Iran and Russia Want to Create a Common Gold-Backed Stable Currency

Audy Castañeda
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<strong>Iran and Russia Want to Create a Common Gold-Backed Stable Currency</strong>

The potential stablecoin is intended to enable cross-border transactions in lieu of fiat currencies such as the US dollar, Russian ruble, or Iranian rial.

Creating a stablecoin backed by physical gold, which is tradable even in the face of economic sanctions; this is a project backed by Russia and Iran, both restricted by the international community.

It appears that the Central Bank of Iran is cooperating with the Russian government to jointly issue a new gold-backed cryptocurrency.

According to the Russian news agency Vedomosti, Iran is working with Russia to create a “Persian Gulf region token” that would serve as a method of payment in foreign trade.

A Russian and Iranian Stablecoin to Counter Sanctions

Negotiations are ongoing, according to Anton Tchakev, a Duma member responsible for working on digital issues. With a caveat for now: Russia will only confirm the creation of this asset when the issue of cryptocurrency regulation settles on its territory. As a reminder, last September, Deputy Finance Minister Alexei Moiseev already raised the possibility of using stablecoins with Russia’s allies.

This stablecoin will be backed by gold, such as PAX Gold, the largest such asset, which is currently worth $513 million. The interest is that it will not be based on a sanction-prone fiat currency, such as the dollar. Gold’s safe haven status is also one of the reasons why it would be chosen.

Iran and Russia Playing a Balancing Act

It is worth noting that both Iran and Russia have banned cryptocurrency payments in their respective countries. Their governments are not particularly interested in letting part of the economy slip away. Nevertheless, they still want to capitalize on the technology that underpins crypto assets.

Last August, Iran confirmed that it would now use cryptocurrencies for its imports. Same story from Russia, which announced in September that it was working on a bill on cross-border cryptocurrency payments. In these two countries, the catastrophic falls of the respective fiat currencies have also led to a marked adoption by the population, in order to counter the deleterious effects on their economies.

Iran and Russia: Steps Towards Crypto Adoption

In August 2022, Iran’s Ministry of Industry, Mines, and Commerce approved the use of cryptocurrencies for imports into the country amid ongoing international trade sanctions. The local government claimed the new measures would help Iran ease global trade sanctions. Subsequently, Iran placed its first international import order using cryptocurrencies worth USD 10 million.

The Bank of Russia, which has historically opposed the use of cryptocurrencies as a payment method, has agreed to allow the use of cryptocurrencies in foreign trade to mitigate the impact of international sanctions. However, the regulator has never clarified which cryptocurrencies would be used for such transactions.

This shows that even in territories where populations stay away from cryptocurrencies, these are considered effective enough to be used by governments.

By Audy Castaneda

Egyptian Pound Hits New Low against US Dollar Despite Flexible Exchange Rate Regime

Audy Castañeda
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<strong>Egyptian Pound Hits New Low against US Dollar Despite Flexible Exchange Rate Regime</strong>

The price of the Egyptian pound has fallen against currencies and the US dollar at an increasing rate since the release of November 2016, losing more than 90% of purchasing power.

The exchange rate of the Egyptian pound against the US dollar fell to a new low on January 11 after touching 32.14 the dollar. The last significant depreciation of the currency occurred only a few months after it adopted a flexible exchange rate regime. According to the International Monetary Fund, the Egyptian monetary authorities have pledged not to intervene in the foreign exchange markets.

Flexible Exchange Rate Regime

Just a few months after falling more than 15% against the US dollar, the Egyptian pound hit a new low of more than 32 per dollar on January 11. According to a Reuters report, the latest depreciation of the pound has led some analysts to question how far the central bank wants the pound to fall.

As Bitcoin.com News reported in October 2022, the official pound exchange rate against the dollar fell from just under 20 units per dollar to 23.09 per dollar, after the Egyptian monetary authorities agreed to abandon the rate regime. fixed exchange rate. In return, Cairo would receive a financial package of 3,000 million dollars from the International Monetary Fund (IMF).

The Experts Share their Opinions

Following the currency’s latest slide, some Egyptian analysts quoted in the Reuters report believed that the pound had reached its lower bound. Others, such as Goldman Sachs’ Farouk Soussa, said it was still difficult to conclude that the pound’s exchange rate against the dollar had reached equilibrium.

“When portfolio investors start to come back, that’s when the market will have judged the balance. But there is no direct way to look at the balance,” Soussa said.

Monica Malik, an economist at Abu Dhabi Commercial Bank, said the latest drop in the pound alone does not guarantee that investors will return. The economist said that liquidating the accumulation of currencies could be a step that reassures investors. However, this requires new USD liquidity and, according to Malik, “there is currently no visibility where this liquidity will come from.”

Carla Selim, an economist at Standard Chartered plc, asserted that “the Egyptian pound will remain under pressure until more dollar inflows are achieved in the foreign exchange market, to match the dynamics of demand and supply of currencies.”

Experts expected that the pound is likely to be pushed beyond the final limit of devaluation before stabilization, during the process of closing the gap between the official and parallel markets.

Meanwhile, in the IMF’s Egypt staff country report, the global lender revealed that the Cairo government had promised not to intervene in currency markets. Under its agreement with the global lending institution, the Egyptian monetary authorities would only intervene in cases of excessive volatility.

By Audy Castaneda

What is Proof of Stake (PoS)?

Audy Castañeda
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<strong>What is Proof of Stake (PoS)?</strong>

PoS is considered a greener and cheaper alternative to proof of work (PoW).

Proof of Stake (PoS) is a method of validating transactions and generating new blocks on a Blockchain network.

Instead of requiring nodes (called “validators”) to solve complex calculations in order to create new blocks (as is the case in proof-of-work), validators in a PoS system are chosen based on the number of coins they have pledged (or “bet”). The more coins a validator puts into play, the more likely they are to be chosen to create a new block.

Peercoin was the first cryptocurrency to implement a large-scale PoS consensus model.

Validators

Validators, in point of sale Blockchain, are selected to produce the next block based on their participation. Although often designed with random features to avoid consensus execution, a larger amount staked by a validator gives them a higher chance of producing the next block.

The blocks offered by the validators are then propagated to the rest of the network, which verifies and adds the approved block to the Blockchain.

Benefits of the Network

PoS bypasses the PoW-like lottery process, eliminating energy expenditure to achieve consensus in the process. This has several important performance and security implications.

Performance-wise, PoS has a “fast final” consensus design in which block production can converge on consensus between validators and network nodes at a much faster rate than its PoW counterpart. As a result, PoS networks perform better in terms of on-chain transactions per second (TPS) and effective settlement of network transfers.

With respect to security, validators are encouraged to act honestly when producing blocks and approving transactions for two main reasons, explained below.

First of all, validators are likely to control significant parts of the coin, even those that are not locked on the network, giving them a financial incentive to secure the chain against a dilemma where security vulnerabilities negatively affect the coin price.

Second, the mechanism for blocking a stake that block-producing validators must adhere to is threatened with being “reduced” or removed from their control if they choose to act maliciously, produce fake blocks, or manipulate transactions.

Benefits for Cryptocurrency Holders

Cryptocurrency owners, who are not interested in becoming validators, can also receive rewards for participating in the network ecosystem.

Different ways of generating passive income are available today. The rules depend on the Blockchain being used.

Stop Reward – Users can earn rewards only by holding their crypto in their wallet for a specified period of time. No specific action is necessary to bet on these cryptocurrencies. The reward will depend on how many coins are saved in your wallet and (often) how many times they are saved.

Participation/delegation reward – Users delegate part of their participation to a validator who will be in charge of securing the network. The reward will come from the validator sharing part of their income with those who have delegated their participation.

By Audy Castaneda

Cryptocurrency Peaks and Crashes: Nothing Stops SingularityNet’s AGIX

Audy Castañeda
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<strong>Cryptocurrency Peaks and Crashes: Nothing Stops SingularityNet’s AGIX</strong>

The good performance of SingularityNet is linked to the enthusiasm of investors for artificial intelligence projects since the beginning of the year.

The year is off to a pretty good start for the cryptocurrency space, with Bitcoin managing to recoup its losses from the FTX crash. Similarly, Ethereum has once again gloriously risen above the token $1,500 mark.

While the cryptocurrency market ended 2022 on a bearish note, 2023 is looking pretty good. After fifteen days, the sector’s global capitalization has gone from 813 to 972 billion dollars, an increase of 19.55%. Bitcoin reversed the $20,000 mark, and Ethereum settled comfortably above $1,500. Moreover, Solana, in particular, has seen its price more than double since the start of the year.

Aside from the bull run, there is other good news: The lawyers for the FTX restructuring team announced that they were able to recover $5 billion of the platform’s funds. They also plan to sell the companies acquired by the exchange, to speed up the refund process for clients of the platform.

Top Cryptocurrencies: AGIX, the Grand Champion of Recovery

SingularityNET’s AGIX token is leading the rise in the cryptocurrency sector. Indeed, the data indicate that the price of the cryptocurrency would have increased by 226.56% in its last 7 days. Based on its peak during the week, its growth even reaches 428%. The good performance of SingularityNET is linked to the enthusiasm of investors for artificial intelligence projects since the beginning of the year.

Aptos (APT), for its part, is basking in the hopes pinned on cryptocurrencies. In addition, the founders of the project present it as the most secure Blockchain in the industry. Many analysts believe that the APT token could replicate the performance of SOL in early 2021.

As for NuCypher and Decentraland, there are no specific reasons behind the growth of these two cryptocurrencies. However, it should be specified that the Metaverse project tokens have experienced relatively high growth compared to the rest of the market. Flow (+52.1%), Sandbox (+45%), and GALA (+57%) in weekly data.

Crypto Failures: Neutrino USD Plummets

The Waves network stablecoin continues its descent. Its current price, $0.3621, is moving further and further away from its parity with the dollar. During the week, USDN lost 18.65%, the worst performance of the entire crypto market.

Other cryptocurrencies did not experience negative growth. Their performance was simply less explosive than the market average. For example, Pax Gold, the cryptocurrency that replicates the price of gold, is usually a project that grows at fairly moderate levels like its benchmark.

While some are already clamoring for the return of the bullfight after this good start to the year for the crypto market, it is important not to sell the bear’s skin before it has been killed.

By Audy Castaneda

Two Important Events for Bitcoin and Cryptocurrencies this Week

Audy Castañeda
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0
<strong>Two Important Events for Bitcoin and Cryptocurrencies this Week</strong>

These are market participants’ focus of attention.

The strength in the financial markets continued in the last week of trading. The US stock indices S&P500 and Nasdaq100 experienced the best week since November 2022. Bitcoin (BTC) benefited from increased risk appetite, and it was able to resolve its trading range of the past two months to the upside on Thursday night.

The price of Bitcoin shot north within hours of trading, starting a cascade of liquidation of over $500 million in leveraged short positions. As a result, the cryptocurrency peaked at $21,321, dragging the entire crypto sector higher.

In view of important economic data, the new business week only really picks up speed on Tuesday, due to Martin Luther King Day in the US. New economic data from the PRC will kick things off. Midweek, with new producer prices and retail sales, market participants expect the release of several key figures on the state of the US economy. At the end of the week, investors focus on the development of the US real estate market.

Gross Domestic Product and Industrial Production in China Open the New Business Week

Investors are initially focusing on the Far East this week. On Tuesday, January 16, first thing in the morning (03:00 CET), the current gross domestic product for the last quarter of 2022 and the new industrial production figures for the previous month of December will be published in China. Based on China’s GDP data, market experts hope to draw conclusions about the situation in the world’s second-largest economy. After a recovery in the last business quarter, experts forecast slower growth again for the fourth quarter.

If the drop is less severe than expected, investors should take this positively and, contrary to expectations, China may have exported more to the US and Europe than previously assumed.

If, contrary to expectations, economic activity has been more resilient to the many problems in China, prices in the US stock market and therefore also in the cryptocurrency sector could benefit from this.

Publication of Consumer Price Indices in the United Kingdom (UK)

On Wednesday, January 18, the National Statistics Office will publish the latest inflation data for December. A slight decrease from the last 10.7 percent to 10.6 percent is expected, compared to the same period last year.

If the forecasts of market analysts are confirmed, and the inflation rate continues to fall on the island, the general trend is also evident here. If the estimate does not meet market analysts’ expectations, the British pound is likely to appreciate against the US dollar. As in the past, this could have a positive effect on the stock and crypto market.

On the other hand, if the consumption indices turn out to be higher than expected, this would be a warning for the financial market and the US dollar could regain its strength. For Bitcoin and Co. that would be bearish.

By Audy Castaneda

The Big Bubbles of the Crypto Markets

Audy Castañeda
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0
<strong>The Big Bubbles of the Crypto Markets</strong>

There were only three halves in Bitcoin, namely in November 2012, in July 2016, and in May 2020.

To date, three large speculative bubbles have formed in the crypto markets. Actually, many more have formed, but they have often been short-lived, limited to only a few cryptocurrencies, or not particularly large.

Those that were huge, extensive, and above all long, were only three. And in all cases, they occurred the year after the one in which a Bitcoin halving occurred.

The three bubbles produced after the three halves of Bitcoin are described below.

First of the Three Crypto Bubbles

The first major crypto market asset bubble occurred in 2013, that is, the year after the first Bitcoin halving. It affected the entire crypto market and lasted more than 12 months. In fact, the rebound followed the 2011 bubble burst, so 2011/2013 bull run effectively lasted two years.

At the time of the Bitcoin halving in November 2012, the crypto market had a capitalization of less than $150 million, of which more than 90% consisted of bitcoins. The great speculative bubble of 2013 caused this capitalization to even reach 16,000 million dollars at its peak, between November and December.

In other words, in about thirteen months, the increase was almost 12,000%. Therefore, it was for all intents and purposes a gigantic bubble, very extended, and with a remarkable duration. In 2013, Ethereum did not yet exist, while Ripple and Litecoin did.

The Second Crypto Bubble

At the end of May 2016, in view of the halving, the crypto market capitalization had already risen to $10 billion, and it began to skyrocket again in October of that year. During that speculative bubble, Ethereum played an important role, contributing to the reduction of Bitcoin’s dominance.

The peak of that cycle was reached in early January 2018, although the price of Bitcoin reached it in mid-December 2017, with a total market capitalization exceeding $800 billion. Compared to 3.1 billion in January 2015, growth had been 26,000%, while post-halving growth was 6,000%.

The Third Bubble

In May 2020 the third halving took place, and in October of the same year, the last great bull run was triggered. Its climax was in November 2021, when the crypto market touched $3 trillion, or an increase of 2,900% compared to the 2018 low, and 667% compared to October 2020. From the November 2021 peak, the overall crypto market capitalization fell to $780 billion in November 2022, a much smaller 74% loss than in the previous two bubbles.

According to the evidence explained above, the crypto markets have expanded a lot over the years, and perhaps that is also why the bubbles have become more and more contained.

By Audy Castaneda

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