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Currency risks will drive gold and silver sky-high by year-end BMO Capital Markets

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Currency risks will drive gold and silver sky-high by year-end – BMO Capital Markets

While gold and silver prices may continue to consolidate in the near term, the rally in the precious metals sector is only getting started, according to commodity analysts at BMO Capital Markets.

In a report published Wednesday, the Canadian bank announced a significant upgrade for its gold and silver price projections for the next three years, with the high-water mark in the final quarter of 2024. The bank’s commodity analysts see gold prices averaging this year around $2,169 an ounce, up 11% from its previous forecast.

At the same time, they see gold prices averaging next year around $2,100 an ounce, a 12% increase from December’s estimates. Gold prices are expected to average around $2,000 an ounce in 2026 and $1,950 in 2027, an increase of 8% and 3%, respectively from the December estimates.

Looking at silver, BMO sees the white metal averaging around $25.60 an ounce this year, up 13% from the December forecasts. The price is expected to average around $25.30 an ounce next year, up 11% from the previous estimate. Finally, prices are expected to average $24 in 2026 and $23.50 in 2027, an increase from the previous estimate of 8% and 3%, respectively.

This year, BMO sees gold prices averaging around $2250 an ounce in the fourth quarter, a 13% increase from the previous estimate. At the same time, silver prices are expected to average the final quarter of the year around $28 an ounce, a 22$ increase from December’s forecast.

June gold futures last traded at $2,214 an ounce, up 0.67% on the day.

The commodity analysts said that gold’s consolidation near its recent all-time highs is an indication that the precious metal is forming a new base and investors are getting comfortable with higher prices.

They added that they remain bullish on the precious metal as a hedge against rising currency risks worldwide, and noted that gold’s all-time highs also coincide with Bitcoin’s move to record highs above $73,000 per token.

“Given no politician is likely to be elected by promising to spend less in a year loaded with elections across key democracies, there is certainly a chance that later in the year we may see further currency concerns supporting precious metal performance as a new era of elevated fiscal spending across global economies gathers traction,” the analysts said in the report. “While we see some consolidation in the current range through mid-year, we expect further sequential gains in H2 as the U.S. rate cut cycle starts to gather pace and geopolitical tensions rise as the U.S. election nears. This could be one of the rare years where both macro and retail investors increase exposure to precious metals.”

While gold regains its luster as a risk hedge, BMO also said they expect the market to remain well supported by “price-insensitive central banks.”

The bank also reiterated its call for Chinese demand to dominate the marketplace.

“China’s households accumulated strong savings over the pandemic, and even over the past two years ~35trn RMB was added. However, these households have had somewhat of a dilemma as to where to put this money, something often termed the ‘ugliness contest’ for Chinese investors,” the analysts said. “Historically, money might have been invested in property as a default position; however, as has been widely discussed this sector continues to face major structural issues which are impacting buyer confidence. With this, gold exposure has become a necessity for Chinese portfolios, as they continue to expect disinflation and income uncertainty.”

Meanwhile, BMO explained that silver will remain well-supported by industrial demand and weak supply growth.

“Historically, money might have been invested in property as a default position; however, as has been widely discussed this sector continues to face major structural issues which are impacting buyer confidence. With this, gold exposure has become a necessity for Chinese portfolios, as they continue to expect disinflation and income uncertainty,” the analysts said in the report.

“Recent weeks have seen vast lay-offs at the world’s largest solar manufacturer, Longi Green Technology, while there have been a number of news articles around poor utility return on solar installations in Europe,” they added. “This has led to some fears of a wider solar industry slowdown; however, we see this as a cyclical element of overinvestment and higher interest rates.”

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Neils Christensen

Time to Buy Gold and Silver

Tim Moseley

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ADA at 10 Price In View As Cardano Surpasses Ethereum ETH Other Top Blockchains In Developer Activity

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ADA at $10 Price In View As Cardano Surpasses Ethereum (ETH), Other Top Blockchains In Developer Activity

By Arnold Kirimi – March 24, 2024

Cardano (ADA) has emerged as a leader in developer activity, surpassing Ethereum (ETH) and other major blockchain networks. The surge in GitHub commits reflects Cardano’s commitment to innovation and growth, positioning it as a frontrunner in the competitive blockchain landscape.

GitHub commits are updates or modifications made to a project’s code on the GitHub platform using the Git version control system.

Each commit represents a specific change to the codebase, like adding features, fixing bugs, or enhancing performance. Commits include a message explaining the changes, aiding collaboration and progress tracking in software development.

Impressive GitHub Commit Numbers

IntoTheBlock reports that Cardano’s ADA is currently the cryptocurrency with the highest development activity and weekly engagements, surpassing major cryptocurrencies like Ethereum (ETH) and Bitcoin (BTC). Following ADA, Avalanche (AVAX) takes the third spot, with Litecoin (LTC) ranking fourth.

Between March 11 and 17, Cardano recorded an impressive total of 978,780 commits on GitHub, showcasing its proactive approach to advancing its platform. In comparison, Ethereum, a leading blockchain platform, trailed behind with 407,170 commits during the same period.

This significant lead in GitHub activity underscores Cardano’s dedication to attracting developers and enhancing its ecosystem.

The rise of Cardano’s developer activity also sheds light on the broader trend of increasing engagement across layer-1 (L1) blockchain protocols. Avalanche (AVAX) recorded 315,770 commits, demonstrating a strong commitment to innovation and growth.

Similarly, Litecoin (LTC) and Tron (TRX) showed notable developer engagement, with 84,110 and 79,380 commits, respectively. Despite these efforts, these networks still lag behind Cardano in terms of overall developer activity.

Developer engagement is a critical metric for evaluating a blockchain protocol’s potential growth and evolution. High-commit counts indicate an active developer community working on decentralized applications (dApps) and improving the network’s capabilities.

This continuous development work is essential for enhancing the functionality and resilience of the blockchain network over time.

Cardano Price Performance vs. Developer Activity


ADA/USDT Price Chart: TradingView

Despite Cardano’s strong developer activity, its price performance has not mirrored this success. ADA has been trading below the $1 mark since April 2022 and is currently priced at $0.63, reflecting a 0.18% surge in the past 24 hours. Despite the positive GitHub commit data, ADA has experienced a decrease of 20.66% over the past week.

However, several analysts have recently expressed optimism about the asset, forecasting a new record high in the coming days. For instance, X user Ali Charts drew parallels between the coin’s current performance and its past bull cycle, suggesting a potential “parabolic” surge to reach as high as $10.

DISCLAIMER

The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.

The original article written by Arnold Kirimi and posted on Zycrypto.com.

Article reposted on Markethive by Jeffrey Sloe

** Loans, secure funding for business projects in the USA and around the world. Learn more about USA & International Financing at Commercial Funding International. **

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Silver can still outperform gold even as prices fall 1 below 2450 – MKS

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Silver can still outperform gold even as prices fall 1% below $24.50 – MKS

Silver continues to underperform within the precious metals market and has been unable to hold gains above $25 an ounce even as gold prices hold near their record highs.

Despite the disappointing price action, many analysts remain optimistic that silver will have its turn to shine in the spotlight.

Even with higher volatility, Nicky Shiels, head of metals strategy at MKS PAMP, said silver is building a solid floor above $23.50 an ounce. She added that she sees potential for the white metal to reach $28 an ounce this year.

The bullish outlook comes as gold prices hold solid support above $2,150 an ounce; spot silver has fallen to a one-week low, last trading at $24.36 an ounce, down more than 1% on the day. The gold/silver ratio remains elevated and is above 89 points.

However, with inflation expected to remain stubbornly elevated for longer than forecasted, Shiels said that she expects the ratio to start falling.

“US growth has exceeded expectations as the Fed manufactures a soft landing while ROW / global growth is ‘stable’ish.’ With expected easier G-10 monetary policy now collectively tolerating a ‘higher for longer’ inflation regime, high beta cyclical commodities like Silver should outperform & the ratio should rerate lower,” she said in a note published last week.

Last week the Federal Reserve signaled that it was still on track to lower interest rates three times this year even as inflation remains above its 2% target.

Along with easing interest rates, Shiels noted that silver remains well supported by strong supply and demand fundamentals as demand continues to outpace supply.

She pointed out that India has once again become a robust source of demand for the physical metal. Quoting the nation’s trade data, Sheils said that in the first two months of the year, India has imported about 3,000 tonnes of silver.

“While that buying pace may subside, we don’t foresee a dramatic scale back in purchases at $25/oz+ prices,” she said.

At the same time, analysts expect healthy industrial demand to push the silver market into another deficit this year. According to research from the Silver Institute, global silver demand is expected to reach 1.2 billion ounces in 2024, the second-highest level on record.

Shiels noted that ongoing demand for silver has pushed above-ground stocks held with the London Bullion Market Association to record lows of 814 million ounces.

Meanwhile, the supply of silver continues to dwindle. Sheils noted that silver production from Mexico and Peru, the world’s top two producers, has dropped to its lowest level in 14 years.

“Mexico & Peru together are producing 25% less vs 2016 levels, helping drive the drawdown in above-ground stocks as a substitute,” she said.

As to what will drive investors back into silver, Shiels said that she expects investment demand to pick up as central banks start to cut interest rates. The Federal Reserve is likely to embark on its easing cycle with a cut in June. She added that geopolitical uncertainty ahead of the U.S. elections can also create some safe-haven demand for silver.

“Trying to time investor engagement is tricky, but as is the case with gold, it’s usually a FOMO trade, so a technical breakup & above $26 (a relatively sticky area) should attract the momentum crowd,” she said.

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Neils Christensen

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Gold gains on technical buying friendly outside markets

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Gold gains on technical buying, friendly outside markets

Gold prices are posting decent gains in midday U.S. trading Monday, supported by chart-based buying amid bullish technicals, and by friendly daily “outside market” forces that see the U.S. dollar index lower and crude oil prices higher. Silver prices are trading slightly up. April gold was last up $16.80 at $2,176.70. May silver was last up $0.042 at $24.885.

Broker SP Angel this morning said in an email dispatch that China and other central banks continue to buy gold. “Recent interest rate moves by major central banks of Japan, Taiwan and Turkey along with the expectations for U.S. rate cuts are making gold increasingly attractive. Investors also remain concerned at the level of high government debt supported by the U.S. and China.”

The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are higher and trading around $82.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 4.25%.

Technically, April gold futures bulls have the solid overall near-term technical advantage. A five-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the contract and record high of $2,225.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,149.20. First resistance is seen at the overnight high of $2,182.50 and then at Friday’s high of $2,188.00. First support is seen at today’s low of $2,164.40 and then at Friday’s low of $2.158.40. Wyckoff's Market Rating: 8.0.

May silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the March high of $25.975. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at Friday’s high of $25.11 and then at $25.50. Next support is seen at last week’s low of $24.58 and then at $24.22. Wyckoff's Market Rating: 6.5.

May N.Y. copper closed up 80 points at 401.55 cents today. Prices closed near mid-range. The copper bulls have the firm overall near-term technical advantage but appear tired now. Prices are in a six-week-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the March high of 416.40 cents. The next downside price objective for the bears is closing prices below solid technical support at 385.00 cents. First resistance is seen at today’s high of 404.70 cents and then at Friday’s high of 406.65 cents. First support is seen at today’s low of 399.05 cents and then at 396.75 cents. Wyckoff's Market Rating: 7.0.

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Jim Wyckoff

Time to Buy Gold and Silver

Tim Moseley

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Gold price correction This week won’t derail a broader rally as Fed looks to cut rates

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Gold price correction This week won’t derail a broader rally as Fed looks to cut rates

The Federal Reserve has given the all-clear to gold after signaling it still wants to cut interest rates three times this year, even as inflation remains above the 2% target; however, some market analysts said that the precious metal could see a healthy correction next week and in the near term.

Following the Federal Reserve’s monetary policy meeting on Wednesday, gold prices rallied to a record high above $2,220 an ounce; however, the rally was short-lived, and prices are looking to end the week in neutral territory. April gold futures are currently trading around $2,164 an ounce, only a few dollars up from last week’s close.

Although the market looks a little heavy, a short trading week with markets closed Friday because of the Good Friday holiday could limit price volatility next week.

James Stanley, senior strategist at Forex.com, said that he expects gold prices to ultimately trend higher ahead of the Federal Reserve’s June monetary policy meeting when the central bank is expected to start its easing cycle.

He noted that gold remains well supported as the Federal Reserve signaled that it will ease interest rates even if inflation remains elevated.

“The Fed had every opportunity to strike a more balanced note, but they didn’t. If you look at the data, there is no reason for the Fed to look for three rate cuts this year. They don’t need to cut as the unemployment rate remains at the lowest point in my lifetime,” he said. “The fact that the Fed didn’t strike a more balanced tone raises a lot of questions for me and is a red flag for the economy that I think will continue to support gold.”

However, Stanley added that although he likes gold, he expects to see a correction in the near term. He said that investors should be cautious of chasing prices near record highs.

“Gold wants to go higher, but I think a pullback would be healthy. For investors who were long gold at the start of the month, this would be a good place to take some profits so we could see a short-term correction,” he said.

Looking at technical levels, Stanley said he is watching initial support at $2,146, as that was the December swing high. However, he added that he wouldn’t be surprised to see gold test support at $2,075 an ounce, representing a three-year resistance point before the early March breakout.

Lukman Otunuga, manager of market analysis at FXTM, said that although the Federal Reserve continues to signal rate cuts this year, the depth of the easing cycle will remain data-dependent. He explained that gold needs to see more disappointing economic data in the coming weeks and months to support the current rally.

“Although the Fed has signaled that three US interest rates remain on the cards in 2024, it’s all about economic data which could support or oppose the argument around rate cuts,” he said. “Gold bulls could return to the scene if incoming US data next week supports the case for lower rates. However, bears are also lurking and waiting for another opportunity to strike prices lower.”

Despite the bullish outlook, Otunuga said that, ahead of next week, the gold market “is looking a little tired.”

 

Although gold prices could see a correction next week, other analysts have said that investors should remain focused on the broader uptrend.

Naeem Aslam, Chief Investment Officer, said that although gold has seen a strong rally this month in anticipation of the Fed’s easing cycle, there is still significant potential for higher prices.

“We certainly haven’t hit high in terms of the gold price. We think that the important ingredient is the Fed’s definition of a normal interest rate, i.e., their target level,” he said. “We do think that the process has started as the Fed is sending a subdued signal that their pre-Covid level needs to be adjusted, and once they make it clean, we would expect the gold price to rally.”

While gold’s technical price action represents a short-term risk, the precious metal also faces some fundamental threats in the near term.

David Morrison, senior market analyst at Trade Nation, said that renewed strength in the U.S. dollar creates a headwind for gold. The greenback is ending Friday at a four-week high above 104 points.

“Could this sudden reemergence of dollar strength indicate that investors are less sanguine than the Fed over the prospect of rate cuts? Perhaps. But it also reflects that the latest round of central bank meetings have made it clear that rate cuts are coming from just about everyone,” he said in a note Friday. “In fact, the Swiss National Bank have already moved. That being the case, the US dollar is back in favour as it’s now the cleanest shirt in the laundry basket. It could be that this shake-out of the weaker holders of gold and silver can set the stage for a bigger rally. But that may be wishful thinking if the dollar continues to strengthen.”

 

Economic data for next week

 

Monday: New home sales

Tuesday: Durable goods orders, consumer confidence

Thursday: Weekly jobless claims, US GDP, Pending home sales

Friday: Core PCE price index

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Neils Christensen

Time to Buy Gold and Silver

Tim Moseley

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The Dynamic Crypto Industry Building A Bitcoin-Backed Monetary System Consider Banks Without Bankers

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The Dynamic Crypto Industry Building A Bitcoin-Backed Monetary System. Consider Banks Without Bankers 

One of the main advantages of cryptocurrency is the independence it offers by enabling individuals to become their own bank. With cryptocurrency, you have complete control and ownership of your assets, whereas traditional banks have technical ownership over the assets you store with them. While the concept of being your own bank is impressive, critics argue that specialized crypto banks may be necessary for crypto to compete effectively with the established financial system.

This article summarizes a report outlining a method for establishing financial institutions without the need for traditional bankers. This method utilizes Bitcoin to achieve this goal, and the approach aligns with the broader aim of revolutionizing the financial sector by harnessing the power of cryptocurrency to replace the existing flawed monetary system. 

Banks Without Bankers Prioritizing User Agency

Today's summary is of a report called "Banks without Bankers," released by AxiomBTC, a venture capital firm focused on Bitcoin. The report starts with a powerful quote from Hal Finney, a pioneering Bitcoin developer who received the first Bitcoin transaction.  In the quote, Hal Finney envisions a future where BTC is crucial in reshaping the banking system. 


Source: Axiom.BTC

In the report authored by Eric Yakes, he explores two potential outcomes for the future of Bitcoin. On one end of the spectrum, all BTC could be held in custody by third parties like banks, with individuals trading receipts instead. This is similar to the historical concept of fiat money, representing a gold claim held by a bank. On the other end of the spectrum, Bitcoin could become a widely-used medium of exchange, with individuals directly transacting with each other and BTC effectively replacing money and its associated functions.

The idea presented is impractical due to several factors. Bitcoin faces limitations in scaling at its core level and is missing the necessary smart contract capabilities for sophisticated financial operations. Similarly, the scenario where all BTC is held in custody is not feasible because some BTC holders prefer to maintain control over their cryptocurrency assets through self-custody and peer-to-peer transactions. Therefore, it can be reasoned that the future of Bitcoin lies in a balance between custody services and individual self-custody practices.

Eric points out in the report that advancing technologies in the Bitcoin sector will allow for striking this balance carefully, emphasizing prioritizing greater peer-to-peer interactions. This approach is logical, as Bitcoin was initially designed to distance itself from traditional financial institutions like banks. In other words, the primary goal of Bitcoin was to remove the reliance on third parties to safeguard assets, hence the inherent trustless quality of cryptocurrency.

Eric contends that not all trust is misplaced, as it's crucial to place confidence in the right individuals and ensure their motivations align. He reinforces this notion by highlighting evolutionary biology findings emphasizing communities' importance in survival and reproduction. He then draws parallels between these findings and the contemporary financial system, where community-oriented banks are less likely to fail.

Eric believes that community banks are restricted by their geographical reach, meaning those nearby can only access their benefits. This limitation stems from the physical constraints of the world. In contrast, the digital realm knows no boundaries or distances. Eric suggests that with the appropriate technology, Bitcoin could enable the establishment of a digital community bank that transcends geographical limitations.

A critical technological component is multi-signature (mult-sig) wallets, which enable multiple individuals to manage a single Bitcoin wallet. In essence, multi-sig wallets enable the creation of conditions that allow this shared wallet to spend BTC. This technology allows the establishment of a ‘federation,’ which Eric defines as a system where “multiple participants hold keys that are useless in isolation, but can be combined to produce a signature that is required to make a transaction.” 


Source: https://fedimint.org/

Fedimint: A Decentralized Solution

The first part of the report introduces a federated network called Fedimint. It’s designed to address issues related to trust in third parties and the complexities of self-custody. The concept is to rely on your community for trust rather than depending on external entities or solely yourself for technical matters of self-custody. A combination of four underlying technologies powers Fedimint;

  1. Federations can be considered a collection of reliable, trusted nodes that work together to operate a network. These nodes are responsible for maintaining the integrity of the system. 
  2. Multi-sig wallets, as previously mentioned above.
  3. A privacy-preserving digital currency called eCash which is backed by BTC.
  4. The Lightning Network: (LN) A layer two protocol on the Bitcoin Network.

At the protocol level, Fedimint consists of four participants; 

  1. Users who can mint, redeem, and transfer eCash. 
  2. Guardians that function as nodes on the network and facilitate the minting, redemption, and transfer of eCash.
  3. Gateways that can be simply understood as nodes that make eCash transferable on the Lightning Network. 
  4. Modules, which are the applications on Fedimint. 

Each Fedimint system has three built-in modules: BTC, eCash, and a connector for integrating with the Lightning Network. Users can expand the functionality of their Fediment system by adding extra modules like eCash payments and advanced eCash exchanges. Fedimint networks have the potential to function as virtual community banks, operate independently, and manage financial transactions without traditional bankers. The community-driven infrastructure allows seamless interaction with other Bitcoin-based Fedimint networks.


Source: Bitcoin magazine

Eric explores an alternative method in which Bitcoin could replace traditional banks, this time through utilizing a different protocol known as Cashu. Like Fedimint, Cashu utilizes a privacy-preserving eCash supported by Bitcoin, crypto’s store of value. However, Cashu is notably more centralized, operating on a single server. The trade-off is that the centralized aspect allows for efficient monitoring of the eCash circulation without jeopardizing user privacy, which contrasts with the challenge faced by Fedimints, where tracking the supply of eCash is hindered by its inherent privacy features.

Money and e-Cash

In the second part of the report, Eric asserts that a single form of money will eventually become the universal standard for transactions. He argues, “In theory, market participants converge upon a monetary standard. In a perfect world, there would only be one form of money. Yet, throughout history, this has never been the case.” Eric provides three explanations for the historical absence of a singular form of money.

The first is opacity or the general lack of information about other currencies available to the average person. Another reason is governments' desire to control their own currencies, a concept called sovereign coercion. The third factor to consider is the trade-offs associated with money. For instance, in today's world, real estate is often viewed as a more reliable store of value compared to the US dollar, as explained by Eric. 

For reference, the concept of money refers to a medium that holds value, while currency is a means of exchange used to purchase goods and services. This video clarifies the distinction between the two, highlighting how they were once equivalent when backed by gold. However, once currency was no longer tied to gold, it lost its value as a form of money. Despite this shift, we continue to operate under the belief that we are working for money through indoctrination, both explicitly and implicitly. 

Eric explains we are not out of the woods regarding BTC being the complete solution to this problem. He notes that although BTC addresses numerous obstacles that have previously hindered the widespread adoption of a single currency, it faces its own obstacles regarding scalability (speed) and privacy. The Lightning Network is a potential remedy for Bitcoin's scalability issue, while eCash is a solution for enhancing Bitcoin's privacy.

The report recognizes that while each of these solutions has its own obstacles, they may still effectively address the issue. However, eCash's success in creating viable money markets depends on its ability to gain widespread acceptance and adoption. Without delving into complex details, this process would entail individuals or organizations with substantial financial resources engaging in arbitrage activities between various eCash systems, stabilizing their value relative to the underlying BTC. This positive feedback loop would boost eCash adoption, fostering more precise pricing, increased market-making, and further adoption. The cycle would repeat, driving up the use and reliance on eCash while maintaining a consistent global value.


Source: Axiom.BTC

The Potential Risks Of An eCash System

The report's third section highlights the potential risks involved with the eCash system, which is built on Bitcoin (BTC) and utilizes the Lightning Network and Fedimint technology. Eric explains that eCash is designed to be minted and redeemed for BTC on the Bitcoin blockchain or BTC on the Lightning Network using a Fedimint Network. This system should ensure that all types of eCash issued by different Fedimint networks are interchangeable and hold equal value. In other words, eCash minted for BTC using one Fedimint network's lightning Network BTC can be redeemed for Layer One BTC at another Fedimint network.

While Fedimints offers the benefit of privacy for eCash transactions, there is a potential drawback. Specifically, Fedimints can generate more eCash than the amount of BTC that backs it, which could result in an imbalance in the system. For instance, one Fedimint network might produce ten times more eCash than others, causing users to claim a disproportionate amount of BTC from other Fedimints. This issue arises because eCash is entirely private, making it difficult to keep track of the total amount in circulation. This issue is mitigated by using Cashu, which maintains a record of circulating eCash and ensures that BTC always backs it.

Now, there's already a precedent for how to solve this problem. It's called free banking, which is banking before central banks existed. In the free banking era, banks could issue currency at their own discretion. In theory, this currency was backed by gold; in practice, it wasn't always. Unfortunately, this led to a situation where customers were not always aware of the actual value of the currency they were using, as they were at the mercy of the banks' honesty. This information imbalance between banks and their customers can be compared to the privacy aspects of eCash issued by Fedimints, where the issuing authority can access more information than the users.


Source: AreaBitcoin

The caveat is that free banks did not have a widespread relationship with all individuals. Only a select few were privy to the financial workings of the free banks, and these were often the first to withdraw their funds before the system collapsed. The report highlights three such groups: competitors, brokers, and clearing houses. Eric suggests similar participants could provide comparable assurances in a decentralized eCash system. This could include entities such as Fedimints, Lightning Network gateways, eCash brokers, and even speculators who wager against unreliable Fedimints. The most crucial participant that could be introduced to an eCash system would be one capable of furnishing proof of reserves.

Those who have been involved in the crypto space since the downfall of FTX will be familiar with the emphasis placed on proof-of-reserves by exchanges aiming to enhance credibility. However, it's important to note that proof-of-reserves alone does not provide insight into a crypto exchange's obligations or debts. This means that an exchange could show evidence of holding $1 billion in BTC for its users who have deposited the same amount while simultaneously being $2 billion in debt, a detail unknown to users.

However, in an eCash system, the concept of liabilities doesn't apply in the traditional sense, as all eCash in circulation is supported by BTC held in a multi-signature wallet. The existence of this BTC collateral ensures the legitimacy of eCash minted by a Fediment, making it unnecessary to worry about liabilities.

Proof Of Liabilities

The fourth section of the report focuses on proof of liabilities. In this context, it alludes to the Cashu-created method for preserving the privacy of eCash users while monitoring the digital currency in circulation. Cashu's proof of liabilities protocol relies on three deliberate steps, which are crucial for its effectiveness.

  1. To publicly commit to regularly rotating its eCash private keys over a predetermined period (“epoch”). This allows all eCash in circulation to recycle from old epochs to the current epoch.
  2. Produce a publicly auditable list of all issued eCash tokens in the form of mint proofs.
  3. Produce a publicly auditable list of all redeemed eCash tokens in the form of burn proofs.

A system with these properties can ensure that Fedimint users can verify whether a mint has issued unbacked eCash during a previous epoch. This system sets an expiration date on user eCash, which prompts users to update their eCash to the latest epoch. The expiration of eCash compels users (through automated processes in their wallet software) to take actions that will lead to the mint disclosing past eCash issuance and redemptions.

The intriguing aspect is that the periodic alteration of eCash private keys is designed to mimic a bank run on the Fedimint. If the Fedimint is unable to modify the private keys used for eCash minting, it suggests that the eCash they've issued is not supported by the BTC reserves they claim.

In the fifth section of the report, Eric examines the possibility of a Bitcoin eCash system being impervious to political influence, provided that there is a sufficient number of decentralized financial networks, known as Fedimint networks. The report speculates that up to 10 million digital community banks could be in the future. Additionally, the report highlights that Fedimint networks are also resistant to politics because they are currently exempt from financial regulations but admit that this could change. If you’ve followed the crypto regulation saga, you would know that the authorities’ goal is ending all custodial crypto. 

The sixth section of the report analyzes why Bitcoin and the Lightning Network are deemed inadequate. The report then shifts its focus back to comparing free banking with the eCash system in the seventh section. The risks associated with each system are highlighted in a diagram presented below.


Source: Axiom.BTC

The report then discusses the potential for Fedimints to start practicing fractional reserve banking. For those unfamiliar with the concept, fractional reserve banking refers to retaining only a portion of the funds backing a currency in circulation. Most financial institutions worldwide maintain a reserve requirement of less than 30%, meaning they must hold 30 cents for every dollar they have issued.

Significantly, the Federal Reserve eliminated all reserve requirements for American banks at the onset of the pandemic and has seemingly yet to reinstate them. Eric highlights that this has raised concerns that Fedimint networks may begin operating like fractional reserve banks, meaning they would issue more eCash than BTC in reserve. However, competition among Fedimints is believed to help mitigate this risk, with those maintaining full reserves coming out on top.

Emerging Technologies

In the latter section of the report, the discussion revolves around new technologies that can bring the eCash concept to life. Eric highlights a novel protocol named Ark, currently in its conceptual phase and can be viewed as a mixing service and an onboarding mechanism that minimizes on-chain activity. Like the Lightning Network (LN) has LSPs, Ark will have Ark Service Providers (ASPs). This is a solution to the onboarding problem and a trustless custodial solution.

Interestingly, Ark's main limitation is that it can only support up to 10.5 million BTC due to technical reasons outlined in the report. Despite this, Eric believes this inherent restriction could be advantageous in the long run. The main point to remember is that Ark has the potential to overcome the technical challenges faced by the eCash system. As noted by Eric, “The Arc protocol could provide the necessary infrastructure for a trustless free banking system of service providers to emerge, removing agency from fundamental economic functions.” 

Next, Eric synthesizes the information in the concluding section of the report, presenting a comprehensive overview as follows:

“Imagine a system where users dollar-cost-average into Bitcoin via Ark, use federated technology for custody, use eCash as the private cash balance for everyday transactions, and on the backend, all service providers are clearing balances between one another via the Lightning Network. Fedimints and ASPs could act as banking infrastructure, and the LN could act as the clearing houses amongst them as a hub and spoke model.”

In essence, it is a monetary framework of decentralized, community-owned, and operated digital Bitcoin banks.

What It Means For BTC

The potential impact on Bitcoin (BTC) is significant, assuming the implementation of the eCash system as described. Such a system would generate substantial demand for BTC, thereby boosting its value. In essence, the eCash aspect of this alternative financial system would serve as a powerful catalyst for BTC's growth.

The more significant concern is how this trend might impact both the financial system and your personal financial autonomy. It's important to remember that economic freedom doesn't equate to having a large sum of money. Instead, it means having the flexibility and control to make choices about your money whenever you see fit. Unfortunately, this level of autonomy is becoming increasingly scarce in traditional financial circles.

As previously stated, having a large sum of money in your bank account may hold little value if you cannot use it. When encountering someone with significant wealth, inquire about the challenges of managing such funds. The process of transferring large sums of money is complex and increasingly so. This difficulty may be attributed to the fractional reserve banking system's ongoing trend towards extreme fractionalization. Put simply, banks are putting up hurdles that make it harder to move your money around because the cash you have there doesn't even really exist. 

The banking crisis from last year highlighted how convenient it is to transfer money in today's world. In the past, customers would have to physically line up at the bank to withdraw their money in the event of a problem, which is the classical definition of a bank run. Nowadays, all you need to do is click a button, which is a big problem for banks. 

In any case, the growing sentiment globally is towards a financial framework that enables individuals to possess their assets and maintain their financial autonomy. The system examined in this report may or may not be the ultimate answer, but it's undoubtedly a move in the right direction toward a future where such a system will be imperative.


Image: Markethive Wallet

On The Right Side Of History

Markethive is also on the right side of history regarding financial sovereignty and keeping the entrepreneurial spirit alive. It is a domain where the individual can thrive in an expanding community of critical thinkers who uphold liberty and free expression, prioritize financial autonomy, and foster an environment where ingenuity and independence can flourish. These aspiring and seasoned entrepreneurs alike reject the constraints established financial systems impose and embrace the potential of decentralized technology. 

In response to the autocracy of governments and mega-corporations on a global level, Markethive has developed its own comprehensive financial accounting hub that can be likened to a bank. This system provides users with a secure platform for financial transactions, including merchant accounts, free from the risk of account closure or seizure by authorities seeking to restrict freedom of expression for any reason.

Markethive’s evolution will include multiple sovereign servers to avoid being censured or shut down and a dynamic and innovative crypto exchange that leverages the platform's unique strengths, including innovative inbound marketing strategies, blogcasting capabilities, dynamic social engagement, and community-driven support. These endeavors are a natural progression for Markethive, allowing it to expand its reach and provide users with a seamless trading experience that integrates the platform's proven features.

With divine guidance, we will resist the oppressive totalitarian regimes that seek to subjugate humanity. Despite the power wielded by the elite, tech titans, government, and mega-corporations, a higher authority exists that eludes their control. The discerning individual cannot help but perceive the larger forces at play.

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.

 

 

Editor and Chief Markethive: Deb Williams. (Australia) I thrive on progress and champion freedom of speech.  I embrace "Change" with a passion, and my purpose in life is to enlighten people to accept and move forward with enthusiasm. Find me at my Markethive Profile Page | My Twitter Account | and my LinkedIn Profile.

 

 

 

 

 

 

Tim Moseley

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Wall Street advises caution on gold prices next week Main Street mashes the gas

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Wall Street advises caution on gold prices next week, Main Street mashes the gas

After last week’s price action was led by inflation data, gold markets were once again dominated by the Federal Reserve and interest rate expectations, though traders’ feelings seemed to evolve as the days went by.

In the immediate aftermath of Wednesday’s FOMC meeting, markets took the Fed’s maintenance of three projected rate cuts in 2024 and ran with it, weakening the greenback and driving the yellow metal to yet another all-time high in both futures and spot prices on Thursday.

Then, later trading brought a major bounce to the U.S. dollar and a significant retracement for gold, which continued through the Friday trading session.

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The latest Kitco News Weekly Gold Survey showed market experts divided and cautious on gold’s direction heading into the final week of the first quarter, while retail traders are very much back on the bullish bandwagon.

Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, captured the zeitgeist among market participants at the conclusion of Fed week. “I am neutral on gold for the coming week,” Cieszynski said. “It has had a big move lately, and may consolidate in the coming days with the US Dollar strengthening, and it being month-end, plus a short trading week next week.”

Darin Newsom, Senior Market Analyst at Barchart.com, said he’s keeping his downward bias for next week. “I’ll stick with this for a third consecutive week,” he said. “It was looking a bit questionable Thursday, until the April contract dropped more than $40 off its session high through the close. With daily stochastics continuing to indicate more downside potential in the market, and the US dollar index gaining strength, April gold could work lower over the next week.”

“The key will be its previous 4-day low, theoretically sitting at $2,150.20 next Monday, depending on what happens Friday,” Newsom added.

“Despite surging to a fresh all-time high on Thursday, gold bulls seem tired and weighed down by a stronger dollar as the week comes to an end,” said Lukman Otunuga, senior market analyst at FXTM.

Everett Millman, Chief Market Analyst at Gainesville Coins, said he thinks that despite Powell’s vote of confidence on the overall economy, and the employment situation in particular, it was the rate cut forecast that drove the optimism coming out of the FOMC on Wednesday.

“I think it does go back to the dot plots, the fact that they haven't shifted to a less dovish stance, at least not in their forecast,” he said. “There is definitely some reason to be skeptical of the dot plots themselves, they haven't always played out according to what the Fed is forecasting. But I think that's really the main reason why gold moved higher, why it seemed to like the news, even though it really wasn't all that dovish.”

“We're not going to say it was the same type of stance the Fed had coming into this year, where they tried to be talking tough about inflation,” he added. “We didn't really see any of that.”

Looking beyond the FOMC, Millman said that there may just be a momentum trade going on with gold right now. “The fact that we have continued to maintain close to all-time highs, that's going to push a lot of trend-following traders and tactical investors into going long gold or covering their shorts,” he said. “I think that’s probably having a larger effect on the gold price action we're seeing, more so than people's expectations of the Fed, although obviously that's always going to be percolating in the background.”

Millman said that the technical picture is not confirming a continuation of this major pullback. “From what I've seen, most of the technical patterns in the gold chart are fairly bullish,” he said. “Having said that, I’m a big believer in mean reversion, and the fact that gold was almost certainly a little bit overbought when it got close to that $2,200 level, I think this is a routine correction that we should expect to see after gold had a month where it posted triple digit gains. So it doesn't surprise me, and I think we're going to have to see how it plays out in these coming weeks.”

Millman agreed that now is a perfect time to sit still and wait for things to settle a bit. “My vote is certainly neutral or sideways,” he said. “I think it would be extremely encouraging if gold could just hold on to most of its gains, given that we've already moved so much higher. When I do look out a little further, towards the third quarter, fourth quarter, by year-end, I do expect gold prices to be higher than they are now. I do expect them to be at new all-time highs. But in the short term, I think that the market just needs a breather.”

This week, 15 Wall Street analysts participated in the Kitco News Gold Survey, and their views were spread fairly evenly across the spectrum. Six experts, or 40%, expected to see higher gold prices next week, while four analysts, or 27%, predicted price declines. Five experts, representing 33%, predicted sideways trading for the precious metal, or suggested they would sit on the sidelines next week.

Meanwhile, 170 votes were cast in Kitco’s online polls, with the vast majority of Main Street investors anticipating further gains for gold next week. 117 retail traders, representing 69%, looked for gold to rise next week. Another 25, or 15%, predicted it would be lower, while 28 respondents, or 16%, were neutral on gold’s near-term prospects.

Next week will see the release of new home sales on Monday, durable goods, consumer confidence, and the Richmond Fed survey on Tuesday, and MBA mortgage applications on Wednesday. Thursday, however, will be the busiest day next week due to the long Easter weekend, with final Q4 GDP, jobless claims, pending home sales and the University of Michigan’s consumer sentiment survey.

Sean Lusk, co-director of commercial hedging at Walsh Trading, was surprised at the positive sentiment from both Powell and the markets, and he doesn’t believe the Fed will be able to deliver 75 basis points of cuts this year.

“I really can't believe what I'm hearing, to be quite honest with you,” Lusk said. “I suppose I shouldn't be that surprised. Are they saying the economy's not as strong as it's perceived to be, given where the indexes are? Or are they saying that there's no inflation, or not as much inflation as it appears to be for the rank-and-file at the grocery store, because it does exist there.”

Lusk said that as far as the greenback is concerned, it's been a ‘buy-the-rumor, sell-the-fact’ event, which he found interesting. “The dollar shot up for two days in a row here, and that's kind of an odd reaction when you get, I would say, neutral to dovish commentary,” he said. “But you also have to recognize, at least in gold's case, volume was ticking up to 300,000, 400,000 contracts in the April contract. Now it's down about 150,000 a day, but you’ve got option expiration on the April contract Monday, and then you're going to roll to June.”

“I think this is all this is, today's weakness, maybe yesterday, they got up to some obscene high and they're yanking back and that's the normal ebb and flow in the markets,” he said. “Plus, you're coming into month and quarter-end, and we've had a hell of a performance here for the better part of two months, since the February lows.”

“They're going to back off here and take some profits, but I don't see any technical damage being done to the charts,” he added. “This thing could fall back to $2,125 and we're still in a bullish posture. We hit our 5 percent marker, that's where we're kicking around, maybe we're just a little bit below it today. I still think once June goes most actively traded, which it will next week, it has a chance to get to and surpass its contract high at $2,246 and then spike up to about $2,270, $2,280, in that area. That'll be 10 percent higher on the year, so that's the target. But if we start slipping underneath some [Fibonacci] numbers here at $2,125, then it can go down to halfway back from the February lows."

“Could they wipe this out at any moment?” he asked rhetorically. “Yeah, but what's changing? Why would they? You're just not going to go up every darn day at these levels, but you are consolidating in some higher ranges, and that's really the more important thing here. You’ve got June gold consolidating between $2,190 and $2,210 for the most part, and that's what I'm keying on here. The market still is in a pretty deep contango here, pretty steady, and should that remain, it just tells you the price is going higher.”

“Listen, my gut feeling here is that seasonally, we'll have some dips and valleys into the end of the quarter, and a three-day weekend next weekend, but the wild card is going to be what the wild cards have been: the Middle East, Eastern Europe, there's always black swans circling with the banking crisis,” he said. “In April, we'll get a second round of earnings, we'll see what those are. Then you're probably going to have a pullback in May when realization starts to hit that they’re not going to cut three times, maybe once at best.”

“Gold rallied through $2220 on the back of the initial dovish read of the FOMC as the dollar and US rates fell,” said Marc Chandler, Managing Director at Bannockburn Global Forex. “However, the market took another look, and rallied the dollar and steadied US rates. Gold pulled back to almost $2162.”

“I look for a firm dollar in the coming days and this may weigh on the yellow metal,” Chandler added. “Support is in the $2145-50 area. While many focus on the central bank gold buying, Chinese and Turkish retail investors also reportedly have been keen buyers. The momentum indicators are stretched but could be relieved by extended sideways activity.”

Mark Leibovit, publisher of the VR Metals/Resource Letter, is also expecting USD strength to push gold lower. “As Dollar rallies, look for a pullback.,” he

James Stanley, senior market strategist at Forex.com, said he believes gold is due for a pullback next week.

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“The trend is starting to feel frothy and even with the Fed going dovish and sticking with three cuts in the forecast, bulls weren’t able to do much beyond $2,200 yet,” he said. “There was an open door for a pullback as gold was holding a descending triangle very near the highs, but the Fed was surprisingly dovish (imo) at the FOMC rate decision and that brought a jolt to the USD which has largely been priced-out since.”

And Kitco Senior Analyst Jim Wyckoff sees gold prices rangebound next week. “Sideways, as bulls have run out of gas on a near-term basis,” he said.

Spot gold last traded at $2,165.31 per ounce at the time of writing, down 0.74% on the day but up 0.43% on the week.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley

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:Cryptocurrency and Terminolog Understanding the Basics

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Cryptocurrency and Terminology: Understanding the Basics

Cryptocurrency and Terminology: Understanding the Basics

Cryptocurrency is a new kind of digital money that has gained a lot of attention from investors, tech experts, and regulators around the world. It’s more than just a different type of regular money. Cryptocurrencies use something called blockchain, which is a way to record all transactions using a network of computers. The blockchain uses special codes to make sure that the transactions are secure and in the right order. This mix of special codes and blockchain means that each unit of cryptocurrency, which people usually call a coin, is special and not easy to copy.

A computer screen displaying various cryptocurrency logos and terminology. Charts and graphs in the background

While the world of cryptocurrency can seem intimidating at first, understanding the terminology can demystify many of its concepts. From the basics of blockchain and the nuances of different coins to the complexities of crypto networks and the significance of cold wallets, each term provides a piece of the puzzle. The cryptocurrency ecosystem consists of various exchanges, wallets, and investment strategies—all of which operate under an evolving landscape of regulation and legal considerations. As the industry expands, staying informed about the key terminology is crucial for anyone looking to navigate this dynamic space effectively.

KEY TAKEAWAYS

  • Cryptocurrencies are secured by cryptography and built on blockchain technology for transparency.
  • Grasping crypto terminology is essential for engaging with and understanding the market.
  • The cryptocurrency ecosystem is constantly expanding with varied regulatory frameworks.

BASICS OF CRYPTOCURRENCY

The foundation of cryptocurrencies lies in their secure digital nature and reliance on underlying technology. By understanding the key concepts and components such as blockchain, various unit denominations, and types of cryptocurrencies, one can gain insight into this innovative financial landscape.

UNDERSTANDING CRYPTOCURRENCY

Cryptocurrency is digital or virtual currency that uses cryptography for security, making it challenging to counterfeit. The most well-known cryptocurrency is Bitcoin, which paved the way for the emergence of various other cryptocurrencies, often referred to as altcoins. Each Bitcoin is divisible into 100 million smaller units known as satoshis, offering precision in transactions and valuation.

THE ROLE OF BLOCKCHAIN

At the heart of cryptocurrency is blockchain technology: a decentralized and distributed ledger that records all transactions across a network of computers. Blockchain’s robust security comes from its ability to encrypt, or cryptographically hash, each transaction block, creating an unalterable chain of records. This ensures transparent and tamper-evident transactions, bolstering trust among its users.

CRYPTOCURRENCY UNITS OF ACCOUNT

The unit of account in the cryptocurrency realm is often the coin, which represents a store of value or means of transactions within a blockchain network. In Bitcoin’s case, the coin is itself divisible and transactions can be measured in smaller units, such as satoshis. Other cryptocurrencies may also have their own unique denomination, but the concept of divisibility generally applies across the crypto spectrum, facilitating versatile use cases and financial applications.

KEY CONCEPTS IN CRYPTOCURRENCY

Understanding the fundamental terminology of cryptocurrency is crucial for navigating this evolving landscape. Below are pivotal aspects that form the bedrock of digital currency operations.

CRYPTOGRAPHY AND TRANSACTIONS

Cryptocurrency transactions are secured through cryptography. Each transaction involves a private key, which authorizes the action, and a public key that functions as an address to receive funds. It’s essential that these keys work in tandem, with the private key remaining confidential to ensure security while the public key can be shared openly. When a user initiates a transaction, it is broadcasted to the network with a unique hash—a cryptographic fingerprint—that ensures its authenticity and prevents tampering.

MINING AND CONSENSUS MECHANISMS

The process of validating transactions and adding them to the blockchain is called mining. Miners compete to solve complex puzzles using Proof of Work (PoW) or contribute their cryptocurrency holdings to secure the network through Proof of Stake (PoS) to make sure that the transactions are confirmed and the blockchain is trustworthy.

WALLETS AND STORAGE

To store and manage cryptocurrencies, users employ a wallet, which is a digital tool containing the public and private keys for transactions. Wallets can be categorized as hot wallets—connected to the internet and suitable for frequent use—or cold wallets, like hardware devices or paper wallets, which offer additional security by being offline. The choice between wallets often depends on the balance between convenience and the heightened security of offline storage.

Cryptocurrency wallets do not store the cryptocurrencies themselves but provide the means to access and interact with one’s holdings on the blockchain.

POPULAR CRYPTOCURRENCIES

Various popular cryptocurrencies, including Bitcoin, Ethereum, and Litecoin, are depicted with their respective logos and symbols. The word "cryptocurrency" is prominently displayed, surrounded by various technical terms and jargon

With the rapid expansion of the cryptocurrency market, certain digital currencies have come to dominate the landscape. This section will explore the trailblazers and innovators among these digital assets.

BITCOIN: THE ORIGINAL CRYPTOCURRENCY

Bitcoin (BTC) was created by someone named Satoshi Nakamoto. It is the first cryptocurrency ever made and is the largest one in terms of market value. People often call it digital gold. Bitcoin works on a network that is decentralized and can be divided into smaller parts. The smallest part is called a satoshi, which is equal to one hundred millionth of a single bitcoin.

ALTCOINS AND THEIR SIGNIFICANCE

Altcoins, a term that encompasses all cryptocurrencies aside from Bitcoin, have introduced a diverse range of functionalities. Popular altcoins like Ethereum (ETH) bring extensive utility through smart contracts, propelling the decentralized finance (DeFi) movement. These altcoins are fundamental in providing alternatives to traditional financial systems and empowering various blockchain applications.

TOKENS VERSUS COINS

The distinction between tokens and coins is critical in understanding cryptocurrency. Coins, like BTC and ETH, have their own dedicated blockchains. Conversely, tokens are built on existing blockchain platforms, representing assets or utilities within specific ecosystems. Ethereum is a prominent platform for token development, with numerous tokens utilizing the network for a variety of applications.

INVESTING IN CRYPTOCURRENCY

Investing in cryptocurrency involves understanding the platforms for trade, opportunities for early investment, and techniques for market analysis. With a range of instruments and terms specific to digital assets, investors are navigating an evolving landscape.

CRYPTOCURRENCY EXCHANGES

Cryptocurrency exchanges are digital marketplaces where traders can buy, sell, or exchange cryptocurrencies for other digital currency or traditional currency. Exchanges serve as an integral part of the Bitcoin network allowing investors to access cryptocurrencies like Bitcoin and Ether. Investors can place a variety of orders, such as a limit order, which specifies the price at which they’re willing to trade. Whales, or large-scale investors, often influence market prices due to the sheer volume of their transactions.

Cryptocurrency and Terminology: Understanding the Basics

INITIAL COIN OFFERINGS (ICO)

An ICO is a fundraising mechanism where new projects sell their underlying crypto tokens for Bitcoin or Ether. It’s akin to an initial public offering (IPO) where investors purchase shares of a company. ICOs can present opportunities for early investment, but carry risks of fraud and high volatility. Investors should be wary of FUD (fear, uncertainty, and doubt) and FOMO (fear of missing out), which can cloud judgement.

MARKET ANALYSIS

Effective market analysis in cryptocurrency requires studying both technical and fundamental factors. Investors analyze market sentiment to determine if it’s bullish (optimistic) or bearish (pessimistic) before making trades. Positive news or strong investor sentiment can lead to an all-time high (ATH) in market sentiment, while negative news can cause assets to drop. Understanding market trends and the influence of ASIC (application-specific integrated circuit) miners on the blockchain can help investors make better decisions.

UNDERSTANDING CRYPTO NETWORKS

A network of interconnected nodes exchanging digital assets with blockchain technology and cryptographic protocols

Cryptocurrency networks are complex systems made up of different participants and technologies ensuring secure and decentralized operations. Key to these systems are the nodes that uphold the network, the possibility of forks which can alter the network’s path, and the security measures in place to thwart potential attacks.

NODES AND NETWORK PARTICIPANTS

Nodes are the backbone of any cryptocurrency network. These are individual computers, or participants, that maintain a copy of the network’s ledger and validate transactions. They communicate with each other using peer-to-peer (P2P) protocols to distribute information about transactions and new blocks. In a typical network, full nodes hold the entire history of blockchain transactions, helping to enforce rules and enhance security.

FORKS IN CRYPTOCURRENCY

A fork occurs when there’s a divergence in the blockchain’s protocol or a change in the underlying rules. Hard forks create a new blockchain that is incompatible with the existing one, requiring all nodes to upgrade to the new protocol. Conversely, a soft fork is a backward-compatible update that doesn’t mandate all nodes to upgrade. Forks can be planned, as in protocol upgrades, or can occur spontaneously due to disagreements in the community.

SECURITY AND ATTACKS

Cryptocurrency networks are designed with robust encryption methods to secure transactions. However, they can still fall prey to attacks. A 51% attack happens when a group gains control of the majority of the network’s hash rate, which could potentially allow them to carry out a double spend—where the attacker spends the same coins twice. Networks strive to prevent such attacks by distributing control among many nodes, making it more difficult for any single entity to gain the

Cryptocurrency and Terminology: Understanding the Basics

CRYPTOCURRENCY ECOSYSTEM

The cryptocurrency ecosystem encompasses a vast network of technologies that facilitate a decentralized digital economy, based on principles of transparency and peer-to-peer interactions, and underpinned by blockchain technology.

DECENTRALIZED APPLICATIONS (DAPPS)

Decentralized applications, or DApps, operate on a blockchain or distributed ledger and aim to eliminate centralized intermediaries. They offer various services from gaming to finance, ensuring that all transactions and operations are stored on a public ledger, providing transparency and resistance to censorship.

DECENTRALIZED FINANCE (DEFI)

Decentralized Finance, also known as DeFi, is a move away from traditional, centralized financial systems to peer-to-peer finance using decentralized technologies. DeFi platforms provide services like lending, borrowing, and trading, using smart contracts to automate transactions without intermediaries. The goal is to build an open finance system that can be accessed by anyone with an internet connection.

DECENTRALIZED ORGANIZATIONS (DAOS)

Decentralized Autonomous Organizations or DAOs are organizations that are governed by smart contracts and often employ a governance token to give participants voting rights. DAOs operate with a level of transparency, accountability, and direct involvement from their members that traditional organizations struggle to match. They hold the promise of democratizing operations and decision-making processes.

REGULATION AND LEGAL ASPECTS

The emergence of cryptocurrency has spurred regulators worldwide to develop laws and frameworks to adapt to the innovation of digital assets. The goals are to ensure stability, protect consumers, and prevent illegal activities, while striving not to stifle the growth of this nascent technology.

REGULATORY ENVIRONMENT FOR CRYPTOCURRENCY

Regulatory responses to cryptocurrencies vary significantly across different jurisdictions. They aim to address the risks while recognizing the potential benefits of blockchain technology. Governments tend to focus on ensuring that cryptocurrency operations are in line with existing financial laws and regulations to maintain market integrity and consumer protection.

In the United States, cryptocurrencies are mostly regulated by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The SEC treats them as securities, while the CFTC treats them as commodities. The Internal Revenue Service (IRS) sees cryptocurrencies as property for tax reasons.

Cryptocurrency and Terminology: Understanding the Basics

Globally, rules for cryptocurrency vary a lot. For example, Japan accepts Bitcoin as official money, while China completely forbids cryptocurrency transactions. Organizations like the Financial Action Task Force (FATF) are trying to create unified rules to keep the financial system stable and prevent financial crimes without making things too hard for the industry.

KNOW YOUR CUSTOMER (KYC) AND ANTI-MONEY LAUNDERING (AML)

KYC and AML regulations are pivotal to the cryptocurrency regulatory landscape. The primary goal is to prevent money laundering and terrorist financing by ensuring that service providers identify and verify their customers. Compliance with these regulations helps promote transparency and trust in the cryptocurrency market.

  • KYC: Involves collecting and verifying personal information from customers before they can engage in cryptocurrency transactions.
  • AML: Includes monitoring and reporting of suspicious activity to authorities.

Cryptocurrency exchanges and wallets must have strong KYC procedures to follow AML regulations. Not following these rules can lead to big fines and penalties. KYC helps exchanges link people to transactions, preventing digital currencies from being anonymous. This way, the operations follow regular financial rules and compliance standards.

As governments monitor cryptocurrencies closely, companies in this industry must comply with intricate laws and regulations to operate lawfully. These endeavors enable them to engage with the conventional financial system and prevent digital assets from being misused, all while upholding the core principles of blockchain technology: decentralization and user control.

FREQUENTLY ASKED QUESTIONS

Cryptocurrency is a complex and nuanced field, full of specialized terms and concepts. This section aims to demystify some of the most commonly queried aspects of the digital currency world through a series of frequently asked questions.

WHAT IS A BLOCKCHAIN AND HOW IS IT INTEGRAL TO CRYPTOCURRENCIES?

Blockchain stands as the fundamental technology underpinning the majority of cryptocurrencies. It operates akin to a digital ledger, registering transactions across multiple computers. Once a record is established, it remains immutable without altering all subsequent records.

CAN YOU EXPLAIN THE CONCEPT OF ‘MINING’ IN THE CRYPTOCURRENCY CONTEXT?

Mining in cryptocurrency involves the rewarding task of validating and adding transactions to the blockchain. Miners enthusiastically tackle complex puzzles to add a new block to the chain and are duly rewarded with newly created cryptocurrency.

WHAT DOES THE TERM ‘ICO’ STAND FOR, AND WHAT DOES IT INVOLVE?

ICO stands for Initial Coin Offering. It is a fundraising mechanism where new projects sell their underlying crypto tokens in exchange for bitcoin or ether. It’s akin to an IPO in the traditional stock market, with ICOs enabling investors to support new initiatives in their early stages.

HOW DO ‘WALLETS’ FUNCTION IN MANAGING CRYPTOCURRENCY ASSETS?

Wallets are digital solutions for storing, sending, and receiving cryptocurrencies. They can be software installed on a computer or smartphone, and hardware devices for offline storage.

WHAT IS THE SIGNIFICANCE OF ‘DECENTRALIZATION’ IN CRYPTOCURRENCY?

Decentralization in the context of cryptocurrency means that there is no central authority or entity that controls the network. This provides several advantages like reduced risk of censorship, increased security, and resistance to fraudulent activities or corruption.

COULD YOU OUTLINE THE PRIMARY DIFFERENCES BETWEEN ‘ALTCOINS’ AND ‘TOKENS’?

Altcoins are like alternative versions of Bitcoin. They claim to have different advantages. Tokens work on existing blockchains, representing assets or enabling smart contracts. These alternative cryptocurrencies, or altcoins, have become popular as they try to solve problems with Bitcoin. Some aim to make transactions faster, reduce fees, or improve privacy. Many altcoins also focus on new technologies like better agreement methods and ways to grow. Overall, altcoins offer a lot of choices for people interested in cryptocurrency.

Tim Moseley

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Solana SOL Emerges as Top Choice for Investors Toppling BNB and Ethereum

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Solana (SOL) Emerges as Top Choice for Investors, Toppling BNB and Ethereum

By Newton Gitonga – March 22, 2024

Solana has emerged as the top choice for investors, surpassing top assets like BNB and Ethereum in terms of global investor interest.

According to a Wednesday report by Coingecko, Solana, currently the fifth largest cryptocurrency by market capitalization accounted for 49.3% of global investor interest in blockchain ecosystems, while Ethereum followed closely behind with 12.7%.

The growth of Solana’s popularity can be attributed to several factors, including the development of ecosystem projects like Pyth Network (PYTH) and the popularity of meme tokens such as SLERF and ‘Dogwifhat’ (WIF). Additionally, Solana’s high trading volumes and low transaction fees have made it an attractive option for investors.

On the other hand, Ethereum maintained its position as a leader in the L2 protocols segment, with second-layer networks built on Ethereum gaining increasing popularity among investors.

“This is likely because Ethereum is already well-established as an ecosystem and familiar to investors, such that it is no longer considered a new, trending crypto narrative. At the same time, attention towards the Ethereum ecosystem is increasingly dispersed across the layer 2 ecosystems building on top of it,” Coingecko wrote.

Arbitrum and Base emerged as the most popular second-layer network ecosystems, with 3.3% and 3.2% of investor interest, respectively.

Other L1 ecosystems, such as Cosmos, Avalanche, and Sui, also gained traction among investors. According to Coingecko, Cosmos’ success can be attributed to successful airdrops like Celestia and Dymension, while Avalanche’s meme tokens like Coq Inu have contributed to its popularity. Sui, on the other hand, lept ahead of TON in terms of investor interest despite TON’s connection with the Telegram messenger.

The report also highlighted the growing interest in L2 networks, with Arbitrum, Polygon, zkSync, and Metis attracting notable attention. Optimism, Blast, and StarkNet are among the top 20 L2 networks.

Notably, Ethereum’s recent Dencun hard fork, which activated on the mainnet on March 13, significantly impacted L2 networks. The update reduced commissions in L2 networks based on Ethereum, leading to a significant increase in the daily volume of transactions on Base, one of the projects that benefited the most from Dencun.

That said, Solana’s emergence as the top choice for investors comes amidst a notable price surge for the crypto asset. Notably, the asset recently tapped $200 and is up over 100% year to date, making it one of the best-performing cryptocurrencies in recent months.

Despite witnessing a brief pullback that saw it plunge to $164 earlier this week, Solana bulls managed to push the price back up, with optimism of a further price surge growing.

At press time, SOL traded at $170.92, reflecting a 9.40% drop in the past 24 hours.

DISCLAIMER

The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.

The original article written by Newton Gitonga and posted on ZyCrypto.com.

Article reposted on Markethive by Jeffrey Sloe

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Gold price gains against the Swiss franc highlight its potential when the Fed starts cutting rate

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Gold price gains against the Swiss franc highlight its potential when the Fed starts cutting rate

Gold price gains against the Swiss franc highlight its potential when the Fed starts cutting rates teaser image

The Federal Reserve’s signal that it still sees the potential for three rate cuts this year, even as inflation remains above its 2% target, has helped propel gold prices to new record highs.

However, some analysts have said that the gold’s true light will shine when the central bank actually embarks on its easing cycle. Some analysts have said that gold’s reaction to the Swiss National Bank’s move to ease is an indication of what to expect.

Thursday, Switzerland’s Swiss National Bank surprised markets with a 25 basis point cut, bringing interest rates to 1.5%. The SNB is the first major central bank to cut interest rates.

The central bank said it eased its monetary policy as inflation is expected to remain below its 2% target this year.

“For some months now, inflation has been back below 2% and thus in the range the SNB equates with price stability. According to the new forecast, inflation is also likely to remain in this range over the next few years,” the bank said in its monetary policy statement.

The central bank also reduced its annual inflation forecasts. It now sees average inflation reaching 1.4% this year, down from its December estimate of 1.9%. Inflation is expected to slow even further next year, rising 1.2%, down from the previous 1.6% estimate. In its first look at 2026, the SNB projects average inflation at 1.1%.

Economists from Capital Economics said that they expect the SNB will continue to lower interest rates this year as inflation pressures remain weak.

“As it happens, we think inflation is actually likely to be lower than the SNB is forecasting, and so we expect it to cut rates again in September and December, taking the policy rate to 1.0%, where we expect it to stay throughout 2024,” the economists said in a note.

The SNB’s interest rate cut has had a solid impact on the gold market. Gold prices have pushed significantly higher against the Swiss franc Thursday.

Holding near session highs, spot gold last traded at CHF55,352.36, up +2.06%.

Although some analysts have described the SNB’s move as a surprise, it is not unexpected for others. March Chandler, managing director at Bannockburn Global Forex, said that he has been warning investors that cuts were coming.

“Rate cuts from the Fed are coming, so the SNB has to beat them to it too because they need to give their currency some cushion against weakness in the U.S. dollar,” he said.

While it's not exactly an “apples to apples” comparison, some analysts have said that gold price action against the dollar when the Fed cuts could be similar to what has been seen against the Swiss franc.

Chandler said that the biggest difference is that he expects gold’s rally to lead what appears to be a likely cut in June. He added that he expects bond yields and the U.S. dollar to weaken ahead of the Fed’s June meeting, which will support higher gold prices.

Phillip Streible, chief market strategist at Blue Line Futures, said that gold’s move against the Swiss franc highlights broader market conditions. He pointed out that the weakness in the Swissy helped propel the broader U.S. dollar index to a one-month high, which has hurt gold.

Despite hitting all-time highs overnight above $2,220 an ounce, gold is ending the day in the red against the greenback. Spot gold last traded at $2,183.14 an ounce, down 0.13 on the day.

However, Streible said that gold still has plenty of room to run when it’s the Fed’s turn to cut rates.

“Research we have looked at says since the 1990s, gold has rallied 6% in the first 30 days after the Federal Reserve’s first rate cut in an easing cycle,” he said.

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