In today’s bitcoin and cryptocurrency news, hear about the “burning” of transaction fees and the termination of mining rewards are responsible, according to analysts, for the dramatic decrease in Ether’s net inflation rate. Meanwhile, despite facing regulatory action from eight states, the cryptocurrency lender is buying into Summit National Bank in Wyoming. Lastly, it’s been dubbed “Web3,” or “Web 3.0” in certain circles, and it’s an imminent technological advancement. Web3 is being heralded as the next generation of the internet, and it will be a decentralized version of the current internet built on distributed ledger technology (DLT).
Ethereum Merge Boosts Cryptocurrency’s Hard-Money Appeal
Original Source: Ethereum Merge Vaults Cryptocurrency Past Bitcoin in Hard-Money Allure
Ethereum received praise two weeks ago for smoothly completing its much-hyped Merge, a transition to a “proof-of-stake” blockchain system promised to lower energy consumption by 99%.
Now, the second-largest blockchain looks to be delivering on another promise of the Merge: increased inflation-resistance.
Since the Merge, the annualized net issuance rate of Ethereum’s native coin, ether (ETH), has plummeted to 0% to 0.7%, according to IntoTheBlock’s Lucas Outumuro. Previously, it was 3.5%. Net issuance rate is the new supply divided by the current supply.
Ultra Sound Money estimates that 8,100 ETH have been added to ether’s supply since the Merge, for an annual inflation rate of 0.19 percent.
In a world where central banks are battling to limit inflation due to trillions of dollars of money-printing and severe supply-chain constraints, Ethereum’s lower issuance rate may boost its appeal among crypto and traditional investors.
Woobull.com reports Bitcoin’s net issuance rate is 1.75%. The Fed increased its balance sheet to $8.9 trillion since March 2020.
The number of fresh tokens has dropped. Simon Peters, an eToro market analyst, said Monday.
The drop in Ethereum’s inflation rate is due to two factors: a reduction in fresh issuance due to a change in the underlying blockchain technology and “EIP 1559,” a mechanism that “burns” or eliminates from circulation transaction fees.
Before the Merge, ether’s proof-of-work (PoW) mining rewards were roughly 13,000 ETH each day.
After the Merge, mining incentives evaporated and staking rewards would be 1,600 ETH per day, a 90% decline in new issuance.
ETH burned depending on the basic fee and the day’s data block crowding. Transactions increase the base charge.
Daniel Kostecki, senior market analyst at Conotoxia, says for ETH to become deflationary at the current pre-burn issuance rate, the base transaction fee would need to be at least 15 Gwei. Ultra Sound Money estimated the transaction charge as 10 Gwei.
IntoTheBlock’s Outumuro said the net inflation rate is “greater than the deflationary ETH many expected.”
The ether price fell approximately 5% in the past 30 days, trading just above $1,300 Tuesday amid heavy market volatility.
According to Quantum Economics’ director of blockchain market research, Alexandre Lores, future network updates may cut fees, resulting in “a higher and expanding supply.”
Lores is positive on Ethereum as the world’s primary decentralized application layer network.
Ethereum’s switch to proof-of-stake included disadvantages, including the danger that the new “staking yields” on the cryptocurrency could receive further scrutiny from the U.S. Securities and Exchange Commission.
The enhanced inflation-resistance “may still be overshadowed by investors’ anxieties about the SEC,” Kostecki added. “ETH-based projects could be affected”
Ethereum’s backers, lead by Vitalik Buterin, are likely satisfied with the early supply statistics, Kostecki added.
Kostecki: “Investors’ confidence could grow.”
Maximiliano Stochyk Duarte, head of marketing at ChainPort and crypto investor since 2014, said, “If Ethereum becomes deflationary, we could see a lot more institutional money invested in ETH in the next few of years.”
“BTC will still be the greatest coin for keeping value without the market’s big volatility,” he continued.
Nexo Purchases a Stake in Summit National, a Federally Chartered US Bank
Original Source: Nexo Buys Stake in Federally Chartered US Bank Summit National
Nexo is investing in Wyoming’s Summit National Bank. By investing in a US federally chartered bank regulated by the OCC, Nexo expands its US presence.
Nexo wouldn’t reveal the deal’s details.
Nexo prefers to focus on the mutually beneficial effects of the share acquisition on both firms and, more crucially, their clientele.
Nexo received a cease-and-desist order for its Earn Interest Product, which eight state authorities labeled an unregistered securities.
Nexo co-founder and CFO Kalin Metodiev hailed the move “another landmark in Nexo’s persistent push to better serve our US customers”
Summit users will get access to Nexo’s portfolio of offerings, including a cryptocurrency exchange, loans, and digital asset trading.
Nexo claims the transaction will allow it to provide US retail and institutional clients bank accounts, asset-backed loans, card programs, and escrow and custodial digital asset solutions.
Summit National Bank president and chairman Forrest Gilman welcomed Nexo. “This is the conclusion of two years of effort to merging Summit National Bank’s historic approach and values with our vision for the bank’s future.”
As Hulett National Bank, Summit National Bank began with agricultural and real estate financing. Summit National Bank enters Web3 with Nexo.
Nexo stated in July that it will purchase rival platform Vauld, increasing its position in Asia.
Web3 Money Doesn’t Need Crypto or Cyberspace
Original Source: Money in Web3 needs neither crypto nor cyberspace
Cryptography dying? Recent Bitcoin market plunges may offer that perception. Google Cloud partnered with cryptocurrency exchange Binance on a smart contract blockchain service this month. The release only mentions the redesigned BNB Chain, not Binance.
Deloitte surveyed 2,000 retail executives in June and found that 85% want to accept crypto payments. 54% have invested over $1m in digital currency payments, and 83% predict crypto will be legal tender within 10 years.
KPMG audited the first pound-backed stablecoin issued in the UK, granting cryptocurrency enterprise authority.
Whether cryptocurrency stays afloat or disappears into the ether may be meaningless if viewed as the first wave of something new. This emerging tech is called Web3 or Web 3.0. Web3 would be a decentralized internet with distributed ledger technology (DLT) as its backbone.
DLT produces cryptocurrencies, blockchain, SSI, and decentralized finance (DeFi). Last on the list may provide an existential issue for today’s financial firms or an opportunity for the nimbler to remake themselves.
DeFi is an experimental type of finance that uses smart contracts on blockchains to conduct financial services operations without relying on the old intermediary model, explains Dr. Joerg Ruetschi, COO of financial software business Cosaic and author of Transforming Financial Institutions.
The COO believes blockchain is this evolution’s main technology, and several companies already use it. Shane Rodgers, CEO of cryptocurrency brand PDX Global, discusses the tech’s impact on the banking industry with ERP Today.
“Corporate CFOs use the architecture to accelerate digital payments and eliminate middleman fees,” he says.
Accenture, Alibaba, blockchain
Blockchain is helping with the supply chain crisis. Stephane Crosnier, supply chain and operations lead for Accenture UK, mentions a global energy major seeking a more linked supply chain across its ecosystem and the financial implications.
Crosnier said the project intends to build a shared data platform for the industrial sector to improve buying and optimize procedures. IoT and track-and-trace record product movement, inventory, and storage capacity.
The blockchain layer creates a common record of product provenance based on these inputs, with consequences for current funding structures.
Integration with partner record systems, paired with purchase order and delivery data, eliminates transactional mismatch and reconciliation. Smart contracts’ codified business logic lowers manual interventions and procurement-to-payment time.
This reduces cycle time, allowing zero-day financing, which frees up working capital in the supply chain and transforms trade financing models.
Alibaba Cloud offers blockchain as a service (BaaS), which, according to a spokeswoman, helps financial customers construct a’secure and stable environment’
BaaS delivers comprehensive security protection using advanced encryption technology, according to an Alibaba Cloud spokesman.
Looking past the glitz and glamour of bitcoin, the underlying innovation offers a security boon for financial institutions. Current financial systems are “more fraud-prone than a well-secured blockchain,” says Rodgers at PDX Global.
“Yes, we’ve witnessed huge attacks on crypto exchanges,” he says, “but these are due to cowboys who fail to install simple customer protections against hackers.” I expect the current crypto shake-out will eliminate poor security and management actors.
Peer-to-peer digital transactions are securely recorded on the blockchain, eliminate middlemen that increase risk, and eliminate lost cards and stolen PIN codes.
Jaco Vermeulen, CTO of BML Digital, says Web3 is inherently secure.
Web3 tools will likely push cardless ways and bind accounts to identities through NFTs and biometrics, he says. This is for account identifier and transaction validation. Thus, account or card numbers aren’t needed, increasing security.
Recognize yourself
Vermeulen is referring to Web3’s self-sovereign ID (SSID), which allows people to authenticate their identity without providing personal data. Using blockchain, digital identities with greater privacy and data management may be created and managed (DID). Users sign up for an SSI and data platform to establish and register a DID, receiving encrypted private and public keys to prove or control identification, such as when opening bank accounts.
Cosaic’s Ruetschi says this undermines the authority of large, centralized organizations and returns personal data control to customers. As a result, switching service providers and “key platforms owned and controlled by incumbents in the industry’s new service model” will be easier.
Onboarding and KYC processes in the banking industry are time-consuming and difficult, says Ruetschi. “Self-sovereign ID is a big chance to tackle the issue and enable financial services companies focus on service and client happiness.
Under the new service paradigm, users can quickly start new partnerships and swap platform providers. Service provision becomes more consumer-centric and the ecosystem more competitive, pushing best-in-class service access.
Peter Heywood, ISG’s BFSI director, sees SSID as part of the financial value chain.
The European Banking Authority agreed in June to include AML/KYC and fraud measures in the Markets in Crypto Assets regulation (MiCA). A financial market needs certain fundamentals to operate efficiently.
“The Nordics are ahead. Norway’s VIPPS payment and identity network lets you find a home and get financing in 30 minutes. This uses DLT.”
Kitty Atomic
National Web3 use could replace the current internet. Lack of integration keeps corporations in Web 2.0 for now.
Deloitte’s poll of retail execs indicated 45% felt integrating crypto conversion with existing systems and across various crypto currencies is a bottleneck. PDXGlobal’s Rodgers views PDXPay as a solution.
We have a small unit that sits on top of any POS system to convert fiat currency on our blockchain-based digital banking network.
The CEO and crew are also building for the metaverse, an immersive form of cyberspace adjacent to Web3, including a capability to facilitate cryptocurrency payments via gestures.
Heywood notes that blockchain’s disparate networks and standards lack compatibility.
Institutional custody is difficult. Asset managers can’t handle self-custody decentralized exchanges. A custodian usually does this.
“A chain link connects off-chain data (like weather) to on-chain data. That provides a barrier for verifying data and individuals using a zero-knowledge protocol (a means to confirm a statement is true without revealing further data).
The ISG director sees potential for Web3 in Citi’s recent custody service announcement and other Tier 1 firms’ comparable plans. He’s also encouraged by the introduction of distributed ledger technology, such as atomic swaps, which are cryptocurrency transactions from separate blockchains.
Heywood sees DeFi and TradFi coexisting long-term.
Traditional finance emphasizes risk management. DeFi is applying our learned principles to digital and crypto assets. This changes finance. We’ll consider it as one of the biggest inventions in finance, along with the first lending agreements in the 1400s, brokers, and shipping underwriting in the 1700s.
DeFi and TradFi can coexist with a robust financial markets infrastructure that connects the two.
Rodgers agrees, pointing out that financial institutions are seeking for replacement payment mechanisms.
A solid crypto conversion solution will avoid the old system and its integration concerns, creating a parallel system that spits the ultimate result back into their corporate program.
Early adopters will give more payment options to shops and customers, he says.
Summary of today’s Bitcoin and Cryptocurrency News
In summary, The drop in Ethereum’s inflation rate is due to two factors: a reduction in fresh issuance due to a change in the underlying blockchain technology and “EIP 1559,” a mechanism that “burns” or eliminates from circulation transaction fees. Before the Merge, ether’s proof-of-work (PoW) mining rewards were roughly 13,000 ETH each day. After the Merge, mining incentives evaporated and staking rewards would be 1,600 ETH per day, a 90% decline in new issuance.
Meanwhile, Nexo stated in July that it would buy competitor platform Vauld in a move that would expand Nexo’s footprint in Asia after Vauld suspended customer withdrawals.
Lastly, the CEO and crew are also building for the metaverse, an immersive form of cyberspace adjacent to Web3, including a capability to facilitate cryptocurrency payments via gestures. Heywood notes that blockchain’s disparate networks and standards lack compatibility.
