Previous Post Bitcoin Breaches $16K as (Committed) Holders Diss Dalio’s Diss The Bitcoin network saw its mempool shrink down to its smallest size since mid-October within this week. Read more here. These two well-known companies will profit mightily from the rise of cryptocurrencies.
A total of $7.6 billion worth of cryptocurrencies have been stolen by hackers and scammers since 2011, according to a new report published by Amsterdam-based blockchain analytics firm Crystal Blockchain.
At the time, the cryptocurrency exchange saw hackers, believe to be associated with the Lazarus group, take over $535 million worth of NEM from its wallet. In terms of exchange security breaches the United States, Japan, United Kingdom, China, and South Korea experienced the most breaches, with U.S. services topping the list.
When it comes to value stolen, China was in the lead over the PlusToken Ponzi scheme, which stole over $2.9 billion from investors, and the WoToken scam, which stole over $1 billion.
Kyrylo Chykhradze, a product director of Crystal Blockchain, was quoted as saying:
We deemed $7.6 billion as the total amount for all the years combined in one sum. Basically a cumulative sum for the last 10 years.
Chykhradze added that the main reason for the vulnerabilities being exploited is that the tech industry continues to evolve at a very fast pace, and more entities appear on the market with “neglected” internal security policies.
The report, the publication adds, predicts that as hackers’ methods become more sophisticated, attacks are set to grow in number in the future. With the latest BTC bull run to test $16,000, he added, the firm assumes “hat the number of attacks and schemes will continue to grow.”
Featured image via Pixabay.
Mempool Clears To Zero On Bitcoin As Fees See Massive Drop
The Bitcoin network saw its mempool shrink down to its smallest size since mid-October within this week. This occurred thanks to the hash power of the network skyrocketing back up.
With a clear mempool, thousands of transactions that were stuck pending confirmation were now all included in the recent blocks, which leaves very few transactions still unconfirmed by the network.
This massive hash power spike comes primarily thanks to China’s crypto miners, having re-activated their rigs after they migrated from Sichuan at the end of the rainy season for the province. Within just two days, between the 9th and 10th of November, Bitcoin saw its hash rate rocket up by 42%.
Regular Bitcoin users will see great benefit from a smaller mempool, as this makes the competition among fresh transactions to be included within the next blocks less. With a lesser amount of competition in the mempool, the transaction fees for Bitcoin are reduced. This is due to how miners can now include all transactions within the mempool within the block without needing to look at the individual gas fees.
On the 30th of October, average transaction fees for Bitcoin saw a peak of $13.16 per transaction, with over 150,000 transactions pending within the mempool at large. With a massive influx of hash power that was seen over the weekend, Bitcoin blocks were processed faster than the benchmark 10-minutes-per-block.
This was due to the network’s relatively low mining difficulty with a massive influx of mining power. With these two facets combined, the number of unconfirmed transactions managed to get reduced to 0 on the 9th of November, 2020.
At the time of writing, around 6,000 transactions were within the mempool, boasting a median fee of 3 satoshis per byte (sat/byte), which is about $0.11. Some users reported even lower, as little as one sat/byte for a transaction, and having that transaction be confirmed within a few hours.
As the next network adjustment looms, it’s expected that the mining difficulty will increase. This comes as a way for the network to compensate for the hash power within it., meaning that the high fees might come back in due time. Even so, the hash rate for BTC at large is volatile, seeing a 37 EH/s drop within a single day.
With this network backlog subsided, Bitcoin users have been actively encouraged to leverage the current conditions, performing transactions that could’ve been too expensive until now.
The mempool has cleared. Send ’em if you got ’em.#Bitcoin pic.twitter.com/XDmDquaUzS
— Clark Moody (@clarkmoody) November 10, 2020
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2 Stocks to Ride the Crypto Wave
A couple of years ago, Warren Buffett made headlines when he said that bitcoin was “probably rat poison squared.” Buffett believes that using dollars to buy cryptocurrency is speculation and not an investment. “Cryptocurrencies basically have no value and they don’t produce anything,” he said.
Buffett’s hostility to crypto is probably based in large part on his shunning of tech stocks in general. Buffett doesn’t invest in things he doesn’t understand well, and crypto is as hard to understand as any technology (maybe harder). His criticism of crypto is similar to what we might say about gold. It’s a rather useless metal with no intrinsic value outside of supply and demand. And yet gold has long been seen as a hedge against inflation. Crypto works the same way.
Indeed, crypto might replace gold as a store of value for people who are dubious about fiat currency. Right now, crypto and gold are similar. It’s an asset you hold in the hope that you can trade it in for more money in the future. But unlike gold, it’s possible that crypto will actually become a currency in its own right. That is to say, one day we might be able to use crypto to actually buy goods and services. And that’s where PayPal Holdings (NASDAQ:PYPL) and Square (NYSE:SQ) come in.
Image source: Getty Images.
On PayPal’s most recent conference call, CEO Dan Schulman said: “We will rapidly move at the beginning of next year and allow consumers to use cryptocurrencies as a funding instrument to shop across all 28 million of our merchants. This solution will not involve any additional integrations, volatility risk or incremental transaction fees for either consumers or merchants and will fundamentally bolster the utility of cryptocurrencies.”
In the U.S., people will still be using dollars to make purchases. But what PayPal will do is enable instantaneous transfer from crypto into fiat currency at a step rate. So at checkout in a store, a PayPal user can immediately turn cryptocurrency (held in a digital wallet) into cash, and use that cash to make payments in any of the 28 million merchants in the PayPal system.
How big a market is this? The market capitalization of the major cryptocurrency, bitcoin, is about $200 billion. A lot of people who own bitcoin are long-term holders of the cryptocurrency and have no plans to spend it.
What might discourage the use of crypto to buy goods and services are taxation issues. Right now, if you were to spend bitcoin to buy a soda, you would pay sales tax at the checkout counter. But you would also owe capital gains tax on the bitcoin sale. This might limit bitcoin’s usefulness as an actual currency.
Nonetheless, the rise of bitcoin and other cryptocurrencies is very bullish for digital wallets and virtual exchanges. As cryptocurrencies become more and more mainstream, the value proposition for PayPal becomes even stronger. And the demand seems to be high. As Schulman said on the call: “Our waiting list was 2 times to 3 times of what our expectations were.”
Data by YCharts.
If the billionaires who hate bitcoin call it rat poison, what do the optimists say? Jack Dorsey, the founder and CEO of Square, says this: “The world ultimately will have a single currency, the internet will have a single currency. I personally believe that it will be bitcoin.”
In October, Square made headlines with a $50 million bitcoin purchase. Square has been a huge proponent of the cryptocurrency. In the third quarter, Square generated $1.63 billion of bitcoin revenue, up 1000% from a year ago. While Square has been buying and selling bitcoin for a couple of years now to facilitate trades for its customers, the $50 million is a long-term strategic bet on the future of bitcoin.
Overall in the quarter, Square had $3.03 billion in revenue. So bitcoin trading made up a significant part of the company’s revenues for the quarter. Indeed, in Cash App, bitcoin revenue ($1.63 billion) surpassed dollar revenue ($435 million) for the third quarter in a row.
Square’s dramatic growth as a fintech has mirrored the rise of cryptocurrencies. And PayPal’s move into bitcoin validates what Square is doing. We are seeing major banks like JPMorgan Chase jump into cryptocurrencies as well.
Investors should not be afraid of these new currencies, but see them as a way to diversify risk. And while the value of bitcoin might shift dramatically, Square and PayPal will profit no matter how it shakes out. When there’s a gold rush, invest in the companies providing picks and shovels.
Author: Taylor Carmichael