Although there is an almost accepted assumption that Roswell either involved a spacecraft from another world or a Mogul balloon of the U.S. military, the fact is that thereis a mountain of explanations for what happened – and that’s even without the “human experiment” angle that I added to the mix. I mention this to specifically demonstrate that, regardless of your personal opinion on the story this book tells, Roswell is nowhere near as resolved as many pro-E.T. champions would have you believe. As you’ll now see. The late Jim Keith was the author of a number of conspiracy / UFO-themed books, including Casebook on the Men in Black; The Octopus (co-written with Kenn Thomas); and Black Helicopters Over America. In a small article titled Roswell UFO Bombshell, Keith described his clandestine meeting with “a longtime researcher / instructor of engineering at a school in New Mexico” who claimed to know the truth of Roswell.
De-extinction – the idea that members of extinct animal species can be brought back and reintroduced to the wild – has been in the news a lot lately as genetic researchers map more genomes, CRISPR gene editing is refined, climate change exposes more flash-frozen carcasses, and the Jurassic Park movies still don’t convince scientists and the general public that this is a bad idea. De-extinction projects tend to be controlled by private organizations, university research projects, research groups focused on finding living holdouts of a particular species (the thylacine is the prime example of this) and some legitimate genetic science organizations. It is rare to find any of these projects backed by government organizations, which is why the news from the U.S. biotechnology company Colossal Biosciences that it had received funding from the government for its de-extinction work is big news. It is even bigger news – some might say ‘colossal’ news – when you find out that the government organization providing the funding is the Central Intelligence Agency … the foreign intelligence service that is supposed to be focused on national security. What do woolly mammoths, Tasmanian tigers and dodo have to do with national security?
“We are deeply sorry,” stated Transit Swap while revealing that a bug in the code allowed a hacker to make away with an estimated $21 million.
Transit Swap, a multi-chain decentralized exchange (DEX) aggregator, lost roughly $21 million after a hacker exploited an internal bug on a swap contract. Following the revelation, Transit Swap issued an apology to the users while efforts to track down and recover the stolen funds are underway.
“We are deeply sorry,” stated Transit Swap while revealing that a bug in the code allowed a hacker to make away with an estimated $21 million. Blockchain investigator Peckshield narrowed down the attack to a compatibility issue or misplaced trust in the swap contract.
— Transit Swap | Transit Buy | NFT (@TransitFinance) October 2, 2022
Peckshield, along with other investigators, including SlowMist, Bitrace and TokenPocket joined in on the pursuit to track down the hacker. Transit Swap stated:
“We now have a lot of valid information such as the hacker’s IP, email address, and associated on-chain addresses. We will try our best to track the hacker and try to communicate with the hacker and help everyone recover their losses.”
The flowchart below depicts the flow of the stolen assets, as shared by Peckshield.
The ongoing investigation hinted that the hacker may have performed earlier withdrawals from known exchanges. Transit Swap has promised to share more details with the community in due time, adding that “Thank you for your understanding and trust.”
Transit Swap has not yet responded to Cointelegraph’s request for comment.
Reciprocating the updated security measures implemented by crypto businesses, hackers continue to evolve their methods to dupe investors.
— PeckShield Inc. (@peckshield) September 27, 2022
The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — one week on Cointelegraph in one link!
Coming every Saturday, Hodlers Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more a week on Cointelegraph in one link.
Top Stories This Week
Edward Snowden has reportedly received Russian citizenship via a decision from the countrys president, Vladimir Putin. Snowden has been a permanent resident in Russia since 2013 after he exposed secrets relating to the United States National Security Agency. However, Snowden favors less government involvement than Putins approach to leadership. Snowden has offered comment on crypto multiple times and helped build crypto asset Zcash.
Global criminal police organization Interpol has put out an alert known as a Red Notice in order to help locate and arrest Terraform Labs co-founder Do Kwon, wherever he may be. Terras ecosystem fell apart earlier in 2022. Charges were brought against Kwon in South Korea for his involvement in the Terra project. Kwon has tweeted that he is not hiding. He was thought to be in Singapore, although Reuters reporting has indicated a possible change in location. Authorities in South Korea have also taken steps to freeze funds reportedly associated with Kwon.
The auction to acquire Voyager Digital assets ended this week when crypto exchange FTX US emerged as the winner, edging out competing bids from CrossTower and Binance. The U.S. exchange paid around $1.4 billion for Voyayers assets, which is roughly the same as the lenders remaining assets. The deal is pending approval from a U.S. bankruptcy court. Wave Financial also participated in the bidding and has since debated the outcome.
U.S. District Court Judge Analisa Torres ruled that the U.S. Securities and Exchange Commission (SEC) must provide information about comments from a former government official that could impact Ripples fight against the securities regulator. In a 2018 speech, former SEC Corporation Finance Division Director William Hinman noted that Bitcoin and Ether did not classify as securities. The ruling from Torres means the SEC must not hold back documents related to that speech. The battle between Ripple and the SEC began in 2020, with the commission calling XRP a security.
After launching its first blockchain fund in 2021, crypto-centric hedge fund Pantera Capital is reportedly looking to raise a whopping $1.25 billion for a second fund targeting digital asset projects. We want to provide liquidity for people that are kind of giving up because were still very bullish for the next 10 or 20 years, Pantera CEO Dan Morehead told Bloomberg.
Winners and Losers
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Quant (QNT) at 37.76%, Terra Classic (LUNC) at 21.41% and Helium (HNT) at 20.93%.
The top three altcoin losers of the week are Chiliz (CHZ) at -9.29%, Lido DAO (LDO) at -6.82% and Cronos (CRO) at -6.31%.
For more info on crypto prices, make sure to read Cointelegraphs market analysis.
Most Memorable Quotations
The most important thing is that [the Ethereum Merge] was executed flawlessly. Everything that was supposed to happen did happen. And none of the things that people were worried about did happen.
Eli Ben-Sasson, co-founder of Starkware
I think the world is just waking up to reality and Ethereum just went way off into fantasyland at the exact wrong time.
Cory Klippsten, CEO of Swan Bitcoin
In DeFi, you cant get away with letting one borrower be half of a lending pool because people see that and they question the risk management there.
Sid Powell, CEO and co-founder of Maple Finance
In our genres that we’re hitting, there might be roughly 500 million people that we can bring in that literally won’t know that they’re playing a crypto game.
Kieran Warwick, co-founder of Illuvium
People need to be able to interact with apps and services and content and transactions without knowing that theyre using crypto.
Jeremy Allaire, CEO of Circle
“SMS 2FA is better than nothing, but it is the most vulnerable form of 2FA currently in use.
Jesse Leclere, security expert for CertiK
Im writing code in my living room. […] Im making zero effort to hide.
Do Kwon, co-founder of Terra
Prediction of the Week
Bitcoin largely remained below $20,000 this week, though the asset successfully broke above that level several times, according to Cointelegraphs BTC price index. After zipping past $20,000 on Sept. 30, Bitcoin fell right back down below the level, seeming to line up with the timing of a recent speech by Russian President Vladimir Putin. Pseudonymous Twitter user Il Capo of Crypto predicted the price action in a Sept. 30 tweet: Pump to 20000-20500 before Putins speech. Then big dump.
FUD of the Week
Crypto lending platform Nexo has been ordered by California’s Department of Financial Protection and Innovation (DFPI) to halt the operation of its Earn Interest Product. The agency asserted that the product does not fall in line with regulatory approval requirements. Nexo essentially froze the product for U.S. customers earlier in 2022, although not fully, according to the DFPI. Nexo reportedly faces similar action from New York, Vermont and five other state regulators. Nexo explained to Cointelegraph that it has been working with regulatory authorities in the U.S.
A Maximal Extractable Value (MEV) bot capitalized on an arbitrage opportunity on decentralized exchange Uniswap V2, tallying about $1 million worth of Ether in profits in a single day. The fanfare was short-lived, however, as the bots apparently questionable code left it vulnerable to exploitation, with a hacker apprehending the funds on the same day.
Hydrogen Technology Corporation and market maker Moonwalkers Trading Limited face action from the SEC for alleged market manipulation. In 2018, Hydro tokens were dispersed via multiple avenues, including an airdrop. Hydrogen and Moonwalkers then allegedly collaborated to make it seem like the asset was significantly active on the market and subsequently dumped Hydro tokens for profit.
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Recent cases involving crypto fraud serve as a timely reminder to do your own due diligence until regulators take more action. If something sounds too good to be true, it probably is.
The California Department of Financial Protection and Innovation (DFPI) announced last month that it had issued desist and refrain orders to 11 entities for violating California securities laws. Some of the highlights included allegations that they offered unqualified securities as well as material misrepresentations and omissions to investors.
These violations should remind us that while crypto is a unique and exciting industry for the public at large, it is still an area that is rife with the potential for bad players and fraud. To date, government crypto regulation has been minimal at best, with a distinct lack of action. Whether you are a full-time professional investor or just a casual fan who wants to be involved, you need to be absolutely sure of what you are getting into before getting involved in any crypto opportunity.
California has toyed with setting up a crypto-specific business registration process for those looking to do business in the state. The proposed framework was vetoed by Governor Gavin Newsom as the resources required to establish and enforce such a framework would be prohibitive for the state. While this type of compliance infrastructure has not been employed yet, it points to concerns that regulatory authorities have related to the crypto industry.
There appears to be a pattern that new industries, especially those that garner as much international attention as crypto, are especially susceptible to fraud. One must go only as far back as cannabis legalization to find the last time California had to deal with fraudulent schemes at this scale.
It appears inevitable that California, known to be a first mover in regulation and compliance, will create some form of crypto-specific compliance infrastructure in the name of consumer protection. If history is any indication, once California releases its framework, other states will follow.
Federal and state representatives have been attempting to draft legislation to establish financial standards for crypto with little luck to date. At the federal level, Senators Cory Booker, John Thune, Debbie Stabenow and John Boozman co-sponsored a bill to empower the Commodities Futures Trading Commission (CFTC) to serve as the regulatory body for crypto, while Senators Kirsten Gillibrand and Cynthia Lummis co-sponsored a bill to establish more clear guidance on digital assets and virtual currencies. Lawmakers have even reached out to tech luminaries such as Mark Zuckerberg to weigh in on crypto fraud.
None of these or other similarly crypto-focused bills are expected to pass in 2022, but this level of bipartisan cooperation has been unprecedented in recent times. The collaboration should reflect just the sheer magnitude of the need for a regulatory framework. Said another way, Democrats and Republicans speaking to one another about anything should stop the presses, but the fact that they are co-sponsoring multiple bills should tell us that there is a monumental requirement for guidance.
How should one approach investing in the crypto space if the government is not going to establish controls for crypto? There are a few general points that one should consider if they are presented with a crypto investment opportunity.
When reviewing any opportunity, do your due diligence! Do not take anyone’s word without some level of substantive support. If crypto is not an area of expertise, reach out to professionals who do have qualified experience. Make sure to utilize crypto monitoring and blockchain analysis tools, if possible, as part of the vetting process.
A common strategy of fraudsters is putting undue pressure or artificial timelines on a potential close. Slow down the process and use any and all time necessary to make an investment decision.
If it sounds too good to be true, it probably is. As overplayed as the cliché may be, it does bring up a valid point. There have been instances of schemes offering to pay initial and ongoing dividends for any new investors that are brought in and for additional dividends to be paid from any investors that those new investors bring in. If this sounds like a pyramid or multi-level marketing scheme, that’s because it is. Terms like “No Risk Investment” get thrown around as well. Ultimately, if no one knows where the opportunity is coming from, beware.
While crypto can be a fun and electrifying topic with many legitimate opportunities, there are bad players who will take advantage of the lack of government oversight and the excitement of overenthusiastic or undereducated investors.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Centralized databases on Web2 are a honeypot for hackers. Decentralizing data on Web3 eliminates a major vulnerability for companies like Uber.
Uber is a staple of the gig economy, for better or worse, and a disruptor that once sent shockwaves throughout the mobility space. Now, however, Uber is being taken for a ride. The company is handling a reportedly far-reaching cybersecurity breach. According to the ride-hailing giant, the attacker has not been able to access sensitive user data, or at least, there is no evidence to suggest otherwise. Whether or not sensitive user data was exposed, this case points to a persistent issue with today’s apps. Can we continue to sacrifice our data — and thereby our privacy and security — for convenience?
Web2, the land of hackable honeypots
Uber’s track record for data breaches is not exactly spotless. Just in July, the ride-hailing giant acknowledged hushing up a massive breach in 2016 that leaked the personal data of 57 million customers. In this sense, the timing of the new incident could not have been worse, and given how long it takes to establish the damage done in such breaches, the full scale of the event has yet to reveal itself.
Uber’s data breach is not anything out of the ordinary — Web2 apps are ubiquitous, ever reaching further into our lives, and many of them, from Facebook to DoorDash, have suffered breaches as well. The more Web2 apps proliferate across the consumer space and beyond, the more often we will get such incidents in the long run.
The issue comes down to the very architecture of apps built on Web2. Through their centralized tech stacks, they naturally create honeypots containing users’ sensitive data from payment details to consumer behavior. As users funnel more and more data through various consumer apps, hackers have more and more honeypots to pursue.
The only true solution to the problem is also the most radical one — consumer apps should embrace Web3, restructure their data and payment architectures to grant users more security and privacy, and welcome this new era of the internet.
What would a Web3 Uber look like?
Web3 does not necessarily mean a change in the app interfaces we interact with. In fact, one could argue that continuity and similarity are key to adoption. A Web3 Uber would look and feel pretty much the same on the surface. It would have the same overall purpose and function as existing Web2 ride-hailing apps. Below the deck, however, it would be a very different beast. All the benefits of Web3 such as decentralized governance, data sovereignty and inclusive monetization models — systems that distribute earnings democratically — are engineered below the surface.
Web3 is all about verifiable ownership. It is the first time that people can verifiably own assets, be it digital or physical, through the Web. This pertains to ownership of value in the form of cryptocurrencies, but in the case of Web3 ride-hailing, it also pertains to retaining ownership of your data and ownership of the apps, underlying networks and the vehicles themselves.
In practical terms, a Web3 Uber will allow users to control how much data they give, to who and when. Web3 Uber would ditch centralized databases in favor of peer-to-peer networks. Self-Sovereign Identities — decentralized digital IDs that you own and control — would allow people and machines alike to have decentralized digital passports which are not dependent on any one central authority for their proper function.
Drivers and passengers would be able to verify themselves on the Web3 ride-hailing app with their SSI in a fully peer-to-peer manner. They would also be able to choose what data they’d like to share or sell and to whom, exercising full ownership over their personal information and digital footprint.
Decentralized governance will make for another monumental shift. It will mean that all stakeholders, be it drivers, passengers, app developers and investors alike, will have the ability to co-own, co-govern and co-earn on all levels – from the infrastructure powering the decentralized application (DApp) to the intricacies of the DApp itself. It would be a ride-hailing app by users, for users.
Imagine for a moment that the fees charged by Uber were voted on by drivers and passengers, not dictated by a boardroom in Silicon Valley. Ask the next Uber driver what they think of that. Users, for their part, will be able to vote things like disaster-time price surges into the bin. For drivers all over the world, Web3 ride-hailing will mean being paid fairly without a third-party corporate intermediary taking a cut.
Web3 also enables a new kind of sharing economy, one where anyone, anywhere is able to own the vehicles being used by ride-hailing apps or any other kind of vehicle-focused app via machine nonfungible tokens (NFTs) — tokens that represent ownership over pools of real-world vehicles. It will be possible for the communities in which these vehicles operate to have ownership rights over those same vehicles, granting the ability to vote on how they’re used and giving them an income stream. The more these increasingly intelligent machines provide goods and services to the community, the more the community earns. Web3 is turning the status quo on its head.
A shift to Web3 in consumer apps will address the root cause of the persistent breaches, removing the very need for centralized data honeypots without necessarily making things more complicated for users. Despite that being an enormous paradigm shift in and of itself, data sovereignty is just one of the advantages a Web3 Uber would have over Web2 Uber.
In the future, blockchain will become something as unseen as the inner workings of Google Pay — just fully accessible to those who wish to view it. It will be something users unknowingly interact with when ordering a pizza or hailing a ride — yet absolutely fundamental to a fairer, more democratic society in the digital age.
This article is for general informational purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Maria Sharapova sat down with Cointelegraph at Binance Blockchain Week Paris to discuss her growing interest in NFTs and passion for bringing more women into Web3.
During an exclusive interview with Cointelegraph, Sharapova mentioned that “she is exposing herself to this new world of crypto and Web3,” noting that the sector will help her better engage with her fans. Sharapova was also one of the strategic investors behind MoonPay’s Series A financing round, yet she mentioned that she aims to bridge her personal experiences to the digital world moving forward.
Maria Sharapova (right) with Cointelegraph senior reporter Rachel Wolfson (left) at Binance Blockchain Week Paris 2022. Source: Rachel Wolfson
Cointelegraph: What are you doing here today at Binance Blockchain Week Paris?
Maria Sharapova: I’m crypto curious and would like to figure out how to bridge the incredible physical experiences that I’ve been able to have with my fans over so many years. I’m now finding ways to include experiences in the digital world, so that’s what I’m most excited about. Also, as a female entrepreneur, I believe it’s important to pave the way for other women to enter Web3. Money is a topic that I feel we don’t speak enough about as women.
CT: Do you have plans to launch an NFT project?
MS: I’ve been looking at this space for several months now, as I’m someone who is more in favor of opportunities for the long haul. When I saw the opportunity to bridge physical with digital experiences, I knew I wanted it to be a long-term experience for myself. Storytelling is very important and it’s a huge component of Web3. I think stories will be told better for both parties when thinking about a project long-term.
CT: Do you think NFTs can help create better fan engagement?
MS: Absolutely. NFTs are about finding ways to communicate with the right communities interested in what I’m doing within a different type of space. For example, I was seen on a television screen every week playing tennis for so many years, yet I no longer have that platform on a daily basis because I retired a couple of years ago. The Web3 experience has given me access to my fans in entirely new ways. I feel like I’m more engaged with them, as opposed to them just being engaged by watching me compete.
CT: As a female entrepreneur and former athlete, do you have plans to get more women involved in Web3?
MS: I want to allow women to have a space where they experiment with Web3. For example, I was 17 when I won my first grand slam and social media was in no way part of that experience. It took years for me to get comfortable with social media over time. I think Web3 is also an area where one has to get out there in order to learn and grow from it. As I mentioned earlier, the conversation about money, finance, crypto and blockchain is a taboo conversation. People may feel that unless they know about these topics, they shouldn’t speak up. But I think this should be the other way around — you learn a lot more if you ask questions and get involved.
CT: Why did you decide to invest in MoonPay?
MS: I want to diversify my portfolio. In the beginning, my investments were around consumer goods. For example, I invested in the sunscreen brand Supergoop early on. I am now exposing myself to an entirely new category.
CT: What do you think are the biggest challenges associated with Web3 and how can we overcome these?
MS: I’d love to see the quality of Web3 experiences come through a bit more and improve, specifically in the digital space.
CT: Any additional comments?
MS: I’m really interested in the NFT space because it bridges my passion for fashion, interior design and creating spaces that are unique to individuals and communities. I’ve become more interested in this space because it has more of a design perspective. It’s also an entirely new revenue stream that both artists and women are discovering.
Cryptocurrencies spur financial inclusion, protect against inflation and enhance the global economy despite the recession.
How do cryptocurrency investments impact the broader crypto-economy?
Although the cryptocurrency market appears to grow in a positive feedback loop, that does not mean that (un)expected events may not impact the trajectory of the ecosystem as a whole.
Although blockchain and cryptocurrencies are fundamentally meant as ‘trustless’ technologies, trust remains key there where humans interact with one another. The cryptocurrency market is not only impacted by the broader economy, but it may also generate profound effects by itself. Indeed, the Terra case shows that any entity — were it a single company, a venture capital firm or a project issuing an algorithmic stablecoin — can potentially set into motion or contribute to a “boom” or “bust” of the cryptocurrency markets.
The impact of such crypto-native events with systemic impact mirroring traditional finance domino effects, and the consequential falls of Celsius and Three Arrows Capital, all indicate that the crypto-economy is not immune to failures. Indeed, while traditional finance has institutions that are too big to fail, the crypto sector does not.
Looking in retrospect is always easy, but the Terra project was fundamentally flawed and unsustainable over time. Nevertheless, its downfall had a systemic impact as many projects, venture capital and standing companies were exposed and heavily impacted. It indicates that investing in cryptocurrencies is all about thinking about risks and potential rewards.
The fall and domino effect across the board indicate the lack of maturity of the very sector itself.
Since innovation and prices are inherently connected and the early-stage development of the crypto-economy offers lots of untapped potential, the said economy may continue to see events that temporarily undermine growth.
Yet, many working in the sector have a “trustless” conviction that strong projects will keep up during temporary corrections and that the cryptocurrency winter will clean up the path for a cycle of unlimited, novel disruptive innovation.
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Will cryptocurrency survive an economic recession?
Cryptocurrency prices, industry developments and innovation are arguably enhancing one another through a positive feedback loop, despite the temporary crypto winter.
The downward pressure in the cryptocurrency markets may correlate with the slipping of traditional markets and geopolitical factors. Cryptocurrency investors go through difficult times. The financial climate has changed considerably. High inflation, for example, is causing central banks to adjust their policies: They raise interest rates and thus ensure a tighter financial market. The rising interest rates make it more interesting to invest in bonds, for example.
When the stock markets suffer a correction, risk-aversion strategies are also toning down cryptocurrency investments. It is often stated that crypto winter is approaching, understood as something similar to a bear market cycle in the stock market but then regarding the prices of digital assets on the crypto markets. The winter goes along with some painful (individual) effects. For instance, some crypto-related companies have been cutting their costs through layoffs.
The cryptocurrency market capitalization being correlated with the traditional markets indicates institutionalization, but that is not necessarily bad. It indicates adoption and acceptance as the first steps toward broader acceptance of cryptocurrencies and their underlying technological foundation.
Indeed, prominent thought leaders argue that the cryptocurrency market develops in cycles and that those cycles can appear chaotic from an external point of view. But, in reality, there is an underlying logic in which prices, industry developments and innovation are connected to one another in a positive feedback loop.
Are there any problems with cryptocurrency?
There are narratives about cryptocurrencies that highlight their use for criminal activities, their supposedly harmful impact on the environment (and the economic impacts related to it) and cryptocurrencies’ volatile nature.
Much like cash, it’s no surprise that some (cyber) criminals use cryptocurrency. Interestingly enough, with the growth of legitimate cryptocurrency usage far outpacing the growth of criminal usage, illicit activity’s share of cryptocurrency transaction volume is very low, as transactions involving illicit addresses represented just 0.15% of cryptocurrency transaction volume in 2021.
Next, cryptocurrencies are said to be bad for the environment. Specifically, BTC’s proof of work (PoW) consensus mechanism is said to cause negative (environmental and economic) impacts. However, estimating studies show that BTC contributes 0.08% t to global co2 emissions. In return, BTC spurs a whole sector and the very financial inclusion of millions of people globally.
Another disadvantage is that most cryptocurrencies cope with: volatility. As a result, some currencies may quickly lose their value. Economists, who tend to look at “money” through a traditional lens, may argue that cryptocurrencies are thus unsuitable as a means of payment and that users run greater risks.
Economists may also argue that the value of cryptocurrencies is not guaranteed because of the lack of commercial or central bank involvement. An economist may hold that a central bank digital currency (CBDC) can be a good solution because governance remains in the hands of the central bank.
Needless to say, the cryptocurrency markets can be extremely volatile and chaotic indeed, but zooming out there appears to be an underlying logic at work. Looking at the logarithmic chart of BTC (see below) instead of its linear chart, for instance, it shows that volatility and drawdowns have remained fairly consistent over time.
How does crypto protect from inflation?
The answer to whether cryptocurrencies and specifically BTC, protect from inflation may depend on your stance. Some may choose to only involve themselves with well-backed stablecoins.
Cryptocurrencies like BTC have traditionally been considered hedges against inflation. The capped supply of BTC and its decentralized nature have been believed to contribute to the increasing value of readily available BTC and those yet to be mined over time.
Falling cryptocurrency prices and high inflation rates today may make some wonder whether BTC delivers to the high expectations of 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐢𝐧𝐜𝐥𝐮𝐬𝐢𝐨𝐧 and hedging against inflation. One may want to distinguish between “owning” BTC and “using” it. Does one consider BTC as a means of payment, potentially meeting the needs of a real economy or does one see it as an investment vehicle as a haven against inflation? Depending on that answer, one can analyze if cryptocurrencies work as hedges.
The alternatives matter, too. Some may choose to only involve themselves with well-backed stablecoins. And, whether cryptocurrencies are valid ways to flee from rising inflation depends on if one considers them true alternatives to (failing) monetary policy. A BTC maximalist may argue that allowing for a non-fixed money supply, post-1971 and certainly post-2008, has proven to not match the needs of a real economy. Staggering inflation rates globally arguably spur the curiosity about and need for cryptocurrencies.
The benefits of cryptocurrency over fiat and their utility are especially significant in countries suffering 50% or more devaluation against the U.S. dollar (over the last ten years). Think Venezuela, Lebanon, Turkey, Surinam or Argentina. Individuals living in those countries were more than five times as likely to say that 𝐭𝐡𝐞𝐲 𝐩𝐥𝐚𝐧 𝐭𝐨 𝐮𝐬𝐞 𝐜𝐫𝐲𝐩𝐭𝐨 compared with those who experienced less than 50% inflation over the same period.
What is the impact of cryptocurrencies on the economy?
Cryptocurrency is far more than just a financial innovation — it’s a social, cultural and technological form of progress. Through its accessible character, cryptocurrencies have the potential to spur the economy immensely.
Cryptocurrencies are digital assets managed with cryptographic algorithms. There are different types of cryptocurrencies. Bitcoin (BTC) is probably the most well-known cryptocurrency, but thousands of others have emerged over time. Naturally, these also include stablecoins, cryptocurrencies whose value is pegged to, for example, a fiat currency, debt paper or commodities like gold.
When cryptocurrency prices are correcting and the fear and greed index bounces, it is important to take a breath and grasp that the wider impact of cryptocurrencies goes beyond daily price fluctuations. Cryptocurrency use cases and their underlying blockchain technologies are being developed at an exponential speed. The tremendous economic impact of cryptocurrencies on the global economy cuts through sectors across national boundaries and goes beyond what was impossible not that long ago.
Cryptocurrencies have pros and cons, like any tool or technology. The positive impacts of cryptocurrency are profound. One of the greatest advantages is arguably accessibility. With cryptocurrencies, one can pay or get paid without the intervention of third parties such as banks. The status quo of the current financial system has arguably failed many individuals globally. Indeed, more than 1.7 billion people don’t have bank accounts.
Due to their accessibility, cryptocurrencies may spur financial inclusion globally. For underserved and unbanked populations — one billion of whom have mobile phones — the use of cryptocurrencies offers a shot at financial inclusion. Therefore it can be argued that cryptocurrencies are inherently good for the economy.
wETH is the ERC-20 compatible and tradable version of ETH and can be used to interact with other ERC-20 assets.
Traders who use the Ethereum network are familiar with the ERC-20 technical standard and have most likely traded and invested in tokens that utilize it. After all, its practicality, transparency and flexibility have made it the industry norm for Ethereum-based projects.
As such, many decentralized applications (DApps), crypto wallets and exchanges natively support ERC-20 tokens. However, there’s one problem: Ether (ETH) and ERC-20 do not exactly follow the same rules, as Ether was created way before ERC-20 was implemented as a technical standard.
So, why does wrapped ETH matter? Briefly put, ERC-20 tokens can only be traded with other ERC-20 tokens, not Ether. In order to bridge this gap and enable the exchange of Ether for ERC-20 tokens (and vice versa), the Ethereum network introduced wrapped Ethereum (wETH). That said, wETH is the ERC-20 tradable version of ETH.
What is wrapped Ether (wETH)?
As mentioned, wETH is the wrapped version of Ether, and it’s named as such because wETH is essentially Ether “wrapped” with ERC-20 token standards. Wrapped coins and tokens virtually have the same value as their underlying assets.
So, is wrapped Ethereum safe to trade and invest in? The answer is yes, as far as Ethereum is concerned. wETH is pegged to the price of ETH at a 1:1 ratio, so they’re basically the same. The only difference between wrapped tokens and their underlying assets is their use cases, especially for older coins like Bitcoin (BTC) and Ether.
Wrapped tokens are like stablecoins, to a certain degree. Come to think of it, stablecoins can also be considered “wrapped USD,” since they have the same value as their underlying asset, the United States dollar. They can also be redeemed for fiat currencies at any time.
Wrapped Ethereum tokens can be unwrapped after they’ve been wrapped, and the process is simple: Users just have to send their wETH tokens to a smart contract on the Ethereum network, which will then return an equal amount of ETH.
Wrapped tokens solve interoperability issues that most blockchains have and allow for the easy exchange of one token for another. For example, users cannot normally utilize Ether on the Bitcoin blockchain or Avalanche on the Ethereum blockchain. Through wrapping, underlying coins are tokenized and wrapped with a certain blockchain’s token standards, thus allowing for their use on that network.
How does wrapped Ethereum (wETH) work?
Unlike Ether, wETH cannot be used to pay gas fees on the network. Because it is ERC-20 compatible, however, it can be used to provide more investment and staking opportunities on DApps. wETH can also be used on platforms like OpenSea to buy and sell through auctions.
Wrapping Ether tokens involves sending ETH to a smart contract. The smart contract will generate wETH in return. Meanwhile, ETH is locked to ensure that the wETH is backed by a reserve.
Whenever wETH is exchanged back into ETH, the exchanged wETH is burned or removed from circulation. This is done to ensure that wETH remains pegged to the value of ETH at all times. wETH can also be acquired by swapping other tokens for it on a crypto exchange, such as SushiSwap or Uniswap.
So, what is the point of wrapped Ethereum? According to WETH.io, the ultimate goal is to update Ethereum’s codebase and make it ERC-20 compliant in itself, eventually eliminating the need to wrap Ether for the purpose of interoperability. But, until then, wETH continues to remain useful in providing liquidity to liquidity pools, as well as for crypto lending and NFT trading, among others.
In short, it’s not really a matter of ETH vs. wETH since wrapping Ethereum is more of a workaround than a permanent solution. With the number of upgrades slated to happen on the Ethereum network over the years, Ethereum seems to be moving closer toward better interoperability by the day.
How to wrap Ether (ETH)?
There are several ways to wrap Ether. As mentioned, one of the most common ways to do so is by sending ETH to a smart contract. Another method is swapping wETH for another token via a crypto exchange.
Let’s look at three ways to generate wETH in the sections below:
Using the wETH smart contract on OpenSea
In this example, we’ll be using the OpenSea platform to convert ETH to wETH using the wETH smart contract.
First, click on “Wallet,” located at the top-right corner of OpenSea. Then, click on the three dots next to Ethereum and select “Wrap.”
Next, enter the value for the amount of ETH to be converted to wETH. Then, click “Wrap ETH.” This will call the wETH smart contract to convert ETH into wETH.
A MetaMask pop-up will appear, prompting the user to sign the transaction.
A confirmation message will then appear once the wrap is complete.
The converted wETH will show up in the wallet portion of the user’s OpenSea account. The wETH will bear a pink Ethereum diamond as its logo, distinguishing it from ETH.
Generating wETH via Uniswap
When using Uniswap, a user first has to connect their wallet and ensure the Ethereum network is selected.
Then, click “Select Token,” located at the bottom field, and select wETH from the list of options.
Now, input the amount of ETH to be converted to wETH and click “Wrap.”
The transaction will then need to be confirmed from the user’s crypto wallet. Gas fees in ETH will also need to be paid at this stage. Once all the details are in order and the transaction has been confirmed from the user’s end, all that’s left to do is to wait for the transaction to be confirmed in the blockchain.
Generating wETH with MetaMask
Upon opening the MetaMask wallet, begin by ensuring that the selected network is “Ethereum Mainnet.” Then, click “Swap.”
Then, select wETH from the “Swap to” field.
Next, input the amount of ETH to be swapped. Then, click “Review Swap.”
A window displaying a quote of the conversion rate will appear. Since it involves the conversion of ETH to wETH, the rate should be 1:1. To finalize the transaction, click “Swap.”
How to unwrap Ether (ETH)?
Unwrapping Ether can also be done manually, such as by interacting with a smart contract. For instance, ETH can also be unwrapped in the same way that it can be wrapped via the wETH smart contract on OpenSea. The only difference is that instead of clicking “Wrap ETH,” the user has to click “Unwrap wETH.”
The same goes for swapping wETH back to ETH, which can be done by using Uniswap or MetaMask. The process for unwrapping is essentially the same as the process outlined above for wrapping ETH on both platforms. The only difference is that the values should be changed (from wETH to ETH).
What are the risks of using wrapped tokens?
Ethereum co-creator Vitalik Buterin himself pinpointed one of the main disadvantages of wrapped assets. According to Buterin, the main problem with many of these wrapped assets is their sensitivity to centralization.
Currently, wrapping assets are not Turing-complete and cannot be automated via the Ethereum blockchain. As discussed, wrapping is usually only carried out using central programs, thus the concern for possible manipulation and abuse.
Issued wrapped tokens depend on the third-party platforms that issue them, inevitably subjecting decisions pertaining to wrapped assets to central entities. Buterin voiced his concerns about the possibility of such a mechanism undermining the core principles of decentralization and transparency that the blockchain industry stands for.
Future of wrapped tokens
Currently, wrapped tokens make it possible for blockchains to interact with one another. This allows for a much more decentralized ecosystem, where tokens can be easily traded or exchanged between different platforms.
Better interoperability solutions are on the horizon, such as updating blockchains’ codebases to be compatible with each other or using bridge chains. For Ethereum, at least, the plan is to eventually phase out the use of wrapped tokens like wETH alongside network developments.
This does not mean that wrapped tokens are going away anytime soon. They will continue to play an important role, providing valuable service to those who need it. For one, wrapped tokens can serve as a stabilizing force between different blockchains, as they help maintain consistent prices between them.
They can also help facilitate cross-chain atomic swaps, which are becoming increasingly popular. In the long run, however, wrapped tokens will likely become less and less necessary as blockchains become more interoperable.
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The crypto community chose to link the funds’ withdrawal with Nexo’s insolvency rumors due to the wallet’s name — Nexo: 0x8fd.
Just a few days after market analysts predicted a 50% drop in NEXO price due to regulatory pressure and investor concerns, a crypto wallet address labeled as NEXO 0x8fd withdrew 7,758.8 Wrapped Bitcoin (WBTC) — roughly worth $153M — from MakerDAO.
On Sept. 26, regulators from eight U.S. states filed a cease-and-desist order against Nexo under the allegations of offering unregistered securities to investors without warning. Moreover, Kentucky regulators accused Nexo of insolvency owing to liabilities exceeding assets when excluding Nexo.
Following suit, on Sept. 30, blockchain investigator Peckshield alerted the transfer of 7,758.8 WBTC from MakerDAO. One of the main reasons the crypto community chose to link the funds’ withdrawal with Nexo’s insolvency rumors is the name of the wallet — Nexo: 0x8fd.
MakerDAO details overview. Source: Peckshield
As shown above, the total value locked (TVL) on MakerDAO has suffered a decline of 43.3% over the past year, which currently stands at $7.11 billion.
Transaction details overview. Source: Peckshield
Transaction details show the transfer of DAI tokens worth $50.1 million from Nexo: 0x8fd to a null address (possibly a burn address) via DSProxy. As highlighted in the above screenshot, the transaction hash also confirms the transfer of $153.2 million in WBTC.
Wish I had seen celsius moving funds before freezing my account … make your own mind up what this means https://t.co/JuQ2fXJIuS
— cryptochicca.eth (@CryptoChicca) September 30, 2022
While the crypto community suspects wrongdoing, further investigations on the matter are underway.
Nexo has not yet responded to Cointelegraph’s request for comment.
Despite the ongoing FUD, Nexo continues to broaden its business. Most recently, on Sept. 27, Nexo purchased a stake in Hulett Bancorp, a holding company that owns a federally chartered Summit National Bank.
The acquisition allows Nexo and its customers to open bank accounts with Summit National Bank. In addition, Nexo’s retail and institutional clients based out of the US will get access to asset-back loans, card products, and escrow and custodial solutions offered through Summit.