With May’s Bitcoin halving event drawing ever closer, Coinbase recently took to pushing the “Bitcoin as digital gold” narrative. In a tweet-storm to promote an accompanying blog-post published Feb. 7, it covered the key reasons why the halving and subsequent supply rate reduction will further cement that link.
Since the gold standard was broken in 1971, the dollar’s value has declined and gold’s value, in dollar terms, has risen over 4000%. Gold has more value than similar metals such as copper due to its relative scarcity and difficulty to acquire. Bitcoin has been designed to be scarce like gold and is artificially difficult to acquire through the Proof-of-Work process of mining. However, it also has an advantage over gold in being transferable through a communications channel. Coinbase concluded:
“Armed with a myriad of technological advantages, accelerating development, and maturing global market, Bitcoin is a store of value to rival gold in the digital age.”
The supply of Bitcoin is limited by design, with new tokens being minted as a reward every time a block of transactions is mined. The initial reward level of 50 BTC per block has already undergone two halving events, bringing it down to the current 12.5 BTC per block. After the May 2020 halving, mining rewards for each new block, mined approximately every ten minutes, will reduce to 6.25 BTC. This will bring the supply issuance of Bitcoin to a rate of around 1.7% per annum. Stock-to-flow (S2F) is a measure of new supply rate over total supply, and post-halving, Bitcoin’s S2F scarcity will be on a par with gold’s. “Gold’s stock to flow is higher than any other metal commodity, and bitcoin is set to soon follow,” notes Coinbase.
S2F forecasts for the price will fail if there is no demand, and this holds true for fiat money, as much as any other commodity. As central banks increase the money supply, economies can sometimes prosper. However, if money supply overwhelms demand then hyperinflation events can occur. Such events drive demand for safe havens such as gold and Bitcoin, and recent economic fear is reaching all-time highs, according to the Global Economic Policy Uncertainty Index. This, along with Bitcoin’s myriad of technological advances and accelerating development, justifies Bitcoin’s title as digital gold, according to Coinbase.
Finnish Customs No Sure What To Do with 15M Euro Seized in Bitcoin
While some governments are selling bitcoins (BTC) confiscated through law enforcement actions, Finland is yet to decide what to do with its seized BTC. Finnish Customs, operating under the Ministry of Finance, has reportedly been deliberating about what to do with 1,666 bitcoins seized from drug criminals years ago. As reported by Finland’s national public broadcasting firm on Feb. 25, the Finnish Customs service doesn’t want to auction the confiscated Bitcoin because the cryptocurrency could be returned to the hands of criminals.
According to the report, at the time of the seizure the amount of confiscated Bitcoin was worth less than 700,000 euros, or roughly $760,000. As of press time, 1,666 BTC is worth nearly 15 million euros — or more than $15.5 million, according to data from Coin360. The authority was reportedly initially planning to auction the funds back in 2018, but eventually ended up with hodling the crypto, citing Anti-Money Laundering (AML) concerns. Pekka Pylkkänen, head of finance at the Finnish Customs service, said that cryptocurrencies like Bitcoin are primarily used for illicit practices:
“From our point of view, the problems are specifically related to the risk of money laundering. The buyers of cybercurrency rarely use them for normal endeavours.”
Apart from holding over $15 million in Bitcoin, Finnish Customs also holds a number of seized altcoins worth of millions of euros, the report notes.
Whatever the reason behind Finnish Customs’ decision to hodl the confiscated crypto, the authority is apparently not alone in thinking that Bitcoin and other cryptos might be more dangerous than cash in terms of money laundering. In July 2019, Treasury Secretary Steven Mnuchin voiced an extremely sceptical opinion of Bitcoin, arguing that cash is not laundered in the same way as Bitcoin. Meanwhile, other countries over the world do not appear so concerned about taking profits from hodling Bitcoin.
On Feb. 18, the United States Marshals Service sold another batch of Bitcoin confiscated during its enforcement operations. According to data compiled by well-known crypto industry figure Jameson Lopp, the U.S. Marshals has missed out on over $1.7 billion by selling seized Bitcoin too early. The agency has confiscated and sold 185,230 bitcoins, according to Lopp’s data.
Bitcoin Gold May Be Held Captive by Whale With Almost Half The Supply
Bitcoin Gold (BTG)’s price is being manipulated by a whale controlling close to half of the circulating supply. These are the findings of an analysis conducted by an independent trader and analyst, who preferred to remain anonymous. He published his findings in a blog post, where he explained why he believes a single group of people accumulated their way into a huge Bitcoin Gold position, and are now using that supply to control the market.
The events started in August 2018, when Bitfinex margin long positions began its sharp ascent to include almost two million BTG. The exchange makes its margin data publicly available, which can help gauge the general trader sentiment in a particular coin — for example by comparing the ratio of short and long positions.
In Bitcoin Gold’s case, the strong increase in margin positions was accompanied by lackluster price action. While the coin generally followed the broader crypto market, the price eventually spiraled downward.
The analyst estimated that the 1.9 million BTG held at some point in Bitfinex represents between 38% and 48% of its total circulating supply. Bitcoin Gold was born in 2017 after a network fork from Bitcoin (BTC), thus maintaining its original history up until that point. This means that Bitcoin Gold contains at least as many inactive coins as its parent, including Satoshi’s cache. He further elaborated how he reached that figure:
“Over 11 million Bitcoins (BTC) haven’t moved in the last year. Considering big wallets’ unwillingness to claim their coins due to fear of private key leak for a minimal return, it can be argued that a number even larger than 11 million BTGs are inactive or lost forever.”
He then estimated a figure of 4 to 5 million active BTG. When asked by Cointelegraph why he is so certain that this is the work of one whale, he explained:
“The accumulation was very consistent and systematic over the course of almost a year, it would be almost impossible for it to be a coincidence that multiple entities were using the exact same system to accumulate.”
DeCurret Partners with KDDI So They Can Test A Digital Currency
As the origin of cryptocurrency, Japan often leads the way when it comes to joint projects between companies in different fields, united by their desire to lead the pack in innovation. E-commerce giant Rakuten partnered with the East Japan Railway Company on June 5 to promote a cashless payment system.
A new collaboration is in progress between the Japanese telecom giant KDDI and crypto exchange DeCurret. According to a Feb. 18 press release, the two companies — in collaboration with au Financial Holdings and WebMoney — will conduct a joint-project to test digital currency issued on a blockchain for real-world transactions.
As part of the implementation for this test, KDDI will make requests to WebMoney to issue and distribute digital currency, while the latter’s parent company au Financial Holdings manages the joint project. DeCurret will take a lead role by providing the platform for both the issuance and management of the digital currency.
The joint-project, which runs from Feb. 18 to Feb. 28, is part of DeCurret’s efforts to increase the range of services on their platform. In this case, the platform will be tested using cryptocurrency for real-world transactions like those at cafes. DeCurrent has come a long way since its launch in April 2019. The crypto exchange has already gotten regulatory approval from Japan’s Financial Services Agency to allow its users to refill the country’s Suica transportation cards by using cryptocurrency.
Altcoin News4 days ago
Calibra Technical Lead Explains Why Facebook Built New Language For The Libra Project
Blockchain News2 days ago
JP Morgan: Digital Money Foundation Laid, Blockchain In Banking Years Away
Blockchain News4 days ago
NBA & NFL See a Future In Non-Fungible Tokens, But Not Contract Tokenization
Altcoin News2 days ago
Crypto Makes A Cameo On The Simpsons Where Jim Parsons Explains It’s ‘Cash of the Future’
Altcoin News2 days ago
Former CFTC Chair Giancarlo Suggests That The FED Should Create a Digital Dollar
Blockchain News11 hours ago
Big Pharma Pushing FDA to Use Blockchain for Drug Tracking
Altcoin News3 days ago
What Business Sectors Are Realizing the Full Potential of DeFi Protocols In 2020?
Bitcoin News8 hours ago
Finnish Customs No Sure What To Do with 15M Euro Seized in Bitcoin