Deep Dive into Ethereum Smart Contracts: Evolution, Use Cases, and Challenges

Audy Castañeda
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Deep Dive into Ethereum Smart Contracts: Evolution, Use Cases, and Challenges

Smart contracts have the power to transform the contemporary world, and their use cases are evolving. What are these challenges and their possible solutions?

In the contemporary world, where most social and administrative processes have centralized infrastructures, Ethereum smart contracts represent the possibility of more fair systems free of centralization.

Smart contracts foster trust and eliminate the need for intermediaries in all types of processes. However, to delve into the impact that this technology has had and will possibly have, it is necessary to review exactly what smart contracts are and how they have evolved to the current point.

A smart contract consists of an application made up of code that runs automatically and under previously established conditions. This is how with the launch of Ethereum in 2015, smart contracts gave birth to the decentralized finance sector. Today they have evolved into a large number of use cases that will be briefly explained below.

Evolution of Use Cases in Smart Contracts

The use cases for this technology continue to expand and evolve and in this segment we will talk about that evolution.

Innovation in smart contracts is joined by the evolution of other applications that are transforming the DeFi sector. One of them is oracles, which can communicate real-world data and integrate it into blockchains. In this way, smart contracts can interact more and better with real-world data every day.

Although Ethereum is the pioneer network in this technology, there has emerged the need to create smart contracts that interact between different networks beyond Ethereum.

Artificial Intelligence also drives the evolution of this sector. Developers are starting to experiment with AI algorithms with smart contracts, resulting in huge potential. In supply chain management, Artificial Intelligence plays an important role in predictive analysis, while smart contracts provide decentralization of these processes.

Smart contracts continue to evolve into more robust applications that increase the number of use cases. One of the limitations of smart contracts is the user experience and therefore current developments focus on facilitating the usability of said contracts.

Regarding the development of programming languages, different experts point out how they are becoming easier to use and more efficient. Therefore, they reduce the barrier to entry and help the developer community grow.

Challenges of Ethereum Smart Contracts

Security is one of the biggest challenges, with tens of billions of dollars lost each year to malicious actors and smart contracts being prime targets for hackers.

Bugs in development also pose a threat, for example, event ordering and reentry errors can be exploited by hackers to introduce malicious data to enable their goals.

While it is true that smart contracts can speed up cross-border transactions and eliminate unnecessary intermediaries, there is no defined regulation in most countries. Therefore, legal challenges are also an obstacle in the expansion and adoption of this technology.

The immutability of blockchain, that is, the impossibility of modifying data within the chain (and what is one of the main qualities of blockchain). This feature becomes an obstacle when the terms of the contract need to be readjusted. Therefore, flexibility is one of its shortcomings.

Finally, developing contracts on Ethereum requires that programmers need to use less conventional programming languages ​​such as Solidity. In addition to needing commercial knowledge, cryptography and networking. Without a doubt, it is a much more complex area of ​​development.

By Audy Castaneda

Coinbase (COIN) Stock Up 10%, Investors Turn Bullish

Leonardo Perez
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Coinbase (COIN) Stock Up 10%, Investors Turn Bullish

Coinbase Global shares rose 10% following JPMorgan’s upgrade to neutral after Bitcoin held onto ETF-induced gains. Analyst Kenneth Worthington cites the launch of Bitcoin ETFs and the bullish prices of Bitcoin and Ethereum as beneficial for Coinbase. Despite the downgrade, Worthington is optimistic about the value; The third quarter of 2024 increased revenue by 14.2%, to $674.2 million.

Coinbase Global (COIN) shares rose 10% after JPMorgan raised it to neutral. The bank’s expert sees potential for COIN, given its strong ties to the sustained momentum of the Bitcoin price.

JPMorgan analyst Kenneth Worthington upgraded COIN to neutral from underweight, as Bitcoin touches $52,400.

Worthington Turns Bullish amid Bitcoin Momentum

Worthington said the launch of Bitcoin exchange-traded funds (ETFs) has led to significant price appreciation of the underlying Bitcoin asset rather than just being a selling event. The bullish price momentum enhances the earning power of crypto companies like Coinbase.

“Given the acceleration in recent days of flows into Bitcoin ETFs and the significant price appreciation of Bitcoin and now Ethereum, we are returning to a Neutral rating on Coinbase as we see the higher cryptocurrency prices not only sustaining, but improving, activity levels and Coinbase’s earnings power as we look to 1Q24,” the analyst wrote in a note to clients Thursday.”

Earlier this month, cryptocurrency brokers Robinhood claimed that clients preferred Bitcoin spot trading over ETFs, suggesting post-ETF income potential for spot trading. Worthington said:

Starting 2024, Worthington downgraded the stock to underweight. At the time, he set an $80 price target for the asset, arguing that the exchange was facing headwinds as investors piled into the new ETFs.

Now, Worthington and others are bullish on Coinbase stock ahead of its Q4 2023 earnings call. In Q3 2024, the cryptocurrency exchange beat top-line estimates with a 14.2% year-over-year revenue increase to $674.2 million.

The company’s custody business also appears poised to thrive, having been chosen as a custodian for Bitcoin ETFs from Franklin Templeton, Global X, Valkyrie, Invesco Galaxy, WisdomTree, Bitwise, BlackRock, and Grayscale.

COIN’s correlation with the price of Bitcoin is also a cause for optimism for investors. The stock price rose 62% in November 2023 before the US Securities and Exchange Commission approved Bitcoin ETFs.

“Coinbase’s business is geared towards higher token prices,” Worthington wrote. “The core revenue is transaction-based and given fees are driven off value traded, the higher value and higher velocity that accompanies the higher token prices should drive trading volume higher.”

COIN Price About to Break Higher

Yesterday, COIN price reached the 0.618 Fib retracement resistance level of the previous decline at $160. This is also a zone of horizontal resistance. This level usually acts as a ceiling if the movement is corrective.

However, COIN’s premarket price is currently at $168, considerably above the 0.618 Fib retracement resistance level. The closest resistance is at $187, created by the 2023 highs. If COIN were to break above it, there would be a lack of resistance until $232, 45% above the current price. The RSI supports the breakout as it has moved above 50 (green icon). Conversely, failure to rise above $160 can trigger a 25% drop to the nearest support at $120.

The exchange might not be profitable this year. According to an analysis by InvestingPro, Coinbase has a negative operating income margin of -55.53%. This profitability ratio measures the profitability of a company after paying its variable costs. Coinbase’s businesses also face legal problems with regulators.

By Leonardo Perez

US Congressman Demands Investigation into Alleged Use of Cryptocurrencies in Terrorist Financing

Audy Castañeda
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US Congressman Demands Investigation into Alleged Use of Cryptocurrencies in Terrorist Financing

Tom Emmer, a United States congressman, sought specific explanations on claims related to the alleged use of cryptocurrencies to finance terrorism reports during a House Financial Services Committee hearing on Wednesday.

On February 14, Congressman Tom Emmer (MN-06) questioned U.S. Department of Treasury Undersecretary for Terrorism and Financial Intelligence (TFI) Brian Nelson during a House Financial Services Committee hearing providing oversight of the Financial Crimes Enforcement Network (FinCEN) and the Office of Terrorism and Financial Intelligence.

It should be recalled that two months ago, Brian Armstrong, CEO of the San Francisco-based crypto exchange Coinbase, challenged the United States Senators’ approach toward the cryptocurrency sector in the country, expressing his opinion via X:

“Senators Warren and Marshall now lobbying for big banks. Being anti-crypto is a really bad political strategy going into 2024:

* 52m Americans have used crypto

* 38% of young people say crypto can increase economic opportunities

* just 9% of Americans satisfied with the current financial system

* crypto prices up 90% YTD.”

Cryptocurrencies Are Not a Tool for Terrorists

At the court hearing, the congressman asked US Treasury Department Undersecretary for Terrorism and Financial Intelligence (TFI) Brian Nelson to confirm the Wall Street Journal’s coverage of Hamas’ efforts to raise money through digital assets.

Emmer highlighted that the magazine revealed in October last year that between August 2021 and June 2023, digital assets valued at $41 million went to Hamas. Additionally, approximately $93 million allegedly went to Palestinian Islamic Jihad.

Several leading blockchain analytics companies around the world have rejected the WSJ’s claim, stating that the amount of money going to these organizations is negligible. Specifically, the congressman curiously asked Brain Nelson to confirm whether this alleged coverage aligns with the US Treasury Department’s assessment.

Responding to the question, Nelson stated that the US Treasury data is similar to that of analytical companies. “The data published in the Wall Street Journal article emphasizes wallets, although not necessarily the aggregate numbers among wallet users,” Nelson said.

Furthermore, the Undersecretary noted that cryptocurrency assets are not the main means of financing terrorism globally. According to Nelson, the US Treasury’s assessment shows that terrorists primarily use traditional methods and services, not cryptocurrencies, to finance their activities.

Nelson further backed up his claims by highlighting that the department has closely monitored this act to demonstrate the accuracy of the data. Because of this, Emmer then questioned whether crypto assets were a common means of financing for Hamas and Palestinian Islamic Jihad.

Need for Accurate Development Data

Later, Emmer asked Nelson if Hamas’ cryptocurrency use was less than what the WSJ and the media are reporting. The undersecretary confirmed that this is correct, as the department’s evaluation says. He added that, in his opinion, “We have done a good job identifying the virtual asset providers and financial facilitators that both Hamas and Jihad have historically relied on.”

Emmer has urged the US Treasury Department to publish its records to address false information in the sector. The Congressman mentioned that several US senators and CEOs are already exploiting the information, threatening innovation in the United States.

In December, US Senator Elizabeth Warren expressed her stance on cryptocurrencies, saying their main use cases are for criminal activities, including money laundering, terrorist financing and drug trafficking, among others.

Warren has called digital assets the “new threat” to the world due to the risk they pose to the economy. However, Emmer, other US representatives, independent companies, and even the Treasury Department, disagreed.

By Audy Castaneda

Is the Ethereum Spot ETF BlackRock’s Next SEC Win?

Leonardo Perez
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Is the Ethereum Spot ETF BlackRock’s Next SEC Win?

BlackRock, with a 576-1 ETF approval record, is waiting for the SEC to approve an Ethereum ETF, following its success with Bitcoin ETFs. The crypto community is optimistic about the approval of the Ethereum ETF on May 23, spurred by BlackRock’s application and regulatory developments. SEC Chairman Gary Gensler expresses caution but does not rule out the innovation potential of cryptocurrencies within a compliance framework.

BlackRock, the world’s largest asset manager, with an unparalleled 576-1 record in exchange-traded fund (ETF) approvals, faces its next potential victory. The possible approval of a spot Ethereum ETF by the United States Securities and Exchange Commission (SEC).

This comes after the company, along with 13 institutional giants, celebrated the launch of the first spot Bitcoin ETFs in the United States on January 10, marking a monumental moment for cryptocurrency investors.

Ethereum Spot ETF Approval Looming

BlackRock’s foray into the Bitcoin ETF market bolstered confidence among cryptocurrency enthusiasts. With over $8 trillion in assets under management and a near-perfect track record, its support for cryptocurrency ETFs has catalyzed optimism. He subsequently hinted at greater acceptance and integration of digital currencies into the overall financial system.

The SEC’s nod for Bitcoin ETFs has sparked speculation in the cryptocurrency community about the fate of Ethereum ETFs. Particularly in light of BlackRock’s November 2023 filing for a spot Ethereum ETF. With the decision deadline set for May 23, the stakes are high.

Bloomberg Senior Analyst Eric Balchunas attributed a 70% approval chance to the Ethereum ETF. It reflected a cautiously optimistic outlook reinforced by recent regulatory developments:

“I see no reason for [the SEC] to deny [spot Ethereum ETFs] given that they have approved [forward Ethereum ETFs]. (…) It would be illogical and technically they could open themselves up to another lawsuit,” Balchunas said.

However, the path to approval is fraught with caution and regulatory scrutiny. SEC Chairman Gary Gensler’s recent statements highlight a cautious stance toward cryptocurrency investments. In fact, he emphasized the agency’s continued concern about the potential risks associated with Bitcoin and, by extension, other digital currencies.

SEC Position on Ethereum Spot ETFs

Despite approving Bitcoin ETFs, Gensler’s comments reflect a deliberate approach to regulation aimed at safeguarding investors against fraud and market manipulation, while recognizing the complexities of the cryptocurrency market:

“This is a field that has been plagued by fraud and manipulation, and look at all the bankruptcies. It is entity, after entity, after entity… We try to make sure as best as possible that there is no fraud or manipulation, but one of the challenges of the Bitcoin market is that there is a lot of trading on trading platforms that do not comply with our laws.”

Gensler’s skepticism extends to the broader cryptocurrency trading environment. He also highlighted the volatility of Bitcoin and questioned the usefulness of many cryptocurrencies. Still, its insistence on compliance suggests a regulatory framework that does not outright dismiss the innovation potential of cryptocurrencies.

As the May deadline approaches, whether Ethereum will follow in the footsteps of the Bitcoin ETF remains a topic of intense speculation. BlackRock’s request represents a litmus test for the SEC’s willingness to further integrate cryptocurrencies into regulated financial products.

With a 576-1 track record, BlackRock’s candidacy for an Ethereum ETF encapsulates the narrative of the cryptocurrency’s journey from the margins to the forefront of financial innovation.

By Leonardo Perez

Bitcoin ETFs Raise Coinbase (COIN) Stock as JPMorgan Upgrades Rating

Audy Castañeda
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Bitcoin ETFs Raise Coinbase (COIN) Stock as JPMorgan Upgrades Rating

As Bitcoin traded higher, Coinbase shares gained as much as 7.8% following the update.

Bitcoin’s recent rally, which pushed its price to the $52,000 level, has positively impacted shares of US-based cryptocurrency exchange Coinbase (COIN).

After experiencing a notable drop to $115 in early February, Coinbase shares rose to $172 on Thursday, following a significant upgrade from a JPMorgan analyst.

Improved Outlook for Coinbase amid Crypto Rally

According to a Bloomberg report, JPMorgan analyst Kenneth Worthington abandoned his bearish view on Coinbase weeks after downgrading the stock. Worthington believes the exchange will likely benefit from the recent rally in digital asset prices, prompting him to change his rating to neutral.

This change in stance comes after Worthington’s downgrade in January, where it predicted a possible deflation of enthusiasm for Bitcoin exchange-traded funds (ETFs). However, contrary to its previous forecast, Bitcoin ETFs have been successful in terms of trading measures, and the price of Bitcoin has surpassed $52,000, reaching its highest level since 2021.

Coinbase stock saw an 8% drop at the start of the year, following an impressive 400% rise in 2023. Analyst opinions on the stock remain divided, with buy, hold, and sell recommendations split roughly evenly. Worthington maintained his $80 price target on the stock ahead of the company’s earnings report, which will be released after the market closes on Thursday.

The analyst emphasized that Coinbase’s business is closely tied to token prices, and its primary revenue is based on transactions. As token values ​​rise and trading activity gains momentum, fees based on the value traded are expected to drive higher transaction volumes, ultimately helping to improve Coinbase’s revenue.

Bitcoin ETFs Witness Significant Trading Volume

On February 14, Bitcoin ETF trading volume showed notable numbers, with Blackrock’s IBIT leading the way with $721 million in volume. Grayscale’s Bitcoin Trust (GBTC) followed closely with $619 million, while Fidelity’s FBTC secured third place with $456 million.

Ark Invest accumulated a volume of $169 million. The total trading volume of the nine ETFs amounted to approximately $1.5 billion. In particular, the largest ETFs saw higher trading volume than the previous day, with IBIT surpassing $700 million and GBTC surpassing $600 million.

Interestingly, before the trading session, GBTC sent less than half of the Bitcoin it sent to Coinbase the previous day. Despite this decline, GBTC’s total trading volume was 50% higher.

As demand for Bitcoin continues to rise, ETFs play a crucial role in facilitating institutional and retail investors’ participation in the cryptocurrency market. The increased trading volume of Bitcoin ETFs highlights growing investor interest and confidence in digital assets.

Regarding predictions about Bitcoin, experts express their opinions. Anthony Scaramucci, founder of SkyBridge Capital, despite regulatory hurdles, is bullish on Bitcoin and maintains his forecast for a significant price rise.

Tuur Demeester, economist, investor and CEO of Adamant Research, raises the perspective that the current bullish cycle of Bitcoin (BTC) could surpass previous ones, with a possible notable increase in the price of the cryptocurrency.

The current situation of the bull market, although similar to the previous ones, according to the economist, has the advantage that this time the cycle will be much longer and should extend well beyond 2024, with a possible realization of profits in the halving. Demeester’s thesis coincides with what other analysts say, such as the Colombian Juan Rodríguez, who also believes that a second phase of the rally is approaching in which retail investors will have a greater participation.

By Audy Castaneda

Why Japan Wants to Stop P2P Cryptocurrency Transactions

Leonardo Perez
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Why Japan Wants to Stop P2P Cryptocurrency Transactions

Japan aims to curb fraud by regulating peer-to-peer cryptocurrency transactions. Japanese regulators advise banks on stricter cryptocurrency transfer protocols. The new guidelines could significantly affect Japan’s 19.25 million cryptocurrency users.

Japan is taking bold steps to mitigate the risks associated with crypto assets. With the rising tide of specialized fraud and illegal money transfers through Internet banking, Japanese authorities are considering a crucial shift in financial security protocols.

The National Police Agency (NPA), together with the Financial Services Agency (FSA), believes that a significant portion of these fraudulent activities leverage crypto assets for illicit fund transfers.

Will Regulators’ New Recommendation Destroy P2P in Japan?

The FSA and NPA are putting pressure on banks to improve customer protection. Therefore, they recommend stopping transfers to crypto exchanges if there are issues such as name discrepancies.

They also want better tracking of unauthorized transfers to prevent fraud. FSA wrote the following:

“The Financial Services Agency, in collaboration with the NPA, encouraged financial institutions to further strengthen the protection of their users based on risks, such as the status of transfers to cryptoasset exchange service providers.”

This action comes from an increase in the number of victims of phishing scams who are forced to send money to exchange accounts.

On February 6, 2024, they formally asked the National Bankers Association and others to implement strict measures. This includes blocking transactions with mismatched names and updating transaction monitoring.

The implications for the peer-to-peer (P2P) market could be profound. P2P transactions, by their very nature, involve different names on the sender and receiver.

Therefore, if banks implement the FSA recommendations, they could stop a significant portion of these transactions.

Japanese Regulator Suggests “Stop” Fiat-to-Crypto P2P Transfers

On February 14, the FSA published a request encouraging banks to “further strengthen the protection of their users.” To achieve this, the FSA and NPA refer to several key initiatives.

One of them could significantly disrupt the P2P market. The regulator suggests that “Stop transfers to cryptoasset exchange service providers if the sender name is different from the account name.”

The Japanese version of the press release uses the verb reject, explaining that the suspension of such transfers should include individual and corporate accounts.

The mechanics of these transactions mean that the names of the sender and recipient on the fiat and crypto ends of the transaction are always different. Therefore, if Japanese banks reject any transaction from one individual’s bank account to another’s cryptocurrency wallet, that could seriously compromise the P2P market.

It should be noted that the current FSA request is drafted as a recommendation, and does not require compliance with specific requirements, but rather refers to initiatives. It remains to be seen how exactly banks will react to these recommendations and whether they will disrupt the P2P market. Cointelegraph contacted the FSA for further clarification.

Japan and its History with Cryptocurrencies

While the FSA’s recommendations are currently just that (recommendations), the actual impact on the banking sector and the P2P market depends on how these institutions respond. The guidelines could directly affect Japan’s 19.25 million cryptocurrency users.

The government’s recent move to reform cryptocurrency taxes for businesses, exempting them from taxes on “unrealized gains” from cryptocurrency holdings, underscores the nation’s intricate relationship with cryptocurrencies.

The reform, aimed at redefining taxes for corporations, more closely aligns corporate cryptocurrency taxes with those of individual investors, taxing profits only from selling crypto assets.

However, this progressive stance on cryptocurrency taxes stands in stark contrast to the cautious approach towards P2P crypto transactions.

By Leonardo Perez

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