Crypto Daily News from ZBG Exchange
1. Crypto Long & Short: Why Tesla’s Reversal Is Good for Bitcoin
The company’s recent move is more about policy than price. Plus: Did this week mark the start of a meaningful shift in the stablecoin market?
Earlier this week, Tesla exacerbated an already nervous market mood with the announcement that it was no longer accepting the cryptocurrency as payment for its products.
As usual, the crypto market focused on the immediate narrative: If Elon Musk says that bitcoin (BTC, -5.69%) is bad for the environment, other large investors will probably worry about public scrutiny and decide to sell, right? The expectations game, which consists of guessing what others think you’re thinking, then makes reducing positions the sensible thing to do, regardless of fundamentals.
While this may be Elon Musk speaking before thinking, or it may be his board and/or executives bowing to outside pressure, it’s worth taking a step back to look at the probable motivation and strategy behind the move, as well as its hopeful outcome.
First, let’s look at why the Tesla statement was not that significant, and then we’ll look at why it does actually have meaning.
Tesla announced that it would start accepting bitcoin as payment back in February, at the same time as it announced a $1.5 billion investment in the asset. Even back then, the payment option felt like a PR stunt. If bitcoin is a “reserve asset,” a hedge against fiat debasement, then why would users want to use it as a payment token?
Many insist that bitcoin is useless as a payment token, given its high fees and slow confirmation times. This overlooks the fact that in many areas of the world, it is still a better option than existing systems. And bitcoin-based payment rails are spreading.
However, for the majority of Tesla’s target audience, bitcoin is unlikely to ever be a better payment option than straightforward bank transfers or platinum credit cards. And Tesla’s signaling that bitcoin is a good reserve asset and a useful payment method presents an intellectual disconnect — if bitcoin is worth holding as a fiat debasement hedge, why would users part with it? Especially when, if they needed to raise funds for a Tesla and had lots of bitcoin sitting idle, they could use the cryptocurrency as collateral for a fiat loan, which could then go toward a shiny new car.
In other words, the number of Tesla customers excited about paying with bitcoin was always going to be small to nonexistent.
Removing that option feels like another PR stunt, and a ham-fisted one at that. The economic impact of removing something hardly anyone would want anyway is negligible, both for Tesla and for the demand for bitcoin.
The reason given for the decision was “the rapidly increasing use of fossil fuels for Bitcoin mining and transactions.” This is factually false. More detailed information on this is not hard to find. And Tesla confirmed that it is not selling its current stake in BTC.
So, with this move, Tesla comes across as one, lazy and irresponsible on the research side — Tesla shareholders have every right to wonder why the company is just finding out about the energy consumption mix now — and two, hypocritical: Why is supposedly contaminating BTC acceptable for the balance sheet, but not as a possible (but unlikely) convenience to users?
As for credibility, when Twitter co-founder Jack Dorsey tweeted last month that “Bitcoin incentivizes green energy,” Elon Musk responded: “True.”
And, you have a potential breach of fiduciary duty, something Elon Musk is no stranger to. With this tweet, the price of BTC dropped almost 8% within three hours, producing a significant slump in the market value of the firm’s bitcoin holdings. (This will not impact the balance sheet, which values bitcoin at the lower of cost or market value.)
Elon Musk may act irresponsibly at times, which is a risk that Tesla shareholders know about and accept. But he is far from stupid. So what is really going on here?
2. Bitcoin, Ether Dive While Some Alternative Cryptocurrencies Hit Record Highs
The balance of bitcoin held on major exchanges is on the rise in what some analysts say is a bearish sign.
Ether, the second biggest cryptocurrency by market capitalization, is positioned to log its first weekly loss since the end of March, as its price, along with that of larger sibling bitcoin, are in the red on Saturday.
At press time ether’s changing hands at $3,779.81, down 8.48% in the past 24 hours, according to CoinDesk 20. Meanwhile bitcoin, the №1 cryptocurrency by market capitalization, has also fallen, down 5.88% in the past 24 hours to below $48,000.
After having logged a six-week-long winning streak, ether’s set to end the week on a down note, according to data from TradingView and Kraken.
As for bitcoin, the balance of that cryptocurrency held on major exchanges is increasing again after dropping for more than a year, according to data from Glassnode. Some analysts interpreted it as a bearish sign for the market. as it could show more BTCs are available to sell on exchanges.
Meanwhile, the winners of the day appear to be tokens of so-called Ethereum Killers and layer 2 scaling projects, as some those tokens have logged new all-time highs on Saturday.
3. Bitcoin Dumps After Musk Fails to Deny That Tesla Has Sold or May Sell All Its BTC Holdings
Elon Musk cannot stop talking about bitcoin and doge.
Bitcoin took an 3.7% drop to near $45,100 Sunday afternoon EST after Tesla CEO Elon Musk did not outright deny that his electric-car company has sold or could soon sell all of its more than $1 billion holdings of bitcoin (BTC, -7%) because of the criticism he’s received after suspending the world’s largest cryptocurrency as a form of payment.
In recent trading, bitcoin had bounced back a bit to $45,627.90, down 4.98% in the past 24 hours.
Earlier the day, Musk also tweeted at Peter McCormack, who posted a Twitter thread about Musk’s criticism of bitcoin and support for dogecoin (DOGE, -7.55%), saying that “obnoxious threads like this make me want to go all in on Doge.”
At press time, dogecoin (DOGE) is changing hands at $0.508, down 0.45% in the past 24 hours.
Musk on May 12 announced that Tesla is discontinuing bitcoin payments due to concerns around its environmental impact, which sent bitcoin down by $2,000.
4. bEarn Fi Loses $11M in Latest Exploit of a Binance Smart Chain DeFi Protocol
The cause of the attack is still under investigation.
bEarn Fi, a cross-chain auto yield farming protocol, was exploited earlier Sunday EST, resulting in a loss of near $11 million, according to China-based blockchain analysis firm PeckShield.
It’s the latest attack on decentralized finance protocols built on Binance Smart Chain, one of the so-called Ethereum killers that’s built by centralized crypto exchange giant Binance.
“Dear community, we are aware that users’ deposit in BUSD have increased significantly,” bEarn Fi’s official Twitter account wrote at around 9:31 a.m. EST Sunday, May 16. “Please be advised that we are currently investigating the Alpaca Vault incident. No other bVault has been affected but we have taken a precautionary measure and temporarily paused withdrawals and deposits for all bVaults.”
A spokesperson from PeckShield told us in a WeChat message that they are still investigating the cause of the attack but the attack on bEarn Fi resulted in losses of near $11 million.
On bEarn Fi’s Telegram group, users have been asking bEarn Fi’s team members since early Sunday morning EST about whether something went wrong with the Binance USD (BUSD) vault on bEarn Fi.
“Is there a BUSD vault problem?” one user asked at 7:11 AM EST. “It’s increasing so much that it’s impossible.”
“We are working on it,” one team member of bEarn Fi wrote, in response to users’ multiple requests on whether their funds are safe.
Earlier in May, another BSC-based defi protocol, Spartan Protocol, was attacked with a loss of more than $30 million.
5. Inside Bram Cohen’s Proof-of-Work Reinvention
In this premiere episode of “Hard Problems”, join BitTorrent inventor and Chia CEO Bram Cohen, CoinDesk’s Adam B. Levine, community members JMHands and Michel Erb for a lively discussion of Bram’s newly launched reinvention of distributed, proof of work consensus known as Proofs of Space and Time.
Bitcoin’s ‘Nakamoto Consensus’ changed the world. For the first time ever, strangers on the internet were empowered by a system that allowed them to individually and jointly track who owned which internet-native items… First money, then early stage (and often illegal) investments, followed by digital cats, multi-million dollar art, viral memes and soon enough, well, everything.
If there’s one complaint (whether right or wrong) about Satoshi’s breakthrough, it’s the energy cost it comes at.
Whether you’re talking about Bitcoin or the myriad other proof of work systems, ‘Nakamoto Consensus’ is a “competitive money burning process.” Each time transactions are added to the permanent history it’s a race to see who can prove their commitment to the network by finding the winning raffle ticket the fastest. Everyone races but only one wins and when each block is found, the process starts over. It’s not a perfect system, but it works and it’s the best one we’ve found… So far.
Founded in July 2018, ZBG is a Hong Kong-based cryptocurrency exchange, a global platform of ZB.COM.
ZBG.com has quickly become one of the top 10 exchanges in the world with its innovative, efficient and global operations, and is known as a “New First-Tier” exchange.
Currently, ZBG supports 11 languages, with an average daily activity of more than 160,000, providing over 3 million users around the world with trustworthy cryptocurrency trading, contract trading and other crypto asset investment services.
In the future, ZBG will continue to expand its global market and provide stable, safe and fast blockchain project listing, diversified crypto assets and blockchain derivatives investment services to more blockchain enthusiasts around the world.
ZBG Official English (Telegram): https://t.me/ZBG_Exchange
ZBG Official Chinese(Telegram): https://t.me/ZBG_ChineseOfficial
ZBG Official Bangladesh (Telegram): https://t.me/zbgbangladesh
ZBG, World’s top 10 crypto currency exchange.
Link to future value!
May 17, 2021