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Stablecoin Shakeup: USD Coin Overtakes Tether on Ethereum

The stablecoin market has undergone a shakeup as USD Coin (USDC) has overtaken USD Tether (USDT) on the Ethereum blockchain.

USD Coin Supply On Ethereum Is Now More Than Tether

As per the latest weekly report from Arcane Research, USDC has now become the largest stablecoin on the ETH chain, surpassing USDT.

A “stablecoin” is a type of crypto token that has its value tied to a fiat currency. Due to this fact, these coins don’t suffer from much volatility, hence their name. Though it must be mentioned that their value isn’t actually fixed, any depreciation or appreciation in fiat carry over to them by nature.

These coins can be minted on many blockchains, but the Ethereum chain has been the most popular option for it since years now.

Tether and USD Coin are two of the biggest stablecoins in the market right now. And while USDC supply has overtaken USDT on the ETH network, USDT is still the largest fiat token overall,

Here is a chart that shows how the supply of the two biggest stablecoins on Ethereum has changed over the past year:

Looks like USDC has enjoyed sharp growth in the second half of the year | Source: The Arcane Research Weekly Update – Week 2

As you can see in the above graph, USD Coin has just surpassed the supply of Tether on the Ethereum blockchain.

Related Reading | Solo Ethereum Miner Hits The Jackpot With 170 ETH For Mining A Block

Over the course of 2021, USDC’s supply grew three times faster than USDT’s. Decentralized Finance (DeFi) has been the main push behind this growth of the coin.

In USDT’s case, the driver behind its growth has been centralized exchanges and institutions. This is why the graph for Tether’s supply shows it moving up in big steps; these organizations usually mint these coins in large bursts.

Related Reading | Bitcoin Implied Volatility Plummets To Pre-Bull Market Levels: What This Means

On the other hand, USD Coin’s supply curve has a more natural growth to it because of crypto traders using it for DeFi.

The report predicts that USDC will surpass USDT to become the biggest stablecoin overall in 2022 as its growth has been much faster recently.

ETH Price

At the time of writing, Ethereum’s price floats around $3.1k, down 3% in the last seven days. Over the past month, the crypto has lost 20% in value.

The below chart shows the trend in the price of ETH over the last five days.

ETH’s price seems to have plunged in the last few days | Source: ETHUSD on TradingView

Ethereum has been in consolidation for a while now, as has been most of the crypto market. At the moment, it’s unclear when the coin may be able to escape from this sideways movement.

Featured image from Unsplash.com, charts from TradingView.com, Arcane Research

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Stablecoin Shakeup: USD Coin Overtakes Tether on Ethereum

The stablecoin market has undergone a shakeup as USD Coin (USDC) has overtaken USD Tether (USDT) on the Ethereum blockchain.

USD Coin Supply On Ethereum Is Now More Than Tether

As per the latest weekly report from Arcane Research, USDC has now become the largest stablecoin on the ETH chain, surpassing USDT.

A “stablecoin” is a type of crypto token that has its value tied to a fiat currency. Due to this fact, these coins don’t suffer from much volatility, hence their name. Though it must be mentioned that their value isn’t actually fixed, any depreciation or appreciation in fiat carry over to them by nature.

These coins can be minted on many blockchains, but the Ethereum chain has been the most popular option for it since years now.

Tether and USD Coin are two of the biggest stablecoins in the market right now. And while USDC supply has overtaken USDT on the ETH network, USDT is still the largest fiat token overall,

Here is a chart that shows how the supply of the two biggest stablecoins on Ethereum has changed over the past year:

Looks like USDC has enjoyed sharp growth in the second half of the year | Source: The Arcane Research Weekly Update – Week 2

As you can see in the above graph, USD Coin has just surpassed the supply of Tether on the Ethereum blockchain.

Related Reading | Solo Ethereum Miner Hits The Jackpot With 170 ETH For Mining A Block

Over the course of 2021, USDC’s supply grew three times faster than USDT’s. Decentralized Finance (DeFi) has been the main push behind this growth of the coin.

In USDT’s case, the driver behind its growth has been centralized exchanges and institutions. This is why the graph for Tether’s supply shows it moving up in big steps; these organizations usually mint these coins in large bursts.

Related Reading | Bitcoin Implied Volatility Plummets To Pre-Bull Market Levels: What This Means

On the other hand, USD Coin’s supply curve has a more natural growth to it because of crypto traders using it for DeFi.

The report predicts that USDC will surpass USDT to become the biggest stablecoin overall in 2022 as its growth has been much faster recently.

ETH Price

At the time of writing, Ethereum’s price floats around $3.1k, down 3% in the last seven days. Over the past month, the crypto has lost 20% in value.

The below chart shows the trend in the price of ETH over the last five days.

ETH’s price seems to have plunged in the last few days | Source: ETHUSD on TradingView

Ethereum has been in consolidation for a while now, as has been most of the crypto market. At the moment, it’s unclear when the coin may be able to escape from this sideways movement.

Featured image from Unsplash.com, charts from TradingView.com, Arcane Research

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Fidelity Says What We’ve Been Thinking: Countries & Central Banks Will Buy BTC

Surprising the world, Fidelity predicts what Bitcoin’s game theory implies. It’s as Satoshi Nakamoto said, “It might make sense just to get some in case it catches on.” That’s the exact same conclusion that Fidelity reaches in its “Research Round-Up: 2021 Trends And Their Potential Future Impact” report. Take into account that Fidelity is a multinational financial services corporation, it doesn’t get more mainstream than this.

I agree with @Fidelity, of course, but still astonishing to read this on Bitcoin adoption game theory in such a mainstream financial report: pic.twitter.com/7zRO9rEele

— Alex Gladstein 🌋 ⚡ (@gladstein) January 13, 2022

What did Fidelity say about Bitcoin adoption at the nation-states and central bank level? 

They put it very clearly:

“We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance. In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost years in the future.” 

In other words, It might make sense just to get some in case it catches on. And, as Stacy Herbert said, “First mover advantage goes to El Salvador”. At least if we’re talking out in the open, because other countries might be accumulating Bitcoin on the down-low. For example, Venezuela seized a lot of ASICs from private miners. Chances are those are active in a warehouse somewhere. And, of course, there are rumors that the USA is already mining.

Fidelity is one of the biggest asset managers in the world

They see what ID-10ts fail to understand

First mover advantage goes to 🇸🇻

Game over for fiat, game on for #bitcoin

🌋🇸🇻 pic.twitter.com/I0Jlp8baVY

— Stacy Herbert 🇸🇻 (@stacyherbert) January 13, 2022

In any case, what does Fidelity conclude?

“We therefore wouldn’t be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition.”

If those players do it in the open, it will probably trigger a race like no other. A race in which it will be too risky not to participate. 

Speaking About Bitcoin Mining…

Fidelity’s report summarized 2021, it goes through most of the major stories that NewsBTC has covered ad nauseam. The company doesn’t try to figure out why did China ban Bitcoin mining, but it highlights how fast the hashrate recovered. 

“The recovery in hash rate this year was truly astounding and one that we think demonstrates several issues that will be important to keep in mind for 2022 and beyond.”

The Fidelity report also highlighted how well the network responded. “This has now been tested and bitcoin’s network performed perfectly.”

BTC price chart for 01/17/2022 on Eightcap | Source: BTC/USD on TradingView.com
What Does Fidelity Say About The Ecosystem In General?

The report wasn’t exclusively about Bitcoin, they also identified the biggest trends in the wide crypto sphere.

“The biggest non-Bitcoin themes put on display this past year included the massive issuance of stablecoins, the maturation of decentralized finance, and the early days of non-fungible tokens.”

And about those trends, Fidelity predicted:

  • “The growth in interconnectivity between siloed blockchains”

  • “Traditional fintech companies partnering or building capabilities to interact with DeFi protocols”

  • “The dawn of decentralized algorithmic stablecoins has officially begun.” Responding to the “growth in demand for more regulated, centralized stablecoins.”

  • “While the long-term value of these NFTs is not known, the impact of increased digital property rights for art, music, and content is likely to be meaningful in some form.”

In general, Fidelity thinks that investment in digital assets will keep growing:

“Allocating to digital assets has become far more normalized over the past two years for all investors. The Fidelity Digital Assets 2021 Institutional Investor Survey found that 71% of U.S. and European institutional investors surveyed intend to allocate to digital assets in the future. This number has grown across each individual region of the survey for the past three years, and we expect 2022 to show another year of higher current and future asset allocations to digital assets amongst institutions.” 

However, something has to happen to catalyze widespread institutional adoption. “The key to allowing traditional allocators to continue to pour capital into the digital asset ecosystem revolves around regulatory clarity and accessibility.”

Is 2022 the year of regulatory clarity? What will happen first, institutional adoption of cryptocurrencies or nation-states adoption of Bitcoin? What central bank will earn first-mover advantage? Burning questions for the year ahead.

Featured Image by Damir Spanic on Unsplash | Charts by TradingView

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Lightning Speed 004: What’s The Lightning Development Initiative?

There’s no denying that 2021 was the Lightning Network’s year. What does the future hold, though? If the objective is to onboard the next billion people, the network needs work and fine-tuning. To grab the bull by the horns, The Human Rights Foundation and Strike set up three 1 BTC bounties. 

The bounties will go to the first person or team to develop an anonymous Lightning tip jar, a tokenless way to peg BTC to dollars, or a privacy-focused wallet that supports some kind of Chaumian e-cash feature. In a Twitter Spaces conversation about the program, they named it The Lightning Development Initiative. 

A catchy name that we’ll use from now on to refer to all of this. This fourth edition of Lightning Speed is all about the future. Let’s explore the three ideas and the new information that we have about each of them.

The Lightning Development Initiative In Twitter Spaces

Among the speakers were Strike’s Jack Mallers, The Human Rights Foundation’s Alex Gladstein, Bitcoin Magazine’s Christian Keroles AKA CK Snarks, and Tales From The Crypt’s Matt Odell. It took place on December 29th and Bitcoin Magazine hosted it. A Twitter user named Gigi summarized it for us.

🚨 A thread summarizing the Lightning Développement Initiative Space ⬇

3 amazingly interesting topic related to the bounties were discussed.

I'm so bullish on Lightning⚡ it hurts. Very grateful to have these people on our side ❤👑

let's look at my notes 🧵 pic.twitter.com/PRs9cohPaN

— Gigi ⚡🇨🇵 (@GuerillaV2) December 29, 2021

Bounty #1: An Anonymous Tip Jar

In our sister site Bitcoinist’s report, they described the challenge as follows:

“Can you create a Lightning tip jar that doesn’t reveal any information about the parties involved? That’s the first task. How to receive completely anonymous donations. According to Bitcoin Mag, the “goal is to enable anyone to use free and open-source software (FOSS) to print a QR code that can be used for receiving Lightning payments privately. Importantly, “The QR code should not reveal the public key or IP address of the user.” 

In the Lightning Development Initiative’s report, we learned that this has to do with the two competing protocols, Bolt12 and lnurl. Jack Mallers “pointed out the absolute need for interoperability on the Lightning Network and that even though lnurl might not be “optimal” right now, the market will eventually decide what open standard they prefer to use. He thinks that currently UX is a major focus for the Lightning community and we should make peace with the fact that there will be competition between solutions.”

Rockstar pointed out that this debate around lnurl vs bolt12 will have huge implications for the future but that he's glad that there's now an active discussion on the matter.

Jack added that contrary to the Bitcoin main chain, we can somewhat afford to fuck up on LN..

— Gigi ⚡🇨🇵 (@GuerillaV2) December 29, 2021

Mallers put forth another interesting idea, “contrary to the Bitcoin main chain, we can somewhat afford to f**k up on the Lightning Network. As long as the Bitcoin monetary policy is not threatened then we can freely fiddle on top of the protocol via Lightning.”

BTC price chart for 01/14/2022 on Bitfinex | Source: BTC/USD on TradingView.com
Bounty #2: Stablecoin On Lightning Without A Token

Bitcoinist described this one as:

“The second challenge seems to be even more difficult, at least on a conceptual level. The HRF and Strike want a wallet that enables “anyone to “peg” an amount of bitcoin to U.S. dollars without needing an exchange or another token.” That’s right, without a centralized entity. And relying only on sats and bitcoin.”

Gigi summarizes why the world needs this:

“The goal is to allow people to access dollars without a single point of failure. Further down the line, as Bitcoin becomes less volatile, these people can use btc, but until then there’s massive demand for holding value in dollars. The tether market cap is proof of this.”

It serve an important humanitarian use case. We need to create the foundation for this new financial system.@Chris_Stewart_5 >> maybe it can be done with DLC's? Not using a token but rather something representing price exposure (think Eurodollar system). (oracles?)

The END.

— Gigi ⚡🇨🇵 (@GuerillaV2) December 29, 2021

Bounty #3: A Chaumian E-Cash Feature

First of all, Investopedia defines Chaumian e-cash as:

“eCash was a digital-based system that facilitated the transfer of funds anonymously. A pioneer in cryptocurrency, its goal was to secure the privacy of individuals that use the Internet for micropayments. eCash was created by Dr. David Chaum under his company, DigiCash, in 1990.“

So, once again, anonymity is the priority. As Alex Gladstein put it when announcing the bounties, they’re “for the first open-source, non-custodial, non-KYC Lightning wallets to ship features requested by dissidents worldwide.” Also, take into consideration the words of security expert Brian Trollz, “Bitcoin without privacy is nothing but a surveillance system.”

Bitcoin without privacy is nothing but a surveillance system.

— Shino (@brian_trollz) January 13, 2022

What does Gigi have for us on this topic? “We need a sort of Chaumian e-cash, extremely easy to use for the Plebs and accessible. Maybe the solution is a federated  one, making it harder to regulate.” He then quotes Jack Mallers again, “There’s going to be a singular standard for the internet of money (Bitcoin). Many will compete on top of BTC so we need “interoperability to the standard.”

Matt: We need to make it very easy to use because experience shows us that if it's somewhat challenging (coinjoins etcc) people won't bother to protect their privacy (goddam idiot normies 🤡)

— Gigi ⚡🇨🇵 (@GuerillaV2) December 29, 2021

Conclusion: The Future Is Bright

Developers, teams, companies, anyone can earn the Lighting Development Initiative’s bounties. The non-profit OpenSats will serve as the judge. They are all open for the whole year. If by the end of 2022 no one has claimed them, the money will go to the Human Rights Foundation’s Bitcoin Development Fund on January 1st. Which is fair. Especially considering they just gave 425 million Sats to these worthy organizations and individuals.

For more information and details read Bitcoinist’s original report.

Featured Image by Micah Tindell on Unsplash | Charts by TradingView

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Fed Chair Jerome Powell Argues private stablecoins can co-exist with US CBDC

On Jan. 11, Federal Reserve Chair Jerome Powell told Senate legislators that nothing prevents privately issued stablecoins from coexisting with a prospective Fed central bank digital currency (CBDC).

Jerome Powell Confirms Fed-issued Digital Currency Is Underway

Sen. Pat Toomey (R-Pa.) asked Powell during his confirmation hearing for a second term as Fed chairman whether there was place for a future Fed-issued digital currency to coexist with a privately issued stablecoin.

Toomey asked:

“Is there anything about that that should preclude a well-regulated, privately issued stablecoin from coexisting with a central bank digital dollar if Congress authorizes and the Fed pursues a central bank digital dollar?”

Powell said the Fed would publish a study on digital currencies soon at a Senate Banking Committee meeting earlier this week. Senator Pat Toomey, the top Republican on the panel, questioned Jerome Powell during the session. Powell responded, “No, not at all,” when asked if a CBDC would exclude the formation of a “well regulated, privately issued stablecoin.”

While other countries continue to create their own CBDCs, the US monetary authority has yet to make an official announcement about plans to introduce a digital dollar. Despite Powell’s remark, it’s unclear how private tokens would compete if the Fed issued a digital currency.

USDT, the largest stablecoins by market cap, stands at $78 billion. Source: TradingView

Stablecoins have proven to be an important component of the cryptocurrency integration process, since investors frequently utilize their steady rate as a starting point for trading other digital currencies. However, the Federal Reserve and other US watchdogs have previously warned that stablecoins require more stringent regulation and should only be issued by licensed entities such as banks. Financial agencies should have the same jurisdiction to regulate stablecoin issuers as banks, according to the President’s Working Group on Financial Markets.

While the Fed has remained tight-lipped about whether it plans to introduce its own digital currency, similar to China’s yuan, the central bank and other US financial regulators have previously stated that stablecoins require additional supervision and should be issued by banks.

Related article | CBDCs to coexist with cash payments, according to FED Chairman Powell

U.S. President’s Working Group on Financial Markets To Regulate Stablecoins

Stablecoins could be used widely in the future as a means of payment by individuals and businesses, according to a new report from the President’s Working Group on Financial Markets (PWG), but sufficient regulation is required to manage risks.

The Treasury Department said in a statement:

“The potential for the increased use of stablecoins as a means of payments raises a range of concerns, related to the potential for destabilizing runs, disruptions in the payment system, and concentration of economic power,”

The PWG suggested that Congress establish laws to protect against dangers, such as treating stablecoin issuers as depository institutions covered by the Federal Deposit Insurance Corporation (FDIC) and subjecting custodial wallet providers to adequate federal regulation.

Powell was present, as was Treasury Secretary Janet Yellen and SEC Chair Gary Gensler, the latter of whom expressed reservations.

Related article | FED’s Powell Doesn’t Think Crypto Risks Financial Stability

Featured Image by Gettyimages | Charts by TradingView

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David Marcus, The Latest Top Executive To Leave Meta/ Facebook’s Crypto Project

Another one bites the dust. David Marcus stepped down as the head of Novi, Meta/ Facebook’s fintech division. The company’s first order of business was to create a cryptocurrency, but regulators around the world were not keen on the idea. After a few missteps and name changes, they finally released a wallet called Novi to little fanfare. The coin, now named Diem, is still in development and unreleased.

Related Reading | What Zuckerberg’s Meta Means for the Metaverse

David Marcus Says Goodbye

This is not the first time this happens, other top executives have abandoned Meta’s ship over the years. CNBC recapitulates:

“Marcus’s departure follows that of other key executives who led Facebook’s ill-fated efforts in blockchain. Fellow project founder Morgan Beller left the company in September 2020 to go into venture capital. Kevin Weil, another one of the project founders, left in March to join Planet, a San Francisco company.”

Ex-Upwork CEO Stephane Kasriel will replace David Marcus, who in a Facebook post announcing his departure said:

“The one thing I’m the proudest of during my time here is the amazing kickass team we’ve assembled over the last three years. This is the most resilient, passionate, determined and talented group of humans I’ve ever worked with. I find comfort and confidence in knowing that they will continue to execute our important mission well under Stephane Kasriel’s leadership, and I can’t wait to witness this from the outside.”

Mark Zuckerberg responded to David Marcus: 

“I’ve learned so much working with you and I’m so grateful for everything you’ve done for this place. We wouldn’t have taken such a big swing at Diem without your leadership and I’m grateful you’ve made Meta a place where we make those big bets. You’ve built a great team, and while I’ll miss working with you, I’m looking forward to working with Stephane to lead the team going forward.”

I am so honored for the opportunity to lead the awesome @novi team, and look forward to continuing to build products and services that allow more access for people and businesses to the financial system and digital economy.

— Stephane Kasriel (@skasriel) November 30, 2021

For his part, Stephane Kasriel said via Twitter:

“I am so honored for the opportunity to lead the awesome Novi team, and look forward to continuing to build products and services that allow more access for people and businesses to the financial system and digital economy.”

FACEBOOK price chart on BMFBOVESPA | Source: TradingView.com
What’s The Deal With Libra/Calibra/Novi/Diem?

After many iterations, Diem is now a stablecoin prototype. For its part Novi, the wallet, is only available in the United States and Guatemala. Facebook/Meta is running a pilot program to test the technology and gather data. They’re trying to steal the remittances market in Guatemala, which constitutes 14% of the county’s GDP. Using the Novi wallet, it’s almost free.

Nowadays, Facebook/Meta is using the Paxos stablecoin USDP as their standard. About this, David Marcus said via Twitter. “USDP is a well-designed stablecoin that’s been operating successfully for over three years and has important regulatory and consumer protection attributes.  I do want to be clear that our support for Diem hasn’t changed and we intend to launch Novi with Diem once it receives regulatory approval and goes live. We care about interoperability and we want to do it right.”

Related Reading | Facebook Officials Claim Novi Received Approval From Major U.S. States

However, will Diem ever receive regulatory approval? For Facebook/Meta, that’s the Trillion-Dollar question. The company’s reputation regarding its handling of personal data is hampering the whole operation. And, well, governments around the world don’t seem to want a company like Facebook in charge of the money. And, well, the project’s been all over the place from the very beginning. No offense to David Marcus, who claims to be Diem’s “Co-creator & Board member.”

The project’s slogan is “To build a trusted and innovative financial network that empowers people and businesses around the world.” And, well, that’s Bitcoin. Why don’t they just plug in to the winning open monetary network? Because Meta wants to be in control of the money supply. And that’s what government’s around the world are trying to prevent.

Featured Image: mohamed_hassan on Pixabay | Charts by TradingView