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Cryptocurrency Volatility Doesn’t Bother UK Financial Professionals 3 1463

Cryptocurrency volatility is a constant concern. After news of the Google advertising ban on cryptocurrency and related products, Bitcoin tanked to a new low. In fact, over $60 billion was wiped off the value of cryptocurrency in the space of 24 hours.

Large selling from a trustee of Mt.Gox, the failed cryptocurrency exchange, was also partially to blame for the slide. Yet, despite the doom and gloom, UK financial professionals remain optimistic about the future of cryptocurrency.

A survey by Citigate Dewe Rogerson found that more than half of all financial professionals who invested in Britain are planning to buy more cryptocurrency this year. Despite the tumultuous landscape, impending regulation and rampant volatility, just 8 percent of those interviewed planned on selling their crypto.

Cryptocurrency Volatility is Passing

According to the survey, the majority of financial professionals in the UK believe that crypto value will rise again later in the year. In addition, retail investors are quietly optimistic. Many of them are seeking to increase their exposure, with 54 percent expecting prices to rise. 56 percent are planning on buying more.

The survey was conducted by the Consumer Intelligence unit of the research and communications company, and took place at the end of February.

But, of course, a lot has happened since then. In just two weeks, cryptos have been delivered blow after blow, with SEC involvement and ICO funding theft.

However, Jennifer McEntire of LexisNexis Risk Solutions believes the volatility is no worse than our traditional markets. “The volatility… I would liken and compare to our traditional markets,” she says.

A Light on the Horizon

Not only are financial professionals undeterred by cryptocurrency volatility, but 32 percent of them expect a dramatic increase in the next couple of years. Others are not so certain, but less than a third of all surveyed believed that valuation will continue to fall.

It’s certainly a gamble, and no one may have the answers in this entirely new landscape.

“Many cryptocurrencies have seen a huge increase in valuations, but also exceptional levels of volatility”, stated Executive Director at Citigate Dewe Rogerson, Phil Anderson. “Cryptocurrency millionaires have been created, but many other investors have lost money. Despite the significant levels of volatility and price fluctuations, our research reveals many financial professionals remain optimistic about the future for cryptocurrencies.”

Despite the cryptocurrency volatility, most financial professionals (59 percent) expect the overall market to reach over $1 trillian by 2021. Less than 20 percent of participants expect the market to shrink to less than $800 billion.

Will Regulation be a Blessing or a Curse?

While many ICOs are nervous about impending regulation, financial professionals seem to welcome it. If crypto transactions are regulated and there are more guidelines and tighter control, investors can invest with greater confidence and ICO scam teams can be eradicated. Moreover, crypto’s usage for instant transactions and removing conversion fees will be more widely adopted by the finance industry.

But beyond Bitcoin and investor buying and selling, the majority of those surveyed believe that the blockchain will have a bigger lasting impact. 44 percent of financial professionals expect to see a major increase in blockchain adoption by corporations, using smart contracts and other blockchain applications in the near future.

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Christina is a technology and business communicator who has worked with high profile ICOs and blockchain influencers to break industry news.

3 Comments

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Bitcoin Uses As Much Energy As Austria, Could Add 2°C to Earth’s Atmosphere 2,187 22125

Photo by Lucy Chian on Unsplash

Bitcoin mining, it turns out, damages the earth more than more traditional environmental assaults like actual mineral mining.

According to a paper published Monday in Nature Sustainability, the power-hungry Bitcoin mining process consumes more than triple the amount of energy needed to mine the equivalent amount of gold, more than quadruple what’s needed for copper, and more than double what it takes to mine platinum.

Other coins didn’t fare much better. By their measurements, Ethereum and Litecoin consume 7 megajoules of electricity to produce the equivalent of $1, the same energy expenditure as copper mining but more than that of platinum or gold. Monero eats up 14 megajoules to produce $1.

Naturally, these measurements refer to the notoriously variable dollar valuations of such tokens. “While the market prices of the coins are quite volatile,” write researchers Max J. Krause and Thabet Tolaymat, “the network hashrates for three of the four cryptocurrencies have trended consistently upward, suggesting that energy requirements will continue to increase.”

Bitcoin’s Growing Electricity Bill is Bigger Than Some Countries

We’ve long known that Bitcoin is unsustainable. In a 2015 article for Motherboard, Christopher Malmo pointed out that a single Bitcoin transaction used 5,033 times as much energy as a Visa swipe, and could power 1.5 American homes for a day.

The electricity used to crunch Bitcoin code—and its environmental cost—has been growing with its increasing popularity. Digiconomist’s Bitcoin Energy Consumption Index shows Bitcoin currently consuming 73.12 terawatt hours (or 263.232 billion megajoules) of electricity annually. To put that in context, it’s comparable to the amount of energy it takes to power Austria for a year.

That means there are 175ish countries on earth using less energy than Bitcoin (to say nothing of crypto on the whole), while 66 countries consume less energy per capita than one Bitcoin transaction (it takes 94 thousand kilowatt hours of electricity to mine a single Bitcoin).

Iceland, a major hub of Bitcoin mining farms, spends nearly as much energy on Bitcoin as it does powering its residential homes. In this case, the damage is mitigated because most of Iceland’s power comes from renewable energy.

Canada’s Bitcoin emissions are also on the lower end due to renewable energy sources. They’re using this to court mining companies from China, where mining emissions are about four times that of Canada’s. Montreal International attracts foreign investment by calling Quebec the land of “green bitcoin”. This has caught the eye of some Chinese mining companies looking to go overseas as the Chinese government has discouraged expansion and shut down some mining operations altogether.

Depending on Bitcoin’s growth, some have projected that it could use as much energy as the entire world by 2020.

Digital Currency Has a Real Carbon Footprint

Krause’s and Tolaymat’s research reminds us of the sobering reality that all this invisible wealth has real world costs.

For the 30 months they measured between January 2016 and June 2018, they estimate their four featured tokens collectively belched out at least 3 million tons of CO2 emissions, possibly as much as 15 million tons.

These findings follow another study, published last month, which determined Bitcoin alone could add two degrees Celcius to global warming within the next three decades. That’s enough to raise ocean acidity by 29 percent.

Solving Bitcoin’s Energy Consumption Crisis

So what is the solution? If the world were to switch to 100 percent renewable energy overnight, the problem would be moot. But we can’t hold our breath for that. There could be ways of incentivizing clean energy so greener mines reap more coins, or of implementing clean energy in other ways.

It’s also possible to adopt less computationally intensive mining algorithms so the mining computers don’t guzzle as much juice. This would disappoint a lot of old school Bitcoiners who have invested in hardware, but their feelings don’t really outweigh that 2 degrees celcius that everyone will have to live with (or die by).

Whatever the best solution turns out to be, something needs to change soon. Bitcoin is growing up, and it’s time for it to mature into something more sustainable.

There’s an Inflatable ‘Bitcoin Rat’ Staring Down the Fed 95 213

Someone has put a giant inflatable rat outside the Federal Reserve Bank in New York.

It’s covered in Bitcoin code, printed in rainbow colors, and is apparently a piece of installation art aimed at subverting the federal institution that controls the US dollar. Or is it pale, puffed-up pariah a commentary on Bitcoin bros themselves? Or does it have something to do with Warren Buffett, who earlier this year called Bitcoin “rat poison squared”? According to CoinDesk, who first reported on the inflatable rat, the meaning is intentionally ambiguous.

The artist behind the puzzling prank is Nelson Saiers. He describes his own work as “mystifying” and “singularly original”, notwithstanding the long history of rats being inflated as protests or used as economic and political icons in art and entertainment around the world.

“It’s art, so I hope they’re entertained by it,” he said, apparently implying that art is entertainment. “It’s informative, I hope people will learn [and] I’m hoping it’ll at least help people understand bitcoin better and be kind of faithful to what Satoshi would have wanted,” he added, citing the mysterious pseudonym of Bitcoin’s founder with a touch of reverence.

A $50 Million Artist

Saiers, a phD in theoretical mathematics, was a hedge fund manager who did that thing where you give up all the money to chase your dream of being an artist.

His financial experience includes a stint as managing director at Deutsche Bank’s prop trading desk, before becoming CIO of Saiers Capital, the hedge fund that bears his name. His creative career gives credence to the theory that working as an artist is more and more a privilege of the very wealthy.

CNBC estimated Saiers’s wealth to be around $50 million at the time of he departed from the financial industry to pick up his paintbrushes.

The Rat Joins a Tradition of Sculpture-as-Commentary in FiDi

The Bitcoin rat, which stands on Maiden Lane, isn’t the first pop up sculpture to grace Manhattan’s financial district. Last year, Kristen Visbal’s 50 inch bronze ‘Fearless Girl’ statue made waves by staring down the famous ‘Charging Bull’, to the outrage of ‘Charging Bull’ sculptor Arturo Di Modica. The 3.5 ton ‘Charging Bull’ itself was left on Wall Street in the middle of the night when Di Modica originally created it, obstructing traffic and drawing the curiosity of passers by.

When Saiers placed the Bitcoin rat, he initially set it up on private property and was promptly ushered off by security guards, who he says were good natured about the situation. He expects the sculpture to be more temporary than the aforementioned Wall Street bronzes, and will probably only be around for a few days.

A Critique of the 2008 Bailouts

The placement of the rat on Maiden Lane seems to be no accident, but rather a reference to the Maiden Lane Transactions, more commonly known as that time when the Fed bailed out the big banks after they all caused the 2008 market crash. The Bitcoin crowd’s antipathy towards the Fed and the big banks is palpable in Sairs’s rat sculpture, and while a more specific meaning eludes, perhaps the success of the piece depends upon its ability to start conversations about the state of finance.

We’ll leave it to the viewers to decide who’s the rat—the Federal Reserve, or Bitcoin itself—and what that means for the future of currencies.

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