After banning crypto payments back in 2017, Indonesia is looking to allow payments in a digital rupiah currency.

The Bank of Indonesia is one of the latest global central banks to announce state digital currency plans amid a major spike in the country’s digital payments.

Governor Perry Warjiyo said Tuesday that Indonesia’s central bank is planning to launch a digital rupiah currency as a legal payment instrument in Indonesia, Reuters reports.

The official noted that the rupiah is the only legally accepted currency for payment in the country so far, and BI will be looking to regulate a digital rupiah the same way it regulates cash and card-based transactions.

According to Warjiyo, BI is now studying potential benefits of a digital rupiah including its impact on monetary policy and payment systems, as well as evaluating the readiness of the financial infrastructure. The bank is also assessing potential technology options for building a central bank digital currency, he noted. Speaking at a streamed news conference, the official did not specify on an exact timeline for a digital rupiah development.

At the time of writing, BI has apparently not released an official statement regarding its CBDC plans. According to a notice on an official website of the bank, BI is about to decide on the issuance of a digital rupiah in the near future as necessary preparations have been completed. “BI is currently still focusing on digital transformation as part of Indonesia payment systems blueprint 2025,” the statement notes.

According to the report, Indonesia’s entrance to the global CBDC race comes in response to a major surge in digital banking, with digital transaction frequency jumping over 60% on an annual basis. Digital payments represent one of the country’s main policy priorities after Indonesia saw strong growth in online transactions during the COVID-19 pandemic.

The latest news follows Indonesian financial authorities announcing potential tax schemes for capital gains generated from crypto last week. Previously, Indonesia’s Commodity Futures Trade Regulatory Agency was also considering levying a tax on all cryptocurrency transactions taking place on domestic crypto exchanges.

Indonesia is known for its mixed approach to regulating crypto as the country put a blanket ban on cryptocurrency payments back in 2017 despite keeping crypto trading legal.

Elon Musk, here we go again: It is not the first time his reckless tweeting has caused serious problems, but this time they’re for crypto.

Powers On… is a monthly opinion column from Marc Powers, who spent much of his 40-year legal career working with complex securities-related cases in the United States after a stint with the SEC. He is now an adjunct professor at Florida International University College of Law, where he teaches a course on “Blockchain, Crypto and Regulatory Considerations.”

These past few weeks have been tumultuous, especially for newbies to the crypto market. First, on May 8, Elon Musk, CEO of Tesla, was the host of Saturday Night Live where he promoted Dogecoin (DOGE) — a highly speculative, volatile cryptocurrency with present meaningful business model other than being a meme for tipping others. Then, a few days later, Musk dissed Bitcoin (BTC) in a tweet, stating that Tesla would no longer allow purchases of its electric vehicles with BTC because of its purported substantial, environmentally unfriendly energy usage.

This is, of course, only a half-truth, as on a relative basis, the current traditional financial industry reportedly uses twice the amount of energy, according to a new study by Galaxy Digital. The crypto industry also comes close to having 40% of Bitcoin mining powered by renewable energy sources, according to the latest study by the Cambridge Centre for Alternative Finance. And according to Skybridge Capital founder Anthony Scaramucci, the “future of #bitcoin mining is renewable energy.”

Energy problem as an agenda?

Also, leave it to The New York Times to never let the truth, or additional truths, get in the way of pushing its own political agenda, which is decidedly progressive and against most anything that benefits the upper-middle class, involves capitalism and investments that fail to advance its liberal positions, and the wealthy. The New York Times has published no less than four articles on the energy consumption of BTC, including an article in January 2018 by reporter Nathaniel Popper, then another in February 2018 by Binyamin Appelbaum, and then another in March 2021 by Andrew Ross Sorkin. Most recently, The New York Times published a fourth article on April 14 by Hiroko Tabuchi on the purported huge amount of energy consumed and carbon emissions caused by Bitcoin.

However, the many supposed “facts” in that most recent piece and a 2018 report upon which that position is in part supported were roundly rebutted by Nic Carter of Castle Island Ventures in a Harvard Business Review article published May 5. It is more than a coincidence, I suspect, that two of the NYT articles were published in early 2018 and two in early 2021, both being time periods when the price of BTC had been rising. Is the Gray Lady just reporting the news, or is it pushing an agenda voicing purported environmental concerns relating to the digital asset and opposition to the many crypto millionaires that BTC ownership has created?

Then, on May 19, the prices of BTC, Ether (ETH) and most cryptocurrencies swooned by over 25%. Now, for those in the space, like me, who were here pre-2018, they understand that such huge price swings are nothing new to crypto. Indeed, in 2017 alone, BTC dipped several times that year by over 30%. It has fallen over 50% several times in the last 10 years. While nerve-racking, such is the price one must pay for this not-yet-mature blockchain technology. From an investing perspective, Basic Finance 101 dictates that for large rewards, there are large risks.

Moreover, it is worth noting that anyone who bought BTC from any time period prior to Thanksgiving 2020 today still has — even with a BTC price of around $40,000 — a return of over 100%. Even if the price is cut roughly in half in the coming days, weeks or months from that level to $20,000, still not one investor who has held the currency from then till today would have lost a penny.

And what’s with bans on crypto?

Apart from Musk’s tweets about Tesla no longer accepting BTC, another speculated cause of the dive was China’s crackdown on crypto trading in the country. Yet, to those educated and within the space for a while, they know this was not the first crackdown of this kind by that country. More importantly, they know all prior efforts failed.

More and more people in China and elsewhere own digital assets, with the number surpassing 105 million worldwide as of February, despite sovereign efforts to curb, regulate or ban them. This is likely because there are many countries — like China, Greece and Venezuela — and continents — like Africa — in the world where citizens do not fully trust their governments or institutions. Either their fiat currencies have been devalued by rampant inflation, their governments are oppressing their people and prohibiting them from transfers of assets outside their borders, or their citizens worry their governments might “nationalize” their bank assets — like was done in Greece in 2014–2016 after the last financial crisis.

There are also around 1.7 billion people in the world that do not — for various reasons — have access to bank accounts or financial institutions where they can maintain stable savings or engage in financial and commercial transactions. The peer-to-peer system allowed by the invention of Bitcoin in October 2008 allows that; all you need now is a smartphone.

As soon as the large declines began early in the day on May 19, JPMorgan Chase showed its true colors. Remember, it was JPMorgan’s chairman, Jamie Dimon, who famously said a few years ago that BTC was a fraud. Yet, JPMorgan has been developing its own digital coin, JPM Coin. When the prices went down, JPMorgan again blasted the asset class. Also, one could almost sense the schadenfreude by some in the traditional media in reporting on the price declines that day.

Back to Musk

But I digress… What I really want to focus on is Musk and his tweeting. Because he does it regularly and, in my opinion, with a reckless abandon that has not only hurt the digital asset market but has probably caused a number of his Twitter followers to lose millions of dollars.

Many of you may remember, or will be surprised to learn, that Musk was accused of fraud by the United States Securities and Exchange Commission in September 2018 for issuing false and misleading tweets. Specifically, the SEC alleged he made “false and misleading” when claiming in tweets that Tesla had secured funding to take the company private at $420 per share. Tesla was also sued for failing to have proper disclosure controls in place to ensure that Musk, then the chairman and CEO of Tesla, did not mislead Tesla shareholders and the investing public.

Tesla and Musk in short order settled the charges the following month and agreed to pay penalties of $20 million each and to hire two independent directors and a securities counsel to review in advance all of Musk’s tweets involving Tesla to ensure that any material information, or information that reasonably could be considered material, is preapproved and accurate.

Despite this SEC settlement being approved by the court in October 2018, Musk was at it again in 2019, tweeting — according to the SEC — without pre-review and approval by Tesla’s new securities counsel and governance committee. The SEC thus brought a motion to hold him in contempt of court for violating the consent judgment he had signed just six months earlier. Musk claimed that the new tweeted information was not “material” and, in any event, was protected by his First Amendment rights. That case, too, was settled, with an amendment of the judgment to specifically identify nine kinds of Tesla-related information for which Musk must receive prior approval before issuing a tweet.

In March — just two months ago — a Delaware derivative lawsuit was unsealed that again accused Musk of violating the SEC settlement and his fiduciary duties by his “erratic tweets.” It has also been over two and a half years since Tesla and Musk paid the collective $40 million penalty. Yet, there is still no specific court-approved SOX Fair Fund plan in the SEC action to distribute the money to shareholders of Tesla who were financially harmed by Musk’s purported tweets about going private. As the adage goes, justice delayed is justice denied — in this case, it is the Tesla shareholders that may have lost out.

So, with Musk tweeting regularly about Bitcoin, Dogecoin and other cryptocurrencies, one can rightly ask: Are the SEC, the Commodity Futures Trading Commission (for commodities such as BTC) or the Federal Trade Commission listening? Or more technically correct, are they reading? Are any of his hundreds of tweets on these and other subjects potentially violating the SEC-amended judgment to which he consented? Are there any tweets involving the finances or business of Tesla that are possibly misleading or that have not gone through the agreed-upon preapproval process? Does Musk have some undisclosed personal or business interest in knocking BTC and promoting DOGE? Are his tweets, which contain what some would consider wild speculation on the prices of Dogecoin and other cryptocurrencies, mere puffery and permitted First Amendment speech, or are they violations of securities, commodities, consumer or other laws?

From the FTC’s perspective, one of its concerns is consumer fraud. It and the SEC have addressed in public announcements the oversized influence of social media influencers and celebrities. In November 2019, the FTC issued guidelines to remind influencers that if they are receiving any form of compensation for their recommendation of a product, it needs to be disclosed. The SEC has sued several celebrity endorsers, including Floyd Mayweather and DJ Khaled, for receiving undisclosed compensation for promoting cryptocurrencies. Is it perhaps time for the government to look into Musk and his tweets again?

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The opinions expressed are the author’s alone and do not necessarily reflect the views of Cointelegraph nor Florida International University College of Law or its affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

The singer is collaborating with a historic gene sequencing company on a one-of-a-kind art drop.

It seems like everything’s a NFT these days, and your DNA could be next. 

In a press release today, AkoinNFT — the nonfungible token platform from musician and budding blockchain entrepreneur Akon — announced the planned auction of a NFT that will contain a “high-res artistic representation” of the genetic data of Professor George Church, a renowned biology researcher and the first human to have their genome sequenced.

AkoinNFT will be using the Parcel development platform from Oasis Labs to store the metadata, and buyers will also have the option to receive a “30x whole genome sequencing” of their own DNA from project partner Nebula Genomics, a DNA sequencing company co-founded by Church himself.

The goal of the auction is “kick-starting a conversation around fair and transparent ways to monetize and share health data,” and it will take place on Thursday, June 10th.

“As we celebrate the artist within all of us, there is no better indicator than our own Genome Sequenced DNA to showcase the individuality that makes us who we are. This NFT drop will be groundbreaking in so many ways,” said Akon in the release.

In addition to being the first to have their DNA sequenced, Church is also considered a trailblazer for making his medical records and data publicly available. As a result, his data has been used in hundreds, if not thousands, of scientific studies.

The move into medical or genomic data stored as a NFT could be a precursor for more extensive medical record work for the Oasis Network. The network recently announced a major migration of a DeFi protocol as part of a patchwork of recent initiatives, but in 2018 raised $45 million with a pitch heavily centered on privacy-preserving computation that would include multiple medical record use cases.

Oasis COO Anne Fauvre said that the Parcel development platform could be used for other off-chain data sets.

“We envision Parcel and the Oasis Network, with its ability to tokenize numerous classes of off-chain assets, as the ideal platform for securing the next generation of NFTs.”

Because of Bitcoin, blockchain’s impact on the climate has come into sharp focus. But can this technology actually be part of the solution for saving the environment?

Elon Musk captured the world’s attention when he declared that Tesla would no longer accept Bitcoin as a payment method, citing the blockchain’s environmental impact.

Although this thrust the debate about cryptocurrencies and the climate into the spotlight, this has been an issue that has been rumbling on for many years.

Bitcoin’s proof-of-work consensus mechanism is exceedingly energy intensive, and it seems to be a problem that’s only getting worse — with vast data centers established as miners vie to get their hands on a supply of new coins that has dwindled further since the 2020 halving.

The latest figures from Digiconomist suggest that Bitcoin’s annual carbon footprint is now comparable to the whole of Portugal. A single BTC transaction uses as much CO2 as completing 1.26 million Visa transactions… or watching 95,000 hours of YouTube. Worse still, this single transaction also uses as much electricity as the typical U.S. household gets through in 40 days. Just a few short weeks ago, this figure stood at about 28 days.

It’s a problem that’s getting worse, not better. You know that you’ve got a problem on your hands when the environmental group Greenpeace says that it will no longer accept donations that are made using Bitcoin.

Worse still, some heavyweights in the crypto industry believe that, unless the issue is resolved as a matter of urgency, it could sink Bitcoin altogether as corporations and governments make concerted pledges to take action and mitigate the effects of climate change. The COP26 climate summit is due to be held in Glasgow later this year, and New York recently unveiled proposals to ban Bitcoin mining in the state for three years — with politicians fearful that the cryptocurrency could cause it to miss environmental targets.

Speaking to CNN recently, Ethereum’s co-founder Vitalik Buterin conceded Bitcoin’s energy consumption is “definitely huge” and a “significant downside” in the quest for mass adoption. He also made this stark warning: “If Bitcoin sticks with its technology exactly as it is today, there’s a big risk it will get left behind.”

Right now, Ethereum itself is making a big change of its own. The blockchain is currently based on a proof-of-work consensus mechanism, but is now making a concerted shift to proof-of-stake. Some cynics will argue that the main motivation for this ambitious transition lies in the scalability issues that have plagued the network, as there’s a firm belief that PoS will allow Eth2 to process considerably more transactions per second. There are environmental benefits too, however, with research suggesting that this algorithm will be up to 99% more energy efficient.

As Buterin said during that CNN interview: “[We’ll] go from consuming the same energy as a medium-sized country to consuming the same energy as a village.”

Climate: A hot-button topic

Blackrock is the world’s largest asset holder — and in a recent forward-thinking letter to business leaders, CEO Larry Fink said the climate transition “presents a historic investment opportunity.” He added: “No issue ranks higher than climate change on our clients’ lists of priorities. They ask us about it nearly every day.”

This laser-like focus on environmental, social and governance (ES&G) projects helps to change the narrative. Such initiatives are no longer regarded as a drain on profit margins, but an absolute necessity that the world’s biggest businesses need to embrace. Just like Bitcoin, they too risk being left behind unless they adapt… and fast.

Data from Morningstar suggests that the total assets under management in ES&G funds rose precipitously in the final quarter of 2020, surpassing $2 trillion for the very first time. This coincided with the election of Joe Biden as U.S. president, with his administration opting to make climate change a central theme of his presidency.

Carbon offsets, plastic offsets and other forms of climate credits have emerged as a new reality in the business world — meaning companies that fall below certain emissions levels can effectively sell their spare capacity to others for a profit. But this isn’t without challenges. Corporations cannot always be certain that what they are purchasing is genuine, and a real need for concrete data has emerged.

What’s the answer?

Although blockchain has regularly been castigated as part of the problem when it comes to the environment, one Albuquerque startup believes this technology has the power to be part of the solution.

Devvio has developed an innovative blockchain initiative that advances sustainability efforts — with ES&G infrastructure that provides for “Bitcoin and Ethereum with net-zero emissions.” It has already amassed a series of partnerships with companies focused on ES&G, including waste collectors, renewable energy producers and data analytics companies.

Tom Anderson, the company’s CEO, believes that the core strengths of blockchain can establish trust when it comes to verifying ES&G ratings and assets. He stressed that while these networks have become best known as being the home of cryptocurrencies and NFTs, these databases are particularly well-suited to tracking ownership of assets and records. Over time, it has the potential to become the ultimate destination for provable, auditable data — giving corporations a way of updating their progress on ES&G in a way that investors can verify.

“Blockchain and environmental sustainability can coexist,” says Anderson. “Distributed ledger technologies aren’t intrinsically wasteful, and blockchain can do far more good for the environment than harm. With Devvio’s efficiency at 1/1,000,000th the energy usage of Bitcoin, you have all the benefit without the environmental cost.”

He added: “Bitcoin was literally designed to waste energy in its consensus mechanism, but there are other ways to run a blockchain. I don’t think anyone could have realistically imagined what Bitcoin’s energy use would become, back in 2009. Although we have created a system that is dramatically more efficient, I think that is only the tip of the iceberg in what is needed given blockchain’s potential to become a trusted source of truth for all ES&G data and assets.”

Firmly focused on enterprise customers, Devvio says the world can no longer ignore ES&G issues. Anderson added that it is an “exciting time” for the businesses, and “enormous opportunities” have emerged as most of the world’s 1,000 biggest companies evaluate their impact on the environment.

“It’s rare to see an opportunity in one’s lifetime where there is such a strong business to be built while also being able to do so much good in the world,” he added.

BTC

Bitcoin slumped to fresh lows on the week as regulatory fears and clampdown in China saw a further unwind of positions. The price of BTC traded as low as $30k but has bounced to $37,000. However, another big-name investor is long the coin for its anti-dollar and inflationary prospects. 

Ray Dalio, the billionaire founder of Bridgewater Associates, which is the world’s largest hedge fund, said that the US dollar is facing two clear risks. The first is an inflationary threat and devaluation risk not seen since the 1970s, while the second is a threat of being unsettled by China as the world’s reserve currency. The hedge fund titan also declared in an interview with Coindesk that he “owns some” Bitcoin.

Dalio previously said of BTC that:

Its own biggest risk is its success. No government wants to have an alternative currency.

That’s a point I made in these articles many times and have stated over the last weeks that the price bubble was heading into a collision with regulatory action from the likes of the Securities and Exchange Commission (SEC). The European Central Bank Chief Christine Lagarde also threatened a global regulatory approach.

The regulatory issue was brought home again last week as China moved to enforce a strict position on mining in the country. 

Chinese Vice Premier Liu told a group of finance officials that the government would “clamp down on bitcoin mining and trading activity” as part of its goal to achieve financial stability. China has moved to regulate and clean up exchanges in the past but targeting the mining sector is a new policy. 

The price of Bitcoin could see a further bounce if it gets above the $40,000 price level this week.

HT

One of the biggest losers of the week was the Huobi Token (HT) which was hit by the China crackdown.

Huobi announced that it would scale back some of its products and services, while it also said that it would reduce its sale of mining equipment and hosting operations.

Due to recent dynamic changes in the market, in order to protect the interests of investors, a portion of services such as futures contracts, ETP, or other leveraged investment products are temporarily not available to new users from a few specified countries and regions.

The country’s Financial Stability Development Committee of the State Council called for a clampdown on crypto mining and trading, while three financial industry associations sent a more targeted message to Chinese banks and other institutions that have supported cryptocurrency firms.  

The price of HT has crashed from highs above $30 to trade at $14 and the coin’s market cap has slumped from over $6bn to less than $2.5bn. 

AVAX

Avalanche has lived up to its name with a drop to $18 on the week after the coin traded close to $60 earlier in the year. 

The coin was off another 50% on the week, but the point of these moves is that the coins are now trading at a discount and if you believe in a particular project then it is a good time to get involved. The regulatory picture has shown that there is risk in exchange tokens and pure currency plays as governments crack down on competition to their central bank digital currency (CBDC) dreams. 

The best investments are probably going to be in projects that operate outside of government remits and that would include those with scalable technology or decentralized finance (DeFi) products such as loans. The CBDCs will want to be the currency in the same way that the US dollar is the currency, but a huge ecosystem of service providers and infrastructure companies support that. The digital world would likely work in the same way. 

Avalanche is a suitable type of application because it is an open-source platform for building decentralized applications at scale. Stablecoin issuer Tether was a recent launch with the project putting its USDT token on Avalanche. Tether operates on nine networks, but the use of the blockchain is a seal of approval. ChainLink is another that works closely with Avalanche.

The Avalanche project also has a much faster transaction speed than the likes of BTC, ETH, or Polkadot and is also CPU-optimal for more energy efficiency.

The price if AVAX has found support at the $14 level and may look to bounce here, but the potential for consolidation at the lower levels is possible in cryptocurrencies in the short-term, with these prices may be looking like a bargain over time.

FTM

Fantom has seen a rollercoaster in recent weeks and the area of energy-efficient cryptocurrency projects is one that should be considered by investors. 

Fantom is providing some of the lowest kWh per transaction in the crypto market and that is boosting demand. The recent change of heart by Tesla regarding crypto payments was based on the energy usage of BTC and it’s clear that “green coins” could be part of the next investment wave in the same way that companies are divesting from fossil fuel investments in the traditional finance world. Fantom has seen increased demand from developers after a recent upgrade.

The price of FTM has slumped to $0.30 after a rollercoaster move from that level to almost $1.00. 

Elon Musk has quickly become one of the most famous entrepreneurs to promote Bitcoin and other cryptocurrencies. His endorsement of crypto began with Tesla this year, but several other recent events have also shaped his position on cryptocurrency.

Tesla Turns to Bitcoin Alternatives

Musk announced on May 12 that Tesla is temporarily suspending Bitcoin payments due to the coin’s power consumption and seeking a low-energy alternative.

“Cryptocurrency is a good idea…but this cannot come at great cost to the environment,”  Musk wrote. “We intend to use it for transactions as soon as mining transitions to more sustainable energy.” He added that Tesla is “also looking at other cryptocurrencies that use less than 1% of Bitcoin’s energy per transaction.”

Musk previously asked his Twitter followers if they would like to see Tesla accept Dogecoin, and approximately 80% of respondents replied that they would. However, the firm has not confirmed that it will accept the altcoin.

SpaceX Will Use Dogecoin In Next Mission

In an announcement on May 9, SpaceX announced that SpaceX will launch a “DOGE-1 Mission to the Moon.” The company will send its 40 kg satellite aboard a SpaceX Falcon 9 rocket and fund the payload with the Dogecoin cryptocurrency.

The mission will be carried out in partnership with Geometric Energy Corporation. Geometric CEO Samuel Reid noted in a press release that the upcoming mission will “[solidify] DOGE as a unit of account for lunar business in the space sector.”

Elon Musk confirmed on Twitter that the mission will be “paid for in Doge.” That follows on from a seemingly tongue-in-cheek joke that he made on April Fools’ Day, stating that “SpaceX is going to put a literal Dogecoin on the literal moon.”

Other crypto entrepreneurs have also taken note. Justin Sun, CEO of TRON and BitTorrent, says that he would like to fund another mission.

Previous rumors from Skybridge Capital CEO suggest that SpaceX has also invested in Bitcoin. However, neither Musk nor the company has confirmed that fact.

Saturday Night Live Disappoints Investors

Prior to both announcements, Musk appeared on Saturday Night Live in a highly-anticipated Dogecoin-themed sketch. However, the sketch seemingly disappointed investors, as the price of DOGE plummeted by one-third within hours of the sketch.

Despite rumors of an elaborate “Dogefather” sketch that would parody The Godfather film series, Musk simply appeared as a fictional financial expert named Lloyd Ostertag. He explained the coin in simple terms, called the cryptocurrency a “hustle,” and repeated Dogecoin catchphrases such as “to the moon.”

The sketch’s reception suggests that not only did many investors choose to sell off their DOGE holdings, but the sketch also failed to attract new investors to the coin.

The downturn has only had a modest impact on Dogecoin’s year-to-date performance. Over the past year, the cryptocurrency’s price has risen by 21,600%.

Prior to his appearance, Musk also put a more serious message on his Twitter feed: “Cryptocurrency is promising, but please invest with caution!” he said on May 6.

Tesla and Cryptocurrency

Prior to these recent announcements, Tesla became the testing ground for Musk’s cryptocurrency enthusiasm. The company invested $1.5 billion in Bitcoin in February, and in March, it added the ability for investors to pay for its vehicles with Bitcoin.

Recent updates from the end of April suggest that though Tesla has sold a fraction of its Bitcoin, the company’s investment is now worth approximately $2.5 billion.

Musk’s involvement in cryptocurrency has come a long way since he first tweeted about cryptocurrency in 2018. At that time, he recruited Dogecoin creator Jackson Palmer to help fight Bitcoin investment phishing scams that circulate widely on Twitter.

Later, Musk began to tweet about crypto more frequently, jokingly calling himself “the former CEO of Dogecoin” and posting memes related to the cryptocurrency. Today, he posts cryptocurrency-related content on an almost daily basis.

Despite Musk’s willingness to integrate cryptocurrency into his business, he does not seem to own much personally. In 2019, he stated that he owns 0.25 BTC, an amount that is worth less than $18,000 today. It is not clear whether he has made further investments.

It remains to be seen whether Musk’s other companies—OpenAI, Neuralink, and The Boring Company—will make use of cryptocurrency in the future.

BTC

Bitcoin slipped below the $43,000 level on Monday as the 2021 bull market comes under threat. A recent spread of investor flows into altcoins coincided with bearish BTC comments from Tesla founder Elon Musk.

The electric vehicle pioneer has backtracked on his support of crypto payments for electric cars due to environmental concerns. He also said that the world’s largest cryptocurrency by market value was not fully decentralized.

The founder of Uniswap, the popular crypto decentralized exchange, ridiculed Musk’s tweet by stating inconsistencies with Tesla battery production.

Adams said:

If we could make Tesla batteries last 10 times longer, with 10 times faster recharge times, at a fraction of the cost, wouldn’t that be great? Yes, but this is incredibly hard to do, and it may take many years of research to get there.

Ideally, Tesla batteries last 10x longer, recharge 10x faster & drops costs 100x. Then it wins hands down.

Musk also made a point that Bitcoin is actually “highly centralized, with supermajority controlled by a handful of big mining (aka hashing) companies.”

The tweet regarding Tesla’s position said: 

Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.

We discussed on this news site previously that Bitcoin mining is actually proving itself to be green, with the majority of mining being done with renewable energy sources. Musk’s comments are yet another sign that the elite are circling their wagons around BTC and are using the energy and “dirty money” excuses to push future regulation. That will come ahead of the release of central bank digital currencies.

BTC is down 25% for the week and there is a risk of further losses if other corporates or whale investors decide to get involved. 

MATIC

Polygon’s MATIC coin was the best-performing asset of the week with a gain of 78%. Polygon is marketed as a framework for building and connecting Ethereum-compatible blockchain networks. The project aims to allow fast scaling of ETH-based apps with lower fees and faster scaling.

The recent move in the coin sees it rising into the top twenty coins at 19th position with a valuation of $10 billion and a price of $1.65.

Another reason for the rise in MATIC this week was Elon Musk’s comments about Bitcoin’s environmental footprint. Environmentally friendly coins have soared and MATIC, which is proof of stake coin, benefited from the move. Proof-of-stake algorithms allow the largest holders of coins to validate transactions. 

The Bitcoin mining sector is said to use a similar amount of electricity as the Netherlands, according to Digiconomist. Bitcoin mining enthusiasts say that it is worth it in the short term, but much of the industry already relies on renewable energy. Bitcoin miners in China spend a lot of time and effort harvesting surplus hydroelectric supplies from Sichuan.

Polygon’s token has seen a strong surge since March and traded at $0.40 at the end of April.

The price of Polygon has been boosted by its own decentralized exchange, QuickSwap, which is gaining momentum with its total value locked (TVL) increasing strongly. QuickSwap was actually a fork of the Uniswap exchange, and it provides much of the same benefits and features.

QuickSwap also offers generous APYs for stakers of liquidity and recent Tweet by the project said that APYs are up to 216% for the ETH/MATIC pair, over 300% ETH/USDC pair, and 250% for DAI/ETH.

KSM

Kusama is another coin that’s been on a meteoric rise, with the coin trading at $1 in 2020 and now testing levels near $600. 

KSM is also marketed as a scaling solution and was, “built by the same teams as Polkadot, using nearly the same code and tools.”

Kusama aims to attract developers that are interested in the Polkadot network, saying, “…other teams will join Kusama as a temporary preparation ground for deployment on Polkadot.”

The last year has seen the coin move into the top forty coins with a current rank of 35 and a market cap of $5bn. 

CELO

CELO was 20% higher on the week as the coin makes slower progress with its price action.

Celo Network is a global payments infrastructure built for mobile devices. The coin started its recent gains after the news that German telecom giant Deutsche Telekom had invested in the coin.

The company purchased an undisclosed batch of CELO coins and has plans to stake them. The company’s subsidiary T-Systems MMS will then act as a validator using the Open Telekom Cloud (OTC), which is the company’s own scalable cloud infrastructure technology.

The price of CELO has now reached $6.00 but could get higher with a break of the resistance at $7.00.

The indisputable rise of Bitcoin has legitimized it in the eyes of big players. The accessible infrastructure has made even large transactions easy, opening the door for hedge fund entry.

So far, the returns on the investments have been impressive. However, the Bitcoin community is divided on whether this is a good thing. But what are Bitcoin hedge funds exactly, and how do they work?

What Is a Hedge Fund, Anyway?

To understand the mechanics behind a Bitcoin hedge fund, it’s essential to demystify the basic principles of any hedge fund. In short, a hedge fund is a type of investment that uses pooled funds and employs various strategies to maximize profits for investors.

The main goal of a hedge fund is to identify different market opportunities. They’re mostly private transactions constructed with limited partnerships, and they require large amounts of the initial investment.

Investors are also required to keep their money in the fund for a specific time, representing a lock-up period. During that time, they can’t liquidate their assets, and withdrawals are scheduled.

The first hedge fund was launched in 1949 but they didn’t really come to prominence until the 1980s. Today, there are thousands of hedge funds worldwide, and crypto hedge funds are among them.

How Do Bitcoin Hedge Funds Work?

As mentioned, the continuous growth of Bitcoin and its increased accessibility has won over many investors looking to avoid risks as much as possible. There are two basic ways a Bitcoin hedge fund functions.

The first approach involves a fund manager who makes all the important investment decisions. The other option is the systemic approach. This relies on various computer models for trading. The systemic approach reduces risk, as the entire process is more or less automated.

However, the discretionary approach is the preferred choice for most of these hedge funds as it statistically leads to better performance. There are other strategies as well. For example, the quantitative approach represents approaching the market in a directional and market-neutral manner.

The liquidity aspect is crucial here, therefore, the funds for trading are limited. Another possibility is using the multi-strategy approach, which, as the name implies, is a combination of all strategies mentioned. Given that Bitcoin is well-known for its volatility, this is often the approach that brings the best results.

The Two Types of Crypto Hedge Funds

When talking about Bitcoin hedge funds, there is another classification worth noting. There are two distinct types of crypto hedge funds in terms of what types of currency hedge funds manage.

Thus, we have a crypto hedge fund that manages Bitcoin and other cryptocurrencies, primarily Ethereum. The other type manages cryptocurrency as well as other asset classes.

Main Characteristics of Bitcoin Hedge Funds

The promise of great returns makes Bitcoin hedge funds an incredibly appealing idea. However, it’s not so easy to get in on the action.

In fact, Bitcoin hedge funds, like traditional hedge funds, have specific features and prerequisites one has to possess to benefit from them.

They Are Not Very Open

There’s a reason not everyone you know invests in a hedge fund of some kind. Bitcoin hedge funds, in particular, can only take money from “accredited” or “qualified” investors.

Some Bitcoin hedge funds will require the investors to provide over £100,000 of the initial investment. But there are those where the starting investment ranges between £10,000-£25,000.

Essentially, a suitable investor for a Bitcoin hedge fund is the one who has already made tremendous profits on the cryptocurrency exchanges. While there are many successful Bitcoin investors, many more have yet to hit that level.

More Latitude

One of the main perks of hedge funds, in general, is that they can essentially invest in anything. Stocks, land, real estate, and currencies are all on the table.

Unlike mutual funds that stick to bonds and stocks, hedge funds are only limited by mandate. Plus, hedge funds charge performance fees and the expense ratio, a structure known as Two and Twenty.

They Employ Leverage

As Bitcoin hedge funds have been reporting massive success over recent years, managers have also employed leverage as a strategy.

Borrowing money has the tendency to amplify the returns when it comes to hedge funds, making it a popular strategy. Not one without risk, though, as hedge funds can also be wiped out.

Bitcoin Hedge Funds and Regulatory Considerations

One of the most critical questions regarding Bitcoin hedge funds is what is the regulatory angle. Generally speaking, it’s the same as that which applies to traditional hedge funds and regulation.

That means the considerations are based on the fund’s origin jurisdiction and places where it operates. However, there is another aspect that needs to be considered in terms of Bitcoin hedge fund regulations. It applies to the investors who use the Initial Coin Offering (ICO) structure.

They are subject to the respective rules, which are considerably different depending on the jurisdiction. They’re also under plenty of scrutiny from various regulatory and governmental bodies around the world.

Bitcoin’s decentralized system is the main reason why there is plenty of urgencies to regulate everything about it, including Bitcoin hedge funds. But it’s also the reason why so much of the regulation doesn’t exist. A lot of consensus on how to approach the matter is still missing.

Bitcoin Hedge Funds – Investment or Gamble?

There is no doubt that the entire cryptocurrency space has been mostly speculative thus far. This is the main reason why many hedge funds are understandably cautious. Some hedge fund experts see it as a form of gambling, others see it as a major opportunity, regardless of how long it lasts.

The Bitcoin bubble is the buzzword of the day, and everyone seems to be scrutinizing it. However, that doesn’t change anything for hedge funds looking for new ways to make money.

Ultimately, investing in cryptocurrency is risky by default, and it’s crucial to enter the market with all the necessary information and reasonable caution.

Author Bio: Hitesh is a digital marketing strategist and entrepreneur with more than 15 years of experience in digital marketing, start-ups, branding, and customer acquisition strategies. Hitesh is the CEO and Founder of Reposition Group, which specializes in digital growth strategies for companies in the cryptocurrency market such as Bitamp.com.