Global Data Report: Cryptocurrencies are Expensive, Slow, Unspendable, Cannot Scale

Cryptocurrencies are Expensive, Slow, Unspendable, Cannot Scale

Cryptocurrencies – Thematic Research, a report recently issued by Global Data, is attempting to smash what it views as myths and huge untruths about the hype surrounding crypto. Among their findings, the company concludes cryptocurrencies are expensive, slow, mostly unspendable, and cannot scale to meet their projected demand.

Also read: Troll Slayer: Derek Magill Defends Peer-to-Peer Electronic Cash Against Defamation

Cryptocurrencies Expensive, Slow, Unspendable, Cannot Scale

Talk about kicking a fellow when he’s down (assuming cryptocurrencies are male). London-based research firm, founded in 2006, Global Data, released a 34 page study on exactly why they believe crypto won’t ever live up to its hype or promise.

Its Chief Analyst, Gary Barnett, gets to the heart of the matter, “Many of the most basic claims made by proponents of cryptocurrencies simply are not true. We are told that cryptocurrencies speed transfers up, that they help to eliminate middlemen and that they are free of cost, but none of this is true.” Anecdotes abound as to the veracity of his claim, especially as it relates to bitcoin core (BTC), the world’s most popular cryptocurrency, and the most well known. The ecosystem has famously chosen to employ ‘middlemen,’ the very same Satoshi Nakamoto’s white paper was written to avoid, such as banks (Coinbase) and other exchanges that are allowed to hold full control over a user’s coins and tokens.

Cryptocurrencies are Expensive, Slow, Unspendable, Cannot Scale

“Cryptocurrency transactions are not free,” Mr. Barnett continues. “For example, at its peak the per transaction cost for bitcoin exceeded $50, which is not exactly a great way to buy $25 worth of groceries. While the cost per transaction hovers around $1 when the bitcoin network is not under load, it will inevitably rise if transaction volumes grow again.” Here again, the whipping boy is BTC, and no mention is made of viable alternatives in this regard like bitcoin cash (BCH) or others.

Perhaps most damning, when considering just what the ‘currency’ part of cryptocurrency means, Mr. Barnett fires “no cryptocurrency is widely accepted and transacted. The number of retailers and businesses that accept cryptocurrencies as payment for goods and services is vanishingly small, and those that do typically report very low volumes of cryptocurrency transactions by comparison to other means of payment.” This somewhat begs the question, but it might require Mr. Barnett and Global Data to be a little hipper when it comes to the more recent history of BTC in particular. Enthusiasts have taken nuanced sides as to the importance of claims like Mr. Barnett’s, and the differences are so profound in the crypto space entire projects exist to prove the others wrong. Plus, it is early days with regard to merchant adoption — constant mainstream media hectoring, along with governments the world over threatening ever tighter regulation, doesn’t help matters.

The Scaling Issue Continues to Haunt

Global Data hammers home a key bugaboo with regard to crypto, scaling. For ‘big blockers,’ this issue seems to trump most. With the advent of bitcoin cash (BCH), larger blocks allow for more transactions, less congestion, and ultimately lower fees and faster confirmations, at least in theory and so far.

Nevertheless, the report concludes “cryptocurrencies cannot scale. The Visa payment network is capable of supporting 24,000 transactions per second (tps) at peak rates and regularly averages in the region of 1,500 tps. Bitcoin, meanwhile, struggles to achieve a transaction rate over 10 tps, while bitcoin cash can handle around 60 tps. The only cryptocurrency which comes close to Visa’s average is Ripple, which is capable of 1,500 tps.”

Cryptocurrencies are Expensive, Slow, Unspendable, Cannot Scale

And so, mainstream research firms such as Global Data are left to muse about the current state of crypto valuations. As “currently applied to cryptocurrencies,” Mr. Barnett stresses, they “have no basis in fact; cryptocurrencies represent a classic bubble, in which valuations are purely the result of speculation on the likely behavior of the market rather than a clear-eyed assessment of underlying value.” No mention is made of it being only near a decade in arriving at valuations, and how currencies such as BTC are up thousands of percents since their inception. Bubble doesn’t seem, yet, to describe crypto prices well.

The report’s lone sober take, though still mired in mainstream cynicism and assumptions, comes as a preface. “In fairness,” researchers note, “all currencies are a confidence trick. The US dollar, British pound, and the Euro all depend on nothing more than market confidence for their value. The extent to which a currency works effectively is a function of a range of factors and this report sets out to determine whether cryptocurrencies represent a serious alternative to the established fiat currencies.” Few crypto proponents would claim decentralized money to be quite there, but, then again, government money has had a huge head start.

Is crypto a failed, over-hyped experiment? Let us know in the comments section below. 


Images via the Pixabay, Global Data, Shutterstock.


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Federal Reserve Pres: People Want Dollar, Not Volatile Crypto

Federal Reserve Pres: People Want Dollar, Not Volatile Crypto

St. Louis Federal Reserve President, James Bullard, was recently interviewed at this year’s Consensus conference in New York City. That a top US economic policy maker was in attendance is victory enough; however, he was asked his opinions on cryptocurrency going forward by CNBC Global Markets Reporter Seema Mody. He explained he found the phenomenon “interesting,” and how more cryptos being issued all time necessitates keeping an “eye” on them. Mr. Bullard also compared the use case for cryptocurrencies with that of the dollar, and whether the former posed a threat to the latter.  

Also read: Bitpay Enables Bitcoin Cash (BCH) and Bitcoin Core (BTC) for Tax Payments

Federal Reserve President Attends Crypto Conference

Federal Reserve President, James Bullard, gave a presentation at this year’s giant Consensus conference in New York City. Reread that sentence. A sitting Fed policy maker thought it important enough to attend a crypto soiree. That’s news enough. But more importantly, President Bullard gave a presentation on the government’s current thinking about cryptocurrency.

In his talk, he acknowledged crypto is facilitating trade that might otherwise not occur. He couldn’t help himself by mentioning illegal activity (and we all know fiat currencies are never used in illegal activity), but he did describe decentralized money’s lean toward frictionless transactions (especially with regard to costs/fees) as being an advancement.

Federal Reserve Pres: People Want Dollar, Not Volatile Crypto
Mr. Bullard and Ms. Mody

The Fed policy maker reserved the bulk of his comments, both in the presentation and during a post-game interview with CNBC, to talk about the problems in crypto as he sees them. One issue is simply the number of currencies being offered. The 12th St. Louis Fed President feels this over complicates matters, especially with regard to exchange rates and volatility.

Asked if cryptocurrencies pose a threat to the dollar, Mr. Bullard, 56, answered he didn’t think so. Global Markets Reporter Seema Mody, who is covering Consensus for CNBC this year, quickly followed up with a “but it could be?” The Fed President was noncommittal, choosing instead to shrug and give the pat answer about no one really knowing what the future holds. He emphasized how since its creation the US dollar has vanquished nearly all currency competition due to its being backed by the world’s strongest economy. It’s abundantly clear, Mr. Bullard suggested, people want the dollar and not crypto … at least at the moment.

Fed Coin on the Horizon?

Ms. Mody pressed Mr. Bullard about his presence at the conference, asking if this was a hint of things to come with regard to a future coin birthed by the Fed, a Fed Coin? Interestingly he didn’t dismiss the idea outwardly, and instead said they’d for sure look at the possibility, as the Fed does with many different types of financial innovations. He also assured there wasn’t any plan being hatched at the moment, no imminent Fed Coin coming. Mr. Bullard also wondered aloud what the gains would be by creating such a coin. He smiled subtly, assuring he’s keeping an “open mind.”

Federal Reserve Pres: People Want Dollar, Not Volatile Crypto

His comments seem to be less strident than statements issued by the St. Louis Fed on the very subject not even one month ago. “The St. Louis Federal Reserve has published an essay critically evaluating the notion of cryptocurrencies that are issued by central banks,” we detailed. “The article is highly dismissive in presenting what it describes as ‘the non-case for central bank cryptocurrencies,’ concluding that ‘a central bank will not issue cryptocurrencies in the sense of a truly decentralized and permissionless asset that allows users to remain anonymous.’”

A rather curious fact about the St. Louis Fed, one of twelve jurisdictions in the Federal Reserve system (the 8th district serves Indiana, Kentucky, Missouri, Illinois, Tennessee, Louisiana, Mississippi, Arkansas), is how it has recently become very chatty about crypto. As these pages reported back at the beginning of this year, “Aleksander Berentsen and Fabian Schär of the Federal Reserve Bank of St. Louis have recently published an article that emphasizes many of the benefits of cryptocurrencies. The article states that ‘cryptoassets are well suited to become an important asset class,’ in addition to offering praise regarding a number of the major applications associated with cryptocurrencies.”

Do you think a Fed president attending a crypto conference is meaningful? Let us know your thoughts in the comments below.


Images via Shutterstock, Pixabay, Twitter.


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Circle Raises $110Mn With Plans to Launch USD-Backed Coin

Circle Raises $110Mn With Plans to Launch USD-Backed Coin

The cryptocurrency based firm Circle announced it has raised $110Mn USD in a Series E fundraising round led by the Chinese firm Bitmain Technologies. Circle now joins Coinbase as one of the most well-funded cryptocurrency companies in the U.S., and the Boston-based firm has announced plans to issue a dollar-backed cryptocurrency called USD-C.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Circle Raises $110Mn Plans to Launch Stablecoin

Circle Raises $110Mn With Plans to Launch USD-Backed CoinCircle has big plans ahead for its latest mobile project called ‘Centre’ while also revealing its plans to create a stable coin much like the currency Tether (USDT). Furthermore, the firm has raised $110Mn in a Series E funding round that included investors such as Bitmain Technologies, Blockchain Capital, Pantera, Digital Currency Group and other venture firms. In addition to the injection of capital, Circle says it is planning to launch a new cryptocurrency that is backed by the price and reserves of USD.

The company’s new token will be called ‘USD-C’ and based off of the Ethereum network. According to the Circle, the firm’s subsidiary ‘Centre’ project will manage the USD-C protocol. Circle feels a cryptocurrency that is tied to a fiat currency can add more value to the blockchain ecosystem.

“It is difficult to use something like bitcoin if the volatility is so high,” Circle’s founder and CEO Jeremy Allaire explains. “Something like this makes it more possible.”  

A Partnership With Bitmain

Circle Raises $110Mn With Plans to Launch USD-Backed CoinCircle also detailed that Bitmain will also be helping with the Centre project and the USD-C launch. “Bitmain will help Centre introduce multiple fiat stablecoins in a variety of geo-currency zones,” the company explains. Moreover, the company takes a jab at other ‘stablecoins’ utilized in the markets right now that lack transparency as the firm states:   

Existing fiat-backed approaches have lacked financial and operational transparency, have operated in unregulated jurisdictions with unknown banking and audit partners, and have been built as closed-loop ecosystems and closed proprietary technologies.

Circle says despite celebrating their fifth anniversary this fall they feel like they are just getting started. In addition to Centre and the new USD-C token that will launch this summer, Circle says it also has plans for Circle Invest, Circle Trade, Circle Pay, and the newly acquired Poloniex exchange.

“We see the future of the global economy as open, shared, inclusive, distributed, and powerful — not only for a few chosen gatekeepers, but for all who will connect,” Circle adds.

What do you think about Circle raising $110Mn in a funding round led by Bitmain? What do you think about this new USD-C idea they have? Let us know your thoughts on this subject in the comments below.


Images via Shutterstock, Bitmain, and Circle. 


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Venezuela’s Petro “May Help the Global Currency System”: Chinese Credit Rating Giant

The post Venezuela’s Petro “May Help the Global Currency System”: Chinese Credit Rating Giant appeared first on CCN

Dagong Global Credit Rating, one of China’s biggest credit rating agencies, recently published a report commenting on Venezuela’s oil-backed cryptocurrency, the Petro (PTR). Per the report, the cryptocurrency “may help the global currency system return to its basic value.” While the agency doesn’t assert whether the Petro can help Venezuela’s economy, it points out the

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