Economic turbulence can have a major impact on cryptocurrencies. In times of economic upheaval, investors tend to flock to stable investments like gold. However, with the recent surge in interest in cryptocurrencies, many people are wondering if these digital assets can weather a storm.
In this blog post, we’ll take a look at how economic turbulence can impact cryptocurrencies and explore some of the key factors that will determine their resilience in times of turmoil. It’s no secret that cryptocurrencies have had a volatile year. After reaching all-time highs in November 2021, prices have crashed back down to earth, with many coins losing over 60% of their value.
Economic turbulence is a period of time during which the economy is in flux,
often due to external factors beyond our control. Economic turbulence is sometimes triggered by natural disasters, political unrest, or even just a change in consumer confidence. During periods of economic turbulence, businesses may struggle to maintain operations and may even face bankruptcy. Economic turmoil can also lead to job losses and an increase in poverty levels. In short, economic turbulence can have a major impact on our lives, both personally and financially.
One of the most famous examples of a company weathering economic turbulence is Sears, Roebuck and Company. Founded in 1886, Sears was one of the largest retailers in the United States by the early 1920s. However, the company faced challenges during the Great Depression. Economic conditions made it difficult for people to afford big-ticket items like appliances and furniture. In response, Sears began offering more affordable items and even began providing financing to customers. As a result of these changes, Sears was able to weather the economic storm and emerged as one of the most successful retailers in the country.
The economic turbulence of the housing bubble exposed many weak financial institutions.
Banks and other lenders were offering subprime loans to people with poor credit, often without properly verifying their income or employment status. This led to a large number of defaults, as borrowers were unable to make their loan payments. The resulting losses forced many banks and other lenders out of business. The housing bubble also had a major impact on the economy, as home values crashed and foreclosures rose sharply. This led to job losses and an increase in poverty levels.
The current economic climate is having a similar effect on the cryptocurrency market. Many of the weaker platforms are struggling to survive, as investors are losing confidence in their ability to weather the storm. This is leading to a consolidation of the market, as stronger platforms emerge as the leaders in the space. Economic turbulence can be a major factor in determining which cryptocurrencies will survive and thrive in the long run.
Cryptocurrencies could be considered as a safe haven investment during times of economic turbulence.
This is because cryptocurrencies are not subject to the same volatility as stocks and other traditional investments. However, there are a few ways in which economic turbulence can impact cryptocurrencies:
– Volatility: Cryptocurrencies are still subject to volatility, even during periods of economic turmoil. This means that prices can rise and fall rapidly, and investors can see their portfolios fluctuate in value.
– Mining: Economic turmoil can impact the profitability of cryptocurrency mining. This is because miners may have to sell their coins at a lower price due to reduced demand.
– Adoption: Economic turbulence can also impact the adoption of cryptocurrencies. For example, if businesses are struggling, they may be less likely to invest in new technologies like blockchain.
There are a few key factors that will determine how well cryptocurrencies withstand economic turbulence:
– Market capitalization: The market capitalization of a cryptocurrency is a measure of its size and popularity. The larger the market cap, the more resilient a coin is likely to be during times of economic turmoil.
– Trading volume: The trading volume of a cryptocurrency is a measure of how actively it is being traded. The higher the trading volume, the more likely it is that a coin will maintain its value during periods of economic turbulence.
– Liquidity: The liquidity of a cryptocurrency is a measure of how easily it can be bought and sold. The higher the liquidity, the more likely it is that a coin will retain its value during times of economic turmoil.
Survival of the fittest is a fundamental principle in the natural world, it carries the same weight in the world of finance. Only the strong survive. Blockchain technology is here to stay. It has truly revolutionized the world of trade. The stronger platforms that emerge from the debris left behind from their defeated rivals will dominate their respective sectors.
Cryptocurrencies could be considered a safe investment during times of economic turbulence. However, it is important to remember that cryptocurrencies are still subject to volatility and may not be the best investment for everyone. Before investing, be sure to do your own research and speak with a financial advisor to get the best advice for your individual situation
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India is Investigating Ten Cryptocurrency Exchanges For Money Laundering.
The Enforcement Directorate of India is now pursuing an investigation against ten cryptocurrency exchanges that are suspected of being involved in the laundering of over 1 billion rupees, which is the equivalent of over $125 million in digital currency.
According to The Economics Times, the cryptocurrency exchanges, which have not yet been named, were used by several companies that have been accused of money laundering to make purchases of more than 100 million rupees worth of cryptocurrency, which were then transferred to other international wallets, the majority of which were linked to mainland China.
The exchanges had a poor control on the activities of their users.
In addition, the sources mentioned that the exchanges acquired KYC data of questionable provenance, as the accounts that were followed belonged to individuals who lived in faraway places “with no relation to the transactions.”
However, the exchanges asserted that they were in conformity with KYC laws, despite the fact that they did not provide any suspicious transaction reports (STRs) that could have led to the discovery of information regarding alleged instances of money laundering.
Therefore, the failure to comply with the measures required by regulators made it more difficult to trace the account, which, upon learning of the investigation, reportedly proceeded to withdraw their funds and log off, according to sources close to the investigation. This made it more difficult to track down the account.
“As soon as these companies discovered that they were being investigated, they shut down their operations and utilized the crypto way to transfer the money overseas. The unregulated nature of the cryptocurrency business combined with the opaque nature of the ecosystem for cryptocurrencies offered the necessary cover for these companies to park their funds offshore.
The cryptocurrency exchanges Binance and WazirX are currently under investigation in India.
Following a series of Twitter spats between the CEOs of both firms about ownership and regulatory non-compliance by WazirX, the ED has decided to focus its attention on Binance and WazirX, as was recently published on CryptoPotato.com.
After the argument between the two companies, the ED blocked WazirX’s bank accounts, which together held more than $8 million, on the grounds that the exchange had “actively” assisted in the laundering of illicit funds for more than 15 different fintech companies.
In reaction, Binance stated that it expects WazirX to “take full responsibility for its operations and users’ funds,” while emphasizing that the global cryptocurrency exchanges has nothing to do with WazirX’s operations. Binance also emphasized that it has nothing to do with WazirX’s operations.
Although the ED is investigating several cryptocurrency exchanges for money laundering, an industry executive who spoke to the Economic Times stated that the exchanges are the second point of failure in these crimes. This executive stated that the money comes in and out of these crimes primarily from traditional banks, which did very little or nothing to trace the funds, which is why “it wasn’t caught at the banking level.” Despite the fact that the ED is investigating several cryptocurrency exchanges for money laundering, the executive stated that the exchanges are the second point of failure.
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Ethereum Completes Its Final Test Before a Major Crypto Event.
Ethereum, the second-largest cryptocurrency by market value, had a final dress rehearsal before a years-awaited upgrade.
Ethereum has been mined using a proof-of-work approach since its introduction in 2010. It needs difficult math formulae and a lot of energy.
Ethereum is transitioning to proof of stake for network security. The new method uses users’ existing ether cache to verify transactions and generate tokens, rather than energy-intensive mining. It consumes less electricity and should speed transactions.
Wednesday 9:45 p.m. ET was the final test.
Ansgar Dietrichs, an Ethereum Foundation researcher, said the most meaningful statistic for success is time to finalization. “Another good exam,” he said.
Galaxy Digital’s research associate noted that after the test merging, participation reduced and there may have been a client issue, but generally, it functioned.
Christine Kim tweeted, “A successful Merge = chain finalizes.” We may see similar troubles with the mainnet upgrade, but “the Merge worked.”
Thursday’s developer meeting will address the upgrade’s timing. The merger was expected to begin in mid-September.
For years, Ethereum’s transformation has been delayed. Core developers say the merge has been gradual to allow for study, development, and implementation.
Ether, the Ethereum blockchain asset, has gained about 80% in the last month, including 10% in the last 24 hours, to $1,875. It’s down half this year.
One of Ethereum’s testnets, Goerli (named for a Berlin train station), mirrored the mainnet’s September process.
Testnets let developers try new things and make modifications before main blockchain updates. Wednesday’s exercise revealed that proof-of-stake reduces the energy needed to verify a block of transactions and that the merger process works.
Josef Je, a former Ethereum Foundation developer who now manages PWN, stated Goerli has a bottom-up testnet.
Je said it’s the most popular testnet, and proof of stake on Goerli will be almost equivalent to mainnet.
Goerli is “the closest to mainnet, which can be beneficial for testing smart contract interactions,” according to the Ethereum Foundation’s blog.
Tim Beiko, Ethereum’s protocol coordinator, claimed they knew “within minutes” if a test was successful. In the hours and days ahead, they’ll still seek for setup flaws to fix.
“We want the network to finalize and have a high participation percentage among validators,” added Beiko.
Participation rate is the easiest indicator to track, Beiko noted. Developers must discover out why if numbers drop.
Transactions are another matter. Ethereum blocks transactions. Beiko said blocks with transactions indicate the test went properly.
Last, make sure more than two-thirds of validators are online and agree on the chain history. Normal network circumstances take 15 minutes, says Beiko.
If those three things seem excellent, there’s more to check, but things are moving nicely, said Beiko.
The Ethereum community has been testing proof-of-stake on a chain called beacon since December 2020. Beacon solved critical issues.
Beiko said the original idea needed validators to hold 1,500 ether, worth $2.7 million. The new proof-of-stake proposal requires only 32 ether, or $57,600.
“It’s not trivial, but it’s more accessible,” Beiko added.
Other events have shaped Wednesday’s test. Ethereum’s longest-running testnet, Ropsten, united its proof-of-work and proof-of-stake chains in June. It was the first big dry run for the mainnet’s planned process next month.
Beiko said testing the merge ensured that Ethereum’s software was reliable and that everything built on top of the network was ready for the changeover.
Blockchain Bridges In Trouble
Another day, another hack, and another bridge on the blockchain is destroyed.
It was the eighth heist of 2022 to target Blockchain “bridges,” which are lines of code that assist transmit cryptocurrency money between different applications. The theft occurred last week when thieves stole an estimated $190 million from American crypto business Nomad.
According to statistics from London-based blockchain analysis company Elliptic, hackers have already stolen cryptocurrency worth over $1.2 billion from bridges this year, more than double the amount they did last year.
Ronghui Hu, an associate professor of computer science at Columbia University in New York and co-founder of the cybersecurity company CertiK, stated, “This is a conflict where the cybersecurity firm or the project can’t be the winner.”
“We have so many initiatives to safeguard. When they examine a project and discover no bugs, they (hackers) can just go on to the next one until they identify a weak spot.”
Currently, the majority of digital tokens operate on their own distinct blockchain, which functions as a kind of online ledger for cryptocurrency transactions. When initiatives using these coins get isolated, their chances of being widely used are decreased.
Blockchain bridges seek to topple these barriers. In “Web3,” the much-hyped vision of a digital future where cryptocurrency is integrated into online life and commerce, backers claim they will play a crucial role.
The Nomad hack ranked as the eighth-largest cryptocurrency theft ever. A $615 million theft from Ronin, which was utilized in a well-known online game, and a $320 million theft from Wormhole, which was used in so-called decentralized banking applications, are two other bridge thefts that have occurred this year.
According to Steve Bassi, co-founder and CEO of malware detector PolySwarm, “Blockchain bridges are the most fertile ground for new vulnerabilities.”
Support has been given to Nomad and other businesses who produce blockchain bridge software.
Nomad, situated in San Francisco, claimed to have received $22.4 million from investors just five days before being hacked, including prominent exchange Coinbase Global (COIN.O). Pranay Mohan, co-founder and CEO of Nomad, referred to its security methodology as the “gold standard.”
To monitor the stolen funds, it has stated that it is collaborating with law enforcement organizations and a blockchain analysis company. It announced a reward of up to 10% for the return of money stolen from the bridge late last week. It announced on Saturday that it had so far recovered more than $32 million of the funds stolen.
The restoration of bridging user cash is our first priority, and community is what matters most in cryptocurrencies, according to Mohan. “Any party that reimburses 90% or more of monies that were misused would be regarded as a “white hat.” White hats won’t be charged by us, “He claimed, making reference to purportedly moral hackers.
According to recent discussions with several blockchain and cyber security experts, bridges’ intricacy makes them potentially vulnerable points for projects and apps.
According to Ganesh Swami, CEO of blockchain data company Covalent in Vancouver, which had some cryptocurrency stored on Nomad’s bridge when it was hacked, “one reason why hackers have targeted these cross-chain bridges in recent times is because of the immense technical sophistication involved in creating these kinds of services.”
Some bridges, for instance, alter crypto coins to make them interoperable with various blockchains while keeping the original coins in reserve. Others rely on smart contracts, intricate agreements that automatically complete transactions.
All of these could have bugs or other weaknesses in the programming that could open the door to hackers.
So how should the issue be handled?
According to some experts, audits of smart contracts and “bug bounty” programs that reward open-sourced assessments of smart contract code could assist prevent cybercrimes.
Others argue that deconcentrating control over the bridges among fewer organizations would increase their resilience and code openness.
Because they frequently use a centralized infrastructure that typically locks up assets, cross-chain bridges are a tempting target for hackers, according to Victor Young, founder and chief architect of U.S. blockchain company Analog.
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