Central Bank Digital Currencies Are Not Cryptocurrencies
As bitcoins skyrocket to more than $12 000 for one BTC, many central banks as ECB or US Federal … [+] Reserve warn of risks of a bubble. Britain and the ECB want to monitor trade for money-laudering suspicions. The main U.S. derivatives regulator said it would allow CME Group Inc (CME.O) and CBOE Global Markets Inc (CBOE.O) to list Bitcoin futures contracts. Toulouse. December 6th 2017. (Photo by Alain Pitton/NurPhoto via Getty Images)
There’s a recent upswing in interest in central bank digital currencies, with China piloting DCEP (its version of a digital yuan) aggressively and several of the most prominent central banks in the world (including the Federal Reserve and the European Central Bank) commenting on their implementation of a CBDC — indicating that central banks around the world are looking at the positives and negatives of offering a general-purpose central bank digital currency.
About 80% of central banks in a recent survey were looking at implementing CBDCs, and more than half have already started running experimental pilots.
It comes at a critical moment, with cryptocurrencies such as ethereum and bitcoin having weathered the storm of market-based economics — serving in both retail use cases and as an institutional hedge, as well as a new philosophical approach to computational resources. The economy is being reshaped in fundamental ways during COVID-19, and digital retail currency backed by central banks might be next.
With the rise of cryptocurrencies, the natural comparison for any new central bank digital currency is to their standards. Yet, in many important ways, many of the proposed implementations of central bank digital currencies run completely counter to cryptocurrency principles. In fact, a primal argument for the adoption of cryptocurrencies has always been that they would serve as a hedge for people who wouldn’t want to be forced into digital alternatives to cash propped up by central banks.
The first and most important difference is that cryptocurrencies are propped up by network incentives by a node of internationally distributed participants while a central bank has one central objective: public policy for one country or perhaps a bloc of countries at best. This makes for a critical difference.
Any one of these central banks are prone to focusing on employment while observed shifts in wage inflation are seen as less of a priority. This has largely been the case during COVID-19, with both the ECB and the Federal Reserve racing to loosen restrictions on inflation while aiming for “full employment” for their domestic countries.
Secondly, the idea of privacy and self-custody is not going to be inherently respected with CBDCs as it is with cryptocurrencies. Central banks are adjacent to the tax authorities that work hardest to enforce anti-money laundering provisions — their relationship is akin to the relationship between police officers and prosecutors, or between different departments in a university. The key policy question facing CBDCs that are being built in accordance with the regulations of their adjacent agencies is who should have access to the data — not whether the data should exist at all.
It wouldn’t be hard to see forced metadata attached to every transaction with a CBDC selectively disclosed to certain agencies. In practice, only cryptocurrencies would allow you to transact between borders without forcing yourself into the regulatory regime of one country or another, allowing you to express how much data you want to share about yourself.
The default assumption that people using privacy-preserving technologies as being presumptive of criminal activity (something the Department of Justice in the United States recently opined) and the recent push by many of the same countries advocating for limits on end-to-end encryption while pushing forward on digital central bank currencies should give people pause as to how faithful governments will be towards privacy and the ability for people to conduct financial transactions in the manner they choose.
Lastly, one other point of emphasis is that cryptocurrencies are relatively battle-tested. There are many reasons to attack the underlying system across a variety of attack surfaces: vulnerabilities in the exchanges that many people use to transact, issues with self-custody and identification of wallet addresses after reuse, the possibility of a chain-wide attack (such as the 51% attack) and more.
The fact that these systems have reached the scale where they are now is all the more impressive because cryptocurrencies don’t have armies behind them or a monopoly on the use of force. Central bank digital currencies present an even larger attack surface with the imprimatur of the state — protections for paper currency have iterated over centuries, while attacks that are cybersecurity-focused will come hard and heavy from rival states, and financially motived hackers.
Instead of a game-theoric evolution of incentives, states will face a barrage of attacks nearly all at once while lending legitimacy and trust to a digital currency might not deserve it yet. After all, as large-scale hacks have shown, states struggle with protecting critical information about internal employees and critical services such as election servers or politically sensitive email inboxes — adding money and financial flows to the mix expands the possibilities of state negligence.
It can be tempting, with the rise of cryptocurrencies and central bank digital currencies, to correlate the two. But there are important, essential differences between the two that are necessary to enumerate. The creation of new central bank digital currencies can be seen by some as a correlate to the success of cryptocurrencies, but in truth, they are more competitive than collaborative offerings. The inevitable creation and distribution of central bank digital currencies is a key reason for why cryptocurrencies exist — not only as a financial hedge, but a technical one as well.
Author: Roger Huang
Ethereum long-term Price Analysis: 13 October
The digital asset industry has somewhat re-ignited its bullish momentum over the past week as Bitcoin emerged above $11,000 price level yet again. Ethereum kept pace with the king coin and currently, both the assets are enjoying over 6 percent growth over the past week.
Yesterday the market opened on another high as Ethereum Grayscale Trust became an SEC reporting company, adding a layer of credibility to the 2nd largest asset. With things moving in the right direction, we analyzed the daily and weekly chart for more indications which may suggest an incoming bull run.
Ethereum 1-day chart
The 1-day chart of Ethereum is currently replicating the consolidation phase of June-July. During the end of July, the bull rally kicked in causing a major upheaval of the valuation from July-end to August-mid. Now, after another similar period of consolidation, the Ethereum price might represent another strong rally towards the 2nd half of October.
Over the current week, Ethereum might swing trade a little by pivoting off the 1st support at $365. After fueling back to back bounce back from $365, the price should gain enough momentum to jump near its August mid highs of $480 by November 2nd week.
The current price can be observed with less trading volume which can be considered as a trigger point. An uptick in trading volume might cause the price to pump higher with bullish momentum.
Awesome Oscillator also hinted at the beginning of Ethereum’s rising bullish momentum.
Ethereum’s 1-week chart
On the 1-week chart as well, Ethereum was witnessed completing a double bottom chart which has taken place in 2+ years starting May 2018. The major fact that ETH has maintained to close a position above the weekly resistance of $360 over the past two weeks is a strong sign of balance and maturity. The next resistance to climb above remains the $400 mark which should be talked easily over the next week.
While the Awesome Oscillator exhibited a little bearish undertone, a green candle to close the recent trend suggested a potential reversal. If the bullish pieces are moved in a clock-work manner, a next all-time high for Ethereum in 2020 can be possible by the end of November; a valuation close to $500.
Author: by admin
Ethereum 2.0 Nearing Completion as Final Zinken Testnet Runs Smoothly
A currently running ETH 2.0 testnet called Zinken, which was launched on Monday, Oct. 12, has been ‘performing perfectly’ according to one of the developers and participants.
Zinken is a shortened testnet, just like the one before it called Spadina, which is aimed at giving client teams a chance to iron out issues in their release process. It also gives validators a chance to experience a smoother genesis prior to mainnet. As with Spadina, the primary goal of Zinken is to practice the genesis process, stated lead developer Danny Ryan in a previous blog post.
Developer Terence Tsao has recently tweeted the performance of the testing he has been running over the past 24 hours on Zinken, adding;
“Almost perfect performance on an incentivized testnet that ran by the community,”
#eth2 Zinken testnet finalized on epoch 2. Almost perfect performance on an incentivized testnet that ran by the community 🚀 pic.twitter.com/SorSkW5fTR
— terence (@terencechain) October 12, 2020
According to the beaconcha.in Zinken blockchain explorer there is currently over 136,000 simulated ETH, or GöETH, staked on the testnet and 4,269 active validators.
The Medalla testnet is also still running and has accumulated over 2.35 million Göerli testnet Ethereum, staked on the blockchain. There are now almost 75,000 validators with the U.S. and Germany, still accounting for 57% of them.
ConsenSys’ Jimmy Ragosa added that the development is extremely bullish for Ethereum as the first phases of Beacon Chain could be just a few weeks away now.
In light of today’s successful #Zinken rehearsal, this is how I picture $ETH bears completely ignoring the obvious signs of #ETH2 Phase 0 incoming in a few weeks. pic.twitter.com/knqs3q9apN
— Jimmy Ragosa (@JimmyRagosa) October 12, 2020
When asked about further roadmaps for future testnets, he added;
“Right now, you just have to know that the last testnet for ETH2 Phase 0 was Zinken and that it was successful, we are just waiting for the mainnet deposit contract and a genesis date now.”
The Prysm client dominates testing at the moment, but Lighthouse is making progress as noted by Sigma Prime co-founder Age Manning;
Another flawless testnet launch with Lighthouse!
v0.3.0 works even more smoothly than its predecessors.
Bring on mainnet 🙂
— Age Manning (@AgeManning) October 12, 2020
The network needs to have over 16,000 validators and 500,000 ETH deposited for the Ethereum 2.0 blockchain to launch in its finality. These figures were reduced for Spadina and Zinken for testing purposes.
The testnet success may have had an influence on Ethereum prices which have jumped 7% over the past few hours from an intraday low of around $365 to top out over $390 according to Tradingview.com. The decline in DeFi fervor has also reduced gas prices to more manageable levels.
Prices have now reached a three-week high and resistance just below $400. Topping this psychological barrier could result in a jump to $440 before attempting to beat the 2020 high of $480. Wider news of the nearing of ETH 2.0 Phase 0 is likely to provide this momentum.
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