Other crypto developments: PayPal, cards & CBDCs
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Data for today’s episode is provided by Mercator Advisory Group’s Viewpoint: Cryptocurrency Landscape Overview
Other crypto developments: PayPal, cards & CBDCs:
PayPal currently allows users to buy, sell, and hold cryptocurrencies directly through PayPal using PayPal Cash or Cash Plus accounts
The conversion from crypto to fiat currency will be handled by PayPal on selection, with merchant settlement managed in fiat
In cases of unauthorized activity using crypto assets, PayPal will protect the buyer but fluctuations in asset value are carried by the account holder
Global payments provider i2C is leading in cryptocurrency cards connecting merchant acceptance with card holders through intermediary payments companies.
Similar to how fiat-to-fiat currency conversions are handled through the card network, crypto card conversions are handled by intermediaries who access the card network merchants and settle in fiat.
According to the Bank for International Settlements, 80% of central banks are exploring some sort of central bank digital currency initiative
China is leading the world with central bank digital yuan, but others including Canada, Sweden, and Uruguay are in the race.
About the Report
After the initial hype, and the inevitable slump, cryptocurrencies are once again gaining mainstream attention.
The ecosystem of cryptocurrencies and their various methods of implementation, with new products and services as well as intensified interest on the part of central banks, again moves the blockchain currency to the center of attention.
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Latest ‘Altcoin Season’ Fueled by XRP, Tron, Stellar Pushes Crypto Market Value to $2T for First Time
Price rallies for cryptocurrencies besides bitcoin (BTC) has helped push the digital-asset industry’s total market capitalization to about $2 trillion, doubling in just a few months.
These “alternative cryptocurrencies,” also known as altcoins, include ether (ETH) along with bittorrent (BTT), xrp (XRP), tron (TRX) and stellar (XLM). They have all logged double-digit percentage growth in the past 24 hours, according to data from Messari.
Prices for bitcoin have doubled this year, for a market value of $1.1 trillion, but the rally has paused in recent weeks, allowing altcoins to seize the market leadership. Bitcoin’s market dominance, or its share of the overall industry capitalization, has slid to about 57%, from around 73% at the start of the year, according to TradingView.
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Ether, the native cryptocurrency of the Ethereum blockchain and the second-biggest overall, recorded an all-time high near $2,100 last week. The digital asset has benefited from speculation that the Ethereum blockchain could see growing use as the network of choice for decentralized finance, or DeFi, consisting of automated, blockchain-based software protocols that might someday replace banks and Wall Street trading firms.
Galen Moore, CoinDesk Research’s director of data and indexes, wrote in an analysis that the outstanding performance during the latest “altcoin season” has come from digital tokens belonging to so-called smart-contract platforms that could compete with Ethereum or complement it.
These alternative blockchains also have benefited from increased usage of stablecoins, which are digital tokens whose value is pegged to real-world currencies, primarily the U.S. dollar.
“I feel like the real value and application of stablecoin, decentralized finance on Tron, and BitTorrent has been identified,” Justin Sun, the founder of the Tron blockchain and CEO of BitTorrent, told CoinDesk via a WeChat message.
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Related: During Market Boom, Monero Cryptojacking Fell for First Time Since 2018
Daily transaction counts on Tron have been consistently surpassing the transactions on Ethereum, according to data from CoinDesk and Coin Metrics. The number of tether stablecoin transactions on the Tron blockchain has also beaten Ethereum’s count, as CoinDesk reported.
Yet, for Ethereum the success has come at a cost: The network’s popularity has resulted in congestion, driving up transactional rates known as “gas fees.”
“The competition between public blockchains is a good thing,” Tron’s Sun said. “It is true that it is nearly impossible to launch new projects on Ethereum because no one want to use projects that come with hundreds of dollars of mining cost at a slow transaction speed.”
One example of the fast industry growth, according to Denis Vinokourov, head of research at Synergia Capital, is Binance Smart Chain (BSC), a smart-contracts blockchain sponsored by the giant cryptocurrency exchange Binance.
“The narrative is that if you provide innovative products, competitive yields, then one can compete with the old-school establishment” of Ethereum, Vinokourov told CoinDesk. “The key is cheap, fast transactions.”
The total transaction volume on Binance Smart Chain in February alone hit more than $700 billion, according to a DappRadar report dated March 11. The unique active wallets on the blockchain increased to 108,000 in February from 30,000 the prior month. Ethereum in February had 67,000 unique active wallets.
“The growth of BSC is generally good for altcoins,” Vinokourov said. It “means you can compete against ether.”
A Binance spokesperson declined CoinDesk’s request to comment on the recent altcoin rally, including Binance’s BNB token.
Early crypto adopters vs. crypto newbies
Unlike bitcoin’s impressive growth since early 2020, much of it driven by institutional investors, the altcoin rally may have been fueled by early crypto adopters and retail investors who are newly arriving to the space.
“As institutional players enter the bitcoin market more and more, they have improved stability, which then begets more stability,” Chad Steinglass, head of trading at CrossTower, said. “While this new dynamic is a welcome development for many investors, it takes away some of the shininess and ‘wild wild west’ mentality that many early adopter crypto traders crave.”
Similar to retail investors’ interest in so-called “meme stocks” such as GameStop in the traditional stock market, many crypto traders like altcoins with higher volatility and risk than bitcoin – for the “excitement” and increased chances of “seeing multi-bag returns,” Steinglass said.
Arthur Cheong, founder and portfolio manager at DeFi-focused crypto fund DeFiance Capital, added that the renewed interest in altcoins also came from “unsophisticated retail” traders.
Traders who “don’t perform much research are coming back to the market,” Cheong said, citing increased trading volume of altcoins in South Korea, a country that’s primarily dominated by retail crypto investors.
What does the new alt season mean for bitcoin?
Though bitcoin’s market dominance has waned, analysts said the growing interest in altcoins will eventually benefit the largest cryptocurrency.
“These early adopters shifting to altcoins will both work to decrease volatility in bitcoin and also eventually help decide the winners from the losers in the alt space, which is kind of a necessary condition for any altcoin to emerge as a viable longer-term asset,” Steinglass said.
Ki Young Ju, CEO of blockchain data provider CryptoQuant, said the heightened capital flows could also migrate back to bitcoin as time goes by.
Bitcoin “will absorb the altcoin market cap sooner or later,” Ju said.
Recent announcements of moves into cryptocurrencies by established financial players like Visa, PayPal, Goldman Sachs and Morgan Stanley have strengthened traders’ confidence the industry is seeing greater mainstream adoption.
Bitcoin’s rally over the past year has been fueled by speculation the oldest and largest cryptocurrency might be useful for investors as a hedge against inflation in the wake of trillions of dollars of coronavirus-related stimulus injected into financial markets by governments and central banks.
In addition to the growing speculation over DeFi, there’s been a flurry of interest recently in non-fungible tokens, or NFTs, which represent stakes in unique assets such as art, collectibles, even sneakers.
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