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‘Big Short’ Investor Michael Burry Warns of ‘Mother of All Crashes’ — Says Crypto’s Problem Is Leverage

Hedge fund manager Michael Burry, famed for forecasting the 2008 financial crisis, has warned of “the mother of all crashes.” He further explained that the problem with cryptocurrency is the leverage.

Michael Burry Warns of Mother of All Crashes

Famous investor and founder of private investment firm Scion Asset Management, Michael Burry, shared his view last week about where he sees the markets heading.

Burry is best known for being the first investor to foresee and profit from the U.S. subprime mortgage crisis that occurred between 2007 and 2010. He is profiled in “The Big Short,” a book by Michael Lewis about the mortgage crisis, which was made into a movie starring Christian Bale.

The Scion Asset Management founder tweeted Thursday:

All hype/speculation is doing is drawing in retail before the mother of all crashes. #FOMO Parabolas don’t resolve sideways; When crypto falls from trillions, or meme stocks fall from tens of billions, Main Street losses will approach the size of countries. History ain’t changed.

He also commented on cryptocurrency, asserting that “The problem with crypto, as in most things, is the leverage.” The famed investor further opined, “If you don’t know how much leverage is in crypto, you don’t know anything about crypto, no matter how much else you think you know.”

Burry previously said that he does not hate bitcoin but is concerned about the government coming down heavily on cryptocurrency. He warned in February that “In an inflationary crisis, governments will move to squash competitors in the currency arena.”

While emphasizing, “I don’t hate BTC,” Burry said that in his view, “the long term future is tenuous for decentralized crypto in a world of legally violent, heartless centralized governments with lifeblood interests in monopolies on currencies.” Nonetheless, he said he is not short BTC because “In the short run anything is possible.”

Burry is not the only one foreseeing a crash. Last week, Rich Dad Poor Dad author Robert Kiyosaki warned that the “Biggest bubble in world history getting bigger,” warning that the “Biggest crash in world history” is coming. The famed author expects the price of bitcoin to fall to the $24K level where he will buy some more BTC.

What do you think about Michael Burry’s prediction and his view on cryptocurrency? Let us know in the comments section below.

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Paraguayan Lawmaker to Present Bitcoin Legislation Next Month — Aims to Make Paraguay Global Crypto Hub

A pro-bitcoin congressman in Paraguay says he will present bitcoin legislation in congress next month with the aim to make Paraguay a hub for cryptocurrency investors worldwide. His efforts follow El Salvador passing a bill making bitcoin legal tender.

Paraguay Wants to Be Global Hub for Crypto Investors

Following El Salvador passing a bill making bitcoin legal tender, a congressman in Paraguay announced that he is working on bitcoin legislation that will be presented next month.

Deputy Carlos Antonio Rejala Helman of the Hagamos Party has called for Paraguay to take similar action to El Salvador regarding bitcoin. The congressman has also changed his Twitter profile picture to include laser eyes, meaning he eyes bitcoin going to $100K.

The deputy is preparing a bill that seeks to legalize the use of cryptocurrencies in Paraguay as a means of payment, La Nacion reported Friday. The bill will establish that any transaction within the national territory can be carried out with bitcoin and the state will be in charge of promoting and training the different sectors so that they can access this new form of electronic payments, the publication conveyed.

The congressman was quoted as saying:

Since we announced that we are working on a bill that legalizes in Paraguay the use of digital assets, better known as digital currencies, or its most popular version, bitcoin, as legal tender for any type of commercial transaction, various Paraguayan companies have already joined and took a step forward towards the new era of transactions, which makes us proud.

The lawmaker aims to present his bill in congress in July. Noting that the legislation is being prepared, he tweeted on June 17 with the hashtag bitcoin, “July we legislate.” He followed up with another tweet that says: “The presentation of the project is coming on July 14.”

The congressman revealed early this month that he is working with Bitcoin.com.py CEO Juanjo Benitez Rickmann and “the Paraguayan crypto community in order for Paraguay to become a hub for the crypto investors of the world and subsequently to be placed among the ones on the cutting edge of digital technology.”

Rickmann confirmed that he is working with the congressman “to introduce a project in congress so that Paraguay becomes a crypto-friendly country for worldwide crypto investors, taking advantage of the renewable and inexpensive energy provided by hydroelectrics #Itaipu #Yacyreta.”

The congressman tweeted on June 7:

As I was saying a long time ago, our country needs to advance hand in hand with the new generation. The moment has come, our moment.

“This week we start with an important project to innovate Paraguay in front of the world. The real one to the moon #BTC & #paypal,” his tweet further reads.

Meanwhile, cryptocurrency adoption is growing in Paraguay. A major entertainment group in the country, Grupo Cinco, announced last week that all of its 24 business units now accept cryptocurrencies bitcoin (BTC), ether (ETH), shiba inu (SHIB), and chiliz (CHZ). In addition, Universidad Comunera (UCOM), a private university in Asunción, Paraguay, now accepts bitcoin for payments.

Would you move to Paraguay if bitcoin is legal tender there? Let us know in the comments section below.

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Sichuan Mining Farms Begin to Shut Down — Seven-Day Stats Show Bitcoin’s Hashrate Plummeting

The hashrate of the Bitcoin network has been steadily falling since June 14 and after Sichuan miners were told to prepare operation shutdowns. Sichuan is the second-densest province in China where most miners are located, according to data stemming from the University of Cambridge. Bitcoin’s hashrate is now hovering just above 100 exahash per second (EH/s).

Bitcoin Hashrate Keeps Falling as Sichuan Farms Shut Down Operations

The hashrate of the Bitcoin network has been steadily falling. The cause of this seems to be the shutdown of several cryptocurrency farms in various provinces including Sichuan. According to the regional publication 8btc news, the Sichuan Development and Reform Commission and Energy Bureau announced it would close the operation of 26 suspected cryptocurrency mining and virtual currency projects on Sunday. Sichuan bitcoin miners leaving to mine elsewhere is a historical event during the leading crypto asset’s 12-year lifespan.

Bye 👋 pic.twitter.com/3JrM5qw0E7

— 8BTCnews (@btcinchina) June 19, 2021

Statements from mining insiders seem to point out the situation is dire for big mining operations. These are the most affected due to its inability to move its operations quickly. The hashrate numbers stemming from Chinese pools have also shrunk: Antpool, Btc.com, Binance Pool, Huobi Pool, and Btc.top have all experienced significant losses of associated hashrate. As a consequence, the Bitcoin hashrate is now hovering over 100 EH/s, almost 50% under its all-time high.

Bitcoin’s price is also stagnating as a result of fears over more forced mining shutdowns in the country. Bitcoin price is now between $33,000 and $34,000 at the time of writing. Other currencies are also feeling the heat, facing important losses.

Location Opportunties Arise

Sichuan is the fifth Chinese province that is shutting down cryptocurrency mining-related projects. Before Sichuan, two provinces also announced the closing of all cryptocurrency mining projects: Inner Mongolia, and Yunan. Other localized closures were announced in Xinjiang earlier last month when Zhundong based miners were ordered to turn off their machines.

Xinjiang is the province where most hashrate resides in all of China, at least according to statistics. A third of all of Bitcoin’s hashrate is located there according to the University of Cambridge. However, this crackdown in Bitcoin mining has spurted opportunities for mining elsewhere.

The mayor of Miami, Francis Suarez, is inviting miners to set up shop in Miami. Suarez stated that the conditions in Miami could be enticing to miners due to the abundance of cheap nuclear power available. Some mining operations are flocking to Kazakhstan and the Chinese ASIC manufacturer Canaan recently established an overseas after-sales center in the region.

Nayib Bukele, the president of El Salvador, is also inviting miners to the country. Bukele announced they would be building geothermal facilities to offer green cheap energy prices to miners just recently. The race to capture these ousted Bitcoin miners is just starting, and other countries might also make their move soon.

What do you think about Sichuan cracking down on bitcoin operations? Tell us in the comments section below.

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Bitcoin to Surpass $98K by November: Stock to Flow Model

The S2F model is currently suggesting that, in the worst-case scenario, BTC will surpass $98K by November, which is highly optimistic given recent market developments.

S2F’s Methodology & Accuracy

Comparing Bitcoin to precious metals like gold and silver, PlanB has used statistics to outline a defined relationship between the value and scarcity of a given asset. The basic hypothesis is that the easier it is to produce a good, the harder it is for it to retain value, assuming demand remains stable.

PlanB notes that demand will be driven by predatory governments imposing negative interest rates, billionaires hedging against inflation, and institutional investors. This information, pieced together with the power laws and fractals observation that BTC’s price often centers around, has created a model that has proven to be fairly solid for the past 2 years.

Turbulent Waters Ahead

The road to a 6-figure BTC price won’t be smooth sailing. Whilst his latest tweet indeed paints an optimistic outlook for Bitcoin by the end of the year, PlanB also notes that there will be possible ‘weakness’ in the next few months due to a ‘more fundamental reason’ that he will reveal later on.

Bitcoin is below $34K, triggered by Elon Musk’s energy FUD and China’s mining crack down.

There is also a more fundamental reason that we see weakness in June, and possibly July. My worst case scenario for 2021 (price/on-chain based): Aug>47K, Sep>43K, Oct>63K, Nov>98K, Dec>135K pic.twitter.com/hDONOVgxH1

— PlanB (@100trillionUSD) June 20, 2021

The recent death cross formation might be a factor in this predicted weakness.

Long-term targets for BTC remain intact, and according to him, still, look better than ever, so it will be imperative for Bitcoin holders to weather the storm and HODL.

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A deep dive into Polkadot’s tokenomics

Built using the Substrate blockchain framework, Polkadot is forming an ecosystem that both complements existing dApp infrastructure and provides new opportunities recognized by over 400 projects developing smart contracts, oracles, NFTs, DAOs, bridges, privacy, gaming, IoT, DEXs, and other DeFi solutions on the platform.

At the heart of this expanding Polkadot ecosystem is the DOT token, going beyond just payments to facilitate various functions across the network. So what is DOT, and how can it be put to use in this blockchain of blockchains?

What Is DOT?

DOT is the native token of the Polkadot network, the smallest unit of which is known as a Planck.

DOT is also an inflationary token, in contrast to the fixed supply monetary policy of protocols like Bitcoin. This is designed to incentivize the network by dynamically adjusting according to the participation rates of users, with a current supply of approximately 1 billion tokens.

Other than serving ancillary functions as a transferable token, there are a number of key uses for DOT across the ecosystem from governance to staking, parachain auctions, and crowd loans.

DOT for Governance

Polkadot enables DOT holders to vote and participate in the governance of the network, including determining fees, parachain connections, and upgrades, alongside a Council and Technical Committee.

Active DOT token holders can make an improvement proposal to the network by bonding their tokens (depositing a minimum amount to a proposal) for a certain period and vote on the proposals of others. Those that gather the highest amount of bonding support will be selected first in each voting cycle. Tokens are then unbonded once proposals have been brought to a vote.

The Council is an on-chain entity elected by the DOT token holders and responsible for determining which proposals should proceed. It manages the treasury from the collection of network fees and represents passive DOT holders in the ecosystem. The Technical Committee comprises the network’s development teams to then action approved proposals.

Any proposal has to go through a referendum so that all DOT holders, weighted by stake, make the final decision.

DOT for Nominated Proof-of-Stake Consensus

DOT is also used to facilitate the NPoS consensus mechanism for Polkadot, designed with the roles of validators and nominators to maximize chain security. Those interested in maintaining the network can stake DOT to run validator nodes, validating the central Relay Chain and connected parachains, and participating in consensus to receive block rewards in return. Validator rewards are paid out equally to all validators regardless of stake, encouraging a more fairly distributed validator set.

Other DOT holders are incentivized to participate as nominators, helping to secure the network by staking DOT and selecting up to 16 of the best performing validators in return for a share of the staking rewards. Staking rewards are then distributed pro-rata to all stakers after the validator payment has been deducted.

DOT staking also serves as a defensive mechanism and disincentive against malicious attacks. Validators are punished for misbehavior such as going offline or running modified software by getting their DOT slashed. Both the validators and their nominators will then lose a percentage of their bonded/staked DOT. Slashed DOT is added to the treasury and used as determined by the decentralized governance process.

DOT for Parachain Slots Auctions

Parachains are the specialized shards of Polkadot that allow transactions to be processed in parallel, most commonly taking the form of a blockchain by leasing one of the scarce dedicated connection slots to Polkadot’s Relay Chain.

For a parachain project to connect to the Polkadot network, it needs to participate in a permissionless on-chain candle auction with the highest bidder securing the lease for a certain period. Prospective parachains will bid using DOT, with the winner locking that DOT for the duration of the lease, which is returned once the lease expires and the parachain is removed.

DOT for Parachain Crowdloans

Polkadot also allows prospective parachains to source tokens for auction bids from the wider community of DOT holders in a decentralized form of crowdfunding that spreads risk, reduces costs, and allows for more competitive slot bids. That community then has skin in the game and can decentralize a parachain even more by airdropping their tokens to participants willing to put up their DOT to help them secure a slot.

Anyone can create a crowdloan campaign for a parachain slot, which can last over several auctions without having to start a new campaign if unsuccessful in securing a slot initially.

Each crowdloan campaign has an index and DOT holders can simply send a special transaction that references the index to participate. If a crowdloan campaign is successful in a slot auction bid, participants’ DOT will also be locked for the duration of the lease and returned when it expires.

The incentive for community DOT holders to do this is the ability to support their favorite projects and gain rewards from a parachain that may be higher than simply staking the tokens, while still retaining ultimate control over them.

Auctions will require a lot of DOT to be put up and taken off the market to support bids and winning slots, but with Kurura, the first parachain auction on Polkadot’s Kusama canary network, already raising $200 million in KSM, it suggests the demand for Polkadot parachain auctions will be there too.

This is where the game theory kicks in. After all, users could simply choose to stake to gain staking rewards with less risk than participating in crowdloans. So, the parachain project will need to provide enough of an incentive to convince users to lock DOT up for a leasing period instead.

However, the ecosystem is dynamic, so the actions of users affect other users, reinforcing a cycle of behavior. If participants are incentivized enough to unbond their DOT from staking to take part in crowdloans, less DOT will be locked in staking, meaning the APR for staking rises to compensate. This causes the demand for DOT to rise and the price of DOT goes up.

But that means compensation for participating in crowdloans also goes up, creating more demand for DOT and so on. Therefore, as the market constantly balances between crowdloan incentives and staking rewards, there’ll be a lot of competition for DOT among participants.

Powering the Blockchain of Blockchains

Polkadot places the interests of DOT holders at the center of its architecture, aimed at developing a protocol that helps to deliver a Web 3.0 where users rather than corporations are in control.

Connecting an interoperable multi-chain network, while maintaining an equitable governance model empowered by DOT, enables the decentralized scalability this rapidly expanding ecosystem needs to deliver the value proposition of the blockchain of blockchains.

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