Riding The Wave News Summary #7
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News
Table of Contents
Bitcoin prices fall to lowest in months after US Fed remarks
Vitalik proposes new ‘multidimensional’ Ethereum fee structure
Polygon Under Accidental Attack From Swarm of Sunflower Farmers
WisdomTree Adds Bitcoin Futures Exposure to Fund, Refiles for Spot ETF
Mozilla backflips on accepting crypto after ‘planet-incinerating’ backlash
GameStop shares jump 26% in after-hours trade after NFT division unveiled
PayPal Is Exploring Creating Its Own Stablecoin as Crypto Business Grows
Airbnb users want crypto payment options, according to CEO’s Twitter poll
Bitcoin prices fall to lowest in months after US Fed remarks
The crypto-currency dropped in value from $47,000 (£34,700) earlier this week to less than $42,000 (£31,000) per digital coin.
It follows minutes from a meeting of the Federal Reserve, which suggested it may raise interest rates.
Political events in Kazakhstan have also raised concerns about the network's capacity.
This is what happened:
Bitcoin started the week at a price above $47,000 per coin
That began to slip by mid-week to around $46,000
On Wednesday, the Federal Reserve minutes were released
By Thursday, the price fell sharply to around $42,000
It hit a low of nearly $41,000 at one point on Thursday before recovering slightly
Matthew Dibb from Singapore-based crypto-company Stack Funds told Reuters news agency: "We are seeing broad risk-off sentiment across all markets currently, as inflationary concerns and rate hikes appear to be at the forefront of speculators' minds."
Markets tend to overreact especially when multiple negative events stack together. Kazakhstan shutting down should only have a short-term impact on Bitcoin due to the systems mining difficulty automatically adjusting over the next couple of weeks to accommodate the 18% drop in network contribution. As you can see by how much of the network was mined by China (Over 50%) before this is a small drop in comparison.
US interest rates can also have a short to medium-term impact on Bitcoin but in the long term, the government won’t get rid of inflation, which means any economic policy could only slow down Bitcoins growth. As long as inflation exists Bitcoin will likely be a better store of value than the current alternatives available.
Will Bitcoin Hit $100,000 in 2022? We Asked the Experts
“The No. 1 influencing factor for Bitcoin and cryptocurrencies in 2022 is central bank policy,” Antoni Trenchev, managing partner of crypto lender Nexo, said in an email. “Cheap money is here to stay which has huge implications for crypto,” as “the Fed doesn’t have the stomach or backbone to withstand a 10%-20% collapse in the stock market, along with an adverse reaction in the bond market.”
I agree that it’s unlikely the US makes any moves that could cause panic. The government is relatively happy with the current market state minus the high inflation. At first, they called it transitory but have now accepted it is permanent unless they take action. Fortunately for Bitcoin and unfortunately for the current financial system, our economy is dependent on inflation as it incentives people to spend rather than save. I doubt the US will ever want to get rid of inflation as it’s such a powerful tool for forcing growth within the economy.
Vitalik proposes new ‘multidimensional’ Ethereum fee structure
Ethereum co-founder Vitalik Buterin has put his thinking cap on again in an attempt to improve the current fee structure for the network.
The proposal titled “Multidimensional EIP-1559” was laid out in a blog post on Wednesday in which Buterin noted that different resources in the Ethereum Virtual Machine (EVM) have different demands in terms of gas usage.
Buterin outlined his fairly complicated proposed changes with a lot of technical math, but in a nutshell, the proposal offered two potential solutions using “multidimensional” pricing.
The first option would calculate the gas cost for resources such as call data and storage by dividing the base fee for each unit of resource by the total base fee. The base fee is a fixed-per-block network fee included in the Ethereum Improvement Proposal (EIP) 1559 algorithm.
The second more complex option sets a base fee for using resources but includes burst limits on each resource. There would also be “priority fees,” which are set as a percentage and calculated by multiplying the percentage by the base fee.
Gas prices (cost of a transaction on a crypto network) are the problem that every crypto network is trying to solve as it’s a scaling problem. This means the larger the network and the more successful, the higher the gas prices. This multidimensional fee structure might help but with ETH 2.0 on the horizon, I think it’s unlikely the development team focuses on this scaling issue immediately. I also think this would be challenging to implement as the more complicated a solution is the more potential loops holes there are.
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