Bitcoin’s (BTC) dip below $29,000 on June 22 rocked the markets a handful of analysts to call for a potential drop below $20,000.
Many traders on crypto Twitter were focused on the formation of a death cross on the Bitcoin chart as an omen for another potential drop in the price but analysts with a more contrarian point of view look at this chart pattern as a signal that it is time to buy the dip.
The ultimate thread on #BTC deathcross and cycle data analysis
1) Historical #deathcross until #goldencross time (in days) + largest price swing since deathcross begins:
2011: 180 D, -59%
2014: 90 D, +83%
2014: 390 D, -63%
2018: 360 D, -55%
2019: 105 D, -29%
2020: 50 D, +66% pic.twitter.com/8JmbtnFLGJ
— venturefoundΞr (@venturefounder) June 17, 2021
Three reasons why some traders still see a bull case for Bitcoin include the appearance of the “spring” stage of the Wyckoff accumulation model, steady buying by long-term holders and the formation of a bear trap at the golden ratio that is similar to moves seen during previous bull runs.
The Wyckoff model says spring has arrived
The Wyckoff accumulation model has been all the rage amongst cryptocurrency analysts over the past month as the price action for Bitcoin has been tracking the pattern relatively closely since the May 19 sell-off.
Wyckoff Accumulation Model – Spring Test
Seems like a possibility. We just got the lower low at $28.8K … If this model plays out we will now enter the final phase of the recovery back up. Lets see how it play out. #Bitcoin pic.twitter.com/stuWJRWWoL
— Kevin Svenson (@KevinSvenson_) June 22, 2021
As seen in the tweet above, Bitcoin’s plunge below $29,000 and the subsequent recovery above $32,000 has some analysts suggesting that the “spring test” seen in phase C of the Wyckoff pattern has been fulfilled. This would indicate that the bottom is in for the current correction and now begins the choppy climb higher.
If this turns out to be true, BTC would enter phase D, also known as the “markup phase” where a new uptrend is established and “pullbacks to new support offer buying opportunities” that are often seen as opportunities to buy the dip.
Related:Bitcoin drops below $36K as century-old financial model predicts big BTC crash
In phase D a breakout to new highs is expected as the cycle completes and prepares to potentially begin again once the move higher is exhausted.
Long term holders are still bullish
Another bullish sign cited by analysts is the steady accumulation by long-term holders.
If you’re scared, just remember what the #Bitcoin long term holders are doing right now. Don’t let the vola flush you out, think long term.https://t.co/koCh7pfGf9 pic.twitter.com/bAba8DUWo2
— Yann & Jan (@Negentropic_) June 22, 2021
The Bitcoin long-term net holder position shows that investors actually began to reaccumulate back in late April and they began to significantly increase their activity in May as the price fell into the $30,000 to $40,000. On-chain data shows that these investors have continued to buy into the most recent dip.
This activity suggests that more experienced crypto traders are familiar with Bitcoin’s market cycles and view the current range as a good level to open long positions when fear is high and the sentiment is low.
The biggest rewards go to those who take the risk to buy an asset amid plunging prices and sentiment, and these are the types of situations where the contrarian traders thriv.
A bear trap lurks at the golden ratio
The third scenario some analysts are focusing on suggests that the current price movements have set up a bear trap that echoes a move seen during the last cycle which involves a pullback to the 1.618 golden ratio extension level which will then be followed by a breakout to new highs.
From this perspective, the market is currently in the awareness phase of the four psychological stages of asset bubbles. After the bear trap occurs, Bitcoin will enter the mania phase where widespread media coverage attracts the attention of new market participants who then chase the price to ever-increasing heights “based on the delusion that the asset will keep going up, forever.”
Previous calls for the possibility of Bitcoin reaching a price of $200,000 by the third or fourth quarter of 2021 by veteran trader Peter Brandt, who was far from alone in predicting its value to surpass the $100,000 mark this year, would suggest that the long-expected blow-off top is yet to come.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
StakeHound has announced that it is suing crypto-custody firm Fireblocks for the loss of 38,178 ETH that has been rendered inaccessible due to negligence of the company. The press release said that they had been informed of the incident on the 2nd of May 2021. But all efforts to resolve the issue were not successful.
This has led to StakeHound to begin proceedings with the Isreali High Court on the 22nd of June.
The loss is attributed to a series of errors on the part of Fireblocks. Apparently, Fireblocks did not generate their private keys in a secure production environment. Furthermore, they did not include the private keys that would be required to decrypt their 2-key shares in the backup. And somehow, the firm had managed to lose both keys.
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Related Reading | Cardano Founder: Ethereum Will Overtake Bitcoin
This means that there is currently no way to access over 38,000 Ethereum in staked coins.
How The Loss Happened
According to the filing with the Tel Aviv court, there were no backups made for the recovery of the coins.
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It is still unclear how exactly a crypto-custody firm managed to lose both keys with access to the coins.
StakeHound however blames Fireblocks for the loss. The Isreali court was told that it was most likely a negligence issue on the part of an employee. Point out that no backups were made by Fireblocks to the wallet keys.
In the filing, StakeHound states; “This is a human error committed by an employee of the defendants. Who worked in an unsuitable work environment. Did not protect or backup the defendant’s private keys needed to open the relevant digital wallet. And for no apparent reason, the keys were deleted. Preventing the plaintiff’s digital assets from being accessed.”
But Fireblocks has denied these claims. CEO Michael Shaulov also pointed out that his company has never lost any keys before.
Ethereum trading below $2,000 | Source: ETHUSD on TradingView.com
The CEO of Fireblocks said that all keys with the company backup automatically. And the keys continuously back up every 10 minutes to three different locations.
Fireblocks said that the fault was not from them as they were not contractually obligated to store part of the keys.
The company said that the keys were generated and stored outside of the Fireblocks platform.
According to Fireblocks, they discovered the loss when they were performing a routine disaster drill in April of 2021. It was during this that they realized that the keys could not be decrypted. Since they had no obligation to backup the keys, they had advised the customer (StakeHound) to backup the keys with a third-party disaster recovery service.
Within a few hours, the Fireblocks team had concluded that there was no third-party backup made. All transactions that that ETH address was suspended.
What This Means For StakeHound Users
Stakers on StakeHound whose coins are held in the wallet with the lost keys risk losing their staked coins.
Staking on a pool in which you have no access to the private keys puts you at risk of losing your coins. And that is what is going to happen if the companies are not able to decrypt the wallets. Without access to the private keys, the coins basically do not belong to you.
This is where the famous “not your keys, not your coins” comes into play.
Staking is currently the new rave in the crypto space with ETH 2.0 coming. People are staking coins with pools without fully realizing the risks associated with doing so. Once you send your coins to a wallet that you do not control the private keys, those coins basically stop being yours.
So for thousands of StakeHound users, this most likely spells bad news for them if the coins cannot be transferred.
Related Reading | Ethereum to $20,000? Factors Behind The Bold Call
It’s the same thing as when an exchange gets hacked and your coins get stolen. There is no way for you to properly protect your coins because you do not control the private keys.
Fireblocks has said that they will continue investigating the situation.
Meanwhile, StakeHound said they will release a public statement in the coming weeks describing the next steps. But will perform a smart contract upgrade with immediate effect. This will allow for the removal of stETH from the liquidity pools. Also preventing it from being sent to the pools.
The company will continue to purchase and distribute token rewards according to its Terms and Conditions.
Featured image from Cryptopolitan, chart from TradingView.com
Despite the rough crypto markets, a popular analyst and trader says this bull cycle is not over yet – and one altcoin in particular is gearing up for a huge rally.
The pseudonymous trader known in the industry as Credible Crypto tells his 219,000 Twitter followers that while fear is widespread, he doesn’t believe that the market has officially entered bear territory.
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“When I talk about bear markets, I generally consider those periods of prolonged price depreciation across the board after a completed major impulse. Our major impulse hasn’t completed yet in this case…
I don’t consider every correction in the midst of a macro bull market as a ‘bear market.’”
According to the analyst, Bitcoin has yet to complete the final impulse wave of a bull market, which tells him that Bitcoin has one more massive move up left in its tank.
“I think our drop from $14,000 to $3,800 was our major wave two, and this drop from $64,000 to $28,000 is our major wave four. But yeah, the idea is right – this is a major correction, but expecting another major wave to the upside (wave five) once it’s complete.”
The trader relies on Elliott Wave theory, a technique that attempts to forecast price action by following crowd psychology manifesting in waves. According to the theory, a bull or a bear market has five major impulse waves, where waves two and four are often prolonged corrective periods.
Credible Crypto says the current Bitcoin correction is the fourth wave, suggesting that BTC is due for a final leg up. His target for the top is above $100,000, but below $300.000.
While the crypto trader is still bullish on Bitcoin, he says his idea will be invalidated if Bitcoin drops to $10,000.
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As for the altcoin market, the trader says he’s convinced the enterprise-grade distributed ledger project Hedera Hashgraph (HBAR) will soar a minimum of 1,000% this cycle, rising from its current price of about $0.18 to at least $2.00.
“I think it could absolutely hit $10+… Which is why my minimum* target is $2-$5. Could absolutely go much higher. But I would rather aim lower and be happy with a bonus than aim too high and be upset because of my expectations.”
The analyst says the project, which is owned and governed by a council of organizations including Google, IBM, and LG Electronics, is a safer bet than many in the crypto markets.
“…buying hype/meme coins is akin to gambling and is a lot more risky. You can play the Uniswap casino and make 100x more than buying any major crypto out there, but the risk is also 100x more.”
Looking at XRP, the trader says Ripple’s native token is currently trading around a strong support level.
“Yes alts are bleeding, but I’m more focused on BTC at the moment since it will decide the direction we are headed. Also, XRP is still on major HTF (high timeframe) support, so I’m not getting distracted by this lower TF PA (price action).”
With the market correction, Credible Crypto says that now may be a good time to scale into XRP as he believes the pullback is just another shakeout event.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
In October of 2008, amidst a global recession resulting in government bailouts of the banking system, a white paper was released under the pseudonym Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System. The paper summarized a confluence of technologies that, when combined, created the first successful form of digital money. These technologies were the product of 4 decades of attempts and failures to create digital money — below is a list of about 100 failed attempts:
Notable attempts to create digital money; those in bold will be discussed later in the essay (data sourced from Princeton).
PayPal is on that list — their original idea was cryptographic payments on hand-held devices. They were not able to execute on this idea, and survived by pivoting away from it. Many of the projects in the above table have a similar story of attempting to make something like bitcoin but coming up short. In hindsight we realize that their fundamental problem was that they tried to be a company in the first place. However, with each failure knowledge was gained, and the world came one step closer to digital money.
Many attempts to create digital money were spawned by the cypherpunk movement which originated in the 1990s along with the growth of the internet. Cypherpunks believed the internet would become a government surveillance apparatus unless defensive technologies were created.
May/Jun 1993 cover of Wired
Before governments implemented national firewalls, before social media websites were selling our personal data, before the NSA’s PRISM program,l and before big tech was systematically censoring political movements, the cypherpunks were at work anticipating this new world. They were able to anticipate it because of their uncommon intersection of various kinds of knowledge — including cryptography, computer science, Austrian economics and libertarianism.
Cryptography enables digital encryption, which removes the power of sovereign influence over the internet. However, an autonomous form of digital money is also required to have an economy free from government control. Digital money enables an encrypted online economy to freely transfer value and thus to freely organize in the digital world.
Here is a summary of the major events that ultimately lead to the creation of Bitcoin:
Public-key cryptography: Started in the 1970s and allowed for public keys to be used over insecure communication channels. Governments attempted to control this new technology by invoking the narrative that criminals will use it. They ultimately lost this battle and this technology is now part of the underlying security for internet communications. It is used in a wealth of modern technologies for encryption.
Digital signatures: Developed by David Chaum in 1989, who used it to found the company Digicash. This allowed an individual to produce a signature (like one on a check) that would prove they had a private key associated with a public key, without revealing the private key. This allowed people to anonymously verify that they are who they say they are. Chaum’s company, however, didn’t figure out a way to verify signatures without trusting a third party.
Digital scarcity: Since digital money is just bits on a computer, what was to stop someone from copying it? Money needs to be scarce to have fundamental value. In the real world, scarce things are few in number or are incredibly hard to find. Adam Back recreated this real-world problem using computational puzzles in his proposal for HashCash in 1997. Computers are good at math but there are some math problems that they can only solve by guessing. If you use big enough numbers, these problems can become extremely hard for computers to solve by guessing. By tying the creation of money with solutions to these hard math problems, digital money was made scarce. In Bitcoin this concept is called the proof-of-work consensus algorithm which requires computers, known as miners, to solve a computationally demanding puzzle to create new bitcoin. This makes bitcoin costly to create and thus scarce.
Blockchain: The concept of a blockchain can be traced back to a paper by Haber and Stornetta in 1991. The idea was for people to send different versions of a document to a server over time. The server would add a hash pointer to the prior document, a time stamp and a digital signature of the server to verify that it was in fact the server that signed off on this (i.e., verified it). This meant that the most recent version in the list had a link to its prior version, thus creating a chain between them all.
A hash pointer is a hash function that hashes the prior document in a temporal list of documents. These functions compress large databases into strings of text for storage, and a single change in any part of the database would be reflected in the string of text. If each document created has a hash pointer to its prior version included, then any changes to its lineage would be apparent through a change in the hash pointer of the current document. Adding a time stamp to each document creates a temporal list, and then using a digital signature allows you to prove which server signed off on the document update. All of these measures combined produced a verified chain of information where any tampering with its history would be immediately apparent.
To recap, digital signatures create a verifiable method of confirming an identity digitally without disclosing it. This digital signature, when incorporated in a blockchain data structure, creates a temporally linked, immutable record of data. These technologies could be used to counteract problems native to digital money. However, the supply of that digital money needed to be scarce, and this problem was solved using computationally intensive puzzles (via hash functions) to regulate supply.
However, none of these advancements had found a way to resolve disagreement between nodes on the recorded ledger. Bitcoin resolved these final challenges. This may not make complete sense yet, but it will, so if you are confused please keep reading.
Bitcoin utilized digital signatures, the blockchain data structure and computational puzzles to successfully create, for the first time in history, decentralized digital money.
Bitcoin
Satoshi says he or she started coding Bitcoin around May 2007 and registered www.bitcoin.org in May 2008. In October 2008 he released the Bitcoin white paper and code. The Bitcoin network was up and running by the start of 2009. The first transaction was sent to Hal Finney and a community of cypherpunks began encouraging the use of bitcoin for peer-to-peer transactions.
The foresight of the cypherpunks is astonishing, and what they did took courage. Much of their quest to invent internet money was inspired by economists rooted in the Austrian school.
In 1984, Nobel laureate economist Friedrich Hayek stated:
“I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can’t stop.”
In 1999 Nobel laureate economist Milton Friedman stated:
“I think that the Internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing, but that will soon be developed, is a reliable e-cash, a method whereby on the Internet you can transfer funds from A to B, without A knowing B or B knowing A.”
In 2008 this vision began its journey toward reality. Satoshi created decentralized digital money while standing on the shoulders of giants.
What Bitcoin Does
What bitcoin does is a separate question from why it is valuable. What makes bitcoin valuable is the network of people who have decided to use it. To understand why these people have decided to use it you need to understand how it works. This can be challenging, as Bitcoin’s technology is a confluence of technical concepts unfamiliar to most people.
The Bitcoin protocol allows you to send scarce money to anyone in the world. This ability sounds simple, but it is powerful. Call your bank right now and ask them to wire a significant amount of money to somebody in another country for you. Enjoy spending the next week trying to make that happen and subsequently getting tracked by the government. The ability to move large amounts of value within minutes over a digital network does not exist anywhere else.
You might ask, what about Paypal or Venmo or Cash App?
These are all trusted third parties, and trusting third parties has consequences.
Let’s append “trustless” to my last statement: the ability to move large amounts of value within minutes over a trustless digital network is incredibly powerful. It is trustless because you don’t have to trust a third party. This is possible because it is a decentralized network which has no third party intermediaries and thus nobody can control it; more on this later.
In April 2020, $1.1 billion in bitcoin was moved in a transaction for a cost of 68 cents, and it was done in a matter of minutes. This was done cheaply and efficiently without the transactors having to play by anybody’s rules, tell a third party who they are, trust anyone with their information or give anyone control over it. No other payment system in the world can move that amount of value, for that price, in that amount of time, without oversight from a third party.
To understand how this is possible we need to get technical. I will keep this high level — you can check out my book for a more in-depth explanation .
One-way Calculations
Bitcoin uses hash functions (also called hashes) in a variety of ways throughout the protocol. In the simplest sense it allows us to produce one-way calculations — a calculation where if A*B=C you can only find A or B if you know them (e.g., if you have A and C you cannot divide them to find B).
In Bitcoin, your public key is C, A is your private key, and B is known by everybody.
A = private key: a random number you select.
B = this variable is public and known by everyone and never changes (in bitcoin it is called secp256k1 which you can read more on at the link).
C = public key: also known as your bitcoin address (but there is a small difference between the two).
One-way calculations work because they are dependent upon an unsolvable mathematical problem called the discrete log problem. In short, if you use finite field math over a field of an unfathomably large prime number then dividing for the solution is practically impossible. Much of modern cryptography rests on this unsolvable problem. If it is solved, most of our cryptographic systems will crumble. Computers could theoretically become fast enough to guess solutions through iteration (e.g., through quantum computing). However, this is very unlikely. To give you some perspective on this, the prime number used by bitcoin is 2256~ or 1077 digits long. The estimated number of atoms in the universe is 1080. A trillion computers doing a trillion computations every trillionth of a second for a trillion years is still less than 1056 computations.1
Bitcoin Addresses And Digital Signatures
Hash functions and digital signatures are used to create the basis of Bitcoin. They enable the creation of Bitcoin addresses. An address is where people can send and receive bitcoin to and a digital signature allows you to publicly prove you know the private key that unlocks your address without revealing it. To do this, Bitcoin uses the Elliptic Curve Digital Signature Algorithm (ECDSA) and below is a description of how this all ties together.
At a high level here is how the ECDSA works:
A private key is generated as a random number. A good source of randomness is critical for security purposes.
The private key is multiplied by a standard point on the Bitcoin elliptic curve to create a public key that can be shared without revealing the private key.
The public key is then hashed to create a bitcoin address. If your private key used a poor source of randomness, your address could have a security issue.
The ECDSA algorithm creates a digital signature from your private key. Using this signature and your bitcoin address you can now send bitcoin to other people on the network.
When you send bitcoin, every node on the network that hears about your transaction verifies your signature with your address and checks that you have at least as much bitcoin as you are attempting to send. If verification of your signature fails, or if the amount of bitcoin you own is insufficient, your transaction is dropped from the network.
Transaction Mechanics
In Bitcoin every transaction has an input and output. When you send bitcoin the input is how much is at your address, and the output is the amount you are sending to another address.
Assume Kanye West sends one bitcoin to Mike Tyson:
Bitcoin exists at addresses, which are potential inputs and outputs for any transaction to come. Bitcoin participants maintain a list of all bitcoin in existence at each address called unspent transaction outputs (UTXOs). This list is what network participants reference to confirm that Kanye had the one bitcoin he sent to Mike. After the transaction, Kanye’s address decreased by one bitcoin and Mike’s address increased by one bitcoin. Mike now has one bitcoin to spend which can be verified from the updated list of UTXOs.
The Blockchain Data Structure
Bitcoin allows people to create transactions and if the transactions pass verification from other nodes they are aggregated into blocks. These blocks are linked together to form a blockchain. The blockchain is used as a ledger that cannot be changed.
Each block has a block header that includes information for easy verification of blocks between nodes.
All transactions are formed into a tree (merkle tree) and then combined and hashed until there is one hash left called a merkle root.
The previous block hash is a hash of the block header in the previous block.
The remaining categories are used in mining, to be discussed later.
This data structure links everything together which allows computers to quickly verify that the history of the Bitcoin ledger is consistent between one another.
So, all transactions are linked within blocks through a tree structure and the previous block hash links all blocks together forming a blockchain. Below you can see a block header that includes all the fields shown above as well as the size of the block and all the transactions in it.
Any change in a previous block will be instantaneously reflected in the current block because the previous block hash would change. This structure was implemented to quickly allow participants to understand that they are both working off the same history of bitcoin transactions. This is basically a method of version control that protects against bad actors. A full explanation of this requires an understanding of the Bitcoin network, covered in the next essay.
Lastly, it is important to understand the memory pool. There is a period between the creation of a transaction and its ultimate recording in the blockchain. During this period, a transaction is held by every participant who has heard of it in their respective memory pool. This is like a waiting room where it sits until a miner has solved the computational puzzle that publishes the transactions to the blockchain. The memory pool can vary for each network participant. The memory pool of the miner who ultimately found the next block is the one that will be inserted in the block chain; any transactions that were sent but not included by this miner will simply have to wait to be included in the next block.
We now understand the structure of the blockchain. This summary of the blockchain is incomplete without understanding the Bitcoin network. How does everyone hear about transactions? Does everyone agree on the same transactions? If not, how is consensus achieved among thousands of different participants when multiple versions of the blockchain are being referenced? The next essay will explain.
References
Mastering Bitcoin, Andreas Antonopolous, https://github.com/bitcoinbook/bitcoinbook
Eric Yakes came from the private equity industry and is a CFA charterholder turned bitcoin pleb and author ofThe 7thProperty: Bitcoin and the Monetary Revolution– a comprehensive/technical resource on money, banking and bitcoin. He is passionate about enabling the Bitcoin ecosystem through financial services — if you have similar interests send him a DM@ericyakes.
This is a guest post by Eric Yakes. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Dogecoin has taken a real beating the past few weeks.
It is now up 20% in the past 24 hours—making it the best-performing altcoin.
Is it making a comeback?
The price of joke-turned-serious cryptocurrency Dogecoin is on the up after weeks of its investors taking losses. Elon Musk’s favorite coin was today trading at $0.23—up over 20% in the past 24 hours, as per CoinGeckodata.
Dogecoin, which was invented in 2013 as a joke but now is the sixth biggest crypto with a market cap of over $30 billion, had taken a real beating. It had high hopes after aCoinbase listingearlier this month but, along with other altcoins, continued to shed value,dropping15% in one night this week.
But today, with the rest of the market, it seems to be making a comeback: it is the best performing altcoin in the past 24 hours—and by a large margin. Ethereum, for example, is today up only 3%, still trading under $2,000. Bitcoin, meanwhile, is up 2.5% and back above $33,000.
Nevertheless, Dogecoin is still well under theall-time highof $0.73 it briefly hit last month ahead of Tesla CEO Elon Musk’sSaturday Night Live appearance.
Musk, who frequently talks about cryptocurrency on Twitter, is partly responsible for the rise of the meme coin. The tech entrepreneur hasinfluencedthe coin’s wild price swings by pumping it on the social media platform with light-hearted tweets.
Dogecoin was created in 2013 by developers who wanted to make fun of Bitcoin. Based on a popular internet dogmeme, the coin was practically worthless over a year ago. It’s currently up nearly 10,000% in the past year.
Some have even made serious money from the project. One man, Glauber Contessoto, madeheadlineswhen he became a millionaire from investing all his savings in the asset. (That millionaire status has sincebeen lostas he refused to cash out.)
One of the developers behind Dogecoin, Ross Nicoll,saidin an exclusive interview withDecryptlast month that the development team is now working on making the coin a Bitcoin rival. They hope it will be quicker, cheaper and more environmentally friendly.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
Pantera Capital CEO Dan Morehead says he’s looking beyond Bitcoin for big returns in the crypto market.
Pantera Capital Management, founded in 2003, is a US-based investment firm focused solely on ventures, tokens, and projects in the blockchain space, managing $3.2 billion in assets.
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In a new interview with Bloomberg, Morehead explains that his company is looking deeper into the crypto market for investment opportunities, as Bitcoin is just one piece of the equation.
“A really important way to think about it is if you’re just long Bitcoin, it’s kinda like in the 90s just being long Yahoo. There were 30 other really important companies to invest in in the 90s, and the same here. There are a lot of different products to be invested in.
And a good example would be this year – Bitcoin is up 34%. Our hedge fund that trades the liquid tokens is up 240%. So there’s 180 percentage points of alpha in investing in things that aren’t Bitcoin.”
As for Pantera’s holdings besides Bitcoin, Morehead says they’re invested in Ethereum (ETH) as their second-largest holding, as well as Polkadot (DOT).
“So obviously, Ethereum is the second biggest. It’s very important. It allows programmable money. You can do smart contracts, all kinds of really interesting things on it. Then, as Mike said, there are newer versions of Ethereum. We’re big investors in Polkadot, which is kind of a newer version of Ethereum.”
Pantera is also invested in protocols built on top of those blockchains, such as Audius (AUDIO), a decentralized music streaming platform on the Ethereum blockchain. He uses Audius as an example to describe how blockchains are redefining our current business models.
“It’s a great way to show the disruption blockchain is bringing – taking these very expensive middlemen like Spotify or Soundcloud out of the middle and allowing consumers to interact directly with the producers of content, and both sides get a much better experience.”
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Tithi Luadthong/stockphoto-graph
After a brief recovery to $41,000 on June 14, Bitcoin (BTC) investors might have thought that the bear market was finally over. After all, it was the highest level since May 21 and the date that MicroStrategy (MSTR) announced a successful $500 million debt offering.
The funds are usually available in one or two business days, and the proceeds would be used to acquire even more Bitcoin for the business intelligence company’s balance sheet. MicroStrategy followed this fund-raise with another surprise filing to sell up to $1 billion of its stock to buy even more Bitcoin.
However, a 30% drop took place over the following week, causing Bitcoin to reach its lowest level since January 22. The $28,800 bottom might have lasted less than fifteen minutes, but the bear sentiment was already established.
The sell-off was largely attributed to Chinese miners’ capitulating after they were forced to abruptly shut down their operations. Furthermore, on June 21, an official People’s Bank of China (PBoC) reiterated that all banks and payment institutions “must not provide account opening or registration for [virtual currency]-related activities.”
The open question is whether derivatives played a vital part in the correction or at least displayed stress signs that may indicate an even more dangerous second leg down?
The futures premium showed no signs of backwardation
The futures premium (or basis) measures the gap of longer-term futures contracts to the current spot (regular markets) levels. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is also known as backwardation and indicates a bearish sentiment.
Huobi 3-month Bitcoin futures basis. Source: Skew
Futures should trade at a 5% to 15% annualized premium in healthy markets, otherwise known as contango. On the worst moment on June 22, this basis bottomed at 2.5%, which is considered bearish but not enough to trigger any red flag.
There was zero panic from top traders
The top traders’ long-to-short indicator is calculated using clients’ consolidated positions, including spot, margin, perpetual and futures contracts. This metric gathers a broader view of professional traders’ effective net position.
Derivatives exchanges’ top traders long-to-short ratio. Source: Bybt
Despite the discrepancies between crypto exchange methodologies, analyzing changes over time provides valuable insights. Top traders at Binance, for example, increased their long positions relative to shorts on June 22.
At Huobi, there has been some increase in their net short exposure, but nothing out of the ordinary as the indicator reached the same level two days before.
Lastly, OKEx top traders reduced their longs on June 20 and have since kept a 0.80 level favoring shorts by 20%.
Long futures liquidations were less than $600 million
Those unaware of the price swing would never have guessed that Bitcoin traded below $29,000 based on futures liquidations data.
Aggregate futures liquidations (longs in red). Source. Coinalyze.net
Less than $600 million in longs were liquidated on June 22, lower than the previous day’s $750 million figure. Had longs been overleveraged, a 20% drop in less than two days would have triggered stop orders of a much greater size.
Data show no current signs of stress from longs or a potential negative swing caused by derivatives markets.
The views and opinions expressed here are solely those of theauthorand do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
This article is part of our ongoing research work and series of publications on the Lightning ecosystem. The previous articles provided an overview of the Lightning Network project ecosystem and an analysis of different Lightning implementations — their key characteristics, usage, development statistics and features. In this article, we attempt to take a closer look at Bitcoin and the Lightning Network applications in gaming.
Summary
Interactions in games largely influence enjoyment and engagement of gamers and subsequently monetization of a game for game developers and publishers.
Micropayments increase interactions within the gaming ecosystem and have already been used successfully to unlock new experiences for gamers and value for the ecosystem.
As Bitcoin adoption continues, bitcoin-based micropayments can break up closed gaming economies and enable disintermediated, bidirectional value flows between game operators, gamers, the audience and advertisers.
Bitcoin can create more liquidity and interoperability of payments between gaming platforms, while also providing the global infrastructure to securely transfer identities (SSI) of persons and assets across trust domains.
Introduction: Seizing The Opportunity
Historically dominated by large incumbents, the gaming industry has been evolving continuously in recent years driven by technological innovation and changing consumer needs. The rapid growth has led the global gaming industry to surpass $150 billion in size in 2019, a ~10% expansion per year.1 For the first time, the gaming market grew to be larger than music and video combined, becoming the most lucrative form of leisurely entertainment.2
Graphic: Gaming market size and growth, per platform.3
Image source
Much of today’s gaming ecosystem lives on and thrives off of massive multiplayer platforms. Many of those subsequently designed and developed internal markets and economies, with proprietary currencies that players use to buy and sell virtual goods and services. These platforms simultaneously represent places for entertainment, content creation and social interaction.
The Evolution Of Business Models In Gaming
Looking at the history of this industry, we not only experienced a shift in access devices from PC and console to mobile but also in business models. The gaming ecosystems developed from a single-player gaming model to gaming economies with multiplayer platforms as their heartbeat.
In 2020, Activision Blizzard generated $5.74 billion of revenue through microtransactions and downloadable content, subscriptions, licensing royalties from products and franchises among other revenues. Gaming product sales only accounted for a third of the company revenue streams — a 50% decrease from 2014 when product sales contributed almost two-thirds.4
About 85% of the revenue of these gaming economies is caused by spending inside these platforms in the form of repeated purchases of virtual goods, known as in-game transactions. Ranging between $5–12,5 they replaced one-time product sales as the main revenue stream. Retail and digital sales, downloadable content and advertising make up the remaining revenue streams.6
Graphic: The evolution of business models in the gaming industry (own graphic); *one time product sales of disc based video games.7
The chart depicts the increasing importance of in-game transactions for new business models in the gaming industry. Together with other technologies such as the internet that opened up new distribution channels, advancements in computing for more sophisticated gameplays, in-game transactions managed to create enormous value that is reflected in the market size of the gaming industry today.
However, many games are designed to have internal markets with proprietary currencies to fuel their economies. Gamers are required to use game-specific transaction mechanisms to buy and sell virtual goods or services. Limited monetary interaction between stakeholders results in closed systems and prevents further value generation. Once a player exits the ecosystem, all value accrued by him is lost.
As research has shown, interactions within games are of paramount importance, influencing both the enjoyment and engagement that a gamer has.8 Interactions are, therefore, in the keen interest of the game developer when optimizing for gamer engagement.
Value flows, as a very direct form of the social exchange theory,9 are a driving force behind interactions and, thus, the guiding theme of this article.
After pointing out how value flows move and where value remains locked in gaming today, this article presents ways to unlock it based on short case studies.
From Uni- To Bidirectional Value Flows In Games
Graphic: Simplified illustration of traditional value streams today (own graphic).
Gaming today is mainly characterized by one-way (i.e., unidirectional) value flows from different stakeholders directly to the game as displayed in this simplified graphic.
Apart from the value of the game itself, we assume most value is generated by the gamer through in-game activity originating in time and monetary contributions.
Therefore, the article focuses on describing value flows from the gamer perspective and reveals four areas where value is accumulated today:
digital assets after in-game purchases (e.g., skins) as a consequence of monetary contributions
game-specific points or currencies for successful gaming as a consequence of time contributions
attention to advertisement from brands as a consequence of time contributions
gaming skills to generate entertaining content for the audience as a consequence of time contributions
Following the trend of decreasing transaction sizes in games, Bitcoin and its second-layer payment network provides us the tools to unlock the described accumulated values for gamers by enabling two-way (i.e., bidirectional) value flows between participants of the gaming ecosystem.
Graphic: Value streams with Lightning-based, peer-to-peer bitcoin micropayments (own graphic).
The Lightning Network is a decentralized, privacy-preserving system for instant, high-volume micropayments at low transaction fees. It builds on bitcoin’s properties of fixed supply,10 peer-to-peer focus,11 network security,12 liquidity13 and accessibility.14 This list of characteristics helps to understand how bitcoin provides unique benefits to its users over fiat or other cryptocurrencies and is especially suited for a global, multinational gaming ecosystem.
The following sections show how bitcoin-based micropayments enable social interaction via novel bidirectional value flows among existing participants of the gaming ecosystem. Gamers, the game developer/publisher, the advertiser and the audience can all transact monetary value peer-to-peer without relying on an intermediary among each other as displayed in the graphic.
Micropayments Between Gamers And Game Operators
This section focuses on bidirectional money flows between the game operator and the gamer and the benefits for both sides. The play-to-earn concept that rewards gamers for putting time and money into a game is not new to the gaming industry but is an established business model in gambling and esports.
Graphic: Global esports revenues, esports prize money and esports audience development from 2010 to 2021 with a revenue and audience forecast until 2024 (own graphic).15
Over the last 10 years, the esports industry is on an impressive growth trajectory that outperformed the global gaming market. The esports market size measured in industry revenues increased by 30% yearly reaching $1.084 million in 2021 and is expected to grow to $1.617 million by 2024. Prize money that is paid out to gamers and audience numbers show a similar upward trend from 2010 to 2020. The COVID-19 pandemic in 2020 caused a slight decrease of market size and total prize money but audience engagement, however, kept rising showing the resilience of the gaming industry compared to many others.
An increase in prize money has helped accelerate the professionalization of the industry.16 Big prize winnings draw in other gamers and large fan followings creating a positive feedback loop and can be considered a valuable tool to bootstrap new markets such as esports.
Numbers from India show that real money games (RMG)17 constitute 55–60% of revenue of the total gaming market in 2019. Only 20% of all online gamers are registered users in real money games indicating a stronger monetization per user for RMG. As RMG operators account for around 40% of all online gaming developing companies, these operators tend to generate more revenue compared to their non-RMG counterparts.18
RMG companies often operate on a service fee model, retaining a portion of the entry fee (typically 5–15%) while distributing the rest as winnings.19 For instance, the ability to stake money generates this “skin in the game” feeling for gamers to incrementally increase engagement.
Random drops and rewards are another game design enabled by real money flows to build a reinforcing stimulus in the gameplay. THNDR Games, a Lightning games developer company, uses lotteries to motivate gamers. To enter the draw, gamers collect THNDR tickets. Each ticket counts as an entry to a draw in which bitcoin prizes are distributed. Winners can cash out instantly to bitcoin wallet apps with Lightning Network support.
This anticipation for future rewards as gamers are never sure when the next essential item will be dropped, adds on to their enjoyment and tempts gamers to stay engaged.20
To sum up, bidirectional value flows between the game operator and the gamer are an established concept in the gaming industry. The example of esports and the case of the Indian market show how real money–based games can unlock additional value for game operators. Monetary payouts professionalize ecosystems, lead to further monetization strategies, and particularly enable new forms of game design with higher levels of engagement.
But there are more than economic benefits for established businesses of using bitcoin and Lightning in games. More granular payments in a peer-to-peer manner can enable a fairer system between creators and users by distributing revenues generated across the value chain proportionally. For instance, gamers pay for accessing special areas in maps. The proceedings are shared directly among all contributors such as content creators, game developers and operators. Hence, bitcoin-based bidirectional value flows in gaming even have the potential to help gamers and creators that cannot afford high upfront investments or simply have no access to the financial system such as hundreds of millions of people of the unbanked population in developing countries21 to participate in the world wide gaming economy. Thus, gaming use cases can serve as an additional on-ramp to bitcoin and existing ecosystems within the gaming industry can create their own circular economy based on bitcoin.
Micropayments Between Gamers
This section describes the case of embracing secondary marketplaces by game operators as a way to realize monetary value exchange between gamers using bitcoin.
Selling virtual goods through in-game purchases has become the dominant business model in the gaming industry.22
On the primary market, the game operator engages in sales of new virtual goods to users for real money and, thus, acts as a monopolist with profit-maximizing price settings.
Once a virtual good has been sold in the primary market, any further trading done with it is considered to be secondary market trading. In virtual worlds, secondary markets users buy and sell virtual assets between each other, often exchanging them for real money or in-game currencies. Prices are set by users and are determined by supply and demand. Secondary markets arise for the same reasons as their real life counterparts: There are certain consumers who value the used goods more than their current owner. Healthy primary markets tend to give rise to even bigger secondary ones.
The primary car market, for instance, accounts for a fairly small percentage of overall car sales compared to the secondary market. The same phenomenon applies to real estate and many other industries. The virtual item economy is just another instance in which a strong primary market can lead to a flourishing secondary market.
Dedicated marketplaces for virtual gaming items emerged, such as G2A, Loot.Farm or DMarket. But also websites such as Discord, Reddit, eBay and various online chat forums serve as trading platforms. Juniper research estimated the total value of in-game items listed on secondary markets in 2019 to be $16.7 billion.23 As these markets for virtual goods keep growing, business model–related questions gain relevance. Why should profit-maximizing virtual world operators embrace these secondary markets instead of eliminating them?
In fact, research shows that a retailer-operated used goods market actually leads to higher manufacturer profits for two reasons.24 First, the sale of used goods serves as a price discrimination mechanism, thereby expanding the total sales and increasing profits. Second, a retailer-operated secondary market generates higher valuations for new goods due to consumers’ ability to re-sell goods they no longer value.
Introducing new versions of goods is another strategy the monopolist can utilize to protect primary market profits against the substitution effect. Players will spend more time in the game, either playing to get new items or to collect enough in-game currency to buy an item — or simply buying it with real money — which leads to more engagement for the game.
Additionally, market operators can engage in new transaction models such as leasing its products instead of selling them or buying them back. The latter one would give the market operator more control over the available supply and the possibility to earn on the price difference.25
These measures show how and why secondary markets have a positive effect on primary market profits provided that the virtual world operator takes measures to mitigate the substitution effect caused by used goods.
Satoshi’s Games, another Lightning Network gaming company, already provides the necessary tool set for developers, called Elixir, to add bitcoin and a marketplace for in-game assets to games. Based on the Liquid sidechain, the Lightning Network, IPFS and L-SATs, Elixir ports the concept of non-fungible tokens (NFTs)26 to bitcoin and makes them tradable in a decentralized manner.
In short, this section describes the case of embracing secondary marketplaces based on real money. Examples show how bidirectional value flows in secondary marketplaces between gamers can unlock additional value for operators and gamers. Due to the peer-to-peer network, the high accessibility and liquidity with instant, privacy-preserving payments at low cost, bitcoin transactions over the Lightning Network facilitate marketplaces by reducing transaction costs for gamers and operators alike. A market that natively runs on Lightning Network technology, if this becomes possible, could potentially provide access to even more liquidity and a seamless user experience.
Micropayments Between Gamers And The Audience
This section looks at interactions between the gamer and the audience through the format of livestreaming coupled with bitcoin-based micropayments.
Livestreaming is the act of simultaneously recording and broadcasting content (including gaming) to a live audience through social platforms. Content creators, or streamers, record themselves live while engaging in video communication with their viewers on platforms like Twitch or YouTube.
Accelerated by the pandemic, the worldwide games livestreaming audience will hit 728.8 million in 2021. The number of people watching livestreams of games will increase 10% from 2020 and continue to grow to 920.3 million by 2024.27
While most content on livestreaming platforms is free, viewers can choose to financially support the streamers through various avenues, including monetary donations or via a monthly subscription to the streamer’s channel. However, significant parts of the value goes directly to the streaming platform passing by the gamer. Roughly 50% of the subscription revenue and around 25% of the tips from followers remain with Twitch.28 Spectators and gamers have to adhere to the rules of the platform limiting the scope of interactions on both sides.
That’s why ZEBEDEE was founded, according to André Neves, CTO of ZEBEDEE: “Value on the internet is no longer bound by a game, platform, or universe. Now internet money is accepted across any reality. All worlds speak Bitcoin.”29 ZEBEDEE provides a suite of products ranging from a mobile wallet, the product Infuse and a developer dashboard to introduce bitcoin into existing games. To address the mentioned challenge and break “the fourth wall,” they built the Gamertag representing the user’s name within the ZEBEDEE ecosystem. It comes with a static QR code for collecting donations or payments anywhere online. Now, video streamers can receive tips in the form of real money and messages from spectators without third-party processor fees and any intermediary.
The benefit for the audience is obvious. Traditional audiences are uniform, static and often passive, but multiplayer games with p2p micropayments give designers opportunities to subvert traditional roles by allowing audiences to impact gameplay both individually and as a collective in a seamless manner. For example, in a racing game, when the streamer is too far ahead, audience participants can impose penalties on him to make the race closer. When he falls behind as a result of these penalties, audience participants can respond by sending him gifts to help him catch up. In other words, spectators play a role usually taken by game systems: balancing player performance against that of opponents.
As a result, this form of gaming, coupled with peer-to-peer micropayments, can create a mutually aware group of audience members and gamers.
On the other side, the success of streamers in large part depends on their ability to entertain the audience through direct participation.30 Real money–based micropayments broaden the set of interactions as we have seen. But there is another part to it: If streamers expect to play a game with thousands of viewers on a consistent basis in a way that generates revenue through donations, sponsorships or increased ad viewership, they can justify spending a much larger amount of money on the game than most individual users would normally spend.
Consequently, game developers and publishers benefit by an increased engagement of gamers and spectators, but also by the incremental monetary value flow to the gamer. For example, a feature that lets spectators pay to trigger an in-game event such as releasing an enemy for players to combat. Thus, interactions based on micropayments increase the scope of monetizing the game.
Furthermore, the development of new, richer modes of communication such as a messaging layer integrated with Lightning, could substantially boost the development of feelings of social inclusion and commitment to the group in the gameplay. It might even make sense to build games for a specific segment of gamers and spectators that benefit from the ability to collaborate to achieve a goal.
These examples show how real money–based micropayments can bring innovation in game development and game distribution for developers, publishers and gamers alike. Audience participation games with peer-to-peer micropayments let spectators interact in a way that has a meaningful impact on the game and blur the line between player and spectator.
Micropayments Between Gamers And Advertisers
The final subsection introduces potential ways and benefits of bitcoin-based micropayments for advertisers.
Revenue from in-game ads paid by advertisers amounted to $42.3 billion in 2019 and is expected to continue its remarkable growth to $56 billion in 2024.31
While some game publishers already leverage many ad formats available to monetize their users, other publishers are just starting to realize the potential of ads. That is because the type of ad that works for a game depends heavily on the genre of the game. Understanding the user journey in the game is the best place to start in order to know what ad formats to integrate and where.
The common misconception is that in-game ads hurt game metrics such as retention or revenue from in-app purchases. However, if integrated correctly, in-game ads actually add incremental value and do not interfere with gameplay retention as Bitcoin Bounty Hunt shows.
Donnerlab the developer behind Bitcoin Bounty Hunt operates a new interactive concept of in-game advertising. Advertisers create images with a credit balance that is measured in satoshis. These images are selected by an algorithm and displayed on in-game advertising panels. Once an image is selected, credits are deducted and made available in the game in the form of Satoshi Cubes. Each time a player collects one of these Satoshi Cubes with an image of the advertiser the bitcoin balance increases.
To participate, sponsors can create their own images or help others to be more visible in the game by increasing their credit. Thus, Bitcoin Bounty Hunt creates a bidirectional value flow directly between gamers and advertisers and helps to build a positive relationship between these two.
ZEBEDEE’s survival game mode for CS:GO is another example of how ads can be linked to payouts. Apart from ad banners distributed on maps inside the game, gamers earn sponsor-branded coins that are generated in the maps as users are shot. These custom coins are paid out in real satoshis. However, ZEBEDEE’s survival mode of CS:GO introduces another innovation. The amount of satoshis represents a gamer’s lives within the game. Players have to stake their own or earn real money to continue playing by actively collecting the bounty where it was dropped but potentially exposing themselves to other players. This risk combined with real money adds a new incentive structure to the gameplay of first person shooters (FPS).
An open approach for in-game ads is especially important when you consider that only 3.8% of mobile game players make in-app purchases.32 Advertisers have the chance to compensate players for their attention with direct payouts of real money and instantly deliver value back to the gamer. A rise in interactivity can affect gamers to be more involved in the gameplay and result in higher brand responses, that is, high brand recall and favorable brand attitude.33
Ultimately, advertisement revenues of games correlate with time spent in games by players and the possibility to display ads. Developers, therefore, will optimize for player retention and enjoyment. With bitcoin-based micropayments developers now have a new tool to support engaging interactions and unlock additional value for the gamer and the advertiser.
Outlook
This article presented different stakeholders of the virtual gaming economy: gamers, game operators, the audience and the advertiser.
Today, the value of the virtual economy manifests especially across massive multiplayer platforms. Fifteen years into the mass adoption of virtual gaming, the virtual economy is still largely based on primary marketplaces — closed worlds, where data and content are centrally owned, stored and managed. Yet a number of pioneers, some of which were presented in this article, are building for the virtual economy what computer scientists built for the early internet — new infrastructure that links disparate platforms with decentralisation at its core.
After pointing out the traditional gaming model with one-way payment flows, we have seen examples how bidirectional value flows can unlock value in today’s closed ecosystems. Using bitcoin-based micropayments over the Lightning Network between gamers, the audience, the advertiser and the game operator become part of an open virtual economy or what can be the future digital “Metaverse.”
While decoupling payments from platforms through a digital peer-to-peer currency such as bitcoin is one step toward this vision of a metaverse, a self-sovereign digital identity that gamers can use across all experiences is another component with great potential and yet remains unsolved.
Today, there are a few dominant account systems, but none have exhaustive coverage of the web and they often stack atop one another with only limited data sharing. As a result, identity silos emerged to secure trust within a limited federation of organizations or by centralized platform providers.34 Lack of privacy, limited data control and bad service experiences are the consequences for users.
What if developers cannot only use bitcoin to enable interoperability of payments on gaming platforms, but also to make identities of persons and assets securely transferable across trust domains?
The good news is, the necessary tools already exist in different forms:
The LSAT Protocol Standard can serve as both authentication and payment mechanism. It allows the unbundling of the authentication and payment logic from the application logic. Game operators can sell their products or services through micropayments, without the necessity of providing a login, email or password to users.
lnurl-auth is another authentication protocol that ensures privacy and makes passwords obsolete. Bitcoin and Lightning wallets are already keeping track of one seed that can be used to generate keys to identify the user, which facilitates the bootstrapping of the protocol. The service can request additional details from the user and associate it with an internal id or username.
ION is a public, permissionless, Decentralized Identifier (DID) network that implements the blockchain-agnostic Sidetree protocol on top of Bitcoin. Similar to Lightning, ION is a Layer 2 overlay to support DIDs and a Decentralized Public Key Infrastructure (DPKI) at scale. Combined with verifiable credentials, the effects are powerful. Users obtain full control over their identity and can share it with any game. Operators can instantly verify user credentials without having to trust the holder.
While secure identities for a person is one part, transferable identity and with it ownership of digital assets is the other one. Normally, a gamer’s assets, such as clothing and weapon skins, are not only stuck in the same game but also stuck in a single account after acquiring them. Non-fungible tokens, as a solution to this problem, are booming.
The Liquid Network, a sidechain of Bitcoin, allows the issuance of digital assets today. Amounts and asset types are not visible to third parties (i.e., confidential) and are settled with one-minute block time.
RGB, another initiative, is a smart contract system developed on top of the Lightning Network to create different forms of fungible or non-fungible assets. RGB smart contracts are designed to operate with a client-side validation paradigm, that is, all the data is kept outside of the bitcoin transaction. This allows the system to operate on top of the Lightning Network without any changes and gives a foundation for a high level of protocol scalability and privacy.
As these tools mature and gain traction among game developers, a bitcoin-powered open virtual economy can become a reality.
Editorial Note:
While writing this article, we conducted interviews with several industry experts. We would like to thank Kenrick Drijkoningen, Sami Lababidi, Thomas Klocanas, Martijn Bolt and many others who took the time to submit thoughtful contributions.
If you have further interest in the subject matter and would like to keep updated: Fulgur Ventures’ Lightning resources web page aggregates statistical data on the Lightning Network and visualizes the activity of the Lightning ecosystem since early 2019.
Check it out here.
About the authors:
Moritz Kaminski is a business development specialist with years of experience in tech ventures and early stage funding. Oleg Mikhalsky is a partner at Fulgur Ventures focused on the Lightning Network and Bitcoin ecosystem.
2. White Star Capital. (2020). “Mapping The Gaming and Esports VC Landscape.” https://medium.com/venture-beyond/mapping-the-gaming-and-esports-vc-landscape-eca062502dca
6. L’Atelier. (2021). “The Virtual Economy.” https://atelier.net/virtual-economy/.
7. Orland, Kyle. (2020). “The Return of the $70 Video Game Has Been a Long Time Coming.” Ars Technica, https://arstechnica.com/gaming/2020/07/the-return-of-the-70-video-game-has-been-a-long-time-coming/.
8. Chen, V., Duh, H., Phuah, P., Lam, D. (2006). “Enjoyment or Engagement? Role of Social Interaction in Playing Massively Multiplayer Online Role-playing Games (MMORPGS).” Lecture Notes in Computer Science 4161: 262–267. https://doi.org/10.1007/11872320_31.
9.Emerson, R., and Cook, K. (1976). “Annual Review of Sociology.” The Social Exchange Theory 2: 335–362, http://www.communicationcache.com/uploads/1/0/8/8/10887248/social_exchange_theory_-_1976.pdf. Accessed April 29, 2021.
10. “Controlled Supply.” Wikipedia, https://en.bitcoin.it/wiki/Controlled_supply. Accessed on April 3, 2021.
11.Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. https://bitcoin.org/bitcoin.pdf.
12. Braiins. (2021). “How Much Would It Cost to 51% Attack Bitcoin?” https://braiins.com/blog/how-much-would-it-cost-to-51-attack-bitcoin.
13. Vermaak, Werner. (2021). “Liquid vs. Illiquid Crypto Markets and Bitcoin.” CoinMarketCap. https://coinmarketcap.com/alexandria/article/liquid-vs-illiquid-crypto-markets-and-bitcoin.
16. PWC. (2020). “Investors: High Demand in Esports Attracts Big Brands from Various Industries.” https://www.pwc.de/en/technology-media-and-telecommunication/digital-trend-outlook-esport-2020/investors.html.
17. Favorite RMG genres in India are card games (Rummy, Poker) and fantasy sports, according to Srivastava, M. (2019). “India’s Gaming Industry Is All Set to Catch Up.” ThePassage! https://thepassage.cc/article/1449.
18.Srivastava, M. (2019). “India’s Gaming Industry Is All Set to Catch Up.” ThePassage! https://thepassage.cc/article/1449.
19. Banerjee, S. (2018). “Gaming Is Big Business: The Next Few Years Will See A Kinetic Thrust as an Explosion Takes Place in the Industry.” Gamer’s World. http://mydigitalfc.com/fc-weekend/gamer%E2%80%99s-world.
20. Chen, V., Duh, H., Phuah, P., Lam, D. (2006). “Enjoyment or Engagement? Role of Social Interaction in Playing Massively Multiplayer Online Role-playing Games (MMORPGS).” Lecture Notes in Computer Science 4161: 262–267. https://doi.org/10.1007/11872320_31.
21.Fentura, L. (2021). “World’s Most Unbanked Countries 2021.” Global Finance Magazine. https://www.gfmag.com/global-data/economic-data/worlds-most-unbanked-countries.
22. L’Atelier. (2021). “The Virtual Economy.” https://atelier.net/virtual-economy/.
23. Harbour, R. (2020). “Part 2: In-Game Items Are a $50 Billion Market, Why Am I Missing Out?” https://medium.com/c%C3%B8ntact-systems/part-2-in-game-items-are-a-50-billion-market-why-am-i-missing-out-2e9159adbd76.
24. Shulman, J., and Coughlan, A. (2007). “Used Goods, Not Used Bads: Profitable Secondary Market Sales for a Durable Goods Channel.” Quant Market Econ 5: 191–210. https://doi.org/10.1007/s11129-006-9017-x.
25. Joas, E. (2016). “Are Secondary Markets Beneficial for a Virtual World Operator?” Aalto University School of Business.https://aaltodoc.aalto.fi/bitstream/handle/123456789/26868/hse_ethesis_14773.pdf.
26. A non-fungible token (NFT) is a unit of data stored on a digital ledger that certifies a digital asset to be unique and therefore not interchangeable.
28. Influencer MarketingHub. (2021). “How to Make Money on Twitch.” https://influencermarketinghub.com/make-money-on-twitch/.
29. Neves, A. (2020). “Announcing zbd.gg.” ZEBEDEE Engineering. https://medium.com/zebedee-engineering/announcing-zbd-gg-bc0c682d9bda.
30. Seering, J., Savage, S., and Eagle, M. (2017). “Audience Participation Games: Blurring the Line Between Player and Spectator.” Proceedings of the 2017 Conference on Designing Interactive Systems. https://doi.org/10.1145/3064663.3064732.
32. AppsFlyer. (2018). “Lifetime Value: The Cornerstone of App Marketing (2018 Benchmarks).” https://www.appsflyer.com/gatedpdfs/pdfs/Lifetime_Value_The_Cornerstone_of_App_Marketing.pdf.
33. Vashisht, D., Mohan, S., and Chauhan, A. (2020). In-game Advertising: The Role of Newness Congruence and Interactivity. Spanish Journal of Marketing – ESIC 24(2): 213–230. https://doi.org/10.1108/SJME-02-2019-0012.
34. Hügli, P., and Kaminski, M. (2020). “Do We Really Need (Or Want) the State to Provide Us With Digital Identification?” libertarianism.org. https://www.libertarianism.org/articles/self-sovereign-identity-blockchain-age.
This is a guest post by Moritz Kaminski and Oleg Mikhalsky. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
New Bitcoin ETFs have kicked off trading in Brazil and Dubai.
They are the first Bitcoin ETFs in their respective regions.
In Brazil, a multi-crypto ETF kicked off in April.
Brazil and Dubai both launched their first Bitcoin exchange-traded funds (ETFs) today.
In Brazil, QR Capital’s Bitcoin ETF QBTC11—approvedby regulators in March—started trading on the Brazilian Stock Exchange (B3).
While in the Middle East, Canadian asset management firm 3iQ’s Bitcoin ETF, started trading on the Nasdaq Dubai. It is the first crypto ETF in the region and wasgiventhe green light in April.
In Brazil, a crypto ETF that gives exposure to a number of assets—including Bitcoin—launchedin April. QBTC11 is the first in the region that solely deals in Bitcoin.
Previously, crypto ETFs only operated in Canada, where there are several. There are along listof companies hoping to get crypto ETFs approved in the U.S.
An ETF is an investment tool that lets people buy shares that represent an asset. This can be anything from real estate, foreign currencies, or Bitcoin.
Crypto ETFs are popular because investors simply buy shares that track the price of the asset and don’t have to worry about owning a cryptocurrency wallet and securely storing it.
Brazil’s QBTC11 was authorized by Comissão de Valores Mobiliários (CVM, Brazil’s Securities and Exchange Commission) and the Brazilian Stock Exchange (B3).
🔴BREAKING: Com alta superior a 7%, o QBTC11, o primeiro ETF 100% Bitcoin da América Latina, iniciou agora há pouco negociações na @B3_Oficial.
— QR Capital (@qrcapital) June 23, 2021
Dubai’s Bitcoin ETF is headed up by 3iQ, which has roughly $1.5 billion in assets under management. Its CEO, Fred Pye,saidin aReutersinterview today that if the ETF was popular, the size of the fund would be increased.
So far, crypto ETFs have been extremely popular in Canada. When the first ones kicked off trading on the Toronto Stock Exchange in February, theybroke records: the Purpose Bitcoin ETF traded $165 million-worth of shares in its first day, including $80 million in its first hour.
Investors are hopefulthat U.S. regulators will approve a crypto ETF this year. The SEC hasrepeatedly rejected Bitcoin ETFapplications due to market manipulation concerns. There are currently nine Bitcoin ETFs up for the SEC’s review, though the Commission has so fardelayed rulingoneach one of them.
According to a Wednesday report from Spanish international news agency EFE, John McAfee has been found dead in his prison cell at the Brians 2 Penitentiary Center.
Born in 1945, McAfee founded the software company McAfee Associates in his early forties. His company was responsible for one of the most well known antivirus software programs at the time. He resigned from the company in 1994, and went on to found software firm Tribal Voice — behind one of the internet’s first instant message and chat programs — as well technology company QuorumEx and security and privacy company Future Tense Central.
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The U.S. government had been seeking McAfee’s extradition for charges including failing to submit tax returns from 2014 to 2018 and allegedly not reporting income related to pushing crypto projects and consulting work. He had been detained in Spain since October 2020 after his arrest at Barcelona’s international airport.
Related:McAfee on BTC, Exile & the US: ‘No Way the Current System Can Survive’
Earlier today, a Spanish court ruled McAfee could have been extradited to the United States following approval from the country’s Council of Ministers and the opportunity for his legal team to appeal the decision. The 75-year-old previously argued that the charges he faced were politically motivated, and if he had been extradited, he would have spent the rest of his life in prison.
