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A string of unfavourable occasions: Cryptocurrencies are having a foul summer season. Whereas the 12 months may need began with bullish tendencies comparable to Bitcoin’s $63,000 all-time excessive in April, the market is now seeing a pattern of diminishing worth.
Extra woes: Since April, not solely has the highest crypto by market capitalisation, Bitcoin, misplaced about half its worth, CNBC reveals that 24-hour commerce quantity went down. Between June 22 and June 30, 2021, it had decreased by 40.3% — from $138 billion to $80 billion.
A clearer image: 24-hour commerce volumes check with the variety of cryptocurrencies which have exchanged fingers in day. Between Could 11, 2021, and July 8, 2021, charts on crypto information web site CoinMarketCap, present a 268% — $233 billion to $80 billion — drop.
What does this imply? In line with preliminary coin providing (ICO) discovery platform, Coinist, a drop in commerce quantity means crypto costs should not prone to rise quickly. Nonetheless, cryptocurrencies are notoriously unpredictable.
The blame recreation: The primary indicators of a downward pattern got here when on Wednesday, Could 12, 2021, when Tesla CEO, Elon Musk, revealed in a tweet that his firm was suspending Bitcoin as a method of fee for Tesla automobiles.
Nonetheless, the precise worth drop started when a clampdown on crypto mining started in China. In line with the College of Cambridge, the nation is dwelling to 65% of the world’s mining exercise. With the world’s mining powerhouse on maintain, the value of Bitcoin plummeted.
Why? In April 2021, China began testing its Digital Yuan, a central financial institution digital foreign money (CBDC). The Hindu explains that the crackdown is a strategy to strengthen the maintain of the brand new digital foreign money.
Extra crypto crackdown: On Friday, February 5, 2021, the Central Financial institution of Nigeria (CBN) launched a round proscribing monetary establishments from facilitating any type of crypto-related transactions. In traditional Chinese language model, the CBN has additionally introduced plans to issue a digital currency.
It’s been 5 months for the reason that round was launched, and regardless of the ban, Nigeria has seen an increase in peer-to-peer trading. Some crypto exchanges comparable to Bundle created peer-to-peer platforms for merchants to change cryptocurrencies safely.
A pattern? Nigeria and China aren’t the one international locations nursing the concept of a CBDC. On April 19, 2021, BBC revealed that the Financial institution of England is establishing a job pressure to look into the potential for a central financial institution digital foreign money.
So what occurs to common cryptocurrencies? Following China’s crackdown on digital currencies to strengthen its Digital Yuan, we’d see extra international locations transfer to create digital variations of their cash. A worldwide crackdown on cryptocurrencies won’t be too distant as properly.
There could be darkish days forward for crypto merchants and lovers. Nonetheless, this pushback by governments may provoke extra technological developments within the blockchain and crypto area.
Additionally, government-issued digital currencies don’t include the identical advantages as common cryptocurrencies.
Whereas they might ease cross border transactions and management volatility, they don’t present the identical degree of transparency and anonymity as a result of they’re created on a private blockchain ledger managed by the federal government.
Because the crypto downtrend continues with Bitcoin now at $32,825, the rallying cry amongst lovers is HODL.
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