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In a recent episode of The Valr Podcast, Yat Siu, co-founder of the Hong Kong-based gaming software company and venture capital firm Animoca Brands, offered a highly optimistic projection for the global cryptocurrency market. Siu anticipates exponential growth that could increase the market’s valuation by up to 200 times over the next decade.
The cryptocurrency market is currently estimated at around $2.7 trillion, according to the latest figures from CoinGecko. This substantial valuation places the digital asset industry among the most significant financial markets worldwide.
Siu predicts a near-term surge in the cryptocurrency market, envisioning a potential doubling or tripling within the next 12 to 18 months. This growth expectation is based on the current trajectory and emerging trends within the industry….Story continues…
By: by Dayne Lee
Source: Animoca Co-Founder Forecasts Crypto Market Value to Reach $200 Trillion in a Decade
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Critics:
The Bank for International Settlements summarized several criticisms of cryptocurrencies in Chapter V of their 2018 annual report. The criticisms include the lack of stability in their price, the high energy consumption, high and variable transactions costs, the poor security and fraud at cryptocurrency exchanges, vulnerability to debasement (from forking), and the influence of miners.
Cryptocurrencies have been compared to Ponzi schemes, pyramid schemes and economic bubbles, such as housing market bubbles. Howard Marks of Oaktree Capital Management stated in 2017 that digital currencies were “nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it”, and compared them to the tulip mania (1637), South Sea Bubble (1720), and dot-com bubble (1999), which all experienced profound price booms and busts.
Regulators in several countries have warned against cryptocurrency and some have taken measures to dissuade users.[226] However, research in 2021 by the UK’s financial regulator suggests such warnings either went unheard, or were ignored. Fewer than one in 10 potential cryptocurrency buyers were aware of consumer warnings on the FCA website, and 12% of crypto users were not aware that their holdings were not protected by statutory compensation.
Of 1,000 respondents between the ages of eighteen and forty, almost 70% wrongly assumed cryptocurrencies were regulated, 75% of younger crypto investors claimed to be driven by competition with friends and family, 58% said that social media enticed them to make high risk investments.[229] The FCA recommends making use of its warning list, which flags unauthorized financial firms.
Many banks do not offer virtual currency services themselves and can refuse to do business with virtual currency companies. In 2014, Gareth Murphy, a senior banking officer, suggested that the widespread adoption of cryptocurrencies may lead to too much money being obfuscated, blinding economists who would use such information to better steer the economy.
While traditional financial products have strong consumer protections in place, there is no intermediary with the power to limit consumer losses if Bitcoins are lost or stolen. One of the features cryptocurrency lacks in comparison to credit cards, for example, is consumer protection against fraud, such as chargebacks.
The French regulator Autorité des marchés financiers (AMF) lists 16 websites of companies that solicit investment in cryptocurrency without being authorized to do so in France. An October 2021 paper by the National Bureau of Economic Research found that Bitcoin suffers from systemic risk as the top 10,000 addresses control about one-third of all Bitcoin in circulation.
It is even worse for Bitcoin miners, with 0.01% controlling 50% of the capacity. According to researcher Flipside Crypto, less than 2% of anonymous accounts control 95% of all available Bitcoin supply. This is considered risky as a great deal of the market is in the hands of a few entities. A paper by John Griffin, a finance professor at the University of Texas, and Amin Shams, a graduate student found that in 2017 the price of Bitcoin had been substantially inflated using another cryptocurrency, Tether.
Roger Lowenstein, author of “Bank of America: The Epic Struggle to Create the Federal Reserve,” says in a New York Times story that FTX will face over $8 billion in claims. Non-fungible tokens (NFTs) are digital assets that represent art, collectibles, gaming, etc. Like crypto, their data is stored on the blockchain. NFTs are bought and traded using cryptocurrency.
The Ethereum blockchain was the first place where NFTs were implemented, but now many other blockchains have created their own versions of NFTs. As the first big Wall Street bank to embrace cryptocurrencies, Morgan Stanley announced on 17 March 2021 that they will be offering access to Bitcoin funds for their wealthy clients through three funds which enable Bitcoin ownership for investors with an aggressive risk tolerance.
BNY Mellon on 11 February 2021 announced that it would begin offering cryptocurrency services to its clients. On 20 April 2021, Venmo added support to its platform to enable customers to buy, hold and sell cryptocurrencies. In October 2021, financial services company Mastercard announced it is working with digital asset manager Bakkt on a platform that would allow any bank or merchant on the Mastercard network to offer cryptocurrency services.
Mining for proof-of-work cryptocurrencies requires enormous amounts of electricity and consequently comes with a large carbon footprint due to causing greenhouse gas emissions.[243] Proof-of-work blockchains such as Bitcoin, Ethereum, Litecoin, and Monero were estimated to have added between 3 million and 15 million tons of carbon dioxide (CO2) to the atmosphere in the period from 1 January 2016 to 30 June 2017.
By November 2018, Bitcoin was estimated to have an annual energy consumption of 45.8TWh, generating 22.0 to 22.9 million tons of CO2, rivalling nations like Jordan and Sri Lanka.By the end of 2021, Bitcoin was estimated to produce 65.4 million tons of CO2, as much as Greece, and consume between 91 and 177 terawatt-hours annually. Critics have also identified a large electronic waste problem in disposing of mining rigs.
Mining hardware is improving at a fast rate, quickly resulting in older generations of hardware. Bitcoin is the least energy-efficient cryptocurrency, using 707.6 kilowatt-hours of electricity per transaction. Before June 2021, China was the primary location for Bitcoin mining. However, due to concerns over power usage and other factors, China forced out Bitcoin operations, at least temporarily. As a result, the United States promptly emerged as the top global leader in the industry.
An example of a gross amount of electronic waste associated with Bitcoin mining operations in the US is a facility that located in Dalton, Georgia which is consuming nearly the same amount of electricity as the combined power usage of 97,000 households in its vicinity. Another example is that Riot Platforms operates a Bitcoin mining facility in Rockdale, Texas, which consumes approximately as much electricity as the nearby 300,000 households.
This makes it the most energy-intensive Bitcoin mining operation in the United States. The world’s second-largest cryptocurrency, Ethereum, uses 62.56 kilowatt-hours of electricity per transaction. XRP is the world’s most energy efficient cryptocurrency, using 0.0079 kilowatt-hours of electricity per transaction. Although the biggest PoW blockchains consume energy on the scale of medium-sized countries, the annual power demand from proof-of-stake (PoS) blockchains is on a scale equivalent to a housing estate.
The Times identified six “environmentally friendly” cryptocurrencies: Chia, IOTA, Cardano, Nano, Solarcoin and Bitgreen. Academics and researchers have used various methods for estimating the energy use and energy efficiency of blockchains. A study of the six largest proof-of-stake networks in May 2021 concluded:
- Cardano has the lowest electricity use per node;
- Polkadot has the lowest electricity use overall; and
- Solana has the lowest electricity use per transaction.
In terms of annual consumption (kWh/yr), the figures were: Polkadot (70,237), Tezos (113,249), Avalanche (489,311), Algorand (512,671), Cardano (598,755) and Solana (1,967,930). This equates to Polkadot consuming 7 times the electricity of an average U.S. home, Cardano 57 homes and Solana 200 times as much. The research concluded that PoS networks consumed 0.001% the electricity of the Bitcoin network. University College London researchers reached a similar conclusion.
Variable renewable energy power stations could invest in Bitcoin mining to reduce curtailment, hedge electricity price risk, stabilize the grid, increase the profitability of renewable energy power stations and therefore accelerate transition to sustainable energy. There are also purely technical elements to consider. For example, technological advancement in cryptocurrencies such as Bitcoin result in high up-front costs to miners in the form of specialized hardware and software.
Cryptocurrency transactions are normally irreversible after a number of blocks confirm the transaction. Additionally, cryptocurrency private keys can be permanently lost from local storage due to malware, data loss or the destruction of the physical media. This precludes the cryptocurrency from being spent, resulting in its effective removal from the markets. In September 2015, the establishment of the peer-reviewed academic journal Ledger (ISSN 2379-5980) was announced. It covers studies of cryptocurrencies and related technologies, and is published by the University of Pittsburgh.
The journal encourages authors to digitally sign a file hash of submitted papers, which will then be timestamped into the Bitcoin blockchain. Authors are also asked to include a personal Bitcoin address in the first page of their papers. A number of aid agencies have started accepting donations in cryptocurrencies, including UNICEF. Christopher Fabian, principal adviser at UNICEF Innovation, said the children’s fund would uphold donor protocols, meaning that people making donations online would have to pass checks before they were allowed to deposit funds.
However, in 2021, there was a backlash against donations in Bitcoin because of the environmental emissions it caused. Some agencies stopped accepting Bitcoin and others turned to “greener” cryptocurrencies. The U.S. arm of Greenpeace stopped accepting bitcoin donations after seven years. It said: “As the amount of energy needed to run Bitcoin became clearer, this policy became no longer tenable.” In 2022, the Ukrainian government raised over US$10,000,000 worth of aid through cryptocurrency following the 2022 Russian invasion of Ukraine.
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