18/12/2023. Weekly CryptoNews Digest (December, 11 – December, 17)

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And now with all introductions said and done let’s have a look at the Weekly CryptoNews Digest. This time it covers the period from December, 11 to December, 17, 2023. I will be covering some of the most talked about news surrounding the crypto markets last week and other important events from that time. Let’s start now, shall we?

LEDGER WALLET COMPROMISED

On December 14, 2023, Ledger, a leading hardware wallet provider, announced that its connector library had been compromised with malicious code. The library is used by various decentralized applications (dApps) to enable communication between Ledger hardware wallets and their platforms. The malicious code, which was injected into the library on December 14, allowed attackers to steal funds from affected dApps.

Ledger detected the compromised library shortly after it was released and immediately took steps to address the issue. The company worked with the developers of affected dApps to remove the malicious code and rolled out a fix for the Ledger Connect Kit, the software that distributes the library. Ledger also advised users to wait for the fix to be rolled out before connecting their Ledger hardware wallets to dApps.

The compromised library affected a number of dApps, including SushiSwap, Curve Finance, and Revoke.cash. According to Ledger, the attacker was able to steal over $500,000 in funds from affected wallets. The attack was limited to a window of less than two hours, as Ledger’s security team was able to identify and remove the malicious code quickly.

In response to the attack, Ledger has enhanced its security protocols and implemented additional safeguards to prevent similar incidents from occurring. The company also plans to conduct an internal investigation to determine how the library was compromised and to improve its processes for identifying and addressing security threats.

The Ledger connector library compromise is a reminder of the importance of security in the cryptocurrency industry. Users should always be cautious when connecting their hardware wallets to dApps and should only do so with trusted platforms. They should also keep their software and firmware up to date to ensure that their wallets are protected against the latest vulnerabilities.

BLACKROCK FILES UPDATED APPLICATION FOR BITCOIN ETF

Last week BlackRock, the world’s largest asset manager, filed an updated application with the U.S. Securities and Exchange Commission (SEC) for its proposed spot Bitcoin exchange-traded fund (ETF). The new filing introduces a key change that could make it more appealing to Wall Street banks and other institutional investors.

Traditionally, spot Bitcoin ETFs have required authorized participants (APs) to create new ETF shares by exchanging cash for Bitcoin. However, BlackRock’s updated proposal allows APs to create new shares using cash instead of Bitcoin directly. This means that banks and other institutions that are not allowed to hold Bitcoin on their balance sheets can still participate in the ETF.

To ensure that the ETF’s holdings of Bitcoin are properly managed and safeguarded, BlackRock has partnered with Coinbase Custody, a leading crypto custody firm. Coinbase Custody will hold the Bitcoin that backs the ETF and will be responsible for ensuring that it is securely stored and insured.

Here are some of the potential benefits of BlackRock’s revised ETF proposal:
– Increased liquidity: More institutional investors participating in the ETF could increase the liquidity of Bitcoin, making it easier to buy and sell.
– Reduced volatility: More institutional investors could also help to reduce the volatility of Bitcoin, making it a more attractive investment for a wider range of investors.
– Greater acceptance: The approval of BlackRock’s ETF could further legitimize Bitcoin as an asset class and make it more widely accepted by institutional investors and other market participants.

However, there are also some potential risks associated with BlackRock’s revised ETF proposal:
– Increased manipulation: More institutional investors could also make it easier for large players to manipulate the price of Bitcoin.
– Regulatory scrutiny: The SEC could take a closer look at Bitcoin ETFs as more institutions become involved in the market.
– Monetary policy concerns: Some regulators may be concerned about the potential impact of Bitcoin ETFs on monetary policy.

Overall, BlackRock’s revised ETF proposal is a significant development that could have a major impact on the Bitcoin market. If approved, it could lead to increased liquidity, reduced volatility, and greater acceptance for Bitcoin. However, there are also some potential risks associated with the proposal, such as increased manipulation and regulatory scrutiny.

JPMORGAN REMAINS SKEPTICAL ON ETF OPTIMISM

While many investors have greeted the Bitcoin’s recent upswing, JPMorgan said the ETF optimism was overhyped. Their analysts recently expressed their skepticism about the recent surge in Bitcoin’s price, attributing it more to “momentum-driven speculation” rather than any fundamental shift in the market’s sentiment. They believe that the ETF approval optimism is overhyped and that Bitcoin’s price may not reach the levels some investors are expecting.

Their reasons for this assessment include:
– Recent price action: Bitcoin’s price has risen sharply in recent months, but this rally has been accompanied by increased volatility and a lack of strong underlying demand. This suggests that the price may be driven by short-term speculation rather than long-term investment.
– Lack of institutional adoption: While there has been some interest from institutional investors in Bitcoin ETFs, the overall adoption of Bitcoin by institutions remains limited. This suggests that there is still a lack of consensus among institutional investors about the value of Bitcoin as an asset class.
– Technical analysis: Technical indicators suggest that Bitcoin is currently overbought, meaning that its price is more likely to decline than rise in the near term.

JPMorgan’s analysts acknowledge that Bitcoin could continue to rise in the short term, but they believe that the current rally is unsustainable and that the price is likely to correct in the coming months. They also warn that regulatory uncertainty could weigh on the market.

Overall, JPMorgan’s analysts are cautious about Bitcoin’s near-term prospects, and they believe that the recent ETF approval optimism is based on exaggerated expectations. They urge investors to exercise caution and to carefully consider the risks of investing in Bitcoin before making any decisions.

It’s important to note that JPMorgan’s analysts are just one set of experts, and there is no consensus on Bitcoin’s future price. Other analysts believe that the ETF approval could provide a major boost to Bitcoin’s price and that the asset could see significant growth in the coming years. Investors should carefully consider all of the available information before making any investment decisions.

BITCOIN NFTS BLACKLISTED BY OCEAN

Recently Bitcoin mining pool Ocean made a controversial decision to blacklist BRC20 token transactions and NFT-related Ordinal inscriptions. This move sparked a heated debate about the ethics of censorship and the role of mining pools in shaping the future of Bitcoin.

Opponents of the blacklisting argue that it amounts to censorship and undermines the fundamental principles of decentralization and openness that underpin Bitcoin. They contend that by selectively excluding certain types of transactions, Ocean is essentially dictating which applications and use cases can thrive on the Bitcoin network. This, they argue, is a form of control that should not be exercised by any individual or entity.

Proponents of the blacklisting defend it as a necessary measure to protect the network from spam and congestion. They argue that the increasing popularity of BRC20 tokens and NFTs has led to a surge in small transactions that are clogging up the network and making it less efficient for other users. By blacklisting these transactions, Ocean is trying to alleviate this congestion and ensure that the network remains usable for all users.

The debate has also highlighted the growing influence of mining pools in the Bitcoin ecosystem. Mining pools, which collectively control a majority of the network’s computing power, have the power to influence the block generation process and the inclusion or exclusion of certain transactions. This raises concerns about the potential for mining pools to abuse their power and manipulate the network.

The Ocean blacklisting decision has also drawn attention to the lack of clear governance mechanisms in the Bitcoin ecosystem. There are no established rules or guidelines for how mining pools should operate or how they should handle issues such as spam and congestion. This lack of clarity leaves the door open for individual mining pools to take actions that may not be in the best interests of the broader community.

The debate over the Ocean blacklisting is likely to continue for some time. It raises important questions about the ethics of censorship, the role of mining pools in shaping the future of Bitcoin, and the need for clearer governance mechanisms. As Bitcoin matures, it is crucial to address these issues and establish a more equitable and inclusive ecosystem that is aligned with the principles of decentralization and openness.

TETHER AND DAI MARKED AS HIGH RISK ASSETS

You might know that Tether (USDT) and Dai (DAI) are two of the most widely used stablecoins in the cryptocurrency market. Stablecoins are cryptocurrencies that are pegged to a fiat currency, such as the US dollar, and are designed to maintain a stable value.

So, last week the German financial watchdog, BaFin, classified Tether and Dai as “high-risk” assets. This means that investors should be aware of the risks associated with these assets before investing in them.

BaFin’s decision was based on a number of factors, including:
– The lack of transparency around the reserves backing Tether and Dai. Tether claims to be fully backed by US dollars, but there have been concerns about the validity of these claims. Dai is backed by a basket of other cryptocurrencies, but the composition of this basket is not publicly known.
– The lack of regulation of Tether and Dai. Stablecoins are not currently regulated by any major financial authorities. This lack of regulation makes them more susceptible to fraud and manipulation.
– The potential for Tether and Dai to be used for illicit activities. Stablecoins are often used to launder money and finance other illegal activities.

BaFin’s classification of Tether and Dai as “high-risk” assets is a significant development. It is the first time that a major financial regulator has warned investors about the risks associated with these two stablecoins. This could have a chilling effect on the use of Tether and Dai, and could lead to increased scrutiny from regulators around the world.

Investors who are considering investing in Tether or Dai should carefully consider the risks involved. They should also be aware that there is no guarantee that these stablecoins will maintain their peg to the US dollar.

SOTHEBYS SELLS FIRST BITCOIN EFTS

And let me end today’s Weekly CryptoNews Digest with some interesting news which was first reported on December 14, 2023 and is related to Sotheby’s which is a well-known international auction house. So they held its first-ever auction of Ordinals inscriptions, a new type of digital artwork minted on the Bitcoin blockchain. The auction featured three images, including a pixelated avocado that fetched more than $100,000 and a design that appears to be derived from a mushroom in the Super Mario franchise that sold for over $240,000.

The auction was a success, generating total sales of $450,000, or five times the highest estimates. The results recall the mania that swept digital-asset markets a couple of years ago when digital artwork and NFTs first started drawing eye-popping sums and captured mainstream attention.

Ordinals inscriptions are created using a new technology pioneered by Casey Rodarmor atop Bitcoin. This technology allows users to create unique inscriptions on the Bitcoin blockchain that can be used to represent digital artwork, music, or other forms of creative content.

The use of Bitcoin for Ordinals inscriptions has sparked debate among Bitcoin users and developers over whether to filter out transactions in NFT-like inscriptions minted using the Ordinals project.

Some argue that NFTs are not a core financial use in keeping with many advocates’ vision for the original blockchain, while others believe that some of the images might be considered high art, tipping the scales towards profit interests.

The auction of Ordinals inscriptions at Sotheby’s is a significant development in the use of Bitcoin for non-financial applications. It shows that there is a growing interest in using Bitcoin for creative expression and that there is a market for this type of artwork.

The auction also highlights the potential of Bitcoin to evolve beyond its original purpose as a peer-to-peer payments network. As Bitcoin continues to mature, it is likely to be used for a wider range of applications, including gaming, social media, and other forms of digital interactions.

That’s about it for this latest Weekly CryptoNews Digest on the MNO blog. I’ll be posting the next update on cryptocurrency in a week, and there will be all the latest developments and news covered. So, if you’re genuinely interested in what is going on in the cryptocurrency world, then make sure you check it out next Monday.

That will be it for tonight, guys. I hope your business week will be fruitful and productive and I will be back with the next blog post in a few days time. Keep following MNO – For Money Lovers!