Bundesbank rejects Bitcoin reserves; the Chainalysis “Crypto-Crime” report; timely scaling solution for Ethereum in sight; SEC throws down Ripple’s argument and Jack Dorsey launches first tweet as NFT.
Another exciting week in the crypto space is drawing to a close. The most important events around Bitcoin and Co. in a compact overview.
Bundesbank rejects Bitcoin reserves
The German Bundesbank clearly rejects Bitcoin reserves. This becomes clear from an interview with board member Burkhardt Balz. The banker was extremely critical of the crypto prime. Bitcoin does not fulfill the money function at all. The comparison with gold is also wrong, since the precious metal has an intrinsic value that has been preserved for centuries. Gold offers security and liquidity at all times, Bitcoin cannot keep up. For these reasons, Balz considers it extremely unlikely that the Bundesbank will ever build up Bitcoin reserves. For him it is clear that a stable monetary value is essential for an economy. Bitcoin cannot reliably guarantee this with its high volatility.
That will not change due to the fact that BTC can look back on a continuous increase in value. It remains an object of speculation, in which everything is possible up to a total loss. In addition, Balz also let through a decision period in relation to the e-euro on the part of the ECB. A decision can be expected from early summer.
According to Chainalysis Report: “Illegal Crypto Transactions Falling In 2020”
The new crypto crime report for 2020 by the analysis company Chainalysis shows that the proportion of criminal crypto transactions has declined. The transfer volume corresponded to around 10 billion US dollars, which represented a total of around 0.34 percent of all crypto transfers. Compared to 2019 ($ 21.4 billion, 2.1 percent) that was a decrease of 1.76 percent. In all probability, however, the value will increase, as the past has shown. According to the report, the proportions of various illegal crypto activities have hardly changed compared to 2019. Fraud and activity in darknet markets continued to make up the majority of illegal transfers.
The biggest surprise of the year resulted from the third place: “Ransomware”, which grew with a share of 350 million US dollars by 311 percent compared to the previous year. There has also been a new high for terrorist financing. For the first time, the report also examined grants for domestic extremists, such as those given in the wake of the storming of the Capitol.
In a podcast, Ethereum co-founder Vitalik Buterin reckoned with a timely scaling solution for the cryptocurrency, which should at least somewhat curb the high transaction fees until the switch to the proof-of-stake procedure. Hopes rest on “Optimism”, a layer 2 solution that is fully compatible with the Ethereum Virtual Machine from the crypto startup of the same name. The focus of the developers is on so-called ZK rollups, ie “zero knowledge processes” that transfer several transactions on a sidechain before they are bundled in one processing on the mainnet. According to Buterin, this could already increase the performance of the Ethereum blockchain a hundredfold. According to this, the Layer 2 solution can increase the transaction throughput “to 1,000 to 4,000 transactions per second”, “depending on how complex these transactions are”. According to Buterin, investors would not have to wait too long for the interim solution. According to this, a functional crypto solution can be expected “in about a month”, which will make the scaling problem forgotten, at least in the medium term.
Crypto litigation: SEC throws down Ripple’s argument
The legal battle between Ripple and the Securities and Exchange Commission (SEC) is entering the next round. Shortly after Ripple CEO Brad Garlinghouse applied for a dismissal of the SEC lawsuit through his lawyers, the US Securities and Exchange Commission is now taking action. In a legal letter to Judge Analisa Torres of the US District Court for the Southern Borough of New York, the agency described Ripple’s defense strategy as “legally inadmissible.” The SEC filed a motion with the court to remove the crypto startup’s “fair notice” defense and to deny executives’ pending motions to dismiss the lawsuit. SEC attorney Jorge Tenreiro argues that the blockchain company is trying to shift responsibility for its unregistered XRP offering on to the agency. Before that, Ripple defended himself, the SEC would have failed to properly indicate that the XRP sales could be illegal. The tax authorities now firmly reject that, ignorance does not protect against punishment, it says in the letter to the court.
Twitter boss Jack Dorsey launches NFT with the first tweet
Twitter boss Jack Dorsey has now also succumbed to the hype about non-fungible tokens. The entrepreneur is now auctioning the first tweet in history as an NFT. Dorsey has long been a friend of the crypto space. The 44-year-old has already invested millions in Bitcoin with the financial services provider “Square”. Now the Twitter boss recently shared a link to a platform called “Valuables”. Since then his tweet from 2006 with the content “just setting up my twttr” has been available for bidding. The highest bid, at press time, was from Sina Estavi, CEO of Bridge Oracle, and stands at $ 2.5 million.
In addition, it is now also known what should be done with the proceeds. Dorsey would like to convert it into Bitcoin first and then donate it to “GiveDirectly”. It is a US charity that uses electronic payment systems to fight poverty by sending money directly to people in need. The proceeds from the auction should then flow into corona projects in Africa.