While prices turned icy again, the crypto sector is heating up as more participants - traders, developers, founders, regulators, and yes, even hackers - try to leave their unique mark on it.
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Ethereum gears up for transition
You may have seen a lot of rhymes in the crypto community of late - merge, surge, verge, purge, and splurge are just a few. The reason? The crypto community is eagerly anticipating the day when Ethereum will fully transition from the high demand ‘proof-of-work’ method of growing the blockchain, to the far less energy intensive “proof-of-stake’ consensus mechanism. This is called the ‘merge’ event.
Ethereum currently has what is known as a “Beacon Chain,” which uses proof-of-stake. Now, the goal is to securely shift Ethereum’s activity to this chain. While official sources reported that 19 September is the deadline, it’s important to remember that Merge ‘deadlines’ are closer to predictions than promises.
Yet, that hasn’t stopped crypto traders from investing in a possible surge in Ether’s price as users and those building projects on Ethereum look forward to a hopefully smoother, cheaper, and more eco-friendly experience after the Merge.
“That is the most important development that we are looking up to, which will basically get Ethereum into a bullish scenario very soon,” said Nirmal Ranga, CRO of Indian crypto exchange ZebPay to The Hindu.
The Merge is only meant to be the beginning for Ethereum, as it has ambitious plans to scale and grow more efficient until it can “help all of humanity,” according to the official website.
Winning back trust after Terra
Stablecoins are an enigma in the crypto sector. Users worldwide have converted their savings to these tokens, whose prices are meant to remain steady, or ‘pegged’ to the value of assets like dollars, pounds, precious metals, and more. However, the collapse of the TerraUSD [UST] stablecoin in May 2022 horrified the sector and triggered losses in the billions of dollars. The surviving stablecoins are feeling the pressure to win back investors’ trust.
On Thursday, Tether Holdings Limited, whose Tether [USDT] is the largest stablecoin by market cap, announced it was working with BDO Italia, an accounting firm, for quarterly attestations. Tether has faced considerable legal scrutiny over the question of whether or not it really backed every USDT with 1 USD, and was even hit with a $41 million penalty from the Commodity Futures Trading Commission (CFTC).
Naturally, what many Tether watchers want is a meticulous audit. While the company has not promised a day when this will happen, it confirmed that an audit was in its future.
“The decision to work with the BDO organization represents its promise to deliver considerable transparency for those holding Tether tokens, providing updates about issued tokens and reserves on a daily basis, supplemented by monthly assurance opinions. This new relationship aligns with Tether’s dedication to transparency and is the next step in the company’s path toward a complete audit,” stated the official release.
Good news and bad news
Ronin, Harmony, Nomad, Solana wallets - these are just some of the crypto hacks which sent shock waves through the sector this year. On Tuesday, the blockchain analytics platform Chainalysis published a report which showed that the first seven months of 2022 saw $1.9 billion stolen in crypto hacks of services, when compared to less than $1.2 billion in crypto stolen by this time last year.
In particular, the report pointed out how decentralised finance (DeFi) protocols were proving to be a rich target for hackers. The analytics platform estimated that North Korea-linked hackers had stolen about $1 billion from these sources.
However, Chainalysis’ report noted that both legal and illegal crypto transaction volumes this year were down, likely due to Bitcoin and Ether falling by more than 50% in value. Investors also seem to be wiser to scams.
“Total scam revenue for 2022 currently sits at $1.6 billion, 65% lower than where it was through the end of July in 2021, and this decline appears linked to declining prices across different currencies,” stated Chainalysis’ report.
What can investors expect in the near future? As September draws closer, expect more buzz about the Ethereum merge event and further debates on the crypto sector’s link to the energy sector—including our ongoing energy crisis. As these discussions unfold, don’t be too surprised by strange price movements or emotions in the market.
[Mr. Nirmal Ranga’s designation in the first section has been updated.]