaking down the alleged risks crypto poses to TradFi, the authors make another eye-opening claim, 

“The crypto universe was built on the promise of an efficient, decentralized, low-cost, inclusive, safe and open monetary system, but structural vulnerabilities in the design and operation of crypto asset markets make them unsuitable as the basis for a monetary system.” 

The key word here is ‘monetary’; the central banks oversee the monetary side of the financial system. In practical terms, this means raising or lowering interest rates through various mechanisms to affect the amount of currency in circulation. It's clear that they do not want to lose control of this ability. 

The Alleged Risks

Market Risk
As stated above, the first crypto risk is market risk. Firstly, the authors implied that publicly traded crypto companies are inherently risky. They also take issue with the fact that some cryptos are held mainly by a handful of wallets. They provide some fascinating statistics to back up their claims, 

“In 2020, an estimated 10,000 individuals owned about a quarter of all outstanding Bitcoin. Satoshi Nakamoto, the anonymous creator of Bitcoin, is the largest holder, with more than 1 million stored in different wallets (around 5% of the total). Other tokens show similar concentration. For example, fewer than 100 participants control over 51% of the value in Dogecoin, ZCash, and Ethereum Classic.”

So, at first glance, these statistics are concerning, but it's easy to forget that there's even more extreme wealth concentration in other asset classes. It exemplifies the top 1% reportedly earned more than the rest of the world combined over the last two years. Why isn't the BIS raising this point? 

The second thing worth noting is that most of the authors' concerns around market stability are directed at stablecoins, which should come as no surprise, given that they are competitors to CBDCs, as mentioned earlier. 

Source: Bitcoin Treasuries 

What is surprising is that the authors also target spot Bitcoin ETFs, quoting, “Bitcoin ETFs could potentially pose a market risk in emerging market economies (EMEs) by lowering the barriers to entry for less sophisticated investors and increasing investors' direct and indirect exposure to crypto assets.” 

Oddly enough, the authors are concerned about the wealth concentration Bitcoin ETFs could cause. Here are a few more statistics; “As of end-March 2023, ETFs owned a combined 819,125 BTC, 3.9% of the total bitcoins to be issued (21 million). The largest Bitcoin ETF is Grayscale Bitcoin Trust (GBTC), which owns 643,572 BTC, or nearly 3% of the total supply. In total, ETFs, governments, and public and private companies own more than 1.6 million BTC, approximately 7.8% of the total supply.”

Source: Bitcoin Treasuries 

Liquidity risk
The second crypto risk is liquidity risk. The authors note that most of crypto’s trading volume occurs on offshore exchanges such as Binance. What's odd is that they include Huobi Global as one of the top crypto exchanges and a potential point of concern when it's no longer that large.

Source: Coinmarketcap.com

Oddities aside, the authors also aim for Tether and allege that its USDT stablecoin is still insufficiently backed. They missed the memo that USDT is now backed almost entirely by US Government debt, like all the other major stablecoins. It appears that the BIS is making arguments using outdated data. 

Anyhow, there’s something else that the authors point out, which is quite essential: money market funds were a significant source of market instability in 2008 and 2020. For those unfamiliar, money market funds are kind of like TradFi stablecoins. The difference is that you earn a yield on them. 

Naturally, the authors note that stablecoins are similar and that if they were to experience a run, this could create problems for the assets that back these stablecoins, namely government debt. The thing is that most money market funds are significantly more extensive than most stablecoins and, therefore, riskier. 

Credit Risk
In any case, the third is credit risk. The authors define credit risk in the context of crypto as “The potential that a counterparty in crypto-asset markets or directly exposed to crypto assets could fail to meet its obligations in accordance with agreed terms.”

Areas of concern include interconnectedness between crypto companies, citing FTX and Alameda Research. Also, lack of governance and disclosures, quoting DAOs and leverage, citing DeFi. They also included crypto exchanges having access to bank accounts, citing Chilean authorities, who forced banks to bank crypto exchanges. 

Despite favorable crypto regulations, crypto companies and projects in pro-crypto jurisdictions still have difficulty opening bank accounts. This is likely due to the Financial Action Task Force (FATF), but this pressure could be from the central banks.

Operational Risk
Regardless, the fourth crypto risk is operational risk. The authors take issue with the fact that cryptos use blockchains, quoting, “One of the key features of blockchain technology is its irreversibility. Once a transaction is recorded on the blockchain, it cannot be undone. This feature can be problematic in situations where transactions need to be reversed, such as in the case of a hack or fraud.” 

News flash: If crypto transactions could be reversed, then there would be no point in having crypto because governments, central banks, and Wall Street could manipulate it. Just like they do with money and other assets. In case it wasn't clear enough, they want to be able to do this with crypto, too. 

Disintermediation Risk
The fifth crypto risk is bank disintermediation risk. This includes both currency substitution and reserve currency substitution, which are significant concerns for the central banks. The authors admit that crypto could “..reduce the monetary authority’s control over liquidity in the economy, thus weakening the effectiveness of monetary policy…” 

The authors reiterate why people would substitute their fiat currencies with crypto. These reasons included not trusting the fiat currency, crypto being more efficient than fiat, and crypto being more private than fiat, which isn't accurate, at least in the case of cash. 

The reserve currency substitution section is where things get seriously bullish for crypto. They quote, “…if crypto assets become mainstream, they could also replace the global reserve currency as a perceived store of value…” The report denotes this substitution process as cryptoization 2.0. Put simply, the authors speculate that crypto could compete with reserve currencies, like the US dollar, if they see enough adoption.

The caveat is that they're saying this in the context of developing countries, where they think crypto will be used to evade capital controls. Even so, this pertains to something speculated about in a previous article about the BRICS countries.  It’s possible they could adopt a cryptocurrency as their common currency. The fact that BRICS’s current and future members fit the profile of the countries described in this BIS report underscores this possibility. 

Capital Flow Risk
The final crypto risk is capital flow risk, another big concern for the central banks. That's because crypto allows people to move their money around without asking for permission from Big Brother; that's not allowed in the modern financial system. The report’s authors are frustrated about the fact, quoting, 

“Crypto assets can operate offshore and hence beyond regulatory oversight. Crypto assets can be traded and stored on a global network of computers, often offshore servers and digital wallets, making it possible for them to operate beyond the jurisdiction of any one country.”

They're also upset that, quote, “…a person can create a digital wallet on a computer or mobile device and store crypto assets in it, without having to go through any formal registration process or identity verification.” Note that they want to connect all crypto wallets to digital IDs eventually. 

To drive the point home about crypto capital flows being a risk, the authors provide another statistic, saying: “One of the biggest Mexican crypto exchanges claimed that in the first half of 2022, it processed remittances for $1 billion in crypto assets, approximately 3.6% of the total flow in that period.” This is bullish for crypto.

Crypto Risk Connection To TradFi

This begs the question of how these crypto risks could spill into the traditional financial system. The third part of the report has all the answers from the perspective of the BIS. These are summarized in a single infographic (below) that shows the connection between crypto and TradFi. These include crypto to fiat, on and off ramps, stablecoins backed by government debt, etc. 

Source: BIS Papers: Financial stability risks from crypto assets in emerging market economies.pdf

What's crazy is that the authors suggest that even if crypto risks don't spill over into TradFi directly, they could spill over indirectly. The report states, 

“Disruptions in the cryptoasset market can potentially spill over to other financial markets through confidence effects. For example, a sharp drop in the value of crypto assets could erode investor risk appetite. This could lead to outflows from the traditional financial system and tighten financial conditions.”

Put differently, if the crypto markets crash, this could spook investors in TradFi, and that would cause issues; therefore, crypto must be regulated, contained, banned, etc.; it’s madness. It also makes no sense because the opposite is true; stocks influence crypto’s price action, not vice versa. 

Crypto Adoption In Developing Countries

All of these allegations about crypto risks could be intended to prime the reader for the fourth section, which is crypto adoption in developing countries. After all, if they believe crypto is so risky and harmful, they will need to ensure those unfortunate folks in the global South are extra protected. Quips aside, the authors detail four so-called risk catalysts for developing countries regarding crypto. 

1. Crypto adoption
2. Inflation and a lack of central bank credibility
3. Lack of payment infrastructure and financial literacy (Arguably not true)
4. A lack of crypto regulation (or rather, the lack of anti-crypto regulation that central banks want to see)

Recommendations For Controlling Crypto

Following a lengthy overview of all the crypto regulations in select North and South American countries, the authors provide recommendations about controlling crypto in the fifth part of the report. They start by saying that there are three approaches to managing crypto: bans, containment, and regulation. 

They say that many authorities have argued that crypto should not be regulated because regulations would give the industry a seal of approval that could lead to more adoption. Regulations mean institutions and institutions represent lobbying for better regulations. Believe it or not, the authors aren't in favor of a crypto ban because it would mean no oversight of crypto. They also do not favor containment, i.e., keeping crypto separate from the financial system, because they know secret connections would inevitably manifest. 

So, the one option remaining is to regulate crypto, specifically with the same risk and regulation principle. If you've read this article about crypto regulations, you'll know that this principle could turn crypto into another arm of the existing financial system, which would defeat its purpose. One of the entities pushing this principle the hardest has been the World Economic Forum (WEF), which the authors cite many times in this report. 

For developing countries specifically, the authors recommend they get their monetary business in order so that there's no incentive for crypto adoption. Indeed, if the central banks and governments manage their currencies properly, crypto probably wouldn't exist because it wouldn't need to exist. They only have themselves to blame at the end of the day, and with a bit of luck, crypto will force them to be somewhat more responsible going forward. 

What Does It Mean For Crypto?

What does all of this mean for the crypto market? In short, it's very bullish. The central banks are aware that crypto adoption is growing fast and is ultimately due to deficiencies in the existing financial system, which they know they probably can't fix. These deficiencies are especially acute in developing countries, and for good reason. 

The US dollar is the world's reserve currency, and it's used in up to 96% of international trade in some regions. Unless a country has many resources, it has difficulty getting its hands on US dollars. These countries can only get US dollars by requesting an IMF or World Bank loan. These loans come with many conditions, which are typically in favor of the US and US-based corporations. 

Now, the consequence of this is that these indebted developing countries just can't get ahead. As pointed out by macro analyst Lyn Alden, only a handful of developing countries have managed to become developed over the last 50 years. For the ones that manage, it was due to their natural resources, especially oil. Some of the only exceptions are South Korea and Taiwan,  both of which have received significant support from the US over the decades, probably for geo-political purposes. 

The rest of the developing world has been stuck in the same place, sometimes worse, and they're starting to understand why. Consider that even the BIS referred to "The global reserve currency in their cryptoization 2.0 prediction.” The keyword is ‘The’一it's singular. Logically, it's a reference to the US Dollar.  Assuming it is and probably is, the BIS’s cryptoization quote reads: "If cryptocurrencies achieve mainstream adoption, they could replace the US dollar as the world's reserve currency.” 

Now consider that this is something that many central banks could be interested in; remember that the BRICS are a thing. This would explain the somewhat paradoxical conclusions of the BIS report, which is to regulate crypto even though they know that it will inevitably result in more crypto adoption. 

When you combine this conclusion with the fact that the BIS will allow central banks to hold up to 2% of their balance sheets in crypto starting in 2025, you begin to realize that some central banks might be breaking ranks. In fact, it's possible they're all breaking ranks except the Federal Reserve. That would be truly something, wouldn't it? 

Tim Moseley

FATF Out To Get Crypto. FATF Travel Rule Expanded. What Does It Mean For Crypto? 

The Financial Action Task Force (FATF) has been making portentous noises about crypto in recent years, and several countries are getting antsy. The most prominent concern is implementing the “travel rule,” designed to force crypto companies to collect information about any transfer of digital assets worth more than US$1,000. Some countries, notably the UK, have in the past pushed back against this ‘recommendation’ from the FATF, but their resistance now appears to be wavering. The FATF is on the warpath and has crypto firmly in sight.

This article examines what the FATF is up to, what it could mean for your country, and what it all means for crypto. Although it may sound like more doom and gloom, there are reasons to believe that crypto could benefit from the FATF’s meddling in some ways.

Just recently, PayPal announced that it would prevent UK users from buying BTC until early 2024. PayPal reportedly did this because the Financial Action Task Force (FATF) so-called travel rule requires all crypto companies to collect detailed info about crypto transfers. The travel rule was set to go into effect in the UK on September 1st, 2023, and is being rolled out worldwide. This could have a profound impact on crypto companies and projects everywhere.

Image Source: Coindesk

What Is The FATF?

The Financial Action Task Force, or FATF, is an unelected and unaccountable international organization based in Paris, France. It was created by G7 countries in 1989 to combat money laundering, but its scope has expanded significantly since then. However, these recommendations have apparently done nothing to combat illicit financial activity over the last 30 years. 

The organization adopted a mandate in 2019 to “Combat any threats to the integrity of the financial system.” Of course, the FATF considers crypto a threat, probably because its purpose is to replace the financial system. The FATF started applying its so-called recommendations to the crypto industry in 2019, and any country that refuses to go along with these recommendations will find itself cut out of the international financial system. The FATF finalized its recommendations for cryptocurrency in October 2021.

FATF’s Crypto Recommendations

The FATF’s crypto recommendations involve labeling everything that doesn't involve a third party as “high-risk.” This includes holding your crypto in your wallet and sending crypto peer-to-peer. The FATF also considers any crypto privacy to be inherently high risk. If these recommendations are implemented as regulations, crypto will become another arm of the existing financial system. It will offer no financial freedom and no financial privacy. The only exception is NFTs, which are exempt from these recommendations for unknown reasons. 

On that note, you should know that the FATF crypto recommendations only apply to intermediaries working with crypto, which the FATF refers to as Virtual Assets Service Providers or VASPs. The FATF’s crypto recommendations do not apply to miners, validators, or crypto wallets, at least not yet. However, the scope of the FATF's requests seems to have expanded over time, so this could change. This expansion is especially true of the travel rule, which requires VASPs to collect KYC on everyone who buys or sells more than $1,000 of crypto. 

The Travel Rule Expanded

Crypto exchanges started collecting KYC in 2021. Since then, however, the travel rule has expanded to require VASPs to collect KYC-level information about crypto transfers to and from VASPs worth more than $1000. Note that it's not entirely clear when the scope of the travel rule was expanded. Research suggests this expansion happened after the FATF’s finalized crypto recommendations were published in October 2021. Some may recall that South Korean crypto exchanges started forcing users to provide KYC-type information for crypto wallet transfers in December 2021. 

Images source: Notabene

The good news is that some countries have pushed back against the expanded travel rule. You might remember that the UK announced that it would not force VASPs to track transfers to and from crypto wallets in mid-2022, stating that they did not pose any illicit activity risks. 

The not-so-good news is that these countries, notably the UK, seem to have pulled a 180⁰. As mentioned, the UK implemented this expanded travel rule starting September 1st. The announcement specified that it did this in response to a statement by the FATF in June 2023. The FATF announcement called on countries to implement its crypto recommendations as regulations “without delay.” Of course, this is not a recommendation; it's a demand. Comply with our crypto recommendations, or we will restrict your access to the global financial system. 

Some countries could not comply, so they had to ban crypto. Two countries that did this are Pakistan and Kuwait, both of which recently banned crypto in its entirety, citing the FATF’s crypto recommendations as the reason. It appears that the UK opted to comply instead. 

Image source: Notabene-Regulations 

Which Countries Are Now Affected 

So this begs the question of when the FATF's expanded travel rule is coming to your country. The answer depends on the country; a complete list of countries and their compliance with the expanded travel rule can be found on the website of Notabene, a crypto compliance company. If you look at the list, you'll notice that some have already implemented the travel rule. It shows that not all have implemented the expanded travel rule. You'll have to click the link on your country and look at the details. 

There's only one country we need to look at: the United States. That's because the US heavily influences the FATF. The travel rule has its roots in the United States’ Bank Secrecy Act. KYC, for financial transactions, originates in the infamous Patriot Act. The FATF’s finalized crypto recommendations were even co-authored by the US Treasury Department. As such, it's safe to assume that the FATF’s crypto recommendations are likely to mirror similar regulations that are being proposed or that have already been passed in the United States. 

The FATF's expanded travel rule seems rooted in an infamous FinCEN proposal from November 2020. The proposal was to lower the travel rule transaction threshold from $3,000 to just $250 and expand its scope to include any crypto transactions. This includes transfers between crypto wallets and VASPs, i.e., exchanges. There is also an outcry on the measure of invasion of privacy, 

Fortunately, this proposal has yet to be approved. Unfortunately, the US has influenced the FATF to implement this proposal in other countries instead. That's because the travel rule transaction threshold in jurisdictions like the European Union is $0, which the FATF suggested in its finalized crypto recommendations. This is more significant than you might think because it indicates the start of a very slippery slope. 

A Slippery Slope

First, the FATF just wanted VASPs to complete KYC on their users. Now, they want VASPs to get info on crypto transactions above a specific value. Eventually, they'll require VASPs to get information on all crypto transactions, and the countries that don't force VASPs to comply will be cut out of the global financial system. This ties into why some countries, such as Kuwait and Pakistan, ban crypto instead of complying with the FATF, like other countries, such as South Korea and the UK.  

The answer is likely because they lack the resources to comply with these recommendations. Take a second to consider that information about all these travel rule transactions will have to be shared with national regulators. In turn, these national regulators will have to make sense of this massive amount of information and understand which transactions could be illicit and which ones are legit. If they fail to do this to the standard that the FATF wants, they could just as easily find themselves on the FATF’s grey list or even black List. 

In other words, the outcome of attempting to comply will be almost the same as outright non-compliance. So why bother trying to comply? Not only that, but it's possible that the US would use this alleged non-compliance as justification to punish its geopolitical opponents. For context, it's believed that up to 40% of money laundering occurs in the United States, yet countries like the UAE are ending up on the FATF's naughty lists. 

Is it Geopolitical, for Profit, or Something Else?

Given this fact, one could argue that the primary purpose of the FATF is geopolitical, not regulatory. If this is the case, it's appalling because it means the US is using the FATF to push its allies to comply. Remember that the UK initially wasn't going to apply the FATF's expanded travel rule. This relates to why any country would take the risk of complying with the FATF crypto recommendations instead of just banning crypto. 

Some say the answer is probably profit. Crypto has unprecedented potential; dozens of countries are trying to capitalize on this by becoming crypto hubs. The paradox is that the FATF's expanded travel rule alone is likely enough to crush smaller crypto companies and startups. That's because they would need more financial resources to comply. This would mean that the large crypto companies left standing could become monopolies. 

At that point, it would be effortless for the FATF to expand the purview of its crypto recommendations again to outlaw self-custody, peer-to-peer transactions, and crypto privacy completely. Again, this would turn crypto into another arm of the existing financial system, making it much more dystopian. 

How Could It Benefit the Crypto Market?

The silver lining is that this outcome is years away from occurring and is not guaranteed. It could also benefit the crypto market in short to medium term. That's simply because institutional investors will likely invest more in crypto once all these FATF-based regulations are in place. This is because crypto would become ever so slightly more integrated with the existing financial system from a regulatory perspective. 

This means more crypto to fiat on and off ramps, more funding for crypto projects and companies, and more direct crypto investment. The consequence is that crypto would no longer become a niche asset class, making self-custody and peer-to-peer transactions more common. 

Under normal circumstances, this would result in an explosion of crypto-specific innovation, like new DeFi protocols, for instance. However, under the FATF's recommendations, any crypto projects or companies offering these innovations would be under extreme scrutiny. Unless they're perfectly decentralized, the FATF will label them all as VASPs and force them to comply with recommendations like the travel rule. 

Believe it or not, this will also benefit crypto because it will force new crypto projects and protocols to be as decentralized as possible to outmaneuver the FATF. This will be painful in the short term because crypto projects and companies are not very decentralized. An explanation of what it means to be genuinely decentralized can be found here.  

That said, if any genuinely decentralized crypto projects and protocols managed to gain significant adoption, the FATF would likely respond by further expanding the scope of its crypto recommendations. In a recent report, Notabene noted that the FATF left the door open to this possibility, citing,

“Transfers between self-hosted wallets, so-called peer-to-peer (P2P) transactions are not explicitly covered by AML/CFT rules. The FATF opens the door to a future paradigm change in case there is a distinct trend towards P2P transactions.” 

Translation: If actual cryptocurrency, that is, peer-to-peer trustless transactions, becomes too popular, then the FATF would respond by saying wallets that engage in crypto activities are high risk.  In practical terms, this could mean not being able to transfer crypto between such wallets and a compliant VASP. What's funny is that this would likely result in a parallel financial system, which is precisely the opposite of what the FATF is trying to achieve with its crypto recommendations.

On that note, fully decentralized crypto-based communities in social media, marketing, and digital broadcasting are rising and in the throes of building a parallel economy. Given the privacy and censorship issues of legacy social media, governments, woke agencies, and tech corporations, with their propensity to ban or suspend their services to individuals and companies that go against their narrative, have brought this imperative to the fore. 

Is the Crypto Industry Complying? 

So, what is the crypto industry doing about the FATF crypto recommendations? Well, at first glance, it looks like it’s complying; upon closer inspection, however, this compliance has been incredibly strategic. To explain, the crypto industry took its time complying with the FATF crypto recommendations. After all, compliance is an additional cost, and most countries were not pressuring them about compliance with the FATF until recently. 

There are technically no deadlines for compliance with the FATF’s recommendations. In theory, countries must apply the FATF recommendations within one year of their announcement. In practice, most countries don't. One expert explained that the travel rule was a bit of a myth. Just 10% had implemented the crypto travel rule in 2022, but in all fairness, this apparent non-compliance wasn't intentional. 

The FATF has constantly been adjusting its crypto recommendations to account for changes in the crypto industry. Everyone started taking them seriously only after the finalized crypto recommendations were published. This includes the crypto industry, which, according to Notabene’s survey, “seemed willing to adopt the travel rule in January 2022.” By then, some of the biggest entities had already started exploring travel rule compliance, like USDT issuer Tether and its sister exchange Bitfinex working with Notabene. 

Here's where things get interesting: Notabene, the crypto compliance company, has been referenced by the FATF on a few occasions. This is surprising, considering that the company has received most of its funding from the crypto industry, according to Crunchbase. 

Also, according to Notabene, the criteria used to determine which crypto transactions are considered high-risk from the FATF's perspective is determined by blockchain analytics companies, not Notabene itself. The largest is Chainalysis, which is very pro-crypto. In fact, Chainalysis pushed back against the FATF’s crypto recommendations when they were first proposed in 2019.

The institutions the FATF relies on to implement its crypto recommendations are all pro-crypto. To put things into perspective, companies like Notabene and Chainalysis have been advising governments and regulators. Put another way, the impact of the FATF crypto recommendations may not be as anti-crypto as they intend them to be because all the institutions required to implement them are pro-crypto. It's not just private companies; some countries are also trying to protect crypto. 

Crypto Privacy in Jeopardy?

There's only one place where the FATF could still cause a problem: privacy. As most of us know, financial privacy is required for financial freedom. You can be coerced in many ways if every transaction is tracked. e.g., by punishing the people you transact with.  Logically, it will be challenging for pro-crypto compliance companies and countries to defend crypto privacy from the FATF. This will be practically impossible when the FATF decrees that any exchange offering privacy coins is inherently non-compliant. It could result in the elimination of crypto privacy altogether. 

Some would say the recent sanctions against Tornado Cash are a prelude to the FATF's next moves. Luckily, the crypto industry has been working on a solution, too. Notably, the FATF claimed that there had been a considerable move towards privacy in crypto in its finalized recommendations, stating, “During recent FATF consultations, the industry highlighted data protection and privacy (DPP) issues as key considerations for travel rule implementation…. Going forward, FATF will continue to monitor these issues to ensure data privacy and other similar issues do not present barriers to implementation.”

Image source: Cointelegraph 

Crypto Privacy Predestined – The Solution

Besides the many crypto projects like Ethereum trying to preserve privacy through cutting-edge technology, like zero-knowledge proofs, Bitcoin has also been subtly working on privacy-preserving technology. The Taproot upgrade is one protocol developed in November 2021. 

One of the things Taproot did was introduce Key Aggregation with Schnoor Signatures. Put simply, it made every single Bitcoin transaction look like a regular transaction. This move means that transactions involving multisig wallets resemble regular transactions on the blockchain. It’s significant because multisig wallets are required for Atomic Swaps, i.e., swapping BTC for a crypto coin on another blockchain. Incidentally, Monero developers finally found a way to execute swaps between BTC and XMR in August 2021. 

Taproot means these swaps are now theoretically undetectable. Multisig wallets are also required for the lightning Network, Bitcoin's most significant Layer 2 protocol. As it so happens, US authorities offered bounties to anyone who could track XMR and Lightning Network transactions in September 2020. This implies that the Lightning Network has similar privacy levels to Monero. 

Interestingly, the three Bitcoin Improvement proposals that make up the Taproot upgrade, including Schnoor Signatures, were all proposed in January 2020, shortly before the first countries started implementing the crypto travel rule. Is this a coincidence, or perhaps something more? 

Image source: GitHub

Anyway, speculation aside, it's clear that crypto privacy is inevitable because nobody wants privacy more than high-net-worth individuals. When these investors get involved during the next crypto bull market, there will definitely be calls to increase crypto privacy, and many will be answered. Additionally, if these calls don't come from the 1%, you can bet they'll come from the central banks that will start accumulating crypto in 2025. 

The regulated crypto space will likely grow, but the unhosted ecosystem will remain a niche area with significant development and innovation. The crypto and blockchain projects that uphold the interests of entrepreneurs and advocate for free and critical thinking are paving the way and developing ecosystems that will have the financial freedom, liberty, and sovereignty that is fundamentally our right of passage, which seems to be all but forgotten by the monopolies and so-called authorities and their mandate to capture the crypto industry. 

Tim Moseley

Redefining Marketing: Markethive Leads in the Inbound Marketing Era

Staying ahead of the curve is crucial in the dynamic and ever-changing business world. In the modern business landscape, innovation and technology act as guiding forces, shaping how companies engage with their audiences and forge connections. In this era of constant evolution, a powerful synergy has emerged between two groundbreaking concepts: inbound marketing and blockchain technology. This convergence is rewriting the rules of engagement and presenting companies with unprecedented opportunities to carve out a competitive edge.

Gone are the days when traditional marketing methodologies ruled the roost. The one-size-fits-all approach of old-school marketing campaigns is gradually being replaced by a more interactive, personalized, and customer-centric approach. Inbound marketing is not just a strategy; it's a philosophy that revolves around attracting, engaging, and delighting customers by delivering valuable and relevant content. It's about creating a genuine connection with your audience, addressing their pain points, and offering solutions that resonate personally.

Amidst this transformative landscape, a standout player emerges: Markethive. This innovative ecosystem stands at the crossroads of the inbound marketing revolution and the blockchain evolution. Markethive's unique proposition lies in its ability to seamlessly fuse the principles of inbound marketing with the cutting-edge potential of blockchain. By doing so, it offers a comprehensive system that empowers businesses to connect with their target audience and build lasting relationships based on trust and transparency.

As we embark on this journey through the eras of marketing, from the traditional approaches of yesteryear to the revolutionary paradigm of today, we'll delve deeper into the facets that make Markethive a trailblazer in this space. We'll explore how its state-of-the-art technology and commitment to blockchain integration position it as a force to be reckoned with in the marketing world. So, fasten your seatbelts as we navigate through the intricacies of modern marketing evolution and the exciting possibilities that lie ahead, with Markethive leading the way.

The Dynamic Evolution of Marketing Strategies

Delving into the ancient history of marketing unveils a fascinating narrative of transformation and adaptation. From the early days of universal billboards and broadcast commercials to the sophisticated era of inbound marketing, marketing strategies have been a journey of innovation, trial, and refinement. What began as a shotgun approach, characterized by mass advertising and outbound messages, has now matured into a nuanced dance of personalized engagement and interactive storytelling.

Cast your mind back to the days when marketing was synonymous with loud, one-sided conversations. Brands would deliver their messages from billboards, TV screens, and radio waves, hoping to capture the attention of a broad audience. This hit-or-miss approach often left consumers feeling like passive recipients of information rather than active participants in a meaningful dialogue. These tactics' lack of customization and relevance underscored a glaring disconnect between brands and their increasingly savvy and selective audience.

But then, the winds of change swept through the marketing landscape. Inbound marketing emerged as a beacon of customer-centricity, altering the course of how businesses connect with their potential customers. This paradigm shift responded to the changing dynamics of consumer behavior and preferences. Modern consumers no longer want to be bombarded with messages; they crave valuable insights, personalized experiences, and genuine connections.

Inbound marketing is a philosophy that turns the tables on traditional approaches. Instead of flooding the masses with messages, inbound marketing seeks to attract, engage, and delight potential customers through meaningful interactions. It's a strategy rooted in empathy, understanding, and value creation. By delivering content that addresses their target audience's specific pain points and interests, brands can establish themselves as trusted advisors rather than mere promoters.

The beauty of inbound marketing lies in its ability to align seamlessly with the evolving preferences of modern consumers. It's not about pushing products; it's about forging connections. It's not about one-size-fits-all; it's about tailoring experiences. In an age where consumers have the power to filter out unwanted noise, inbound marketing opens the door to authentic conversations and valuable exchanges.

As we navigate through this dynamic evolution of marketing strategies, it's clear that the journey is far from over. The landscape continues to shift, driven by technological advancements, changing consumer behaviors, and societal trends. But one thing remains certain: the heart of effective marketing beats to the rhythm of connection, relevance, and engagement. As we embrace this new era of marketing, one thing is for sure: the consumer is at the center, and the businesses that listen, adapt, and engage are the ones that will thrive.

The Power of Inbound Marketing

Imagine a world where businesses aren't just vying for attention with flashy ads and intrusive pop-ups, but rather, they're earning attention by offering solutions to real problems. That's the essence of inbound marketing. By crafting content that addresses pain points, answers questions, and gives insights, businesses become more than just sellers; they become trusted sources of information and assistance.
 
The transformative power of inbound marketing becomes even more pronounced in today's digital age. Thanks to the rise of social media, businesses now have direct access to their audience, enabling authentic interactions and meaningful conversations. No longer are companies limited to a one-way communication channel. Instead, they can engage, listen, and adapt in real-time. This has ushered in a new era of marketing where feedback isn't just welcomed; it's actively sought after.
 
But the impact of inbound marketing isn't solely about engagement; it's about building relationships. When content resonates with the audience, it sparks a connection beyond transactional exchanges. It establishes a bond based on shared values, common interests, and a genuine understanding of the audience's needs. This connection drives customer loyalty and advocacy, turning satisfied customers into brand ambassadors.
 
Consider the scenario where a fitness enthusiast comes across a series of blog posts from a sportswear brand. These posts provide workout tips, nutritional advice, and success stories from fellow enthusiasts. By offering this valuable content, the brand positions itself as more than just a seller of athletic wear; it becomes a partner in the journey towards a healthier lifestyle. This emotional resonance is what sets inbound marketing apart. It creates a narrative that customers want to be a part of.

Markethive's Innovative Approach

At the crossroads of innovation, where the worlds of inbound marketing and blockchain technology converge, lies Markethive, a platform that is rewriting the rules of engagement. It's not just a platform; it's a visionary approach that melds the power of inbound marketing, the potential of blockchain technology, and the strength of a vibrant community, all fueled by its very own cryptocurrency, ‘Hivecoin.’ This cryptocurrency isn't just a digital token; it's a symbol of collaboration and a medium of exchange for ideas, services, and value.

Visualize a terrain where traditional marketing techniques are no longer sufficient, customer relationships are not just transactions but genuine connections, and security and transparency are paramount. This is the landscape that Markethive is helping to shape, offering a fresh perspective on how businesses can interact with their audiences.

Inbound marketing, the heartbeat of Markethive's strategy, is all about creating meaningful interactions. It's a departure from the one-way communication of old marketing methods. Instead, it's a conversation, a dialogue, and a relationship-building endeavor. Markethive recognizes the power of this approach and has harnessed it to its fullest potential. Through the platform's array of tools and features, content creation becomes an art, and engagement transforms into a science.

But Markethive doesn't stop there. It goes further, embracing blockchain technology and redefining the foundations of trust and security. Blockchain, often associated with cryptocurrencies, is more than that; it's a technology that brings accountability and immutability to the digital world. Markethive seamlessly integrates blockchain's capabilities, ensuring that data remains private, transactions are tamper-proof, and interactions are verifiable.

What sets Markethive apart is its community-driven ethos. It's not just a platform for marketers; it's a living, breathing ecosystem where individuals with diverse talents and goals come together to thrive.

So, when you look at Markethive, you're not merely seeing a platform; you're witnessing a paradigm shift in how marketing, technology, and community intersect. It's a place where creativity meets security, transactions are infused with trust, and a global community comes together to shape the future of engagement. This is Markethive, an innovative fusion of ideas, technology, and humanity, redefining how we approach marketing and community collaboration.

The Multifaceted Advantages of Markethive

When exploring the advantages that Markethive brings, one quickly realizes that this platform is a true game-changer in more ways than one. Beyond its surface appeal, Markethive's multifaceted benefits resound through the core of modern marketing and networking dynamics. In this era where data is as precious as gold, Markethive harnesses the power of blockchain technology to provide a level of assurance and security that is nothing short of revolutionary.

In a world with its fair share of data breaches and privacy concerns, Markethive stands tall as a fortress of data security. The seamless integration of blockchain technology within the platform serves as a reassuring shield, safeguarding user information against the prying eyes of malicious actors. The inherent transparency and immutability of blockchain deter unauthorized access and offer users the peace of mind they deserve. This is more than just a feature; it's a testament to Markethive's commitment to building a haven for its users.

Beyond data protection, Markethive takes decentralization to a whole new level. In an age where governments use businesses to dictate the rules of engagement and achieve their control agenda by proxy, Markethive flips the script. The decentralized structure of the platform puts the reins back in the hands of the users themselves. No longer confined to the dictates of third parties, users are empowered to direct their interactions, forging connections on their terms. This enhances user autonomy and ushers in an era of authentic engagement.

One of the most intriguing facets of Markethive's approach is its ingenious way of turning content creation and sharing into a rewarding endeavor. In a landscape where attention is a currency, Markethive elevates this concept by enabling users to monetize their contributions. Imagine earning tangible rewards for sharing your insights, creating content, and engaging with a community that values your input. Markethive transforms your actions into currency, making every interaction a step towards potential earnings.

Markethive is a game-changer because it's powered by the strength of people coming together. The company is on a mission to give you an edge that's seriously unfair in the best way possible. Imagine being part of a movement that reaches billions through social networks and gets you top-notch SEO results in a snap. That's the kind of power we're talking about.

The system is jam-packed with features that are designed to help you succeed. The autoresponders here are even better than what you'd find in popular services like Aweber, and the capture page technology is out of this world, ensuring you capture leads like a pro. And speaking of leads, there are widgets that make subscription a breeze for your capture pages and WordPress sites.

The blogging systems are designed for massive reach. Your visitors can easily subscribe and spread the word through their social networks. And there’s an auto-posting feature; we're talking about reaching millions, even billions, on platforms like Facebook, LinkedIn, Instagram, and more. Results? Yep, you're gonna see them with mind-blowing ROI.

Inbound marketing is the way to go. More than 90% of your potential customers search the web, and a whopping 80% of their purchasing journey happens before they even contact you. That's where Markethive comes in, helping you understand your customers and guiding them straight to your website. Attract leads, nurture them, and turn them into loyal customers. That's the power of inbound marketing. And with Markethive, you're not just getting a platform but becoming part of a movement. Several other services are in the works, so whether you're starting or ready to take your business to the next level, Markethive is here to support you. Your success is our success, and with Markethive, you've got a partner who's got your back every step of the way.

It's worth noting that the extensive censorship on various social media platforms and the concerning actions of governments that seem to limit people's freedoms, Markethive provides an exciting solution. Markethive creates an environment where people can truly express themselves without fearing censorship or suppression. This merging of ideas and technology promises to allow individuals to communicate, connect, and collaborate without facing the hurdles often accompanying the virtual landscape.

Markethive aims to establish a space where creativity and dialogue can flourish unhindered, promoting an atmosphere of openness and unrestricted exchange of thoughts and ideas. By acknowledging the concerns surrounding censorship and the desire for personal freedoms, Markethive is positioning itself as a potential solution, offering a platform that aspires to preserve the essence of free expression in an ever-evolving digital world.

Navigating the Future

As digital marketing has become essential in today's business environment, businesses constantly seek efficient ways to reach their target audiences—Markethive steps in by offering a suite of inbound marketing tools designed to address these challenges head-on. Unlike traditional outbound marketing, where messages are pushed to consumers, inbound marketing focuses on attracting potential customers through valuable content and experiences.
 
Markethive's arsenal includes systems and tools like blogs, email autoresponders, e-commerce stores, banner advertising, press releases, boost, video advertising, broadcasting, franchised news sites, and analytics that empower businesses to craft engaging content and strategically share it across various platforms.
 
Businesses can streamline their marketing efforts and achieve a more significant ROI by offering a comprehensive toolkit that covers content creation, social media management, analytics, and community engagement. This approach aligns well with consumers' evolving preferences, who value authenticity and personalized interactions.
 
One of Markethive's standout features is its emphasis on community building. Businesses can thrive by connecting with like-minded individuals, networking within their industry, and fostering meaningful relationships. This communal approach enables trust and credibility, which are crucial components of successful marketing campaigns.
 
Markethive's potential to surpass the tech giants lies in its commitment to addressing the pain points of modern marketing. Markethive's innovative solutions have the potential to propel it beyond Facebook, Twitter, and LinkedIn. Its focus on inbound marketing, community building, and blockchain technology sets it apart as a platform that understands and addresses the evolving needs of businesses in the digital age. As we navigate the future, it's exciting to witness how Markethive could reshape the landscape of social media and marketing.

Final Thoughts

Markethive is like a fresh breeze in the world of marketing. It's an ecosystem that mixes modern marketing ideas with the power of blockchain technology. This lets marketers do their thing, keep their data safe, and make real connections. Markethive is all about changing how we do marketing, and it's a sign of how new and exciting ideas can shape industries for the better.
 
The company's unique positioning as a pioneer in this space underscores the platform's commitment to reshaping marketing practices for the better. As we look ahead, it's clear that the fusion of these dynamic forces will define the trajectory of marketing in the digital age, and Markethive is the pioneering force.

Tim Moseley

United Nations' Insane Attempt At Global Digitization: A Plan To Control And Profit

For most of us, it feels like digitization has already permeated every aspect of our lives, whether we like it or not. Some, most notably UN Secretary-General António Guterres, believe digitization is nowhere near the worldwide goals needed. The world must be digitized as quickly as possible, ideally no later than 2030. 

As we didn’t vote for this, all we can do as citizens is forward petitions to governments opposing this invasion of privacy and top-down control. More often than not, it seems to fall on deaf ears as the politicians supposedly working for the people are getting orders from corporate lobbyists or unaccountable and unelected international organizations, not their citizens. 

The United Nations is one of the most influential of these organizations, and it recently released a plan for a “Global Digital Compact” that governments will soon agree to. This article summarizes these digital plans, when they’re expected to be finalized, and what we can do to stop them. 

The report is titled “A Global Digital Compact – an Open, Free and Secure Digital Future for All.” It was published by the United Nations (UN) in May 2023 after almost four years of work. 

 
Source: A Global Digital Compact.pdf. 

Incidentally, in a speech that António gave at the World Economic Forum’s (WEF) Davos meeting in January 2023, he confirmed that the WEF and its affiliates have been forcing the UN's Sustainable Development Goals or SDGs using the Environmental, Social, and Governance or ESG investment trend. In other words, the WEF is effectively the arm of the United Nations. 

The good news is that the private sector isn't too keen to go along with the UN these days, per António's admission. The bad news is that the public sector is still very much on board, and António instructed the politicians at the WEF to ignore the opinions of their populations when implementing the UN's policies. 

The fact that the public sector is still on board means that some of the UN's policies could still be implemented. If you want a sense of what these policies will look like, consider that the UN recently took over the EU's pandemic passport to develop what is essentially going to be a global digital ID. The continued influence of the UN in the public sector is why it's prudent to summarize its recent report. It's necessary to know what they're planning and when they want to implement it if you want to sidestep or even stop it.

Report’s Brief Introduction

António himself apparently wrote the report; however, given the detail and scope of these initiatives and reports, many would find that very hard to believe. It's more than likely that someone is advising António, and it's possible he didn’t write these reports at all.

Speculation aside, the report begins with a brief introduction. In the first few sentences, António reveals that the proposals in this report are expected to be approved and adopted by global governments at the Summit of the Future in September 2024. He also reveals that he is behind the broader UN initiative this report is related to. 

Antonio underscores that all the policies in this report are intended to help achieve the UN's SDGs. For context, the SDGs are a set of 17 milestones that every country is supposed to meet by 2030. The SDGs are the origin of digital IDs, CBDCs, and that 2030 date you see everywhere. 

António explains that these policies can only be achieved with the help of so-called stakeholders. A word that effectively refers to the world's most powerful individuals and institutions. Note that private sector stakeholders want profits, and public sector stakeholders want to control. This is why both parties are obsessed with digitization. Plugging everyone into the system increases profits and makes it easier to control them. 

António laments that some people aren't as plugged in as others and implies that this is why inequality is growing around the world. Some would say that inequality is increasing because central banks and governments are lining their pockets and the pockets of their cronies using money printed out of thin air or taken from the average person via taxation, but that's a topic for another time. 

António also laments the fact that new and innovative technologies such as AI and crypto are not being sufficiently governed, that is, controlled. He applauds the digitization that resulted from the pandemic and implies that this is the direction the world should go in. António ends the introduction by saying, "Global digital compact is necessary to achieve the governance required for a sustainable digital future.” 

By now, you'll know that governance means control, and you'll also notice that António threw the word ‘sustainable’ in there out of nowhere. This could be a subtle reference to the individual carbon credit score system the UN is trying to set up.  

Requirements For Global Digital Cooperation

The first part of the report is about the requirements for global digital cooperation. António explains that it requires having a set of shared goals, and wouldn’t you know it, the SDGs are highlighted in blue. 

Source: A Global Digital Compact.pdf. 

António stresses that we must fully digitize the remaining 2.7 billion people ASAP. Notably, more than 1 billion are children. He acknowledges that not everyone wants to be part of the system and says that a “demand pull” is also needed and that this is where the public sector can play a role. He explains that they can do this by making things like digital ID mandatory to access Public Health Services. António includes schools and cultural services, which begs the question of whether we’ll eventually need to show a digital ID to get an education or practice religion. 

António calls on both the public and private sectors to make all their data accessible so that the UN can keep track of how close countries are to meeting the SDGs. He admits that the UN’s progress towards achieving 41% of the 92 environmental SDGs indicators cannot be globally measured due to a lack of interoperable data and standardized reporting. In other words, the UN has struggled to assess whether countries have achieved 41% of the SDGs by 2030.

Image source: UNStats.com

He then pivots to a topic he's been passionate about on X lately: Online Safety, AKA censorship. He says, “Open, safe, and secure use of the internet is slipping away from us, potentially, permanently.” He blames this on disinformation, hate speech, and the like. Antonio acknowledges that some countries have taken steps to censor the internet but says this isn't enough. He says the governments need to get more involved, both online and in the real world, and that they should crack down on hate speech. He also says that the “Global nature and infrastructure of the internet needs to be protected.” 

This is reminiscent of something António said in his speech at the WEF. He fears that the internet is splitting in two: A censored internet in the West and a censored internet in the East. Meanwhile, regarding AI, António says that the rapid advancement of technology is making governance, AKA control, very hard for the UN and its affiliates and that AI has put this on full display. 

Naturally, António is upset that AI is making it possible to generate so much content. “Imagine the disinformation”, he says. António does acknowledge that AI can be beneficial, but only if it is sufficiently controlled. He reveals that the UN has already been working with AI experts to assess how it can be controlled and how to make sure that it can always be shut down.

Lastly, António says that the “Arc of Innovation” needs to be bent toward solving societal problems and global challenges. Translation: AI needs to be used to manage the peasants. He says that governments need to be involved because businesses won't do this on their behalf. Some would say that some companies are doing the bidding of UN-controlled governments already, but let's not go there. 

Digitization Approach Similar To Climate Crisis?

The second part of the report is about the Global Digital Compact António is obsessed with. He starts by saying that digitization should be addressed in a manner similar to the climate crisis. This is quite concerning as it implies lots of regulation, intervention, and restriction of the internet. It would be ludicrous if they swapped out the climate crisis with some sort of AI-driven digitization crisis, but that would never happen, would it?

Speculation aside, António explains that the global digital compact he envisions adheres to the UN's SDGs, and the purpose of the compact would be to ensure that the SDGs are met. He hints that this will require “New governance arrangements.” In other words, more shady organizations. 

On a curious note, throughout the report, António refers to countries as “states,” presumably a term in the global government structure the UN is apparently trying to create. Antonio reveals that the UN is already actively discussing digitization with the states.

Member States of the UN

The Global Digital Compact Objectives

António then lists the global digital compact's objectives and the actions stakeholders should take to ensure these objectives are met. The first objective is to plug everyone into the matrix, and António provides a long list of measures, including subsidies and $100 billion of funding to this end. 

The above ties into the second objective: to invest heavily in digitization and “develop environmental sustainability by design and globally, harmonized digital sustainability standards, and safeguards to protect the planet.” It's a word salad that sounds like total control of digital technologies. 

The actions António recommends include money, money, and more money. They also encompass sharing data so the UN can finally start tracking how far along countries are in meeting the SDGs. For reference, there are only seven years left. It's safe to say that it's not looking good. Maybe they'll just rebrand like they did when their Millennium Development Goals failed due to the 2008 GFC.  

The third objective is to end the “gender digital divide” and to ensure that labor rights are adhered to online. Like all vague and ambiguous objectives, the actions required to meet them include some seriously dystopian stuff, including creating a dedicated UN government body in every country. 

The fourth objective is to ensure the internet remains open, secure, and shared. António's actions include avoiding blanket internet shutdowns but managing dissent or opposition. He suggests that governments use “targeted measures” instead.

This relates to the fifth objective: to address disinformation, hate speech, and the like to develop “trust labels and certification schemes” and to ensure that gender is included as a part of every digital policy to ensure absolute equality. Antonio proposes a long list of actions here, the most important of which is establishing a global code of conduct to ensure that the internet is policed correctly in every corner of the planet. After all, if there is a place where free speech still exists, opposition to the UN and its allies could start to spread. We can't have that, can we?

The sixth objective is to ensure adequate data governance, i.e., control. Actions include ensuring that all data is interoperable because nothing says privacy, like sharing your most sensitive data with every corporation, government, and organization on the face of the Earth. 

The seventh objective is to ensure adequate control of AI. Actions include “Urgently launching a global body that will regulate all of the AI in existence and any new AI that emerges.” António mentioned the UN half a dozen times, at least in this section. It sounds like they bought into the AI boom. 

The final objective is to ensure all other targets are met under the UN's SDGs. If you read through the report, you’ll see that António used “I” rather than “we” when recommending what action stakeholders should take to ensure these objectives are met. Those who often read reports may know this is rare in accounts by any organization. Some would say it speaks to the size of António's ego. 

Implementation Of Global Digital Compact

In any case, in the next part of the report, António discusses the actual implementation of the global digital compact. He starts by saying that various stakeholders will be responsible for different tasks. He then provides a long list of UN entities to assist with implementation. Oddly enough, António doesn't believe these existing UN entities are sufficient. He reveals that he wants to establish an annual digital corporation forum after all the world's governments agree to the global digital compact at the Summit of the Future in September 2024. 

What's hilarious is that he doesn't even ask for feedback about this idea. He literally says that he's just going to go ahead and start planning the agenda for this new forum. Would-be members of the forum already have homework. Every year, they will write an extensive report about digitization for the UN. 

António concludes the report by recounting how the UN began this digitization initiative four years ago and how he released an initial roadmap for it two years ago. A partial timeline is illustrated in the image below. Note that it doesn't end with that event in 2024. It ends with the World Summit on the Information Society review in 2025 instead.

 
Source: A Global Digital Compact.pdf. 

António then declares,

“The time for talking about the need for digital cooperation has long passed. We need to focus on how we make this a reality. We need to act now, and with speed, if we are to recover the potential of digital technologies for the equitable and sustainable development that is slipping away from us and the planetary crisis that confronts us.”

The remainder of the document provides a list of all the different UN entities and stakeholders involved in this particular initiative. Most people, including me, do not recognize any of the key players in the infographic (shown below), and many critical thinkers opine that the rabbit hole runs right to the center of the earth with each one. 

Source: A Global Digital Compact.pdf. 

How Do We Stop This Global Takeover?

So the big question is how to stop this Global Digital Compact. The answer could be as simple as letting history run its course or as complex as convincing public institutions to steer clear of it. The simple answer is to reference all the countless UN initiatives that never came to pass. As you can imagine, coordinating hundreds of institutions and thousands of individuals can be challenging. Everyone must be on the same page, or they won’t meet their international goals. After all, the world is pretty fragmented right now, and that's why António is so frustrated. 

Internationally, the global South is slowly cutting itself off from the global North. Domestically, political tensions are rising fast, and UN-affiliated ideologies are quickly becoming unpopular. In this climate, it's impossible to achieve widespread consensus. The fact that some of the UN's initiatives are bad for the average person makes the presence of countries not conforming to an agreement a problem. That's because regular folks will be able to compare outcomes and see what effects the UN has. And if we end up with some kind of financial crisis, it's guaranteed that the UN's Global Digital Compact or the SDGs will be of insignificant value. 

Consider that the 2008 financial crisis stopped the MDGs dead in their tracks. They were also on year eight of a 15-year journey. It would be uncanny if history repeated itself this year. But let’s play out a scenario for the sake of entertainment. Let's assume the UN somehow gets all its ducks in a row. In this case, convincing public institutions to defect from its digitization agenda will be extremely difficult. 

The UN can pressure them to comply using other public and private institutions. Some of the UN's digital initiatives, such as CBDCs, may appear appealing to the average person initially, which means there's likely to be lots of voluntary adoption at the outset. It's not until later that the populace will realize that they've sleepwalked into digital slavery. 

As such, the only solution would be to create an alternative system or help existing alternative systems grow. This is what the UN fears the most, especially when this alternative system consists of rapidly evolving technologies, such as ethical AI and cryptocurrency. 

Indeed, the fact that the UN fears these kinds of technologies proves that these technologies are a part of the solution. If the UN gets its way, it could also become a part of the problem. Thankfully, technology evolves much faster than the United Nations and is also much humbler than the UN's head honcho, so it's implausible that the stratagems of these self-serving globalists will reign. 

The great reset/agenda 2030 is falling apart, so always seek the truth and share it. The elites will try and take control by putting us in de facto digital prisons with CBDCs and digital IDs, but alternatives exist and are evolving. They will prevail if they're promoted, adopted, and crowdfunded.

Cryptocurrency will play a critical role in this decoupling between the average person and the corrupt institutions that rule them. Success is not guaranteed, but the pendulum is swinging toward freedom. The UN/WEF's self-confidence is waning as its stakeholders and countries realize how out of touch they are with ordinary people like us, so let's keep that momentum going.

Tim Moseley

The crypto-verse is truly holding its breath as Gary Gensler of the SEC shifts his gaze towards the challenges presented by artificial intelligence. In the whirlwind domain of cryptocurrencies, where values swing wildly in the blink of an eye, it's rare for a single person's actions to stir up so much speculation and excitement across the entire industry. 

Yet, that's exactly what's happening with Gary Gensler, the Chair of the U.S. Securities and Exchange Commission (SEC), as he zeroes in on the hurdles posed by AI. It's like a sudden plot twist in a gripping movie, keeping everyone on the edge of their seats. But the stakes are much higher this time, and the outcome could determine the destiny of an entire economic sector.

Gensler's tenure as the SEC Chair has been all about taking the reins in cryptocurrency regulation. He's brought lawsuits and investigations against significant players in the crypto field, aiming to establish more explicit guidelines and clamp down on possible fraud or deceptive practices. This bold approach marks a clear departure from the more hands-off attitudes of the past. However, just when everyone thought they had the storyline figured out, the narrative took an unforeseen twist.

Gensler, recognized for his deep understanding of financial regulation and emerging technologies, has made a surprising choice to shift the SEC's focus toward the challenges posed by artificial intelligence. This unexpected move has raised eyebrows among those in the industry and those observing from the sidelines. With the crypto market booming and regulations still a work in progress, the question arises: Why would Gensler shift his attention to a whole new frontier?

The crypto sector now stands at a crossroads, uncertain about the path ahead. With Gensler's attention toward AI, those invested in cryptocurrencies can't help but wonder how this chapter will unfold. Will it be a story of collaboration and forward movement or a tale filled with suspense and hurdles? Only time holds the key to revealing the upcoming exciting chapter in this ongoing saga.

Regulatory Concerns and the SEC

The SEC wears the hat of a regulatory guardian, ensuring that securities are handled fairly, and markets run smoothly. When it comes to the realm of cryptocurrencies, their mission extends to safeguarding investors against fraud and unethical practices. They meticulously monitor Initial Coin Offerings (ICOs) to guarantee compliance with securities laws. Think of them as the lawmen of the digital Wild West, where crypto-cowboys roam.

But the plot has taken an interesting twist. The SEC's head honcho, Gary Gensler, has unveiled a change of focus. Instead of exclusively zeroing in on cryptocurrencies, he's turning his attention to the hurdles posed by artificial intelligence (AI) in the financial arena. The US watchful regulators are now keeping tabs on the potential influence of our future robot overlords.

This shift has thrown the crypto industry into a state of suspense. What does this mean for the fate of cryptocurrencies? Will they finally break free from the chains of regulatory uncertainty, or could they find themselves overshadowed as AI takes center stage? The answer is yet to be unveiled. 

But one thing is sure: Gary's shift might divert attention and resources from overseeing cryptocurrencies. This could bring a sigh of relief to those yearning for less interference or raise eyebrows among those advocating for stricter control. The industry is undoubtedly in for some turbulence as this transformation unfolds. It's akin to riding a rollercoaster with no map of its twists and turns. 

The crypto industry has weathered many ups and downs before and is well-equipped to navigate this latest twist. It's all part of the wild and unpredictable nature that makes this industry so intriguing. Moreover, who knows the ways in which AI could revolutionize the cryptocurrency landscape? Picture self-trading coins or wallets that seem to possess a mind of their own. The potential seems boundless!

So, as we await the SEC's strategies to tackle AI challenges, let's keep our gaze fixed on the ultimate goal. Cryptocurrencies have come a long way, and their journey is far from over. As the industry matures and adapts, we'll continue to rise above whatever hurdles come our way. After all, these very challenges shape us and fuel the evolution of this exciting sector.

SEC Chair Gensler speaking before the National Press Club on July 17. Source: SEC

In his speech at the National Press Club, Gary Gensler underlined a significant truth: While the cryptocurrency arena has its fair share of issues like scams, hacks, and money laundering, the realm of artificial intelligence (AI) poses even more significant financial hazards for folks in the US and other nations. As he delved into the topic, Gary spotlighted various risks tied to the ongoing AI surge, which could shake up trillions of dollars worth of assets traded on markets overseen by the SEC.

Looking closely, Gary explains that amidst this AI boom, there's a flip side to the coin. On one hand, AI-generated investment suggestions could revolutionize the customer experience within financial institutions. Sounds promising, right? 

However, he doesn't shy away from pointing out a potential drawback. This emerging technology could also be used to blur the lines of accountability when things go wrong. If errors or failures occur, AI could be exploited to shroud responsibility.  AI-driven trading bots can potentially manipulate financial markets, particularly in unregulated sectors like cryptocurrency. This manipulation can deceive investors into buying assets at inflated prices, resulting in financial losses.

Phishing scams used to stand out due to their misspellings or grammar mistakes, but with the advent of generative AI, creating well-written emails in any language has become effortless. This technology can craft convincing messages that mimic native speakers. In simpler terms, Gary is raising a flag on the potential upsides and downsides of AI's influence on the financial world. It's like navigating a brand-new terrain where incredible opportunities and unforeseen pitfalls are equally likely. As he steers this conversation, Gary is essentially shining a light on the unknown pathways that lie ahead in the realm of AI.

Phishing scams used to stand out due to their misspellings or grammar mistakes, but with the advent of generative AI, creating well-written emails in any language has become effortless. This technology can craft convincing messages that mimic native speakers. In simpler terms, Gary is raising a flag on the potential upsides and downsides of AI's influence on the financial world. It's like navigating a brand-new terrain where incredible opportunities and unforeseen pitfalls are equally likely. As he steers this conversation, Gary is essentially shining a light on the unknown pathways that lie ahead in the realm of AI.

Image source: X [Twitter]

The Waiting Game

Gary Gensler has been quite vocal about his criticisms of the crypto world, accusing it of being filled with hackers, fraudsters, and scams. He's been attacking the industry with full force, making us all wonder what his next move would be. But then, out of nowhere, BlackRock, the giant investment firm, steps in and expresses its interest in crypto. 

They see the value and potential in Bitcoin and other cryptocurrencies. And just like that, Gary's tone changes. He suddenly shifts his focus to AI and suggests we can address the crypto world later. It's almost like that schoolyard bully who picks on a kid, only to back off when he realizes the kid has a strong older sibling to protect them. BlackRock is that older sibling defending crypto against Gary's attacks.

This turn of events is quite amusing to watch. With Gary's attention focused on AI startups, it's safe to say that those in the AI industry need to brace themselves. It seems like Gary is excited about this new direction and wants to regulate AI. As for crypto, there's a sense of relief that his aggressive attacks might lessen. 

However, remember the importance of clarity and resolution for ongoing cases. The SEC seems to be strategizing by prioritizing the current cases before moving on to new ones. After all, a win in these high-profile cases could set a legal precedent that affects the entire industry.

It is essential for the crypto community to come together and support each other in these cases. The industry can't afford to have a fragmented stance where some projects are supported while others aren't. The outcome of the SEC’s regulation against AI will impact the entire crypto industry, and it's crucial for crypto to have a strong track record. 

All the players need to understand that it's not just about supporting one project over another but rather about advocating for a fair and just resolution for all cases involving crypto. So, amid all this, we continue to watch the developments unfold. The shift from attacking crypto to focusing on AI is quite the twist, and it'll be interesting to see how it all plays out. 

The Bottom Line 

AI is making leaps and bounds in technology, with blessings and concerns in store for the cryptocurrency industry. The fusion of AI and various aspects of cryptocurrencies can make things smoother, more accurate, and super secure. Picture this: Trading strategies are automated, and fraudulent activities are identified in a snap. That's the kind of potential AI brings to the table.

But of course, there's the flip side. Cryptocurrencies' unique, decentralized, and roller-coaster nature poses a challenge for AI algorithms. Making sure these systems can keep up with the ever-shifting crypto landscape is no cakewalk. And let's not forget about the worries around privacy, data security, and biases sneaking into AI decisions. All these are real concerns that are keeping industry regulators awake at night.

Now, while the SEC's AI focus might momentarily shift away from cryptocurrency regulation, folks in the know are pretty sure it's just a temporary shift. The waiting game has begun, and everyone's busy speculating. Will we see more regulations? Will the cryptocurrency ecosystem become even more robust and secure? It's like making guesses about what's in the next plot twist.

As for how the industry is reacting to Gensler's AI interest, it's a mixed bag. Some see it as a thumbs-up, a sign that the SEC is on track with keeping up with the times and potential risks. Others have their brows furrowed, worried that too much regulation might stifle the creative spark of innovation. But no matter which side you're on, one thing's for sure: AI and cryptocurrencies are about to collide in ways that could blow our minds.

In a world that's moving faster than ever, the way to win is adaptability. As we all eagerly await the SEC's next moves, folks in the industry should gear up to be informed, ready to act, and quick on their feet. Embracing innovation while addressing valid concerns is going to be the way forward. This fusion of AI challenges and regulations promises a truly exciting future where finance and technology intertwine to change how we perceive and handle money. Get ready because it's bound to be a thrilling ride!

Tim Moseley

New Use Cases For Bitcoin. Ordinal Theory Disturbs Bitcoin Purists. Competition For Ethereum? 

Bitcoin is evolving with the introduction of inscriptions, which has caused an explosion in innovation, creating new use cases for Bitcoin that many thought it would never advocate. Some believe these use cases are inappropriate for Bitcoin's primary mission of decentralizing money and being a store of value. These use cases include BRC-20 tokens, and Ordinal Inscriptions likened to an NFT called Digital Artifacts, and many are wondering whether they will compete with NFTs and ERC-20 tokens on Ethereum. 

This article illustrates what Inscriptions, Ordinals, and BRC-20 tokens are, how they work, and evaluates what impact the Ordinal theory could have on BTC. Also, how will these protocols impact Ethereum? Could ETH lose NFT market dominance as a result? 

When Did It All Start

The history of Bitcoin's recent innovations begins with the Taproot upgrade, which went live in November 2021. Essentially, Taproot removed limits on how much data each BTC transaction can use, allowing a single transaction to fill an entire Bitcoin block. This opened the door to attaching additional data to BTC transactions, including individual Satoshis. (Sats). For context, each BTC comprises 100 million Sats, like cents to a dollar. 

Image Source: Cointelegraph

As the name suggests, inscriptions make it possible to attach data to individual Sats, including audio, video, and text. Bitcoin Ordinal inscriptions can be fungible or non-fungible, depending on who owns the Ordinal and whether they wish to preserve the individual Satoshi. 

The concept of adding data to individual Sats isn't necessarily new. In fact, Bitcoin creator Satoshi Nakamoto and early Bitcoin developer Gavin Andresen discussed creating a domain name system on Bitcoin in 2010. This eventually led to the creation of Namecoin, one of the first Bitcoin forks. In 2012, the CEO of eToro proposed the concept of colored coins, which involves attaching data to BTC transactions to tokenize real-world assets effectively. 

The main reason why these concepts failed to reach mass adoption was because of data limits on BTC transactions, which Taproot has since removed. Another reason why these inscriptions failed to reach mass adoption was because it was challenging to create or keep track of them. This is what the Ordinals protocol does. It allows anyone to inscribe individual Sats with additional data and keep track of where they are. 

Ordinal Protocol and Inscriptions

As stated on the Ordinal website, a Sat inscription is an NFT; however, "digital artifact" is used instead because it's simple and familiar to artists, collectors, and traders. The phrase "digital artifact" is highly suggestive, even to someone who has never heard the term before. In comparison, NFT is an acronym that feels like financial terminology and doesn't indicate what it means if you haven't heard it before.

Bitcoin developer Casey Rodarmor created the Ordinal protocol in late January 2023. In an interview, Casey explained that he'd been considering making the protocol since he saw generative art NFTs on Ethereum in early 2022. Casey wanted to bring similar kinds of NFTs to Bitcoin. However, Casey stepped down as the lead developer of Ordinals in late May and announced a pseudonymous developer named Raph Japh would be taking his place as he couldn't give the protocol the attention it deserves.

Interestingly, Ordinals only need two things to run the protocol: a full Bitcoin node and a Bitcoin wallet that can read and write Ordinal inscriptions. Casey explained in an interview that the Ordinal protocol was designed to require no extra infrastructure; it exists entirely on Bitcoin. Even more interesting about Ordinals is that the inscriptions apparently can't be searched using a browser, at least for now. 

Casey explained that this is because of “instability.” This means that you must search for inscriptions manually on Ordinals.com, which isn't easy because there are many. For reference, there were more than 10 million inscriptions when Casey stepped down from the protocol in late May. It’s not surprising considering that multiple NFT marketplaces had started supporting Ordinals inscriptions, and a new type of inscription was also invented, the BRC-20 token. 

Image source: X [Twitter] Ordinals Wallet

What Is A BRC-20 Token?

The BRC-20 token experiment was introduced by a pseudonymous on-chain analyst named Domo in early March 2023; that enables users to create fungible tokens natively on Bitcoin. However, before launching BRC-20, Domo stressed that the token is “simply a fun experiment.” 

The BRC-20 token standard is similar to the ERC-20 token standard commonly used on the Ethereum blockchain. However, unlike the popular token standards on Ethereum, BRC-20 tokens do not use smart contracts. Instead, users store a script file on Bitcoin and use that to attribute tokens to individual satoshis. BRC-20s embed JSON data into ordinal inscriptions to enable users to deploy, mint, and transfer tokens. BRC-20s are considered “semi-fungible” since users can only exchange BRC-20 tokens in set increments. 
 
BRC-20 tokens have limited functionality compared to their ERC-20 counterparts on Ethereum. Unlike ERC-20s, which can be used as collateral in various dApps, BRC-20s are restricted to minting and moving fungible tokens on the Bitcoin blockchain. This is why there were over 10 million Ordinals but only around 40,000 BRC-20 tokens. Each Sat inscribed with an Ordinal Digital Artifact only contains one image, video, or text, whereas each Sat inscribed with a BRC-20 can have millions of units of a single token.

BRC-20 Memecoin Craze Causes Fees To Skyrocket

Naturally, BRC-20 tokens caused the number of inscriptions to surge, and the subsequent BRC-20 memecoin craze caused transaction fees on Bitcoin to spike. By May, the market cap of BRC-20 tokens had passed $1 billion, with crypto wallets adding support and exchanges listing the biggest ones. The most popular crypto wallet for BRC-20s and Ordinal Digital Artifacts is the UniSat browser extension. The browser wallet has been downloaded over 300,000 times so far. To put things into perspective, the wallet only had 100K downloads in mid-May – a 3X increase in a month.

Screenshot: Chrome Web Store

Meanwhile, the number of non-zero Bitcoin addresses, i.e., the number of Bitcoin wallets holding more than 0 BTC, has gone parabolic over the same period. Bitcoin miners have also been raking it in from the transaction fees. The fees actually surpassed the block rewards for the first time since 2017. At the same time, innovation around both Ordinals NFTs and BRC-20s had increased. 

More Innovations Ensued

One of the most famous innovations happened in February 2023, when a crafty hacker found a way to upload a cloned version of the 30-year-old video game classic DOOM to the Bitcoin blockchain as an inscription on the network’s Ordinal protocol. You can literally play a simplified version of Doom on Bitcoin. 

More recently, another pseudonymous Ordinal developer named Leonidas introduced recursive inscriptions, making it possible for inscriptions to interact. This, in turn, makes it possible to upload playable video games larger than one Bitcoin block and unlocks other new use cases. 

In May 2023, Milady’s NFT enthusiasts launched a new Ordinals NFT standard with the help of an Ordinal Digital Artifact marketplace that makes it possible to bridge NFTs from Ethereum to Bitcoin. The catch is that the conversion is currently a one-way trip, but it foreshadows more interoperability for Ordinal Digital Artifacts and BRC-20s. 

On that note, the first BRC-20 stablecoin was launched in late May. The caveat is that the issuer of this stablecoin appears to be somewhat sketchy. Even so, it foreshadows the launch of more reputable stablecoins directly on the Bitcoin blockchain, likely resulting in even more Bitcoin adoption. 

Image source: BRC-20.io

Bitcoin Maxis Pushing Back

Not everyone is applauding Bitcoin's recent innovation, however. Many have argued that Ordinals are useless. This argument has some merit, considering that some of the earliest Ordinal inscriptions contained unsavory types of content that have since been hidden. Still, as it’s been inscribed into the blockchain, the image itself is immutable.

Some have also argued that BRC-20 tokens are harmful. This is also understandable, considering that they caused transaction fees on the Bitcoin blockchain to spike. It’s made it more expensive for people in developing countries to send BTC transactions, all because some degens wanted to trade memecoins. 

Others have argued that Bitcoin shouldn't be used for anything other than regular peer-to-peer BTC transactions. This is reasonable, considering the Bitcoin white paper says peer-to-peer electronic cash. Never mind that the more complexity you add, the more vulnerabilities you create. 

Crypto analyst Eric Wall explained in an interview that the way the ordinals protocol was coded is akin to an exploit. Crypto VC partner Nick Carter also pointed out in an interview that this unforeseen use of the Taproot upgrade could make the Bitcoin community more hesitant to approve future upgrades. Nick believes that Bitcoin won't be seeing another upgrade for a long time because of the unforeseen risks it will create. 

On the other hand, many, including Nick, have argued that the objectively useless Ordinal Digital Artifacts will be priced out due to the increased transaction fees. It makes sense because whoever pays the highest price has their transaction processed first. People won't continue to pay a high price to inscribe useless data. 

Progressive Bitcoiners Counter

Some have argued that Layer 2s will solve the blockchain bloats supposedly caused by BRC-20s like the Lightning Network. This also makes sense because higher transaction fees on the base chain create an incentive to generate scaling solutions, an incentive lacking in Bitcoin. 

Others have argued that the fees from peer-to-peer BTC transactions alone may not be enough to secure the Bitcoin blockchain as time passes, so additional use cases should be allowed. This makes sense because Bitcoin isn't just a crypto; it's the most secure network in the world, the ideal base layer. It's not just the progressive Bitcoiners saying this, either. Bitcoin OGs like Blockstream CEO Adam Back have acknowledged that Bitcoin can be used for whatever people want. 

Many Ordinal supporters have also noted the technology’s contribution to the freedom of speech. One Bitcoin observer posted on X stating, “I know everyone hates Ordinals, but whether it’s text or images, the ability to publish uncensorable information on the Bitcoin time chain effectively makes speech uncensorable worldwide forever.” 

What matters at the end of the day is the demand for block space and BTC, ideally from objectively valuable use cases. F2Pool CMO Li Qingfei underscored that Ordinals and BRC-20 tokens will eventually give rise to these objectively valuable use cases once all the hype is gone. The consensus is that both innovations are a net benefit and clear advantage to Bitcoin, but it's still too soon to say what's hype and what's here to stay. 

Ethereum Gearing Up for Competition

Many people have pointed out that conversations around Ordinal Digital Artifacts and BRC-20 tokens sound eerily similar to those around the first NFT craze and the ICO boom on Ethereum in 2017. At the time, people were also arguing about Ethereum’s future in light of these disruptive innovations. Some of you will recall how pictures of cartoon cats once caused massive congestion, jamming up the Ethereum network.

You may also know that most crypto projects launched on Ethereum were utterly worthless. Notably, all will appreciate that many of the NFTs and ERC-20s that survived are valuable and useful. Chances are that we will see the same thing happen with Ordinal Digital Artifacts and BRC-20 tokens. This means that Bitcoin could become more akin to Ethereum; if it does, it will make BTC a more direct competitor to ETH, and it appears that ETH has already been gearing up for this direct competition. 

To explain, BTC is considered to be digital gold. This is primarily because BTC's tokenomics make it an ideal hedge against currency debasement and, arguably, inflation – It is “Sound money.” Conversely, ETH is considered to be digital oil. This is primarily because ETH is the fuel that runs Ethereum, which hosts most dApps and tokens. The narrative around ETH started to change in mid-2021 with the EIP1559 upgrade. 

EIP1559 burns a portion of all transaction fees on Ethereum to refresh your memory. With enough activity, this makes ETH deflationary. Hence, the new narrative of ETH is “Ultrasound money.” Obviously, the term is meant to imply that ETH is a superior store of value to BTC due to its deflationary nature. 

Image source: X [Twitter] 

Ethereum’s transition from Proof-of-Work to Proof-of-Stake also made ETH more appealing to institutional investors because they can stake it to earn a yield, and we know institutions love earning yield. Regarding the environmental aspects of Proof-of-Work versus Proof-of-Stake, you should know that ESG-obsessed institutional investors aren't really concerned about the E part. They're worried about the G, the Governance, i.e., the control. Bitcoin can't be controlled, and ESG investors don't like that.

What Makes BTC More Appealing

Given that ETH can be deflationary and earn a yield via staking, it begs the question of what makes BTC more appealing than ETH to investors, particularly institutional investors. Many people have been asking this question lately, especially as ETH continues to change and BTC stays relatively static. The answer to the question is “security.” 

The Bitcoin blockchain is the most secure network in the world, mainly because it is static compared with all the others, which change constantly. It is the ideal base layer on which additional innovations can be built. The only thing missing was the incentives to create them. Ordinal Digital Artifacts and BRC-20s have introduced these incentives and prepared Bitcoin’s ecosystem to see the same explosive growth Ethereum did after NFTs and ERC-20s saw genuine adoption. 

The difference is that Bitcoin’s ecosystem will be much more secure due to its base layer. This is significant because security is the only thing institutional investors love more than token burns and yield. They want to be sure that the tokens they mint on a cryptocurrency blockchain will stay there forever, and Bitcoin arguably provides more certainty than Ethereum here. 

This is for many reasons, including that Proof-of-Work is more secure than Proof-of-Stake. The infrastructure used to interact with Ordinal Digital Artifacts and BRC-20 tokens exists on Bitcoin itself—the fact that Bitcoin doesn't change, and it's been around for much longer than Ethereum. Never mind that BTC is the only crypto the SEC has said is not a security. 

Bitcoin Innovation Risks

As bullish as Ordinal Digital Artifacts, BRC-20 tokens, and other Bitcoin innovations will be for BTC, there will also be risks. This is one undeniable advantage that Ethereum has: it has moved fast, broken things, and fixed them. Bitcoin hasn't broken anything yet, but unlike Ethereum, it can't afford to. 

Many argue that the most significant risks associated with Bitcoin innovation appear to be regulatory. Bitcoin evangelist Michael Saylor believes there could be regulatory risks, mainly for BRC-20 tokens. Like the ERC-20 tokens on Ethereum, Michael thinks that some BRC-20 tokens could be classified as securities by the SEC. It's ironic, considering that BTC itself is supposedly immune from scrutiny. 

Definitively, the most considerable risk associated with innovation on Bitcoin is one that's been overlooked, and that's centralization. As transaction fees on the Bitcoin blockchain rise because of the innovation, more people, mainly those who don't have much money, will switch to using Layer 2 protocols. 

The Lightning Network is Bitcoin’s Layer 2 solution for its renowned slow transaction speed. It consists of payment channels that contain large amounts of BTC. Individual payment channels between various parties combine to form a network of Lightning Network nodes that can route transactions among themselves. The interconnections between different payment channels result in the Lightning Network. 

Unless you have enough BTC and technical know-how to open your own payment channel, you must use a payment channel that a third party of some kind operates. The harsh reality is that sending BTC transactions on the lightning network using a payment channel run by a third party is no different from using a bank to send fiat transactions. 

That's because every BTC transaction is tracked, and you technically don't own your BTC, meaning it can be frozen or stolen. Because of this protocol’s current vulnerabilities, third parties must run on nodes to prevent fraud within the Lightning Network, called a watchtower, which monitors transactions.

Today's gas fees on Ethereum transactions are unaffordable for most people, forcing them to use Layer 2s, which are centralized and controlled by VC investors. It’s fair to say that's not what crypto is about and what anyone wants for Bitcoin, Ethereum, or other cryptocurrencies. All being well, Bitcoin will take a different approach to growing and scaling its ecosystem than other Layer 1s. All it takes is the right incentives. 

Image source: Ordinals Marketplace

In Closing

The developers of the Ordinal theory have expressed that the most essential thing the Bitcoin network does is decentralize money. They acknowledge all other use cases are secondary, including Ordinals. However, they believe that Ordinal theory helps Bitcoin's primary mission, at least in a small way. 

Suppose inscriptions prove to be highly sought-after digital artifacts with a rich history. In that case, they will serve as a powerful hook for Bitcoin adoption: Come for the fun, rich art, and stay for the decentralized digital money.

Ordinals and inscriptions increase demand for Bitcoin block space, which increases Bitcoin's security budget. This is vital for safeguarding Bitcoin's transition to a fee-dependent security model, as the block subsidy is halved into insignificance and ensures that Bitcoin remains secure.

Many hope that the Ordinal theory strengthens and enriches Bitcoin and gives it another dimension of appeal and functionality, enabling it to serve its primary use case more effectively as humanity's decentralized store of value.

This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Tim Moseley

Markethive’s Reason For Being and Magnanimity. Entrepreneur One: A Divine Legacy

Markethive’s epic entrepreneurial ecosystem has come a long way since its Divinely inspired inception. Markethive now runs on its own servers, with the security of blockchain and its Hivecoin (HVC) so close to being released on crypto exchanges and self-custody wallets. We have arrived as the first mega-decentralized marketing and broadcasting network encompassed by a social media interface with a vision and mission to deliver an autonomous sovereign meritocracy en masse that is not subject to oppressive technocracy.

When the founder and CEO Thomas Prendergast was given this vision from the Lord to build Markethive, the basics had to be free for everyone, such as the newsfeed, video, autoresponders, capture pages, the rotator link, broadcasts, etc. All Tom had to do was work out how to fund the project. 

How was Markethive’s growth made possible?

Through the Divine inspiration and tenacity of the founders, the concept of the Entrepreneur One Loyalty Program (E1) was created.  When the Entrepreneur One Upgrade was constructed, it was designed to reward the person for seeing the vision and trusting Markethive, particularly Tom, to build this vision. 

Ergo, how the E1 works and what it does is a Divine inspiration. Firstly, it funds Markethive to build the vision, and in turn, it will give a magnificent return from the Initial Loan Protocol (ILP) or, as it’s more recently called, the Incentivized Loan Program, which is included in the E1. As the name suggests, it is a loan from you to the company that pays you back at the end of the term and gives you magnificent returns when Markethive opens it to the masses.  

Markethive did have numerous affluent investors preparing to invest millions of dollars into Markethive; however, various tragic events fell on each of them before finalizing their commitment. In Tom’s words, “…it’s so weird! It got to a point it was laughable.” 

But, Markethive does have a core of people who are dedicated to the Markethive vision and have given Markethive its “daily bread” by being an Entrepreneur One for $100 per month so Markethive can continue the Divine quest inspired by our Lord. It can only be explained as biblical. Because of the goodwill and conviction of some, Markethive has accumulated the money needed to move forward with development as fast as possible, funds permitting.

The world’s disastrous events, especially over the past three years, have been called biblical also, and this is the reason why the entrepreneurs of Markethive and the company have this imperative to free and help every living soul achieve financial and self-sovereignty. To be enlightened and awakened to the perils and evil that’s been active and, for the most part, hiding in plain sight for decades, if not centuries, from all of us. 

Markethive’s Engineers. A Divine Intervention

Markethive’s engineers came to Markethive through the Holy Spirit. They were told to work with Markethive through their relationship with the Lord, where they received messages and answers through inspiration. Markethive was the company they were directed to, and through their dedication, sacrifice, and ingenuity, the platform, with its unique concepts, is being built. We are so blessed to have them on board with us at markethive. 

Entrepreneur One Receives Many Rewards

The E1 wasn’t set up to be any particular time period, but as Tom & Co continues to build Markethive, the E1 has evolved and given those with one or more E1 accounts a variety of rewards. As explained in a previous article, there are many different rewards and opportunities to generate income allocated to the E1 member.  

The Banner Impressions Exchange (BIX) is one that has been overlooked up to this point. Since its release, it hasn’t been a huge moneymaker, but it will be. Keep in mind that the banners are only shared by a maximum of 500 E1 accounts. To explain its potential, let’s take LinkedIn as an example. 

LinkedIn has 750 million active users, which equates to 40 billion hits per day. When Markethive has those massive hits from 75 million users, and you’re one of only 500 E1 members that can sell your impressions to a potential 750 million people who want to run ads, they will be willing to pay $4-$5 per impression. The amount of income that alone can produce is significant. The revenue of just that one component of the E1 will increase over time, and it’s forever as long as you are an E1 and active.

The banner placement space that belongs to the E1s is showcased on the premium real estate of the Markethive site, which is the upper header space below the taskbar. The Banner Impressions Exchange is available to all members should they wish to buy impressions from the E1 members to place a banner in Markethive.      

The E1 Upgrade gives other excellent benefits, like a 100% matching bonus on your new signups and those brought in by the company. In other words, the E1s get all of the traffic Markethive is responsible for bringing in via marketing campaigns, and the signups are rotated to only the E1s. 

Another benefit is the upcoming Promocode issued by Markethive to the E1s. Each E1 member will have their own Promocode, and Markethive’s administrative control panel decides what products the Promocode gives. These incentives consist of WOF, Boosts, Markethive Credits, Markethive tokens, Push, Broadcast, HVC, etc. And these will be assigned in multiples! 

So when prospects sign up on your Markethive promocode site, they will receive what’s allocated once they’ve completed KYC. Furthermore, it’s free to you as an E1: Markethive includes this in the E1 Upgrade subscription.  

As Markethive builds its system, the daily bread has been coming in consistently via the Entrepreneur One Program, which has enabled Tom and the Engineers to produce the Premium Upgrade. The Premium Upgrade is one of the additional things they’ve added since Tom was told to give the platform away for free. 

Markethive’s Retail Products

We now have numerous facets added on top of the basics that Markethive can sell that are very valuable. Markethive now can create retail sales packages like the Premium Upgrade. We also have the Wheel of Fortune, the Boost, and the E1 banners and impressions.

In the works, we have the Push, which is a group that, when you publish in the group, your posts are on the top of every single newsfeed in view for every new person who signs up. The very top banner on the Markethive platform will also be available for sale, which is the ultimate in prime real estate and primarily for the company’s use.  We are also preparing to deliver the broadcasting, press releases, and video advertising. All of the above are Markethive’s retail products. 

More About The ILP

As stated earlier, The ILP is one aspect of the Entrepreneur One Loyalty Program but is separate. There is still some confusion about the difference between the E1 and ILP. To clarify, The E1 (Entrepreneur One Upgrade) is a $100 monthly subscription, where you earn 0.1 ILP after one year of consecutive payments, which accumulates every year while active. 

The ILP (Incentived Loan Program) is a loan to the company that is paid back to you via a balloon payment after 20 years, or you can re-initialize it for another 20 years. So, you are lending Markethive the money that the ILP represents. It also provides monthly payments or returns to you, which is 20% of the net revenue of Markethive’s retail products. This is paid to all ILP token holders per their pro-rata share as long as the principal is outstanding. 

Also, note that the ILP is an assumable note that you can transfer to anybody. For example, If you hand your Markethive account over to someone else, the ILP is theirs, and they benefit from the returns. There will be an ILP Exchange, like the upcoming E1 Exchange, where you can sell your ILPs. 

The Markethive legacy will last forever. Markethive’s ethos, ethics, and transparency allow everyone to benefit, including the BOD and Alpha shareholders from the previous company before Markethive. These members are grandfathered in, automatically receiving 0.5 ILP for BODs and 0.2 ILP for Alpha members. 

Right now, anyone can buy an ILP or part thereof with Markethive tokens, Bitcoin, bank transfers, or credit cards. You can also earn ILPs through the Entrepreneur One Program or win an ILP through the contests Tom holds occasionally. 

Remember, the ILP is not an ICO, which is a security. You are not buying it from Markethive on speculation that it will be worth more in the future, like stocks. The ILP is a loan, which is not a security but a legally binding and conforming loan agreement. Because it is a debt instrument, it is not subject to tax and is compliant with the USA UCC code governing debt instruments.

What Markethive, the company, pays out to you, in fact, all transactions, will come through the wallet Markethive has just finished building. The spectacular, very sophisticated wallet also keeps track of the ILPs you own, and you will be paid your 20% share of Markethive’s revenue with the profit of the retail products through your Markethive wallet. 

It’s important to note that the ILPs earned through the E1 Upgrade are bona fide and are yours to keep forever. Your earned ILPs will continue to pay you returns even if you cancel your E1 subscription. The ILPs will continue accumulating in the E1 Upgrade until all 1000 shares/ILPs are accounted for. 

Another Divine Inspiration from Tom

Here’s something to look forward to. Once the bona fide ILPs are dispersed, there will be what is called a Virtual ILP. (V-ILP) It will be produced to take its place and take another 10% of Markethive’s revenue. You will acquire the Virtual ILP in the E1 account that you have, and as long as it’s active, the Virtual ILP that it’s earning will pay out 10%. If you cancel the E1 subscription or sell it on the E1 Exchange, the V-ILP associated with that account will cease and no longer be payable to you. Unlike the original E1 Upgrade, you do not keep your ILP.

The E1 Is A Legacy Program

The Entrepreneur One Loyalty Program is a legacy program, and it’s Divine because not only does it empower Markethive to move forward, grow the company, and, as we move forward, be massively successful, but in turn, it pays back to each person who supported the company to fulfill its mission victoriously. Eventually, it will get to a juncture where there will be a tipping point, and more revenue will come into that ILP than what the E1s are paying out for their monthly subscription. 

Current Entrepreneur One members are urged to continue with their subscription as it will fuel their future wealth. Remember, it’s a loan from you that is paid back to you at the end. Meanwhile, 20% of Markethive’s revenue is also paid to you. This is unique and a gift from the Lord; no other company does this!  

The Markethive wallet has been accomplished and is functional for all intents and purposes. The wallet is just waiting for the Hivecoin launch to step outside of Markethive’s door, unleashing it to the global community. We are now very close to assigning Hivecoin and launching it to various wallets and exchanges.

The countdown will be activated at that time, and the announcement that the Entrepreneur One Loyalty Program is closing to new members and will not be available from the company, only E1 members through the E1 Exchange. You will have 30 days from the notification to either become an Entrepreneur One member or, if you have suspended your E1 Status, re-instate your E1 account to receive all the benefits and potential wealth it has to offer. 

But why wait? Become an Entrepreneur One now by subscribing for $100/month or save $200 when you purchase an E1 for $1000 for 12 months. Start accumulating your bona fide ILPs now. You’ll be an integral part of Markethive’s development envisioned for all humanity and be rewarded with a legacy of wealth to enjoy and pass on to your family.  

May the Lord bless and uphold you for all eternity…

Tim Moseley

About The Markethive Wallet – What You Need To Know

Great news, Markethivers! The wallet is now installed on the Markethive platform. Markethive has kept its promise and delivered a complete working wallet. This mighty, robust, and secure wallet encompasses all aspects of facilitating your business and securing all your financials within Markethive, like earnings and payments, dividends paid from your ILPs, retail products, etc. 

This is a significant step in the right direction for monetizing Markethive’s ecosystem as it endeavors to ensure and restore sovereignty and financial freedom increasingly being stripped from us by a global authoritarian regime. This article will illustrate what you need to know and do to access the now-operational wallet. 

Understand that access and functions of the wallet are only for Entrepreneur One (E1) members at this stage. E1 members can now retrieve their Hivecoin (HVC) from their cold storage to their hot wallet. (You can do this in preparation for the forthcoming coin exchanges and your 3rd party self-custody wallet.) You can also transfer HVC to other members within Markethive via the wallet. 

Access The Markethive Wallet

To access your wallet, tap on the wallet icon on your Markethive dashboard (portrayed in the image above). A popup of the wallet will appear on your screen. If you haven’t completed your KYC, you will see a stop sign (pictured below) and a prompt for you to initiate the KYC protocol. You must complete the KYC process and 2FA for access to the Wallets section of the Markethive Wallet. (Note: The 2FA protocol will be installed into the Security section of the wallet in due course.) Meanwhile, you will have confirmed your 2FA when logging in to Markethive. 

The non-E1 KYC-approved members will see the banner announcement (pictured below) until its full release. The image in the wallet has a link should you wish to upgrade to Entrepreneur One to gain early access and take advantage of all the benefits offered, including becoming a shareholder by securing the ILP (Incentivized Loan Program), which will pay a monthly dividend on the net profit of Markethive’s revenue. The E1 membership will no longer be available from the company once the wallet has fully launched. 

About KYC And 2FA

In Markethive’s case, KYC is for the community’s benefit of knowing who they are engaging with and not for governmental regulations, unlike exchanges and others.  It assures Markethive members that you are a real person, dedicated to honest and transparent relationships in business and socially. The purpose is to have an active, dynamic, and secure “hive of people.” Note that once KYC is approved, the documents uploaded to attain approval are all deleted; Markethive does not keep these documents. 

The short selfie video required in the Markethive KYC protocol is kept on file so you can retrieve access to your account if you lose it. The admin can verify you with that video if you lose your device and the 2FA app needed to utilize your Markethive account and wallet. You just make a short video requesting access to your account and how you lost access. The video prerequisite is another layer of security to prevent your account from getting hacked. It also prevents members who have signed up but are not verified from hacking or spoofing.   

This article comprehensively explains the 2FA installation and protocol for various devices. Since Markethive introduced 2FA at login, most members have successfully activated it; however, some still need clarification or have issues with it. The most common problem people have with the Google Authenticator app is an incorrect code. If your code is incorrect, it usually means you entered it after it expired. The code changes every 30 seconds. 

If you input your code within the allotted time and it’s still incorrect, it means the time on your Android device is not synced with your local time zone. To remedy this, open the Google Authenticator app on your Android device. In the top right, select More ⋮ > Time correction for codes > Sync now. On the next screen, the app confirms the time is synced.

Markethive Wallet Security

More and more platforms are utilizing this protocol for security reasons. Markethive has taken it further with its unique, never-been-done-before system to provide the most extreme security that virtually makes it impenetrable. Unlike other platforms, we have a comprehensive financial accounting hub that can be likened to a bank. Your assets in your wallet are precious and, in most cases, can be considered a livelihood.  

You must set up the Markethive security protocol as it is needed to transfer HVC to any other 3rd party wallet once HVC has been officially named and can be listed on various self-custody wallets. More about Hivecoin in a forthcoming article. This security consists of the following: 

1. Your Security word. 
2. Your security image and word.
3. Confirm your 2FA.
4. Retrieve the code sent to your email on record with Markethive.

The security of such a system needs to be severe and is very necessary in today’s world of massive corruption.

How To Retrieve Your HVC From Cold Storage

The above Markethive security protocol is unnecessary for internal transfers. However, as Markethive is currently on the Solana blockchain, you must have a small amount of Solana coin (SOL) in your Markethive wallet to facilitate the transfers, whether within your Markethive wallet or externally. As shown in the image below, only a minuscule amount of SOL (0.002) is needed to retrieve your HVC from cold storage to your hot wallet balance.  

First, to deposit SOL into your Markethive wallet, go to your Markethive Wallets section > Go to Solana Wallet > In the drop-down menu, tap ‘Receive Solana’ > Copy your Solana address. Then, go to the wallet where you hold the Solana coin and complete the transaction. Your chosen amount of SOL will be in your Markethive wallet instantly. 

You can then retrieve your Hivecoin from cold storage into your hot wallet to access your HVC for transactions. Once in the hot wallet, you can transfer to anyone within Markethive, or any wallet you or anyone else has where the HVC is listed.  

HVC Retrieval Guidelines

Another great reason to have Entrepreneur One status is that E1s have no limit on retrieving Hivecoin from the cold storage to the hot wallet. This drastically reduces the risks of bottlenecks that can occur when restrictions are in place. These guidelines are as follows: 

• E1s have limitless retrieval of Hivecoin from cold storage to the hot wallet.
• Premium upgrades can retrieve 10 HVC per day. 
• Free members can retrieve 0.01 HVC per day. 

Become an E1 Now. Time Is Running Out!

Markethive has built a system that works for the average entrepreneur and will continue to expand and reach new heights with its unique concepts and products. The wallet is now complete and functional for the Entrepreneur One members. You will want to become an E1 when you understand what Markethive is doing with the Entrepreneur One Upgrade. 

It’s Markethive’s vision and mission to spread the wealth with as many who are willing to be part of this. You bless Markethive by upgrading to Entrepreneur One now and be prepared to be blessed a thousandfold. This is your company, your online business, and your home. These memberships will be sought after, demanding huge prices on the upcoming E1 Exchange, and sold by E1 members who understand and believe in the vision with the foresight to acquire multiple E1 accounts. 

Entrepreneur One Upgrade. A Reciprocal Blessing. It Works Both Ways!

Secure your share of Markethive and experience exponential growth of your income and legacy. You are welcome to purchase multiple Entrepreneur One subscriptions, which multiplies your income accordingly. Time is running out as the E1’s availability from the company will soon come to a close when the Markethive Wallet is released to the community. This is your chance to secure an E1 membership from Markethive for free, help pioneer, and own part of the world’s first blockchain-driven social market broadcasting network of the future, where we stand for freedom and hold dear your sovereignty. 

Tim Moseley

Wall Street's Money Game Puts Crypto Revolution At Risk

Many people who believe in the potential of cryptocurrencies hope that Wall Street, the famous financial hub, will eagerly invest in the growing crypto market and enjoy the same profitable returns that individual traders have experienced whenever the value of cryptocurrencies has surged. However, this belief overlooks two crucial facts: firstly, Wall Street is already heavily involved in the cryptocurrency market, and secondly, it has no intention of injecting its capital to boost this volatile market.

The world of institutional finance has had numerous opportunities to capitalize on the cryptocurrency space. However, as its influence expands, the cryptocurrency market is transforming, potentially into something entirely different. Whether this transformation is intentional or an unintended consequence of its shortcomings, Wall Street may gradually undermine the essence of cryptocurrency itself.

This article explores the intricate dynamics between Wall Street and the crypto world, shedding light on the potential implications of the Wall Street money game in the crypto industry. Let's unravel the mysteries and better understand this ever-evolving landscape.

Wall Street Is Not On Your Side

The recent exposure of Wall Street's Bitcoin conspiracy has shed light on some alarming developments in the market. It all began with the BlackRock Bitcoin ETF application. BlackRock, a powerful asset manager known for its extensive control over various industries, including media and pharmaceuticals, has been implicated in bribery and political manipulation over the years. It is essential to remember that Wall Street and these major players are not interested in your financial freedom. They are anti-revolutionary and do not have your best interests at heart.

The news of BlackRock's Bitcoin ETF application is significant due to its massive influence as a $9.1 Trillion asset manager. Even a tiny portion of their funds could potentially buy up all the Bitcoin available on exchanges. However, BlackRock is not the only organization venturing into the Bitcoin ETF business. Fidelity, a $4.24 Trillion asset manager, and other major players are also interested in entering the market. These ETFs are expected to be backed by real Bitcoin and traded on stock exchanges.

The paperization of Bitcoin raises concerns as it will move more Bitcoin into the hands of stockbrokers, reducing the amount of Bitcoin available on the blockchain and resulting in fewer fees for miners in the long run. Long-term investors currently hold a significant portion of Bitcoin. BlackRock, Fidelity, Wisdom Tree, and Invesco, have all filed for Bitcoin ETF applications. These developments cannot be ignored.

Furthermore, we have EdX, an institutional-grade cryptocurrency exchange backed by Fidelity, Charles Schwab, and Ken Griffin's Citadel Securities. The pieces start to come together when we see the bigger picture. A crackdown on the cryptocurrency industry led by Gary Gensler, the head of the SEC, raises eyebrows. Gensler's previous affiliation with Goldman Sachs, a major player on Wall Street, suggests a conflict of interest. It appears that Wall Street is orchestrating a deliberate attack on its major competitors, such as Coinbase and Binance, while simultaneously preparing to launch its own cryptocurrency exchange.

The entry of Wall Street into Bitcoin is not a coincidence. It is a meticulously planned move to manipulate the markets for their benefit. Institutions like JPMorgan and BlackRock are experts in market manipulation, and their involvement in Bitcoin will undoubtedly affect its price. 

However, we must understand that inviting Wall Street into the cryptocurrency space comes with risks. They have a history of dismissing Bitcoin as a scam, and suddenly they are interested in Bitcoin. The agenda is clear; they aim to gain control over it and take surveillance to the next level. We can expect them to push for code changes in Bitcoin to exercise control, which organizations like Greenpeace have already discussed.

While the influx of ETF applications may seem exciting for regular consumers wanting to invest in Bitcoin, it comes at the cost of relinquishing the uniqueness of Bitcoin itself. Owning Bitcoin through Wall Street-backed ETFs means giving up control over your assets. The hope that these institutions will hold and redeem your Bitcoin in the future is not the vision that attracted many people to Bitcoin in the first place. If you genuinely believe in the principles of Bitcoin, buying and holding your own Bitcoin is crucial, securely stored in your personal wallet. Wall Street cannot be trusted with your financial sovereignty.

Image source: Wall Street Mojo

How Wall Street Can Potentially Harm Cryptocurrency

To understand how Wall Street can negatively impact cryptocurrency, let's delve into a concept called hypothecation. In simpler terms, hypothecation occurs when a company or firm pledges its equity shares as collateral to a lender. Here's an example to illustrate this: Imagine Company A needs $5 million, and Broker B agrees to lend them the money. In return, Company A offers $5 million worth of their securities as collateral to Broker B. This type of arrangement is known as hypothecation.

Now, here's where the potential problem arises. Rehypothecation comes into play when Broker B, the lender, reuses the assets received from Company A as collateral for their business activities. This practice allows Broker B to utilize the assets as a security for their transactions. In the traditional financial world, rehypothecation is relatively straightforward due to a few reasons.

Firstly, shares in the traditional financial system are not physically settled; ownership certificates represent them. This characteristic makes transferring ownership as an 'IOU' simple without physically moving the shares. Secondly, accounting and tax regulations permit the same asset to be attributed to different parties as long as each party records a distinct amount of debt on their balance sheets. However, this flexibility granted to banks and brokers increases the risk associated with counterparties involved in such a system.

Cryptocurrency, like Bitcoin and Ethereum, operates on decentralized networks that rely on blockchain technology. These digital currencies are not governed by centralized authorities like banks or governments. The underlying technology ensures transparency and trust in transactions by recording them on a shared, immutable ledger.

However, when Wall Street, with its established practices and financial mechanisms, enters the realm of cryptocurrency, it introduces potential threats. The concept of hypothecation and rehypothecation, which are prevalent in traditional finance, can pose risks to the stability and integrity of cryptocurrency.

One significant concern is the possibility of multiple parties claiming ownership of the same digital asset. Unlike traditional shares represented by certificates, cryptocurrency ownership is recorded and verified through complex cryptographic algorithms. If a broker were to hypothecate or rehypothecate digital assets without proper mechanisms in place, it could result in conflicting claims and disputes over ownership.

Moreover, the transparency and decentralization that define cryptocurrency could be compromised. Rehypothecation often involves leveraging assets for additional borrowing, which can introduce systemic risk and potentially lead to market manipulation. This practice could undermine the principles of fairness and equal opportunity that many proponents of cryptocurrency value.

The risk of counterparty failure increases with rehypothecation. In the traditional financial system, where banks and brokers hypothecate, and rehypothecate assets, the complexity of transactions and the interdependency among market participants heighten the risk of a domino effect if one party defaults. Such failures can have far-reaching consequences, including financial instability and loss of investor confidence.

The Implication Of Rehypothecation For The Crypto Industry 

There's an important issue to consider when discussing cryptocurrencies like Bitcoin. Many of these digital currencies claim to have a system that ensures their security and reliability, such as a proof-of-work (PoW) or proof-of-stake (PoS) mechanism. However, these cryptocurrencies are often traded on centralized exchanges despite these claims.

Let's delve deeper into the problem. Imagine a scenario where a Bitcoin is rehypothecated multiple times as brokers and exchanges trade debt and collateral. In such a situation, who gets to claim ownership if there's a need for it? Who indeed possesses the cryptocurrency at the end of the day when multiple parties know the private key, or worse when no one does?

Cryptocurrency enthusiasts strongly believe in the idea that if you don't have control over your private key, you don't have control over your crypto assets. This means that if you don't directly manage and secure your private key, you can't truly claim ownership of your cryptocurrency.

Now, let's consider some potential problems that can arise. What if a broker goes bankrupt, and someone needs to be compensated? Or what if a hard fork happens, and someone needs to participate by voting with their stake in the cryptocurrency? In such cases, determining the rightful owner of the Bitcoin becomes exceptionally complicated due to the long chain of transactions involved. It becomes unclear who should be considered the valid owner, and this uncertainty creates a significant challenge.

Moreover, the current transient ownership model, where cryptocurrency ownership changes hands frequently, simply doesn't work well for assets recorded on a ledger. This flawed model can lead to multiple parties expecting compensation simultaneously, creating a chaotic situation. The risk of a complete breakdown in this scenario is alarming and could have devastating consequences.

One empirical example of the catastrophic consequence of rehypothecation in the crypto industry was the lucrative Grayscale Bitcoin Trust (GBTC) “premium arbitrage,” which led to the demise of 3AC, Genesis, and Grayscale. Rehypothecation generated credit from assets and allowed multiple transactions to be collateralized by the same asset. This unstable chain of transactions supported by the same collateral was poorly understood and resulted in the collapse.

Image source: Hackernoon

Addressing these concerns and finding solutions to ensure the proper ownership and control of cryptocurrencies is crucial. The complex and convoluted nature of ownership in the current system poses significant risks that could undermine the stability and reliability of cryptocurrencies as a whole. Therefore, exploring alternative models and frameworks that can provide a more robust and secure ownership structure for digital assets is essential. By doing so, we can build a stronger foundation for the future of cryptocurrencies and protect investors from potential disasters.

Why Investors Are Eager For A Bitcoin ETF

The idea of a Bitcoin ETF has captured the imagination of cryptocurrency enthusiasts for a couple of important reasons. First, ETFs are built on a solid foundation of tangible assets, and second, they are seamlessly integrated into the traditional financial market through brokers. If a Bitcoin ETF were to become a reality, it would make Bitcoin much more accessible to everyday investors who may not have the patience or technical know-how to buy Bitcoin on cryptocurrency exchanges or manage a blockchain wallet. In simple terms, a Bitcoin ETF could be the key to achieving widespread adoption of Bitcoin.

The hope for a Bitcoin ETF received a glimmer of optimism in October 2021 with the launch of the ProShares Bitcoin Strategy ETF (BITO) on the New York Stock Exchange (NYSE). However, it's important to note that this particular ETF is not directly tied to Bitcoin itself. Instead, it tracks the Bitcoin futures contracts offered by the Chicago Mercantile Exchange (CME), which are essentially bets on the future price of Bitcoin.

On the other hand, ETF proposals directly linked to Bitcoin from various companies have either been outrightly rejected, as was the case with early Bitcoin investors Cameron Winklevoss and Tyler Winklevoss or are still awaiting approval from the U.S. Securities and Exchange Commission (SEC).

Although there are opportunities for profit in the cryptocurrency market, and the industry has experienced a surge in popularity in recent years, there remain numerous uncertainties surrounding the future relationship between cryptocurrency and Wall Street and its broader acceptance among the investing public.

Many investors believe that the influx of Wall Street money might lead to more regulation, oversight, and accountability in the crypto space, which could ultimately benefit users and investors.

In the end, the impact of Wall Street money on cryptocurrencies will depend on how regulators, policymakers, investors, and users find the right balance between risk and reward, trust and verification, centralization and decentralization, and innovation and stability.

Tim Moseley

Crazy Battle between Securities and Commodity Hangs Crypto in a Regulatory Limbo 

Welcome to the fascinating world of cryptocurrencies, where digital assets have emerged as a disruptive force within the financial ecosystem. However, navigating the regulatory landscape surrounding these innovative forms of currency can be a bewildering experience. Despite their name, regulatory bodies like the Internal Revenue Service (IRS) do not recognize cryptocurrencies as currencies. Instead, they are often categorized as property, which has significant implications for taxation.

Simultaneously, the Securities and Exchange Commission (SEC) has raised concerns about initial coin offerings (ICOs) and their potential classification as securities. This has led to discussions around registration requirements and investor protections in the realm of cryptocurrencies. As a result, the emergence of cryptocurrencies has not only challenged traditional definitions and classifications of commodity and currency but has also blurred the lines between traditional financial instruments and these new digital assets.

Whether you are an investor looking to navigate the legal complexities of the crypto space or simply curious about the evolving nature of digital assets, this article aims to unravel the intricacies of the crypto landscape and shed light on how cryptocurrencies fit into existing regulatory frameworks. By exploring the classifications of cryptocurrencies as securities and commodities, we hope to provide you with a deeper understanding of their implications and the broader impact on the financial world.

Understanding Traditional Assets

To navigate the complex world of assets, it is essential to grasp the classifications established by regulatory agencies like the IRS, CFTC, and SEC for tax and regulatory purposes. While some definitions rely on legal precedents, such as the renowned Howey Test for securities, others may vary across regulatory bodies. Nonetheless, gaining a fundamental understanding of traditional assets is crucial before delving into the cryptocurrency spectrum.

There are three primary categories into which financial assets are typically grouped:

1. Real Estate:
Real estate, as a category of traditional assets, encompasses the land and any structures or improvements attached to it. This includes residential homes, commercial buildings, factories, warehouses, and even natural resources like minerals or water rights associated with the land. Real estate encompasses the tangible, physical properties and resources tied to a specific location.

When purchasing real property, certain fees and additional expenses contribute to the overall cost basis of the property. Specific rules and deductions apply to your taxes when dealing with real estate. By understanding the intricacies of real estate, including the costs involved in property transactions and the tax implications of property ownership, individuals can make informed decisions when buying, selling, or investing in real estate assets.

2. Securities:
Securities are financial instruments that represent ownership or a stake in a company or entity. They include familiar assets like stocks, bonds, and derivatives. The Securities and Exchange Commission (SEC) is the regulatory body overseeing securities in the United States. To shed some light on the legal aspect, in a significant court case called SEC v W. J. Howey Co. in 1946, U.S. securities law defined securities as "investment contracts."

In simple terms, when someone invests in a security, they expect to profit solely from the efforts of the issuer or a third party involved. These profits can come from selling the security at a higher price, receiving dividends, or earning interest. This landmark case established the "Howey test." It was utilized in various SEC enforcement cases, including disputes involving tokens like Ripple's XRP and the creators of NBA Top Shot, a digital marketplace for sports collectibles known as non-fungible tokens (NFTs).

3. Commodities:
Commodities refer to physical goods traded in large quantities on specialized exchanges. They can include agricultural products like corn and wheat and precious metals like gold and silver. Their current market price typically determines the value of commodities. The Commodity Futures Trading Commission (CFTC) oversees certain aspects of commodities trading in the United States.

However, it's important to note that the CFTC's regulatory authority primarily covers wrongdoing related to commodities futures trading rather than spot trading, which involves immediate transactions of physical goods. Spot trading of commodities doesn't fall under the CFTC's direct jurisdiction like securities do under the SEC.

As the popularity of crypto assets continues to soar, questions arise regarding how these conventional asset categories apply to the growing realm of digital assets.

Cryptocurrencies challenge the traditional notions of physical-focused assets, prompting regulators to adapt their frameworks and policies to encompass these innovative financial instruments. Consequently, exploring the distinct characteristics and implications of digital assets within the context of existing asset classifications becomes imperative.

Image source: Crypto.news

Why the Classification of Cryptocurrencies Matters

To truly grasp the different categories that crypto-assets fall into and how it impacts their regulation, it's essential to understand the meaning behind the Howey Test. The Howey Test has emerged as a widely respected method to classify these assets, and it does so by posing these fundamental questions:

1. Is money being invested?
2. Is there an expectation of earning a profit from the investment?
3. Does the investment involve a common enterprise?
4. Are profits generated through the efforts of others?

If a cryptocurrency meets all four criteria outlined in the Howey Test, it is considered a security. This means that promoters are actively marketing these tokens, while investors anticipate earning profits primarily through the efforts of others. SEC Chair Gary Gensler emphasized this point in a statement on September 8, emphasizing the prevalence of token sales where the public expects profits based on the actions of others. By understanding these criteria, individuals can gain insights into how crypto-assets are classified and regulated under the Howey Test.

If a cryptocurrency is classified as a security, it means that the issuers and exchanges of that cryptocurrency must obtain licenses from securities regulators. However, getting these licenses can be pretty challenging, which is why the crypto industry puts a lot of effort into ensuring that their cryptocurrency sales and projects comply with securities laws.

Issuers try to avoid violating securities regulations by focusing on decentralization. If a cryptocurrency is developed in a way that doesn't have a central group driving up its value, it becomes less likely to be seen as security by regulators. This is why decentralized finance (DeFi) projects work towards decentralizing their development efforts and splitting governance through decentralized autonomous organizations (DAOs). 

They also utilize mechanisms like proof-of-stake as a consensus mechanism. The argument behind this approach is that if people are both investors and actively participate in the project's growth, such as by staking the coin or voting in DAO decisions, they are no longer solely reliant on a third party to generate returns, as required by the Howey test.

The risk of classifying cryptocurrencies as securities is that exchanges may choose not to list them to avoid being fined by the Securities and Exchange Commission (SEC) for trading unregistered securities. Cryptocurrencies may face state-specific rules and regulations. For instance, the New York Attorney General filed a lawsuit against KuCoin, and multiple state regulators have teamed up to target a coin featuring Elon Musk's image called TruthGPT Coin. These cases highlight the potential legal complications that can arise.

The SEC has provided guidance on initial coin offerings (ICOs) and digital assets. In their framework for the investment contract analysis of digital assets, the SEC emphasized factors such as the speculative nature of many ICOs and their lack of utility as payment or store of value, which could lead to these coins being classified as securities. Kik, an ICO project, faced legal consequences when its CEO said buying its tokens would result in significant profits. The SEC sued Kik, and the company was fined $5 million, nearly pushing them to bankruptcy.

Conversely, the Commodity Futures Trading Commission (CFTC) argues that cryptocurrencies like Bitcoin and Ether are commodities and can be regulated under the Commodity Exchange Act (CEA). The CFTC's rationale is based on the fact that cryptocurrencies like Bitcoin are interchangeable on exchanges, just like sacks of corn of the same grade have the same value. This determination was reinforced in the CFTC's case against Bitfinex, a crypto exchange, and Tether, a stablecoin issuer, where the agency stated that digital assets like Bitcoin, Ether, Litecoin, and Tether are all commodities.

Determining whether cryptocurrencies fall under the classification of securities or commodities has significant implications for their regulation. It affects licensing requirements, listing on exchanges, compliance with securities laws, and potential legal consequences. These classifications shape the regulatory landscape and play a vital role in how cryptocurrencies are treated within the financial ecosystem.

Image credit: Markethive.com

Where Things Stand in The Ongoing Regulatory Debate

The regulatory landscape for cryptocurrencies is constantly evolving, and it's challenging to predict how it will look in the future. Various stakeholders and factors are involved, making it a complex situation. In the United States, Congress has made efforts to grant the Commodity Futures Trading Commission (CFTC) broader authority to regulate the spot trading of non-securities tokens. Among these tokens, Bitcoin is currently the only one that both agencies, the CFTC and the Securities and Exchange Commission (SEC), openly agree on its classification.

One possible outcome of this ongoing debate is that specific cryptocurrencies may be classified as securities while others are treated as commodities. This would create an even more intricate regulatory landscape where different cryptocurrencies are subject to different rules and regulations.

Alternatively, lawmakers could establish crypto as its distinct asset class, introducing tailored regulations specifically for cryptocurrencies. This approach is largely followed by the European Union, which has implemented the Markets in Crypto Assets (MiCA) regulation. MiCA outlines steps that crypto issuers, wallet providers, and exchanges must follow to protect consumers and ensure fair trading.

However, even with these regulations in place, there may still be some legal areas that need to be addressed on a case-by-case basis. For example, determining whether a particular series of non-fungible tokens (NFTs) must adhere to specific rules. As the discussions continue and regulatory bodies navigate the complexities of cryptocurrencies, it remains a dynamic and evolving landscape with ongoing developments that will shape the future of crypto regulation.

Controversial Guidelines on How Cryptocurrencies Are Classified

The classification of cryptocurrencies has been a contentious issue, with different U.S. regulatory agencies offering their own definitions. The Securities and Exchange Commission (SEC) labeled cryptocurrencies as securities, considering them investment assets that generate returns. This categorization was based on federal security laws and the belief that anything traded on an exchange qualifies as a security, including cryptocurrencies.

However, the Commodity Futures Trading Commission (CFTC) took a different approach. Following a court ruling.pdf, the CFTC gained the authority to regulate digital currencies as commodities, treating them similarly to products like coffee and oil.

Additionally, the Internal Revenue Service (IRS) defined cryptocurrencies as taxable property for federal tax purposes, adding another layer to the classification debate.

Two other agencies, the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN), also provided their guidelines. OFAC considered digital currency on par with fiat currency, while FinCEN categorized cryptocurrencies as a form of money. These distinctions diverged from other agencies' commodities, property, or asset classifications.

These conflicting definitions within the same government highlight the challenge businesses face in legally classifying cryptocurrencies. However, efforts have been made to bring more clarity. For example, the SEC clarified that it does not consider Ethereum and Bitcoin securities but focuses on Initial Coin Offerings (ICOs). While there is an ongoing debate, this statement narrows the understanding of cryptocurrencies within the United States.

The different classifications can create confusion for businesses, which may struggle to understand which regulations apply to them. This confusion can lead to legal risks if companies fail to comply with the appropriate regulations. It can also discourage some businesses from entering the cryptocurrency market due to the uncertainty and complexity of regulations.

Moreover, the classification can impact innovation in the crypto industry. If a new cryptocurrency is classified as a security, it may deter innovation due to the stringent regulatory requirements. Conversely, if classified as a commodity, it may encourage development due to the relatively less strict regulations.

However, it's important to remember that the regulatory landscape for cryptocurrencies is still evolving, and changes may occur in the future that could affect crypto businesses. Therefore, it's crucial for companies to stay updated on the latest regulatory developments and seek legal advice to ensure compliance.

Classifying cryptocurrencies as securities or commodities is complex, with significant implications for investors and regulators. As the cryptocurrency market continues to evolve, it may be necessary to reevaluate and refine these classifications to reflect this asset class's unique nature accurately.

While the current classifications provide some clarity, they also highlight the need for a more nuanced regulatory framework to accommodate cryptocurrencies' distinctive characteristics. This is a challenge that regulators worldwide will need to address in the years to come.

This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Tim Moseley