Important milestones have been reached in Bitcoin mining. Inflation rates are getting higher in the United States and Europe. The main players of the crypto industry were in front of the U.S. Congress. Craig Wright is in the headlines again. Facebook tests cryptocurrency transactions in WhatsApp.
Achievements in Bitcoin mining
The events of last summer are fresh in the minds of many crypto investors. The price of Bitcoin dropped more than 50 percent at the end of May. One of the biggest reasons was China’s decision to ban Bitcoin mining.
Related to this Bitcoin’s hash rate quickly dropped by 50 percent. The environmental impact of Bitcoin mining was also highlighted at the same time. Tesla announced it didn’t accept Bitcoin after all due to the environmental impact of Bitcoin mining. This scared many institutional investors out of the market.
Last week we saw an important achievement. Bitcoin’s hash rate set a new record, rising higher than last spring before the China ban. The image below shows a seven-day moving average from blockchain.com.
This means that Bitcoin recovered from a massive hash rate collapse in less than six months. China’s mining ban has also had positive effects. Mining farms in new locations are using far more renewable energy.
The 90% milestone will also be passed these days. This means that 90% of bitcoins are already mined. Well-known Bitcoin maximalist Marty Bent tweeted about the subject.
There will only ever be 21,000,000 bitcoins and 90% of them have been distributed to the public already. Plan accordingly. pic.twitter.com/uZjIRQH2ZZ
— Marty Bent (@MartyBent) December 12, 2021
The mining of new bitcoins is not going to stop for a long time. It will take about 120 years for the remaining 10% to be mined.
Most of the Bitcoin news is about its price. Sometimes you might want to take a few steps back and look at the big picture. Bitcoin is progressing great, despite all negative attention every now and then.
This is what hyperbitcoinization looks like:
It's still early.
— Dan Tapiero (@DTAPCAP) December 11, 2021
According to the graphic above, more than $12 trillion worth of value has been transferred on the Bitcoin network this year. This is more than the total amount between 2009 and 2020.
Inflation in the U.S. hit a new record
Inflation has been one of the hottest economic topics this year. Earlier it was mainly discussed among Bitcoin and gold investors, but this year everything has changed. Inflation was first described as transitory, but now even Fed Chairman Jerome Powell has acknowledged the reality.
There is likely political pressure behind it. Average people (=voters) are suffering from inflation. It is now a real problem instead of just figures on economists’ models. Last week, another record was set in the United States: 6.8%. This is the highest reading in 40 years.
It is not just the United States that is affected. Inflation in the euro area has also reached 4.9%, which is the highest figure in recorded history.
The price of Bitcoin has benefited significantly from the economic conditions in the past 10 years. Money has been printed, interest rates have been at zero and inflation has been below 2%. Now the situation has changed and inflation is getting out of hand.
Former Fed insider Danielle DiMartino Booth commented on the situation about a week ago.
Controlled inflation is good for both stocks and Bitcoin. It allows central banks to have a loose monetary policy. The current situation is problematic.
Central banks can fight against inflation by tightening the monetary policy. Fed has already started tapering, which means it will buy fewer securities from the market in the future. When this is done, the next step is to increase interest rates.
This was tried last time in late 2018. The result was a collapse in the stock market and crypto market. Jerome Powell was forced to change his policy and bring rates to zero.
The Fed Chairman Powell is not alone in the situation. Inflation is at high levels around the world. Changes in monetary policies will inevitably be reflected in the cryptocurrency market too.
The crypto leaders were grilled by the U.S. Congress
The U.S. Congress held an important debate regarding the future of cryptocurrencies. The venue was the United States House Committee on Financial Services, which oversees the country’s financial services.
As a conclusion of the debate, it seems that U.S. decision-makers have slowly woken up to reality. However, Representative Sherman seems still to be living on his own planet.
I couldn’t help but begin this with Mr. Sherman, a Democratic House member.
In this clip, he claims that Bitcoin is at risk of being replaced by Hamster coin, Mongoose coin, among many other ridiculous names.
This one is just hard to watch. pic.twitter.com/cVa1jLL8JI
— croissant (@CroissantEth) December 9, 2021
The majority of representatives seem to think that the United States should not over-regulate the crypto industry. This aspect is very important for the overall market. The United States is the world’s leading economy and its regulatory decisions affect the entire industry.
Regulation is likely to increase in the stablecoin market. It is important for the United States to maintain the dominance of the dollar. If the regulation of stablecoins tightens, this can mean problems for Tether and algorithm-based stablecoins such as UST and DAI.
SEC Director Gary Gensler, whose policies on Bitcoin spot ETF have been completely illogical, got his share of the conversation. Spot ETF would be a much sought-after product in the market.
At the moment, it appears that there is no desire to ban Bitcoin or other cryptocurrencies in the United States. The understanding of the industry seems to be slowly growing, which is extremely good for the market.
The Craig Wright vs. Kleiman trial is finally completed
There used to be a lot of news about Bitcoin Cash and Bitcoin SV some years ago. Lately, these coins have been largely forgotten. Bitcoin Cash ranks 24th on the list of cryptocurrencies and Bitcoin SV’s position is 57th. A couple of years ago both of these projects ranked in the top 10. They have lost more ground than most large altcoins.
Craig Wright is known as the frontman of Bitcoin SV. Last week he ended up in headlines again due to a lengthy trial. The case of Wright vs Kleiman was finally closed after several years. The outcome was reported as very contradictory.
Kurt Wuckert, an advocate of Bitcoin SV, commented on the situation on the popular Kitco channel.
Supporters of Bitcoin SV believe that the victory proves that Wright created Bitcoin (alone). Other crypto fanatics could not disagree more.
The trial was about whether Dave Kleiman was Craig Wright’s partner in Bitcoin mining in its early years. Dave Kleiman himself has already died, but he was represented in court by his brother Ira Kleiman.
The theoretical assets are worth tens of billions of dollars. The court ruled that there was not enough evidence of co-operation. However, as a result, Wright was sentenced to pay $100 million for other reasons.
After the trial, Wright commented: “I have never been so relieved in my life.”
The Court did not take a position on whether Craig Wright is Satoshi Nakamoto or not. Wright has not been able to prove this completely, meaning he has not been able to move the so-called Satoshi’s bitcoins. This is a requirement for whoever claims to be Satoshi Nakamoto.
Meta is testing crypto transactions at WhatsApp
The Libra hype of 2019 is still fresh in many people’s memory. At the time, many believed that Facebook was the next major player in the crypto industry. However, the Libra project experienced a lot of setbacks. Many partners left and the project ended up changing its name too.
Facebook is now known as Meta. Libra has also become a crypto wallet Novi. At the end of October, Meta launched a pilot which aims to increase the efficiency of remittances between the United States and Guatemala through Novi and Paxos stablecoin.
This project did not cause much fuss, but last week’s news seems more interesting. Meta has launched a pilot for sending cryptocurrencies on Whatsapp using a Novi wallet.
Below you can see a tweet from Stephane Kasriel, the director of the Novi Project.
There's a new way to try the @Novi digital wallet. Starting today, a limited number of people in the US will be able to send and receive money using Novi on @WhatsApp, making sending money to family and friends as easy as sending a message. 💸💬 pic.twitter.com/dGz3lejri7
— Stephane Kasriel (@skasriel) December 8, 2021
This is only a pilot. You can read more about it on Novi’s website. At least for the time being, the Novi wallet uses regulated USDP (Pax Dollar) stablecoin developed by Paxos. In the future, it would also be possible to send other cryptocurrencies via Novi wallet.
WhatsApp has over 2.5 billion users worldwide. One of its uses is to organize small payments or and share payments between individuals. WhatsApp could also be ideal for sending cryptocurrencies.