In a 80–19 vote in the Senate, U.S. lawmakers confirmed Jerome Powell as the next chair of the Federal Reserve System, where he will also serve as a board member until 2028.
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The United States Senate has confirmed the nomination of Jerome Powell as the chair of the board of governors of the Federal Reserve System until 2026.
In an 80–19 landslide vote on the Senate floor on Thursday, U.S. lawmakers confirmed Powell as chair of the Federal Reserve, a position he held from February 2018 until February 2022, when he was named chair pro tempore until a confirmation vote could be secured. Powell was one of four Fed nominees awaiting a full Senate vote following weeks of delays due, in part, to partisan obstructionism — Republican lawmakers in the Senate Banking Committee boycotted a meeting in February that would have likely sent Powell’s nomination to the Senate for a vote earlier.
However, some of United States President Joe Biden’s nominations for the Fed have recently moved forward. In April, the Senate confirmed Lael Brainard as Fed vice chair in a 52–43 vote, and on Tuesday, Vice President Kamala Harris cast the tie-breaking vote to confirm economist Lisa Cook as a Fed governor for a term ending in 2024. Philip Jefferson had the largest bipartisan support in his 91–7 confirmation vote on Wednesday, which also granted the economist a seat on the Federal Reserve Board until 2036.
Former Obama administration official Michael Barr, who was on the advisory board of Ripple Labs from 2015 to 2017, is awaiting approval from lawmakers following President Joe Biden announcing him as his pick for Fed vice chair for supervision in April. According to the White House, Barr was “a key architect” of the Dodd-Frank Act — legislation that continues to influence financial policy in the country.
During his first run as Fed chair, Powell was vocal on what he thought the role of digital assets should be in U.S. markets as the space grew. He said in September 2021 that he was unlikely to support a blanket ban on cryptocurrencies and has also lauded stablecoins as a “useful, efficient consumer-serving part of the financial system if they’re properly regulated.”
In addition to the Securities and Exchange Commission and the Commodity Futures Trading Commission, the Federal Reserve is responsible for many regulations concerning digital assets in the United States. President Biden also signed an executive order in March directing government agencies to coordinate and consolidate policy on a national framework for crypto.
Finance Redefined: Uniswap breaches $1T volume, WEF 2022 discussion on Terra, and more
The decentralized finance (DeFi) ecosystem continues to struggle with the ongoing market volatility and after-effects of the Terra ecosystem collapse. Over the past week, major DeFi protocols showed signs of increased trading activity, with Uniswap breaching the $1 trillion trading volume mark.
Terra remained the focus of most of the discussions around blockchain and crypto at the World Economic Forum (WEF), with analysts suggesting Terra was offering unsustainable yields. DeFi insurance protocol to pay out millions after Terra collapse, while interest in Ethereum Name Services (ENS) shattered new records.
Top DeFi tokens by market cap had a mixed week of price action, with several tokens in the top 100 registering double-digit gains over the past week, while many others continue to trade in the red.
WEF 2022: Terra was offering unsustainable yields and DeFi can support financial inclusion
Reporting from the inaugural day of the Blockchain Hub Davos 2022 conference, Cointelegraph’s editor-in-chief, Kristina Lucrezia Cornèr, hosted a panel discussion centered around DeFi titled “Programmable Money is Here — and It’s Changing the World as We Know It.”
Coral Capital’s Horsman shared that the Terra crisis partly occurred because “they were essentially offering yields that were unsustainable, and [that] there were venture capital firms that were bootstrapping those yields in order to bootstrap an ecosystem.” He noted that his firm decided to withdraw funds from the project in November–December 2021 after their reserve modeling data predicted worrying calculations for the future.
InsurAce says it will pay millions to claimants after Terra’s collapse
DeFi insurance protocol InsurAce says it was well within its rights to reduce the claims period for people affected by the TerraUSD (UST) depegging event from 15 days to seven — but added it has already processed nearly all 173 submitted claims and will pay out $11 million.
InsurAce (INSUR) is the third-largest insurance provider for decentralized finance (DeFi) protocols, with a market cap of $15 million. On May 13, InsurAce caused a stir when it announced it had shortened the claims window for those with cover related to Anchor (ANC), Mirror (MIR), and stablecoin UST following the collapse of the Terra layer-1 blockchain.
Uniswap breaks $1T in volume — but has only been used by 3.9M addresses
Decentralized exchange (DEX) Uniswap has topped $1 trillion in total trading volume since launching on Ethereum in late 2018.
That comes from a relatively small user base, however, indicating that there is a lot of potential growth to come. According to data from Uniswap Labs, which are major contributors to the development of the protocol and ecosystem, the DEX’s number of cumulative addresses hit around 3.9 million this month after just over three years.
Interest in Ethereum Name Service reaching ‘critical mass’
The Ethereum Name Service is having its best month on record for new registrations, account renewals and revenue, thanks to community awareness and low gas fees.
Lead developer at ENS Nick Johnson tweeted on Monday that the metrics for the Web3 domain service through May so far. He noted that numbers were poised to shatter existing records because they were already at all-time highs, “and there’s still a week of May left.”
DeFi market overview
Analytical data reveals that DeFi’s total value locked continued to show outflow in the past week as well, falling to $79 billion, a $5 billion decline over the past week. Data from Cointelegraph Markets Pro and TradingView reveals that DeFi’s top 100 tokens by market capitalization registered a week filled with volatile price action and constant bearish pressure.
Majority of the DeFi tokens in the top-100 ranking by market cap traded in red, barring a few. Aave (AAVE) was the biggest gainer with a 15% surge, followed by Loopring (LRC) with 14%. Tezos (XTZ) saw an11% price rise while Kava (KAVA) grew by 10%.
Before you go!
Do Kown’s Terra revival proposal finally got approved. Kwon’s “Terra Ecosystem Restoration Plan” is to create new coins and give them out to investors who lost money. “Let’s call the existing Terra blockchain network ‘Terra Classic,’ and the present Luna blockchain, ‘Luna Classic,’ and create a new Terra blockchain,” CEO Kwon tweeted on May 18.
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us again next Friday for more stories, insights and education in this dynamically advancing space.
Can a lesson in bimetallism help the long-term stability of Bitcoin and privacy coins?
The crypto market has been on a downward trajectory since the tail end of 2021. In early May 2022, it culminated in a dip that impacted traditional markets just as hard. The recent bust removed some speculation from the market. But the shakeup is different than in the past. There are still many more active users utilizing the Bitcoin network than we have seen in past cycles. Many more holders and true believers made it through to the other side. However, as this increases over time, one of the concerns some have over Bitcoin (BTC) may impact its adoption. There is an economic incentive, not just utility, that privacy coins can offer as a solution.
At different points in the first half of 2022, both in crypto market rallies and huge dumps, privacy coins such as Monero (XMR), Dash (DASH) and Zcash (ZEC) have fared relatively well against other altcoins. Does this mean there is an underlying demand for interest in crypto privacy?
The Bitcoin standard is finally here (well, not yet)
For the sake of this discussion, let us presume that Bitcoin made it. Bitcoin is now the dominant currency globally. But due to the pseudo-anonymous nature of the Bitcoin blockchain, anyone can see all of the transactions for each wallet. And for each coffee purchased, the spending habits of the buyer, the location where the spending took place and all the other dystopian trappings of a 1984-inspired nightmare are a reality. This nightmare is what has spurred on the creation of the likes of Monero, Zcash, Dash, Decred (DCR), Secret (SCRT) and Horizen (ZEN), just to name a few. Some of these have similar qualities to Bitcoin. Zcash is modeled very similarly to Bitcoin with a 21 million hard cap supply and operates by proof-of-work.
Could it be out of the question that one or two of these blockchain protocols would be adopted as the “everyday” transactional currency to complement the Bitcoin standard? Protocols like Monero and Zcash have either a shallow inflation rate or a capped supply. They act with their tokenomics and do not promise to do more than be a medium of exchange and store of value, other than, of course, protecting the privacy of the user.
Bimetallism: What is that, and why does it matter?
Bimetallism is a concept from long ago and before the advent of cryptocurrencies. As the name suggests, the idea behind bimetallism is that different types of precious metals would be used to offset the price inflation rate relative to the other. Gold traditionally had silver and vice versa to balance the other out if one started to have too much buying power. For example, a horse is worth one gold coin or 10 silver ones (gold and silver are rare to different degrees but still have different intrinsic qualities for utility). If the horse is now equal to two gold a year later, it may only be 12 silver coins, which makes the trade more palatable to the holder of silver, putting pressure on the inflation price of gold. This bimetallism arrangement works in theory when you have similar mediums of exchange like two precious metals. When the state introduced fiat currency in the mix, Grisham’s Law kicked into effect, and with a vengeance.
Grisham’s Law states that bad money drives out good. If a holder has fiat or Bitcoin, there is a high probability that they will value the good/service less than they do BTC and trade away the fiat, which has a potentially unlimited supply. This means that Bitcoin will sit, unused, in people’s wallets forever, destroying some of the value proposition of sound decentralized money for the world. If we are to assume that the world is going to digital mediums of exchange, it will not change the laws of economics.
There will still be adjustments in the price level of things to tradable assets. To keep these different mediums in check, other assets may be needed as alternatives. However, if we do not wish to have Grisham’s Law play out again, there must be assets similar to Bitcoin yet propose a different value proposition. Enter privacy coins.
Bitcoin can be a unit of account, medium of exchange, store of value and other qualities that fit the gold 2.0 narrative. And the traceability of Bitcoin is a good feature that has its uses. As we see now with Bitcoin-backed loans, the transparency of assuring creditors the funds exist is a great utility of the chain. But do you want the coffee barista to know you shop at the antique store every Wednesday? Do you want your personal finance known to your boss? Or to anyone who cares to look through your payment history?
This is where the idea of bimetallism, or “bicryptoism,” can step in and solve these issues. If Bitcoin is adopted with one or two different scarce and limited mediums of exchange (a privacy coin), these can help to keep the purchasing power of goods/services in constant “stable fluctuation” against each other. This is, of course, in the future when Bitcoin is the dominant currency of the world.
Because these different protocols have different properties (just like gold and silver), they can serve different functions in users’ lives. For daily transactions, users can enjoy the privacy that a privacy coin can offer while utilizing all the benefits of a decentralized ledger and blockchain technologies. When users desire to transfer their money into wallets that have a publically facing address, they can choose to keep their funds in Bitcoin. Perhaps, through functions like atomic swaps on-chain, this can be even easier than a decentralized or centralized exchange.
Satoshi Nakamoto, the mysterious inventor(s) of Bitcoin, once wrote: “For greater privacy, it’s best to use Bitcoin addresses only once.” A new BTC address for every user would be rather impractical for the 2022 crypto user, never mind a world where Bitcoin is the standard medium of exchange. Users will either have to try and create a Bitcoin improvement proposal (BIP) to change Bitcoin to adopt to include privacy-enhancing features or co-exist with options in a “bicryptoism” setup with one or more privacy coins. The latter has additional economic benefits of keeping inflationary pressures lower on prices over time.
These are just some thoughts for the future, and the greater crypto community needs to think about these potential issues as we move forward. Economics played a big part in the founding of Bitcoin and the cryptocurrency revolution, and it should be a great source of informing its future as well.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Michael Tabone is an economist at Cointelegraph Research. A Ph.D. candidate, engineer, economist and business strategist, he also provides strategic consulting to firms concentrating in the DeFi and blockchain space. Michael has co-authored several reports for Cointelegraph Research and writes a quarterly venture capitalist report published on the Cointelegraph Research Terminal. His Ph.D. dissertation is on DAOs and their practical applications in the world of business.
Bitcoin network difficulty falls 4.3% to 29.897T, biggest drop in 10 months
The network difficulty recorded a drop of 4.33% — falling from 31.251 trillion to 29.897 trillion on May 26, just two weeks after attaining its all-time high.
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The Bitcoin network witnessed a historic event on May 12 when the network difficulty attained its all-time high of 31.251 trillion as miners mined nearly 50,000 BTC of the remaining 2 million tokens.
While the Bitcoin community rejoiced the added resilience to the network owing to the rising difficulty in mining a Bitcoin block, the network difficulty recorded a drop of 4.33% — falling from 31.251 trillion to 29.897 trillion on May 26.
As Cointelegraph reported on several occasions, Bitcoin’s network difficulty consistently achieved all-time highs over the past ten months as it recovered from a massive drop of 45.4% — from 25.046 trillion on May 29, 2021, to 13.673 trillion on July 22, 2021.
Ever since then, Bitcoin’s network difficulty witnessed a total growth of 128.56% as it surged to its all-time high. However, despite the momentary decline of over 4%, the BTC ecosystem is still guarded by the most secure blockchain network.
Higher network difficulty demands higher computational power to validate and confirm transactions over the BTC blockchain. As a result, this prevents bad actors from taking over the network by contributing to over 50% of the hash rate and carrying out double-spending attacks.
Cointelegraph recently interviewed Dania Gonzalez, Deputy of the Republic of El Salvador, to better understand the social impact of adopting BTC as legal tender.
According to Gonzalez, El Salvador made profits via strategic BTC investments and repurposed the fresh funds to build infrastructures like a veterinary hospital and a public school.
“What Nayib Bukele did was buy Bitcoins and make a profit at a certain strategic moment,” she said.
The Bitcoin (BTC) network broke its 10-month-long streak as the network difficulty recorded a drop of 4.33%, standing at 29.897 trillion at the time of writing.
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