Crypto Pirates

Although Bitcoin is the most valuable cryptocurrency in terms of market capitalisation, Americans are more interested in Dogecoin and Shiba Inu.

Whoever believes meme cryptocurrencies are worthless at this point may want to reconsider. According to a recent study, people in much of the United States are more interested in puppy-themed meme coins like Dogecoin or Shiba Inu than they are in large-scale serious projects claiming to be a financial revolution.

While Bitcoin and Ether account for more than 60% of the total market capitalisation of all cryptocurrencies, Dogecoin and Shiba Inu won the hearts of Americans in 2021, trending in 30 of the 50 United States.

Dogecoin Takes Over Nearly Half Of The United States

According to Business Insider's coverage of a study by research firm The Advisor Coach, an average of 7 million searches for content about Dogecoin occurred last month. This level of interest is significantly higher than the averages for Bitcoin and Ethereum combined. According to Business Insider, such an increase could be attributed to the influence of the Dogefather:

"The increase in interest can be attributed in part to Elon Musk's announcement earlier this year that Tesla would accept dogecoin as payment,"

And, while the popular financial publication The Motley Fool describes Dogecoin as a "hyped token with virtually no real-world utility," it appears that things could change in the near future, thanks to a series of capital investments and Elon Musk's interest in adapting Doge's code to global usability standards.

In 23 American states, including Florida, Hawaii, New Jersey, and Arizona, Dogecoin is the most widely used cryptocurrency. Indeed, the United States leads the world in overall Dogecoin searches, scoring 97 out of 100 on Google Trends, second only to Turkey – a country with a fraction of the population.

Shiba Inu Aspirations To Be Alpha Dog

Shiba Inu follows closely behind. Dogecoin's offshoot already dominates search results in California (the nation's technology capital), Washington, Nevada, Wyoming, Texas, North Carolina, and New York.

By way of comparison, Bitcoin is the dominant currency in ten states, while Ethereum is the dominant currency in eight. Cardano is a favourite in Colorado.

During the coronavirus pandemic, the market for meme cryptocurrencies developed as a sort of social phenomenon. Despite the fact that Dogecoin, Shiba Inu, Floki Inu, and others lack significant fundamentals, they benefited from several social media pumping campaigns.

However, Dogecoin and Shiba Inu have grown to become part of the Top 10 cryptocurrencies by market capitalisation. Dogecoin is currently ranked tenth, while Shiba Inu is ranked twelve.

And, given that the primary component of money (its value and acceptance) is purely subjective, perhaps it is time to reconsider our perspectives and give memecoins a chance.

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Rockdale, a little town of 5,600 people an hour outside of Austin, lost a key employer when Alcoa closed its aluminium smelter in 2008. However, the electrical infrastructure that Alcoa left behind is being repurposed for a new purpose: Bitcoin mining.

At the old Alcoa facility, more than 11,000 computers hum 24 hours a day, performing billions of operations every second to help run the Bitcoin network. Riot Blockchain is in charge.

Riot earned $54 million from the machines' "mining" of 1,292 Bitcoins in the third quarter. Rockdale is now one of North America's largest Bitcoin production facilities. Riot intends to add 63,000 machines by the end of 2022, more than doubling its mining capacity. 

"We intend to make it one of the world's largest Bitcoin mining assets," adds Riot CEO Jason Les. The Alcoa site contained a big electrical switching yard, which was excellent for a miner looking to expand to 700 megawatts of capacity, which would be enough to power 650,000 homes. 

Because of this level of electricity use, some argue that crypto mining contributes to carbon emissions. However, if you believe in Bitcoin's promise, the miners provide an alternative to holding the coin by betting on the network's high-tech plumbing and potential for substantial returns. 

Riot is interesting due to its expanding market share and efficiency improvements as it expands. Core Scientific, a miner that plans to go public through a merger with a special purpose acquisition company, or SPAC, is another stock to consider. 

Acquisition of Power and Digital Infrastructure Marathon Digital Holdings (MARA) may also emerge victorious. The stock dropped this week after the Securities and Exchange Commission revealed an investigation into the past issuing of restricted shares. 

"There is no allegation that we did anything improper," Marathon CEO Fred Thiel tells Barron's. Marathon, he adds, is flying in mining "rigs" from Malaysia and expects to more than triple its Bitcoin capacity in the coming year.

This year, mining stocks have gained an average of 291 percent as Bitcoin has doubled, significantly outpacing the Nasdaq Composite's 25 percent gain. However, they are extremely vulnerable to changes in Bitcoin values and investor mood. Marathon, for example, was up 628 percent this year before losing about a third of that gain on news of the SEC enquiry, as well as an enhanced convertible bond offering.

(1) Next year, XPDI is planned to combine with Core Scientific. Data for the post-merger Core Scientific.

(2) Price change from earlier this year's IPO. E=estimate.

Despite the unpredictability, large-scale miners are profitable, as measured by adjusted earnings before interest, taxes, depreciation, and amortisation, or Ebitda. According to consensus forecasts, Riot's income would increase to $464 million next year from $220 million this year. Ebitda is predicted to rise from $125 million to $324 million.

Core, situated in Bellevue, Washington, is likewise emerging as a market leader. The firm now operates in Kentucky, Georgia, and North Carolina, and is establishing operations in North Dakota and Texas, with the goal of reaching 1,000 megawatts of total capacity by the end of 2022, outpacing every other North American miner. Core's goal is to host infrastructure for other miners while also producing its own currencies, resulting in more reliable cash flows than if it were a standalone miner.

Core also aspires to be nett carbon neutral through the use of renewables and carbon credits. "They have solid long-term contracts with energy providers," says one investor who owns more than 5% of XPDI. He anticipates that the stock will reach $20, up from $13.75 recently. Investors can cash out at $10, like with any SPAC, when the merger is put to a vote, which is expected in January.

According to D.A. Davidson analyst Christopher Brendler, Core is a "best in class" operator that should increase earnings as it expands. He expects the company's revenue to more than double to $1 billion in the next year, with adjusted Ebitda of $565 million.

Marathon, for one, is betting on an asset-light business, contracting with hosting facilities for energy and investing practically all of its capital in mining machinery. The company employs only ten people and outsources the majority of its activities. Thiel claims that the company is buying machines in bulk at 30% of the industry norm, resulting in Bitcoins costing around $6,200, significantly below the industry average of $10,000. Wall Street anticipates that Marathon's sales would more than triple between 2021 and 2022, reaching $750 million, resulting in an Ebitda of $581 million.

Bitcoin mining is not the same as extracting gold from the ground. Instead, it entails creating Bitcoins as a byproduct or reward for authenticating transactions on the blockchain network. Miners accomplish this by continuously operating computers in an attempt to guess a string of alphanumeric characters for each block of transactions. Correctly guessing validates the block, adding it to a chain of preceding blocks (hence the term blockchain). The main benefit for coming in first is payment in Bitcoin, which the network's programming distributes at a rate of 6.25 Bitcoins every block.

Along with the price of Bitcoin, one important element is mining difficulty—how many guesses per second the network makes to validate, or "hash," the next block. This hash rate is expressed in exahashes, or 10 to the 18th power hashes per second. According to Thiel, it is presently about 170 exahash and could more than double in the next year if miners lock in power agreements and make their machines operational.

What is the significance of this? Because increasing the hash rate decreases the potential payouts for each miner. The rate fell this summer after China stopped Bitcoin mining, but it has since risen. Analysts predict that it will climb, potentially making it more difficult for miners to obtain Bitcoin rewards and necessitating more electricity for each currency.

"We're dead set on winning this weapons race." However, it will get more difficult in the future."

Increased Bitcoin prices attract more miners, increasing the network's hash rate. Miners are consequently engaged in a never-ending arms race, constantly expanding and improving equipment in order to meet production targets. They also have a tendency to raise funds in a serial fashion for new infrastructure and machines, potentially diluting stock owners or straining their balance sheets. Riot, for example, spent $651 million to acquire mining assets in Rockdale and intends to invest $160 million in infrastructure development. Marathon raised $650 million lately.

Rising hash rates have another repercussion: a higher carbon toll. According to the Cambridge Bitcoin Electricity Energy Consumption Index, miners consume 0.5 percent of the world's electricity. As mining becomes more difficult, corporations may consume more electricity, thereby increasing carbon emissions even as many countries aim to reduce them.

According to industry associations, 58 percent of worldwide Bitcoin manufacturing is currently carbon neutral, relying on renewable energies. El Salvador, where Bitcoin has become an official currency, is mining with geothermal energy derived from a volcano. However, a significant amount of Bitcoin is still created using coal in areas such as Kazakhstan.

North America is also becoming a mining hotspot, accounting for more than 40% of worldwide hash rate. According to the industry, renewable energy currently accounts for one-third of US output, potentially lowering the carbon footprint. One novel approach:

"Miners do not contribute to carbon emissions in properly constructed energy markets," argues Peter Cramton, an economist and former Texas energy regulator. He points out that miners in particular markets absorb renewables that would otherwise be wasted as surplus power. This can generate demand for wind and solar power providers, incentivising them to develop renewables with long-term clients. "Excess power companies are looking at Bitcoin mining as a way to create baseload consumption for renewables," Thiel says.

Riot intends to increase capacity in Texas as well as construct a "immersion cooling" system to keep circuits functioning at lower temperatures. According to Riot, the cooling baths should increase the machines' hash rate by 25% while decreasing downtime and increasing overall performance by up to 50%.

"It will result in fewer machines providing the same hash rate," says Kevin Dede of H.C. Wainwright, who rates the company as a Buy with a $50 price objective.

Mining stocks are popular on Wall Street due to their capacity expansion plans and high gross margins. The stock's multiples are significantly lower than those in other areas of crypto, including exchanges like Coinbase Global (COIN) and mining chip maker Nvidia (NVDA) are both trading at much greater prices.

The discounts given to miners indicate concerns about their capital intensity as corporations compete for output, wagering on higher prices for a risky and contentious asset. Investors have witnessed this scenario play out in other cyclical industries, most notably Texas' century-old oil field.

Bitcoin mining will become more difficult as the hash rate increases. The Bitcoins awarded for validating blocks will be cut in half in 2024, to 3.125 per block, prompting miners to increase capacity to compensate for lost revenue. Costs remain low enough that large, efficient operators can be tremendously profitable. However, as margins shrink, scaling will become more important than ever. "We're dead set on winning this weapons race," Thiel says. "However, it will get more difficult in the future."

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A spate of significant developments in economics and popular culture imply that 2021 marked the official start of cryptocurrency general acceptance.

The march towards widespread adoption of blockchain and cryptocurrencies made significant gains in 2021, as the emergence of decentralised finance (DeFi) and nonfungible tokens (NFT) propelled crypto into the daily focus of mainstream media.

From the rise of meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) to the meteoric rise of the play-to-earn gaming model and popular protocols like Axie Infinity, 2021 has been about demonstrating the revenue-generating options available inside the cryptocurrency ecosystem.

And it is not just consumer interaction that indicates that mainstream acceptance of cryptocurrencies is imminent; many high-profile developments in finance and popular culture demonstrate that blockchain technology is gradually becoming a mainstay of global civilisation.

Here are some of the most significant happenings in 2021 that show that cryptocurrency general acceptance is imminent:

Massive endorsement deals grab the attention of the mainstream media

The increase in major endorsement deals and partnership agreements between cryptocurrency-related companies and other major organisations such as sports teams and professional sports organisations, as well as popular celebrities and influencers, has been one of the most significant signs of mass adoption in 2021.

Recently, Crypto.com stunned the globe by announcing the signing of a 20-year naming rights agreement with AEG, the world's largest sports and entertainment corporation, to rename the Los Angeles Staples Center Crypto.com Arena.

Crypto.com will collaborate with the Los Angeles Lakers and Los Angeles Kings as part of the $700 million arrangement, serving as the popular sports organisations' "exclusive cryptocurrency platform partner."

Crypto.com's naming contract follows a similar move by cryptocurrency exchange FTX earlier this year, when it secured a 19-year, $135 million deal with Miami-Dade County to brand the Miami Heat's home stadium FTX Arena until 2040.

Apart from these multi-year, multi-million-dollar endorsement deals, a slew of other cryptocurrency-related endorsements have occurred, including a partnership between Coinbase and the National Basketball Association and a partnership between the New York Digital Investment Group and the Houston Rockets, in which the investment firm will pay the franchise in Bitcoin (BTC).

The NFT culture is embraced by major brands

Another indicator of widespread adoption is the embrace of NFT culture by globally famous businesses such as McDonald's and Burger King, which are looking to leverage the popularity of the fast rising crypto subsector to engage their customers.

Despite China's broad cryptocurrency crackdown, McDonald's China introduced its "Big Mac Rubik's Cube" line of NFTs on Oct. 8 to commemorate the company's 31st anniversary in the Chinese market. The giveaway included a set of 188 NFTs handed to staff and customers.

Burger King launched an NFT-focused marketing campaign in September called "Keep It Real Meals," in which consumers could scan a QR code included in their meals to get one of three collectable game pieces. Players who gather all three game pieces will be eligible to get a digital collectable, a year's supply of burgers, or a phone call with one of the campaign's celebrity endorsers.

All of this attention on NFTs by large brands and organisations comes at a time when public interest in NFTs is increasing, as indicated by data from Google Trends, which indicates that searches for NFT-related phrases have eclipsed searches for terms like as "DeFi," "Ethereum," and "blockchain."

Additionally, television viewers have been exposed to more cryptocurrency-related advertising with well-known spokespersons such as actor Matt Damon and National Football League quarterback Tom Brady.

Finance as we know it has finally embraced Bitcoin

A third indicator that mainstream adoption of cryptocurrencies is underway is the integration of cryptocurrency-related projects into established financial markets, the most notable example being the launch of the ProShares Bitcoin Strategy exchange-traded fund (ETF) (BITO), the first Bitcoin-related ETF permitted on the US market.

The launch of BITO was quickly followed by the launch of the VanEck Bitcoin Strategy ETF (XBTF), indicating that the US Securities and Exchange Commission is comfortable approving Bitcoin futures ETFs at the moment but is not yet prepared to allow spot Bitcoin ETFs, which may not occur until 2022 or later.

Additionally, 2021 saw a considerable integration of blockchain technology into the broader financial sector, as major payment processing networks including as Visa and Mastercard negotiated many collaborations with the cryptocurrency industry to enable crypto holders to utilise their tokens as payment.

Numerous prominent crypto-focused businesses, including the aforementioned Crypto.com, BlockFi, and Coinbase, rely on the Visa network to power their debit and credit card systems, while Mastercard has partnered with the digital asset platform Bakkt, laying the groundwork for eventual support of central bank digital currencies (CBDC).

The fact that numerous central banks around the world have indicated their intention to investigate or construct their own CBDCs demonstrates the technology's eventual integration and widespread acceptance in the broader global financial ecosystem.

While the crypto market as a whole is likely to continue to experience boom-bust cycles, as all markets do over time, crypto holders can rest assured that the long term trajectory of blockchain technology is towards widespread adoption and integration in numerous aspects of our daily lives as the Internet of Things and Web 3.0 continue to evolve.

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Bitcoin bulls, undeterred as ever, travelled to the first country to legalise the cryptocurrency for a week of events and revelry.

The Bitcoin community descended on El Salvador this week, the world's first country to legalise the cryptocurrency, reiterating their extremely bullish stance on the digital currency while shrugging aside the digital coin's recent decline from record highs.

They were in El Salvador as part of "Bitcoin Week," a series of events anchored by two conferences and highlighted by a slew of parties and impromptu get-togethers that allowed industry insiders and crypto devotees alike to declare their allegiance to the digital token they regard as a global game-changer.

Wearing hats with the Bitcoin symbol and T-shirts with the crypto mantra "buy the f*cking dip," believers who travelled to the Latin American country stated that they are unconcerned about recent price swings and are in it for the long haul.

The week's highlight was the biennial Latin America Bitcoin and Blockchain Conference, which concluded on Friday after three days.

On Wednesday night, hundreds of Bitcoin proponents danced to Latin rap music in front of a live music stage outside the event, downing cans of Pilsener and Golden, two popular local beers, as they condemned the US currency and warned of impending hyperinflation.

"To me, the dollar looks antiquated," said Jose Schierano, 51, owner of an ice cream delivery business who was wearing white shorts and a black shirt that read "Bitcoin Country" in reference to El Salvador.

Schierano stated that he travelled to LaBitConf from Cordoba, Argentina, to hear panellists speak. He also attended a different conference earlier this year in Miami, at which El Salvador's President Nayib Bukele announced that Bitcoin will become legal cash. The Argentine peso has depreciated by 16 percent against the dollar this year, and severe foreign currency regulations in Argentina limit Schierano to withdrawing $200 in American money per month, he said. "Bitcoin provides a way around this, and you can see it in other places as well, such as Venezuela or Turkey, where central banks lack credibility." Bitcoin is dubbed shitcoin by critics, but the true shitcoins are all the other fiat currencies."

Businesses ranging from Bitcoin ATM providers to cryptocurrency exchanges have put up stalls outside El Salvador's capital city's Teatro Presidente. Several attendees planned trips to El Zonte, a seaside hamlet about an hour away that was the birthplace of Bitcoin in El Salvador.

Meanwhile, Bitcoin has largely fallen in value as a result of the festivities. It fell every day except Friday and closed the week around 16% below its all-time high of over $69,000 set earlier this month. The revellers seemed unfazed, with conference speakers estimating that the price may rise to $400,000 or perhaps $1 million in the following years.

According to Jose Luis Guillen, CEO of Coincaex, a Guatemala-based Bitcoin exchange, the recent decline should not bother investors who want to hold their tokens. "I'm not concerned about the price in the long run," he explained. "Bitcoin is currently in a 13-year bull market." Guillen said he has witnessed an increase in clientele over the last year as inflation in the United States has quickened, and that his customers are becoming older, now falling into the 45-to-65 age range rather than the 20- and 30-somethings he initially observed.

Jerri Schick, who travelled from Galveston, Texas to attend the event, said she has witnessed an increase in the cost of products and services in the United States this year, making it more expensive to maintain her recreational vehicle park. She began purchasing Bitcoin in February and aims to purchase between $20 and $100 of the cryptocurrency each day to help combat inflation. Since she began trading, her portfolio has increased by 40%, she stated.

"I believe Bitcoin is the escape hatch for what is about to happen, including the collapse of the US currency, the development of bioweapons, and extinction-level events," she explained.

Jessie Rodriguez, a Colombian computer programmer, stated that he is still a buyer of Bitcoin, which he began experimenting with in 2014. While Colombia does not face hyperinflation on the scale of regional counterparts Venezuela or Argentina, the country's peso is worth less than half of what it was seven years ago, eroding his savings. Now, when he performs work for international clients, he requests payment via Paypal and promptly converts his foreign earnings to Bitcoin.

"I've gotten to the point where I'm not even keeping dollars anymore," he explained. "Bitcoin was initially maligned and no one accepted it as a form of payment, but here in El Salvador, you can use it to pay at Starbucks or get pupusas. It's a dream come true, and I hope it occurs in Colombia as well."

On Sept. 7, El Salvador legalised Bitcoin as legal cash, and the government introduced the Chivo digital wallet, which came pre-loaded with $30 worth of Bitcoin. El Salvadorans rapidly began speculating, purchasing dips and selling rallies with their wallets, which enable easy translation to US dollars. El Salvador's Economy Minister Maria Luisa Hayem stated during the conference that the move places the six-million-strong country "at the cutting edge of technology."

Samson Mow, the chief technology officer of Blockstream, a blockchain technology startup, is even pushing the government on issuing a $1 billion sovereign blockchain bond. He met with government officials this week and claims they were open to his offer to sell a 6.5 percent 10-year bond denominated in dollars. According to his idea, the government would convert $500 million of the initial sale into Bitcoin and, after five years, utilise the revenues from any cryptocurrency appreciation to pay investors a dividend. The method would be implemented on the Liquid network, enabling fast settlement and assisting the government in avoiding the costs associated with bank middlemen and a traditional issue, he explained.

"A Bitcoin-based financial system is unavoidable," Mow stated. "You do not require the World Bank or the IMF." Bitcoin is going to save the day. This is the only opportunity we have to mend the financial system."

Bitcoin bulls undoubtedly feel this way, and in El Salvador, they see the start of a global phenomenon they hope will expand.

"Money is changing throughout the world," Pablo Gonzalez, co-founder of Bitso, a cryptocurrency exchange based in Mexico through which Bukele's government purchased 700 Bitcoins, explained. "El Salvador made a really courageous move in expediting that money transition. They are a driving force behind the Bitcoin revolution."

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The Commonwealth Bank has acquired a modest interest in global cryptocurrency exchange Gemini, extending the bank's leadership position in the embryonic digital asset industry.

CBA informed investors on Friday that it was a participant in Gemini's first-ever investment round, which revealed overnight that it had received $US400 million, valuing the company at $US7.1 billion.

Gemini is the same exchange with which CBA recently partnered to enable its customers to purchase and sell cryptocurrency through its platform, and the bank revealed it made a "minority investment" in the business as part of its recent capital raise.

"As we consider methods to help our customers, we have made the strategic decision to collaborate with Gemini, a worldwide leader with robust security and a track record of serving major institutions," Commonwealth Bank CEO Matt Comyn said.

"In Australia and New Zealand, our investment in Gemini is part of an exclusive relationship. We congratulate Gemini on successfully raising financing and look forwards to collaborating with them in the months and years ahead," he said.

Gemini is one of the world's most prominent cryptocurrency exchanges, created by the Facebook-famous Winklevoss twins. The company manages more than $US30 billion in cryptoassets and operates its own non-fungible token marketplace, Nifty Gateway.

"We are ecstatic to continue pushing the boundaries of cryptocurrency and provide individuals worldwide with increased choice, independence, and opportunity through crypto," co-founder Cameron Winklevoss said.

CBA has a track record of investing in businesses with whom it partners or that operate in industries closely related to banking, having acquired a stake in purchase now, pay later operator Klarna in 2019, which has since soared in value to more than $2.5 billion.

Morgan Creek Digital, a blockchain and digital asset specialist, also participated in Gemini's fundraising, as did 10T, ParaFi, Newflow Partners, and Marcy Venture Partners.

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There are several compelling reasons why Bitcoin (BTC) is attracting so much attention from cryptocurrency investors. For starters, it was the original cryptocurrency. Second, its value has soared to new heights, having increased by more than 300 percent over the last year.

Finding the next Bitcoin has become a key objective for some cryptocurrency investors, and I recommend that they shift their focus to Ethereum (ETH). While there is no certainty that Ethereum will reach the same value as Bitcoin, there are several compelling reasons why this cryptocurrency and its underlying technology could be just as significant – if not more so – to the crypto world as Bitcoin.

1. Its worth has increased dramatically in a short period of time.

One feature that links Ethereum to Bitcoin is the cryptocurrency's meteoric growth in value. As of this presss, one Ether currency is worth almost $4,600, representing a roughly 900 percent gain in value over the last 12 months.

While there is no way to predict if Ethereum will ever overtake Bitcoin in value, what is critical to remember is that the more investors value Ether, the more it develops into a well-established cryptocurrency in the mould of Bitcoin.

And, with over 9,000 cryptocurrencies now available to investors, Ethereum's status as an established token has aided in its differentiation from the competition.

2. The Ethereum blockchain is assisting in the creation of entirely new markets.

At least in part, the value of an Ethereum currency has increased as the Ethereum blockchain has become the de facto standard for developing decentralised financial (DeFi) applications and systems.

DeFi has the potential to transform the financial world by giving individuals greater power over borrowing, saving, and trading assets – all without the need for an intermediary such as a bank or financial institution.

Developers have flocked to the Ethereum blockchain to create DeFi apps (dApps) for everything from international money transfers to crypto token trading and even insurance purchases.

One such emerging sector built on Ethereum — and rapidly growing – is non-fungible tokens (NFTs). NFTs can be any type of digital product, from music to photos, and many of the major NFT marketplaces are created on the Ethereum blockchain.

3. Ethereum has a sizable developer community.

When it comes to getting a system off the ground, size matters, and Ethereum has the largest development community of any blockchain.

Each month, Ethereum sees an average of 2,300 engineers working on its blockchain — a figure that has increased by more than 200 percent in the last three years.

This gives Ethereum a distinct advantage over other blockchains and contributes to the token's value. The wider the developer community, the more frequently it receives updates and the more trustworthy it becomes. As a result, increased community trust should attract other developers, re-igniting the flywheel of accelerated growth.

Ether's growth trajectory appears to be positive.

While it is impossible to predict whether Ethereum will surpass Bitcoin in market capitalisation, for the reasons outlined previously, it has unquestionably become a prominent crypto name for investors to consider. That being said, investors should be aware that the cryptocurrency market may be extremely volatile, and should approach any crypto transactions with caution.

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For more than a decade, bitcoin — and by extension, cryptocurrency – has been a hot topic. Since the birth of Bitcoin in 2009, the concept of digital money has received tremendous attention and acceptance by a variety of platforms. It's tough to deny its influence on finance, and for the longest period, the benefits have outweighed the drawbacks.

Nowadays, investors are becoming more aware of the downsides of Bitcoin and cryptocurrency in general as a result of recent events. It's impossible to dismiss difficulties when they've been brought to the forefront and become harder to ignore. It is too early to determine whether these disadvantages will result in Bitcoin's demise, but they will undoubtedly tarnish the cryptocurrency's reputation. Indeed, one might argue that the dent already exists.

The essential question is not "what are the issues?" rather than "what is the primary issue?"

Price instability

Numerous downsides could be argued to be the primary issue with cryptocurrency and Bitcoin. One is that it is built on sophisticated blockchain technology. This technology was only introduced into widespread use a few years ago. Today, crypto and blockchain professionals are so few that they can be numbered on one hand. Additionally, these technologies are always evolving.

Another significant flaw is Bitcoin's infamous scalability issue. The Bitcoin network has a limited capability for rapidly processing huge amounts of transaction data on its platform. It relates to the fact that the Bitcoin blockchain's records (a.k.a. "blocks") are limited in terms of frequency and size.

As inconvenient as these drawbacks are, they pale in comparison to what many view to be the primary issue with Bitcoin and cryptocurrency. That is to say, price volatility. Even the most ardent crypto proponents would admit that this is a significant disadvantage of the technology. Bitcoin's price and worth can fluctuate dramatically and without warning, prompting many to be sceptical about investing in it.

The primary factor contributing to this disadvantage is the fact that Bitcoin is not backed by any assets. Without a steady asset to sustain it, its price changes are unpredictable, making it a dangerous investment.

Cryptocurrency backed by assets

What better approach to combat unbacked cryptocurrencies than with asset-backed cryptocurrency? While there are further potential remedies to Bitcoin's volatility problem, this is perhaps the greatest. Or, at the absolute least, it is the most prudent course of action.

With the proliferation of asset-backed tokens, investors now have an ideal entry point into the world of cryptocurrency. They can now explore cryptocurrencies without the frequent volatility associated with large tokens.

The best feature of asset-backed cryptos is their direct connection to a physical asset in the real world. These assets continue to grow with each passing day. However, those that are linked to gold, fiat currencies, real estate, and other commodities are the most popular. Perhaps the primary attraction of asset-backed tokens is that they are less volatile than Bitcoin due to their backing by real-world assets.

"Stable coins" and "gold-backed cryptocurrencies" are the two most popular asset-backed cryptocurrencies. The former are very resistant to price changes and lack the instabilities associated with Bitcoin. As the name implies, the latter are digital currencies whose value is determined by the worth of physical gold.

Through asset support, we ensure reliability.

It's tough to deny that the fundamental impediment to Bitcoin and cryptocurrencies is price volatility. Without a physical asset to underpin the digital currency, its value becomes unstable. By investing in asset-backed crypto, investors have a guarantee of stability and reduce the chaotic nature of price movements. In general, they will act as a bridge to more widespread applications as the crypto market grows, develops, and evolves.

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Ethereum has lost more than 5% of its value in the last 24 hours.

* Analysts feel that the US Infrastructure bill passed earlier this week may have played a significant impact in the ongoing financial crisis.

* Google searches for the keyword non-fungible token (NFT) are at an all-time high.

* The crypto sector's overall market capitalisation has fallen from A$4.15 trillion to A$3.29 trillion seemingly overnight.

Ethereum has recouped some of this week's losses, rising 2.2 percent in the previous 24 hours, despite a weekly loss of 8.3 percent. The broader cryptocurrency market is in decline, with Bitcoin losing 8% this week.

The aforementioned volatility has resulted in the liquidation of A$274 million worth of ETH futures, with experts speculating that the passage of the United States infrastructure bill earlier this week may have had a significant influence in the development. To refresh your memory, the aforementioned bill requires that all digital currency transactions over the US $10,000 value threshold be disclosed to the Internal Revenue Service (IRS). However, due to a lack of clarity in the law's phrasing, it is unclear if this provision applies to individual cryptocurrency owners or businesses that use blockchain technology as well.

Another possible explanation for the ongoing bloodbath is the United States Securities and Exchange Commission's (SEC) rejection of VanEck's application for a spot Bitcoin exchange-traded fund, claiming that the offering could result in a number of 'fraudulent, manipulative market tactics' in the future.

In 2021, Google searches for NFTs will reach all-time highs

According to Google Trends data, searches for the term nonfungible token (NFT) are currently at an all-time high, even outpacing several other popular mainstream crypto-centric terms such as DeFi, Ethereum, and Blockchain. 

The majority of this interest appears to be coming from countries such as Brazil, Argentina, and Columbia, as well as some Asian countries such as China, Singapore, Hong Kong, and the Philippines, where NFTs have garnered huge popular traction in the last three to six months.

What does the future hold for ETH?

With Ethereum trading below its fourth-quarter upward trendline support level of A$5,600, many analysts fear the altcoin might fall as low as A$5,000 in the coming days before making a strong upward push. Having said that, others feel that ETH may have to fall to the A$4,100 resistance level before making a meaningful comeback. Thus, it remains to be seen what the future holds for Ethereum.

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According to a Reserve Bank official, cryptocurrencies pose no threat to the Australian dollar or the central bank's operations.

Tony Richards, the RBA's head of payments policy, has similarly questioned the extent to which cryptocurrencies are kept in Australia, but admits to holding his own cryptocurrency wallet.

He told a Thursday online conference that while cryptocurrencies have garnered widespread attention, they are not commonly used in Australia.

"I do not believe they constitute a threat to the Australian currency, our monetary sovereignty, or the Reserve Bank's ability to conduct monetary policy," Dr Richards told the Australian Corporate Treasury Association.

"I don't see shops publishing prices in cryptocurrencies, businesses issuing annual reports in cryptocurrencies, or a large number of people requesting payment in cryptocurrencies."

He said, however, that a diverse variety of investors - from individuals to hedge funds - feel cryptocurrencies have an important role to play.

"At the same time, a sizable portion of the global official sector remains sceptical about bitcoin market movements," Dr Richards stated.

He noted that the recent cryptocurrency bubble is best exemplified by the fact that Dogecoin - "a cryptocurrency that was created as a joke in late 2013" - had an inferred market value of up to $US88 billion in June of this year.

Although it has now decreased to roughly $US31 billion, it remains the ninth largest cryptocurrency in terms of market value.

"While cryptocurrencies have undoubtedly attracted the interest of many, no doubt aided by influencers and celebrity tweets," Dr Richards said.

According to him, some surveys indicate that almost 20% of the Australian population owns cryptocurrencies, while another indicates that 5% of the nation owns Dogecoin alone.

However, he deemed such conclusions improbable because online surveys omit significant sectors of the population, most notably elderly adults, those who live in rural areas, and those who do not use the internet on a regular basis.

However, after raising concerns about the widespread use of cryptocurrencies, Dr Richards - who is retiring from the RBA at the end of the year - admitted that he had owned a bitcoin wallet since June 2014.

"After all, a significant portion of my job is to attempt to comprehend novel payment instruments and technology," he explained.

He believes there are possible scenarios in which a variety of things might combine to dramatically undermine the current cryptocurrency fervour.

This includes households becoming less affected by fads and more receptive to regulator warnings about the dangers of investing in something with "no issuer, no backing, and highly unpredictable value."

He warned that cryptocurrency "mining" consumes a significant amount of energy and may garner increased attention from governments and policymakers.

Additionally, a greater emphasis may be placed on their potential use in assisting financial crime and the black economy.

He informed the conference that the RBA's work on the future of payments will be a top priority in the coming years as part of its mission to ensure the public has access to safe forms of money.

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Hundreds of billions of dollars have been knocked off the value of cryptocurrencies in a market-wide catastrophe that experts are saying will have a "domino effect."

Hundreds of billions of dollars have been wiped off the value of cryptocurrencies in a market-wide crash that has pushed bitcoin's worth below $60,000.

Other big cryptocurrencies, including ethereum, Binance's BNB, solana, cardano, and Ripple's XRP, have all suffered losses of up to 10%.

The whole cryptocurrency market cap decreased by more than $200 billion overnight, to about $2.6 trillion, after briefly approaching $3 trillion during last week's record-breaking run – with bitcoin reaching a new all-time high of $69,000.

Although the reason for the precipitous decline is unknown, several factors appear to be forcing investors to pause for thought.

These include a further crackdown on bitcoin mining in China, the rejection of a spot bitcoin exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC), and long-term investors liquidating their holdings.

However, cryptocurrency is notoriously volatile, and analysts believe it is too early to know whether the recent dip signals the beginnings of a market reversal or only a correction en route to new all-time highs.

Bloomberg quotes an analyst as warning that fresh lows could emerge as a "domino effect" takes hold.

"After many days of advances that saw Bitcoin hover near its all-time high while several other cryptocurrencies set new records, we are seeing a huge pullback," said Walid Koudmani, an analyst at XTB Market.

"The market's extraordinary volatility might trigger a domino effect if additional negative news emerges, pushing prices to new lows."

Other analysts believe the market is on track to set new all-time highs in the coming weeks, referring to the recent decline as a "correction."

"Bitcoin's sell-off has sent it back to levels last seen ten days ago, which is hardly a crash but more of a correction of the multi-month surge," Nicholas Cawley, an analyst at foreign currency firm DailyFX, told The Independent.

"The one point of concern is that bitcoin has broken out of its multi-week ascending channel, changing the technical view from positive to neutral.

"An interesting level of support is around $59,500 — if this holds, bitcoin may well regain its recent losses and attempt to print a new all-time high in the coming weeks."

Today, Australian shares are expected to begin higher, lifted by gains in New York as retail sales figures indicated the possibility of a robust holiday shopping season despite rising prices.

Near 5 a.m. AEDT, the ASX futures were up 38 points, or 0.5%, at 7447.

Overnight on international markets, European equities ended mainly higher, while US indexes rose and the currency strengthened on the back of stronger-than-expected retail sales and hawkish comments from the US Federal Reserve.

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