Historian Adam Tooze Wonders Whether There Is a Side Door for those Wanting to Control Bitcoin

Alexander Salazar
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Historian Adam Tooze Wonders Whether There Is a Side Door for those Wanting to Control Bitcoin

Tooze considers it ironic that the US National Security Agency developed crucial software to hide and compress information. Sociologist Donald MacKenzie thinks that the steps contained by SHA-256 are too simple to hide a side door.

British economic historian Adam Tooze recently asked whether Bitcoin had a side door. Although private developers were primarily those who built and maintained the network, it is essentially a public good.

He stated in the blog that it is an open-source protocol, and anyone can enter it through a wide-open front door. However, he also wondered whether there was a side door for a privileged group that wanted to gain more control over Bitcoin.

Adam Tooze, a professor at Columbia University, was born in London, England, in 1967. He graduated in economics from King’s College, Cambridge. He received his doctorate from the London School of Economics with a thesis on the statistical history of Germany.

In addition, the historian holds the Shelby Cullom Davis Chair in History at Columbia University, where he serves as Director.

In 2019, the Foreign Policy magazine named Tooze as one of the leading thinkers of the decade worldwide.

Adam Tooze Gives His Opinion on the Pioneering Cryptocurrency

Tooze, a fiat money advocate interested in the democratic policy of money, recently gave his opinion on Bitcoin. He said that he viewed cryptocurrencies primarily in terms of the mistrust towards governments expressed by crypto advocates and the artificial scarcity of Bitcoin issuance.

He considers that its fixed upper limit of 21 million coins is arbitrary, causing Bitcoin to be much more restrictive and deflationary than gold. In that regard, he stated that the gold stock has proved to be something that can further expand.

He Wonders Whether the Government Can Control Bitcoin

Tooze considers it ironic that the US National Security Agency (NSA) and other state organizations developed some crucial attributes of Bitcoin.

In particular, he refers to a hash function called SHA-256 that Bitcoin uses. It allows users to hide and compress information through a mathematical hashing operation.

He wonders why the NSA created that central piece of software on Bitcoin, a currency system supposedly designed to minimize government dependence. He says that that should change the narrative of cryptocurrencies since he finds Bitcoin policies deceptive.

That Has Also Caught the Attention of Donald MacKenzie

Adam Tooze stated the only other person that expressed his view on the participation of the NSA in the creation of SHA-256 was Donald MacKenzie.

The sociologist said nobody has to be too paranoid to think about the link between Bitcoin and that leading code-breaking intelligence agency. However, he thinks there is no reason to worry that the NSA has built a flaw to decrypt SHA-256 encrypted messages.

Likewise, MacKenzie added that the US National Institute of Standards and Technology made the algorithm public. He explained that the steps it contains are so simple that it would be hard to hide a side door.

Adam Tooze replied that he respects Donald MacKenzie but considers crucial problems. He believes that state agencies should not participate in cryptocurrency projects looking to replace the trust in the government.

The creation of Bitcoin and other decentralized cryptocurrencies aimed to avoid government control and authoritarianism. Since state intelligence agencies helped create crucial software for the Bitcoin network, doubts have arisen among analysts.

By Alexander Salazar

In the War between Russia and Ukraine, Bitcoin Will Be more than a Store of Value

Alexander Salazar
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In the War between Russia and Ukraine, Bitcoin Will Be more than a Store of Value

During geopolitical conflicts, investors seek assets that maintain a stable value, like gold and silver. Although Bitcoin lacks maturity as a store of value, it is a strong competitor for precious metals.

Bitcoin will not be the leading asset in the current conflicts occurring in Eastern Europe. The recent drop in the price suggests that investors do not seek value in it. They prefer precious metals like gold and silver despite the strength of the narrative of Bitcoin as digital gold.

Due to its current price, Bitcoin does not seem a good alternative store of value against the effects of the war between Russia and Ukraine, while the value of the cryptocurrency recovers from a sharp drop of 8%, that of gold increases by 3.4%.

The panic and speculation in the Bitcoin market contradict the belief that the cryptocurrency will replace gold as a store of value. Its adoption in countries like Venezuela, Argentina, and El Salvador, besides its sustained growth in the pandemic, has reinforced that narrative.

The entry of a growing amount of institutional money into the cryptocurrency market has helped its price couple to institutional assets. There is a high correlation between Bitcoin and stocks of technology companies, also affected by the economic crisis in the United States and worldwide.

In that regard, Bitcoin behaves as a highly volatile speculative vehicle rather than an asset to maintain capital value. That feature can keep investors away and lead them to look for alternatives against the uncertainty of the Russian invasion of Ukraine.

Cryptocurrency expert Vijay Ayyar, vice president of the Luno exchange, considers Bitcoin is in a too early stage of maturity to call it digital gold. Besides, market analyst Eduardo Gavotti notes that the current geopolitical situation could make the price of the cryptocurrency increases its volatility.

Bitcoin Offers People Other Features in this Conflict

The use of Bitcoin goes beyond that of a store-of-value asset, a characteristic that this financial product meets. Therefore, this temporary episode should not affect its reputation as a digital gold in the future.

Bitcoin may become the favorite asset when geopolitical conflicts occur in a few years. However, during the attack by Russia against Ukraine, the pioneering cryptocurrency could only offer limited financial protection.

It complies with most characteristics making an asset a store of value: trust, limited supply, low storage cost, easy transmission, and durability of value. However, its narrative as digital gold fails since its price fluctuates rapidly, not remaining long enough to generate security in the short term.

Although it is not the best time to prove that Bitcoin is the gold of the future, investors continue to seek alternatives to protect their capital. Of course, the cryptocurrency created by Satoshi Nakamoto remains a strong competitor in that process.

Bitcoin stands out as a financial product thanks to its deflationary nature, fully transparent transaction log, censorship resistance, and ease of trading. During an economic and political conflict, the most vulnerable look for tools like BTC that protect them and make their daily lives easier.

Although many people will buy futures in gold or jewelry to keep their capital safe, they may also see value in Bitcoin. The cryptocurrency can give citizens power over their money while resisting censorship and authoritarianism.

By Alexander Salazar

The US Froze Assets from Important Russian Banks While Bitcoin Price and Main Altcoins Started to Breathe Again

Jenson Nunez
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The US Froze Assets from Important Russian Banks While Bitcoin Price and Main Altcoins Started to Breathe Again

According to analysts, the procedures revealed by the US and the UK kind of alleviated the uncertainty reigning in the cryptocurrency environment. The entities pointed out that these currencies can be helpful in both Ukraine and Russia because of their decentralized features.

Commanded by President Joe Biden, the US government has applied a series of economic punishments on five of the largest Russian financial entities, obstructing all the assets that these institutions possess in the United States of America, estimated at more than USD 1 trillion.

After applying this measure, the US joins efforts with other concerned nations that have taken the same stances. A country like the United Kingdom stands out especially, where its prime minister, Boris Johnson, also announced a similar measure. It freezes the Russian financial entities stored in the English region.

On the other hand, regarding the measure taken by the US, President Biden highlighted in a press conference that the procedure got created to prevent Russian entities and the government from continuing to collect new funds on US territory.

Regarding the range of these procedures, Biden explained that for now, it only applies to banks and associated entities, since it is a measure accorded between the highest representatives of the United States of America and the G7, which has a more superior level than the punishments initially applied to the Russian Nation this week.

According to a report revealed by the Financial Times, it seems that the expectation of the US president and the British prime minister is that this also includes Russia suspending the Swift international payment network, something that hasn’t reached an agreement yet.

However, Biden maintains that the weight of these sanctions far outweighs the effect that excluding the Soviet nation from the system as mentioned above could have, and it would also be on the table to limit the country’s ability to negotiate with other currencies, such as dollars, euros, pounds, and yen.

Bitcoin and Cryptocurrencies React Positively

The announcements made by Biden and Jhonson this February 24 created a positive impact on the digital currency market, in which a large number of exponents partially regained their health and started to breathe again.

It is worth considering the case of Bitcoin, a digital asset that, after marking low rates near USD 34,500, managed to reach a new high peak valued at USD 39,000 but keeps its constant fluctuation to date.

Just Useful and Balanced Cryptocurrencies

Many analysts have described how helpful digital currencies like Bitcoin are when it comes to bringing a financial back-up to the Ukrainian government and troops amid the fight in the eastern nation, precisely because it operates as an instrument to share values through transferences without third party control.

However, just as it can be a positive alternative for Ukraine, these assets could also bring many advantages for the Russian government, which could also employ these methods to find financing in the face of restrictions and punishments applied by a good faction of the world.

By: Jenson Nuñez

Bitcoin Price Plummets Following President Putin’s Declaration of War on Ukraine

Audy Castañeda
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Bitcoin Price Plummets Following President Putin’s Declaration of War on Ukraine

Experts explained that the prices of Bitcoin, Ethereum, and other cryptocurrencies may continue to fall due to the crisis in Ukraine.

This February 24, various cryptocurrencies such as Bitcoin, Ethereum, XRP, among others, suffered a sharp drop after the war in Ukraine. For example, Bitcoin fell 8.5% reaching $34,337 after Vladimir Putin announced the attack on Ukraine. Ethereum, the second-largest crypto, posted a drop of 12% and its price is around $2,301. Other coins like XRP, Cardano, and Solana also fell, according to Bloomberg.

Bitcoin Price Falls as Tensions Rise

The price of Bitcoin has seen a sharp drop after Russian President Vladimir Putin officially announced a “special military operation” to complete the “demilitarization” of Ukraine.

Media have reported explosions in the capital of Kiev after Putin declared war on Ukraine. There have also been reports of a series of explosions heard in the city of Kharkiv, some 300 miles east of the Ukrainian capital.

The total cryptocurrency market capitalization has fallen by almost 5% in the last 24 hours. US stock markets have tumbled, with the Dow Jones Industrial Average down 1.38% at the time of writing.

Bitcoin price fell below the $35,000 level, breaking below the lower bound of the symmetrical triangle pattern at $36,673 and putting a further 32% collapse to $25,039 on the table.

Bitcoin price may drop towards the nearest level of support at the Jan 22 low of $34,056, before falling towards the June 27 low of $31,973.

Additional lines of defense may emerge at the June 26 low of $30,151 before reaching the 127.2% Fibonacci extension at $27,652.

However, if buying pressure mounts, Bitcoin bulls may attempt to reach the lower bound of the prevailing chart pattern at $36,930, which coincides with the 78.6% Fibonacci retracement.

Larger draws will target the 50-day simple moving average at $40,138.

What the Experts Say

After the start of the war between Russia and Ukraine, and the fall of the main cryptocurrencies, it is evident that these are assets with great variations and that their integration with global financial markets is increasing; turning them into high-risk assets, according to the head of research and strategy at the cryptocurrency exchange, Ben Caselin.

Additionally, the chief of operations of the Cooper.co crypto platform, Jonathan Tse, explained that the crisis between Russia and Ukraine could cause cryptocurrency prices to drop significantly in the short term.

“However, it could be what is needed to find a bottom sooner, rather than an ongoing crypto winter for prices to slowly decline,” Tse noted.

The vice president of corporate development at Luno, a crypto platform, Vijay Ayyar; If new falls occur, the price of Bitcoin could fall between $28,000 to $29,000.

Economist Jason Furman, a former adviser to President Barack Obama, said this week that, “Russia is incredibly unimportant in the world economy, except for oil and gas. It’s basically one large gas station.”

Holders see Bitcoin (BTC) as a hedge against inflation, with many expecting its price to show resilience in a time of crisis. However, Sam Bankman-Fried, CEO of global cryptocurrency and derivatives spot exchange FTX, believes that the drop in BTC was not a surprise. On Twitter, he published that, “It makes sense that stocks are down. War is, generally, bad. What should BTC be doing here? Well, on the one hand, if the world gets shittier, people have less free cash. Basically, selling BTC–along with stocks, etc.–to pay for war.”

Bankman-Fried said the war has created a cash shortage in the market that has led to selloffs in both traditional and cryptocurrency markets. BTC’s price drop is also attributed to its increasing correlation with the Nasdaq and the S&P 500, which recently hit a two-year high.

Bankman-Fried also pointed to the destabilization of the currency in Eastern Europe, suggesting that Eastern European investors could look for alternatives due to the invasion of Ukraine, which could make BTC an obvious choice.

By Audy Castaneda

European Regulatory Proposal Includes the Ban on Bitcoin Mining

Alexander Salazar
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European Regulatory Proposal Includes the Ban on Bitcoin Mining

The European Parliament will discuss several laws to regulate cryptocurrencies at the end of February. Erik Thedéen and Björn Risinger have promoted the ban on Bitcoin mining in Europe since November 2021.

Representatives of Swedish regulatory institutions included the ban on Bitcoin mining in the discussions on cryptocurrency regulation in the European Parliament. The political institution added the proposal to the package of laws called MiCA (Markets in Crypto Assets). The latter will regulate crypto-assets in all the countries of the European Union.

The European Parliament recently had access to the draft law, which contains a provision that prohibits using proof-of-work (PoW) algorithms like Bitcoin.

Erik Thedéen, from the Environmental Protection Agency, and Björn Risinger, from the Swedish Financial Supervisory Authority, proposed the bill in early November 2021.

Last year, the officials released a report on their views on the environmental impact of mining cryptocurrencies using the PoW consensus mechanism. The text includes a call to the authorities of Sweden and the rest of Europe to ban the activity. At the beginning of 2022, the regulators said that it is necessary to meet the environmental goals of the Paris Climate Change Agreement.

Likewise, the provision in the MiCA regulation seeks to prohibit service providers in the sector operating with PoW minted cryptocurrencies. The bill would exempt small-scale operations that do not affect the goals to reduce energy consumption in the European Union. If the ban receives approval, it will enter into force in January 2025.

Everyone Will Know the Final Proposal on February 28th

The proposal seems to have gained traction among parliamentarians from Germany, Spain, and Norway. Last week, the Central Bank of Hungary also said that it supports a ban on Bitcoin mining. The governor of the financial institution György Matolcsy expressed he agreed that cryptocurrencies contribute to illegal activities.

According to local media, German parliamentarian Stefan Berger said that the approval of the proposal would be probable. The president of the Committee on Economic and Monetary Affairs of the European Parliament is one of the congressmen that favor banning Bitcoin mining.

The Parliament will have to decide what to do about the draft of the MiCA regulatory package on February 28th. Following the vote, the EU Commission, Parliament, and the Council of member states will have a tripartite dialogue. After that conversation ends, the Commission will evaluate the parliamentary proposal.

Reasons to Ban the Mining of Bitcoin and Other Cryptocurrencies

Many regulators from different countries have tried to control or ban Bitcoin and other decentralized cryptocurrencies. They allege that those assets pose a risk to the stability of the financial and banking systems. They also say that mining them harms the environment due to the carbon emissions from farms.

Of course, others favor using crypto assets in the economy and legalizing them as money. The president of The Salvadoran government was the first to adopt Bitcoin as legal tender, and other countries want to follow its example. Legislators are meeting to discuss this subject to decide whether to approve or reject the bills they receive.

By Alexander Salazar

Potential of the “Test of HUMANity” in the field of NFTs Highlighted

Audy Castañeda
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Potential of the “Test of HUMANity” in the field of NFTs Highlighted

NFTs create a unique on-chain smart contract that does not have a directly tradable counterpart

The HUMAN Protocol confirmed through their official blog that the Proof of HUMANity has potential applications in the world of NFTs. The group claims that, NFTs are not a fad. Of course, the current use of NFT technology as digital art property may or may not last, but this is just one application of NFTs. It is worth remembering the great utility of NFTs, or non-fungible tokens, which simply create a unique on-chain smart contract that does not have a directly exchangeable counterpart. It is unique, or non-fungible.”

Proof of HUMANity and the Bid for NFTs

From Human Protocol, they also pointed out that the latest NFT platforms are incorporating on-chain auctions to NFTs, as is the case of Metaplex (Solana Labs).

“While on-chain auctions may be appealing to both buyers and sellers of NFTs, it comes with a risk. When you are bidding at a traditional auction house, you can see [whom] you are bidding against. In Web 3.0, you cannot. Just as malicious bots can front-run DEXs and manipulate market prices, so they can in on-chain auctions. They could bid higher on pieces, artificially driving the price up, or else orchestrate with other bots to manipulate the appearance of a bidding war (if you think you are up against 1,000 bidders, you may be likely to walk away, not knowing they are bots).,” they specified.

In the blog post, they claim that the humanity test stops bots at their source. In this example, Metaplex could integrate Proof of HUMANity to function as an essential test that all bidders must pass.

Beyond Art

For those behind the HUMAN protocol, it is worth analyzing other NFT applications to understand the determining potential that bots could have in such technology and ecosystem.

“NFTs are simply a unique digital code for which there is no equivalent tradable asset; they can be traded for other things, but there is no direct substitute for it. It is non-fungible, while a dollar is fungible: one dollar is equal to another”, they noted.

“NFTs will most likely be used as a form of identification in Web 3.0. Anything else unique – be it tickets to a sports game, the movies, a plane ticket or any kind of QR code – could be an NFT,” they added.

In this sense, any form of bidding that may take place in these NFTs could benefit from a proof of humanity check.

“Whether one is selling Bitcoin through DeFi, or Superbowl QR code tickets through an online marketplace, the principle remains the same; bot protection is essential,” they pointed out.

Creation

The proof of humanity could also be a required proof in the minting of the NFT itself.

They assert that, “to mint an NFT is not very difficult. As bots become more sophisticated, there is a possibility that they themselves could create NFTs, whether for art, identification, or event tickets, to name just a few uses of NFTs.”

In this case, “Proof of HUMANity would not only be used in any bidding process or DeFi protocol, but also as a way to ensure humanity at different stages of the NFT life-cycle  – whether to authenticate that the minter of the NFT is a human, or that the holder of the NFT is a human,” they explained in the blog.

They then added that it is essential to convert NFTs into forms of identity, or into QR codes, as a means to stop a bot from minting its own QR codes and thus scam shoppers.

In conclusion, they highlighted that the HUMANity test is not likely to be a stand-alone solution to protect the creation, offering, and ownership of Web 3.0 NFTs, but will be part of a broader background or identity check process. However, an on-chain bot blocker has endless use cases to protect Web 3.0 as it moves toward using non-fungible tokens in more useful and common ways.

By Audy Castaneda

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