Bitcoin Miners Earn a Salary Valued at Least 90% Less in Fees than a Year ago

Jenson Nunez
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Bitcoin Miners Earn a Salary Valued at Least 90% Less in Fees than a Year ago

The average transaction fee crumbled down from $21 to $1.36. The Bitcoin mempool has been clear, keeping transaction fees at a low rate.

Bitcoin miners’ revenue from transaction fees has been crumbling down for at least one consecutive year. The real reason behind this situation relies on the drop in the average amount given in commissions on the BTC network.

A year ago, the average fee for each transaction carried out on the Bitcoin network almost reached 39,000 satoshis, the most minimal figure into which a currency like bitcoin got divided. Today, the average fee for carrying out a transaction on said network barely surpasses 3,400 satoshis.

If the average cost of the transaction fees gets turned from satoshis into US dollars (USD), the difference at the percentage level might show some similarities. As of mid-February 2021, 39,000 satoshis went equal to $21, whereas today, 3,400 satoshis run in parallel to $1.36.

It is worth clarifying that what Bitcoin users pay to carry out transactions and what miners receive for commissions are just values parallel to the current fees. If the fees go up, the miner’s income goes up, and if the fees crumble down, the miner’s earnings go down too.

The situation described applies whenever the evaluation gets achieved in satoshis. If the amounts get translated into fiat currency, the foreign exchange market factor could get added and ruled by very different principles.

The Current Status of the Bitcoin Network and How it Impacts Miner Fees

Looking at the Bitcoin mempool is one of the methods to know how high the transaction fees can get. The mempool is a waiting room where transactions that have not been added to a block yet could get located.

If the mempool gets filled, the fees tend to face an increase;  the commission paid for a transaction gets higher, the sooner it will get included in a block and confirmed. On the other hand, if the mempool appears to be empty, the rates tend to crumble down; because the transactions will get added to the blocks without waiting too long.

The last few days, the Bitcoin mempool got quite loose with space. The mempool space website only shows 5,000 transactions waiting for verification worldwide. A block could count on more than 3,000 transactions, so in at least 20 minutes, all those transactions will already become a fundamental piece of the Bitcoin blockchain.

Another feature of the network contributing to the mempool is that it does not need to struggle with overcrowding. According to data revealed from statoshi.info, Bitcoin counts on the processing power of 193 exahashes per second.

The fact that the Bitcoin hash rate remains at all-time highs and does not decay, even though the miners are receiving less profit, gives a point in favor of these network workers.

By: Jenson Nuñez

There Could Be a Regulation on Cryptocurrencies in Hong Kong Following the Chinese Model

Alexander Salazar
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There Could Be a Regulation on Cryptocurrencies in Hong Kong Following the Chinese Model

Since Hong Kong is a particular niche for cryptocurrencies, its tense situation with the Chinese government has generated uncertainty in the ecosystem. The region is a global financial services hub, but many people are concerned that China will undermine its autonomy.

The government of Hong Kong has been working to regulate the cryptocurrency market in the last few weeks. In that regard, many people are worried that they will follow the same model as China.

Hong Kong Could Follow on the Same Path as China on Cryptocurrencies

It is relevant to know that Hong Kong is one of the two Special Administrative Regions (SAR) of the Republic of China. Although it is part of the Asian nation, it enjoys a higher level of autonomy than other regions.

Unlike in China, the political system of Hong Kong incorporates the separation of powers.

However, China has been seeking to tighten its control over Hong Kong in recent years. As a consequence, various companies have gone away or reduced their operations.

That region of China has also become a particular niche for cryptocurrencies. Being one of the most prominent financial ecosystems worldwide has helped it do so.

For that reason, the tense situation between Hong Kong and China has also generated uncertainty in the cryptocurrency ecosystem.

Hong Kong Government Seeks a Regulatory Framework for the Crypto Ecosystem

In early January, the Hong Kong Monetary Authority (HKMA) issued two crucial documents for the crypto ecosystem. One was about stablecoins and the other about cryptocurrency-related exchange-traded funds (ETFs).

Likewise, in early February, the government of Hong Kong revealed that it wanted to propose a licensing system for cryptocurrency exchanges.

That proposal implies that any cryptocurrency company will need a license from the Securities and Futures Commission (SFC). However, the government also proposes that licensed crypto-asset providers only provide services to professional investors.

A professional investor is one whose portfolio has at least 8 million Hong Kong dollars (HKD), equivalent to around USD 1 million.

China Seeks to Undermine the Autonomy of Hong Kong Regarding Cryptocurrencies

Recently, some professionals in the industry expressed their opinions about the regulation of cryptocurrencies in Hong Kong.

Lennix Lai, Director of crypto exchange OKX, explained that the regulatory framework for cryptocurrencies is taking shape in Hong Kong. He said that it was consistent with the status as a global financial services hub of that region.

However, many people are concerned that China seeks to undermine the autonomy of Hong Kong.

In 2021, the Chinese government declared all activities involving cryptocurrencies illegal. Following that announcement, uncertainty spread throughout the crypto sector of Hong Kong.

In that way, the question arises about what the future of cryptocurrencies will be like in Hong Kong. There is particular uncertainty about cryptocurrency-related service providers such as exchanges and ETFs.

Cryptocurrencies like Bitcoin play a relevant role in the economy, which regulators from different countries do not overlook. For example, China is against any activity related to decentralized crypto assets, which led them to create their central bank digital currency (CBDC).

By Alexander Salazar

The Pioneering Cryptocurrency Leaves US Treasury Bonds Behind in Terms of Profits

Alexander Salazar
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The Pioneering Cryptocurrency Leaves US Treasury Bonds Behind in Terms of Profits

While US Treasury bonds currently produce a 2% return monthly, Bitcoin has grown by 100% annually in the last eight years. The percentage of the cryptocurrency does not have to be so high to improve its performance dramatically in a portfolio.

US Treasury Bonds have maintained low returns in recent years, but Bitcoin continues to be a robust long-term store of value. In 2021, bonds produced an average return of nearly 2%, and Bitcoin yielded almost 60%.

Bonds had historically offered investors diversification away from traditional stock, leading them to compose portfolios with 60% shares and 40% bonds. Last year, the returns of Bitcoin doubled those of the above assets, while 60/40 portfolios offered a 15% return on average.

Regarding traditional assets, 60/40 portfolios had an 8% performance last year, after adjustments for inflation. That performance is superior to the median of the return of those investment instruments over the last twenty-one years. However, the annual profits of bonds have been very unattractive to investors.

Over the last five years, the annual returns of the 10-year Treasury Bond have contrasted to the evolution of the Bitcoin price. The current monthly performance of that bond is 2.05%, but the return of Bitcoin in the above period is higher than 3,900%.

During the first quarter of 2022, the Bitcoin price has dropped by 8%, but its return has far exceeded bonds in the medium and long term.

Bonds are less attractive to investors due to the decreasing performance of bonds, said a report in late March 2021. At that time, renowned economist Ray Dalio stated that the US dollar was significantly weak and that investing in bonds was stupid.

The founder of Bridgewater Investment Associates considers that the cash performance is negative relative to inflation. For that reason, he said it is preferable to borrow money and look for other investment options like Bitcoin.

Investors Should Diversify Their 60/40 Portfolios with Bitcoin

Although the interest from traditional investors in Bitcoin is growing, many still perceive that cryptocurrency is a risky asset due to its volatility. One way to prove the benefits of Bitcoin is to include small percentages of the crypto asset in 60/40 portfolios. After that, it is possible to measure the impact on their profitability.

Last year, an analysis by Ecoinometrics measured the impact of including Bitcoin in a traditional investment portfolio. It has various asset percentages of the Standards & Poor 500 index and gold.

Ecoinometrics found that Bitcoin had a 100% return, S & P 500 showed a 9% return, and gold reflected a fall of 1% from 2013 to 2021. The on-chain analytics tool indicates that the percentage of Bitcoin does not have to be so high to improve performance dramatically. That would also allow a monthly portfolio rebalancing can compensate for the volatility of Bitcoin.

Although the price of Bitcoin has dropped, it has historically proven that it can rebound from its all-time lows. Besides, investors can see the advantages of including a small percentage of the pioneering cryptocurrency in their portfolios.

By Alexander Salazar

No One Knows Where the Price of the Uniswap (UNI) Token Heads Next

Alexander Salazar
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No One Knows Where the Price of the Uniswap (UNI) Token Heads Next

A sideways range with resistance at USD 13 and support at USD 10 does not define who dominates the market in the short term. The downward trend of UNI does not show signs of exhaustion after the price drop in the last three months.

Despite the market rally, the token of decentralized exchange Uniswap has remained dormant. However, it seems that its price could continue to fall in the short term.

UNI is trading at around USD 9.90 and has accumulated a 7% loss in the last week. Its trading volume is above USD 378.23 million, and its market capitalization is about USD 4.51 billion, according to CoinGecko.

That cryptocurrency occupies 33rd place in the market ranking after being in the top 10.

The significant correction of the token since its price reached its all-time high of USD 45 has reduced its volatility considerably.

Although that fall worries some people, it is a necessary corrective process. As that movement in the price spreads, sellers have less room to continue dragging the price down.

The value of UNI does not seem to indicate clear signs of bearish exhaustion, so there could be problems for a longer time.

The following analysis provides details about the current situation of the price of that crypto asset.

Daily Technical Analysis of the Price of the Uniswap Token

The daily UNI/USDT chart clearly shows that the price is in a sideways range with resistance at USD 13 and support at USD 10.

If the value remains within those levels, it cannot define who will dominate the market in the short term.

However, that is consolidation after a bearish momentum, so it may be a respite before suffering a new drop. To confirm that, the price of UNI must break through the support level. If that happens, then there could be sales up to USD 7.32.

If the value breaks above USD 13, there could be a rally to USD 18 next.

The Price of UNI Could Drop to an Even Lower Level

The weekly UNI price chart indicates an abrupt medium-term bearish direction. The significant correction that the Uniswap token is going through after reaching a high of USD 45 caused it.

In 2021, UNI was one of the cryptocurrencies whose price rose the most but also suffered many corrections.

A marked downward trend emerged due to the token value falling in the last three months. At the moment, that movement in the price does not seem to show any signs of exhaustion.

Currently, there seems to be a little respite, but it may soon give rise to new bearish momentum.

The immediate support of the price of the Uniswap token is at USD 10. If it loses it, the ground will be clear for USD 5.65.

When increasingly high lows and highs appear on the weekly chart, it will be possible to think that the bulls have regained control of the trend.

Looking to the left, it is clear that the strength of buyers is quite dominant, but they are not back yet. As discussed above, sellers have less room to drag the price down as the decline extends.

By Alexander Salazar

Bank of Spain Approved the Registration of the First Cryptocurrency Platform

Jenson Nunez
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Bank of Spain Approved the Registration of the First Cryptocurrency Platform

Bit2Me became the first cryptocurrency platform recognized by the Bank of Spain and achieved a milestone in that country.

The Bank of Spain approved for the first time a cryptocurrency platform. Bit2Me is a Spanish platform that or a provider of virtual currency exchange services for fiduciary currency and custody of electronic wallets. Bit2Me is then the first to receive the approval of the Spanish central bank, and now, more platforms are waiting for approval.

According to various media outlets, the process got opened some months ago. The applicants have had to demonstrate that they meet the requirements of commercial and professional integrity established for credit institutions and with the regulations for the prevention of both money laundering capital and the financing of terrorism.

In October 2021, the Bank of Spain enabled the registry for cryptocurrency providers. Before, the central bank stated that all those who carry out crypto activities must comply with the registration process, even if they got already registered in other administrative sites of the entity.

What are those Requirements?

One of the requirements that companies and individuals must include is a criminal record certificate of the person in charge. Likewise, a money-laundering prevention manual got required to express, among other things, what the client admission policy will be with a description of the clients that may potentially represent a higher risk due to regulatory provision.

It would also apply because the potentially risky client emerges from the risk analysis. The measures against this potential risk are the refusal to establish business relationships and execute operations or end the business relationship.

It must also include a risk analysis document. Among other things, this analysis will set up identification and assess risks by type of customer. It will also evaluate the country or geographic area, product, service, operation, and distribution channel, considering variables such as the purpose of the business relationship, the level of assets of the client, the volume of operations, and the regularity or duration of the business relationship.

Too Many Requirements

According to media outlets like El Pais, to pass the regulatory examination, the company must show proof that it counts on proper means to prevent money laundering and other methods of financial terrorism. Platforms must have duly identified the client that works with them and has a prevention manual, among other requirements that got already requested. Bit2Me clarified that it has already been complying with them voluntarily, although it has needed to send extra documentation to the regulator.

Bit2Me offers its services in more than 100 countries and registered in 2021 a transaction volume of more than 1,100 million euros (USD 1,250 million). According to the CEO, Leif Ferreira, Bit2Me is the first company to achieve this position shows a lot about the security with which that service gets developed.

By Jenson Nuñez

Terra Got Commanded to Act in Accordance with a Subpoena Charged by the SEC in the US

Jenson Nunez
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0
Terra Got Commanded to Act in Accordance with a Subpoena Charged by the SEC in the US

Terraform Labs and its CEO received subpoenas from the regulator in September 2021 but refused to act in accordance with the commands and filed a complaint against the SEC. A court highlighted its stance favoring the SEC and suggests the company appear and comply with the order.

An American court filed an order against Terraform Labs and its CEO, Do Kwon, to act in accordance with subpoenas that come from the SEC, the first financial regulator in the nation.

A series of files from the court revealed that a New York district judge commanded blockchain project leader Terra to heed an SEC call connected to the investigation of Mirror, a decentralized finance protocol created by Terraform Labs.

The project and its director received a subpoena sent by the entity in September last year. However, in December, Terraform filed a complaint against the SEC, and its subpoena intentions; the dispute seems to be far from reaching a conclusion.

The court filing, based on February 17, highlights that the court managed to check all of the parties’ submissions and ruled in favor of the SEC’s request, which needs Terraform Lab’s compliance with its subpoenas.

The CEO received two subpoenas filed by the SEC in September 2021 while attending the Messari conference in New York. The CEO filed his lawsuit against the regulator in response to their actions, highlighting that the subpoenas got improperly handled by the SEC. The CEO also highlighted that the agency failed to maintain its investigation in confidential status.

The main struggle for the federal agency is the Mirror protocol. The platform gives users the possibility of trading tokens that reflect the price of big US-traded stocks. The SEC still investigates whether Terraform has disrupted federal law through this protocol.

The regulator put its magnifying glass on Mirror in May last year, just months after it got launched. The SEC attorneys contacted the CEO to update him about the course of the investigation and asked for his voluntary contribution. Kwon agreed now counts on lawyers in the United States of America to watch over his interests.

According to CoinDesk, Kwon and Terraform Contributed to the SEC

The US regulator also desires to regulate the industry. However, the absence of regulatory frames is still a concern and a matter of discussion. This problem affects companies that intend to understand the policies and legal boundaries and regulators who fight for more control in the field.

Under the commandment of Gary Gensler, the SEC has been setting up an expansion of its strategies to regulate the crypto environment. But with the sector growing in a fast way, the agency then focused its efforts on the big fish. The figures and the fast growth of Terraform Labs have possibly captured the interest of regulators.

The disruptions and violation of federal securities policies are constant subjects of discussion in the SEC’s investigations and strategies to regulate the sector.

By: Jenson Nuñez

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