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Centralized monetary systems never end well, US Congressman Tom Emmer said during the latest Pomp Podcast.

In brief

  • Bitcoin’s decentralization is its main trump card against fiat currencies, said US Congressman Tom Emmer.
  • The coronavirus pandemic, akin to the 2008 financial crisis, is prompting people to look for alternative stores of value, he noted.
  • He added that centralized monetary systems are only good for small groups of people who are in charge of money allocation.

The decentralized nature of Bitcoin is what makes it stand out compared to traditional, tightly controlled fiat currencies, US Congressman Tom Emmer said yesterday, during the “Pomp Podcast” hosted by Morgan Creek Digital co-founder Anthony Pompliano.

Emmer pointed out that Bitcoin was conceived by Satoshi Nakamoto around the same time the 2008 financial crisis struck the world—not unlike today’s economic woes spurred by the coronavirus pandemic. And like in the past, people are looking for new stores of value amid the US government’s unprecedented relief measures that could ultimately devalue the US dollar.

“As we come out of the crisis, Bitcoin ain’t going away. It’s gonna get stronger. And now [Acting Comptroller of the Currency] Brian Brooks is saying ‘Hey, institutions, you can start banking this stuff. You can provide a home for it, you can start working with it’,” said Emmer.

He was referring to Brooks’ recent statement that banks in the US are allowed to custody cryptocurrencies—a move widely supported by the crypto industry.

Looking at the Twitter hack

As Decrypt reported, the Congressman also defended Bitcoin in the wake of the recent Twitter hack, stating that “Bitcoin isn’t the problem. Centralized control is.”

During the podcast, Emmer confirmed his stance.

“Look, Twitter’s the problem. They are the ones that screwed up. Bitcoin didn’t screw up. Twitter, your security was not adequate. They hacked Twitter, and you’re gonna have bad guys all over the place,” said Emmer.

He also explained that this is why he doesn’t like centralized control. As an example, Emmer recalled when the coronavirus started spreading in Chinese Wuhan and the local government just “shut everybody down” since it was in control of fiat currencies.

“The government has your currency all on a card. And guess what? If you lived in Wuhan, they shut you down, man. You couldn’t get a ride out of Wuhan to another city. You couldn’t go get some groceries unless the government released you to go get the groceries. So, need I say more about what I don’t like about centralized control?” asked Emmer.

Emmer added that when Facebook’s Libra cryptocurrency was first proposed, he thought “Oh, great concept, wonderful. But somebody’s gotta be in control, right?”

Citing “The Road to Serfdom,” a book written by an Austrian-British economist and philosopher Friedrich Hayek, Emmer pointed out that in a centralized system there always has to be someone—or some group—that decides the allocation of money. And that is never a good thing.

“Now that works out pretty good if you’re the one that’s in that group or is that guy. But after a while, if you’re not in the group, if you’re not the one making the decisions on the allocation, this thing only ends one way. And it has never been good, no matter where it’s been tried,” said Emmer.

“I don’t wanna see the government screw up, and that’s the crypto area,” he added, pointing out that Bitcoin’s decentralization is what could make it the “next phase” of contemporary monetary systems.

“I think we’re just moving into that next phase, which is why crypto, the area, excites me. Because do I think that the government has a role? Yeah, I’m not gonna say ‘no.’ I don’t think it has a big role. I think people can police themselves,” Emmer noted, adding, “I don’t like the fact that my colleagues think everybody is so dumb they’re all gonna get fleeced all the time. You know, the greatest gain is through the greatest risk.”

Author: Liam Frost

Source: Decrypt: ‘Bitcoin ain’t going away. It’s gonna get stronger,’ says US Congressman

Fidelity Digital Assets argues that Bitcoin has the makings to become a steady asset, but that its price volatility right now is still a “silver lining.”

In brief

  • Fidelity Digital Assets published a thesis paper, explaining why Bitcoin has all the makings to become a store of value.
  • Bitcoin’s scarcity is one of the key factors that would allow it to retain value in the long run, the researchers noted.
  • They also argued that Bitcoin’s volatility actually has a positive impact on its adoption.

Bitcoin meets all the main criteria of a store of value but has not yet officially acquired this status, said researchers at Fidelity Digital Assets in a thesis paper yesterday.

Titled “Bitcoin Investment Thesis: An Aspirational Store of Value,” the paper argued that Bitcoin is capable of becoming an “insurance policy” that may provide protection against various consequences of contemporary monetary practices.

“Many investors consider Bitcoin to be an aspirational store of value in that it has the properties of a store of value but has yet to be widely accepted as such,” the document said.

A store of value, as the name suggests, is an asset that can save the value that was put in it over long periods of time. One of its main features is its ability to retain purchasing power and usefulness in the future.

While Bitcoin’s price volatility might seem like a direct opposite to “retaining value,” Fidelity Digital Assets pointed out that this is actually one of its “silver linings” as it helps bring attention, development and innovation to the cryptocurrency—at least in its early years.

Recently, Morgan Creek Digital co-founder Anthony Pompliano also echoed this sentiment during his heated debate with Peter Schiff, arguing that Bitcoin’s volatility is a double-edged sword that can be both detrimental and advantageous for investors.

Four reasons why Bitcoin can become a store of value
One reason why Bitcoin might become a store of value is its “unforgeable digital scarcity,” noted Fidelity. Since Bitcoin’s emission is limited to 21 million coins at the protocol level, Bitcoin can be considered a deflationary asset thanks to its hardcoded immunity to oversaturation.

“Scarcity is the key characteristic cited in reference to a good store of value as it is essential for protecting against the depreciation of real value in the long run,” the document stated.

The authors highlighted a second supporting factor, that today’s record-low interest rates in traditional finance, as well as unprecedented levels of global monetary stimulus, could have “unknown consequences” and are currently “adding fuel to the fire of awareness and adoption” of Bitcoin.

Bitcoin is generally stored in a cryptocurrency wallet (Image: Shutterstock)

“Longer-term drivers include ‘slow and steady’ inflation and the great wealth transfer to a millennial demographic that has a favorable opinion on digital assets,” the authors noted, adding two more reasons.

Summarizing, Fidelity Digital Assets acknowledged that while Bitcoin’s success as a store of value is not guaranteed, the cryptocurrency has all it needs.

Author: Liam Frost

Source: Decrypt: Fidelity gives four reasons why Bitcoin will become a store of value

The biggest mystery Bitcoin wallet has just been emptied. But where has the money gone?

In brief

  • The largest unknown Bitcoin wallet just moved its funds to another two wallets.
  • It was the largest non-exchange Bitcoin address.
  • The huge transaction cost just $0.48 in fees.

The largest Bitcoin wallet that belongs to an unknown entity or individual recently moved 101,857 BTC, worth just over $933 million. The transfer was first noticed by automated crypto tracking service Bitcoin Block Bot on June 27.

And for this whopping transaction, the mysterious owner of the wallet paid just $0.48 in fees.

The address was documented as the richest among non-exchange BTC wallets back in April, when it was holding 0.55% of all existing Bitcoin at the time. And even when compared to the major exchanges, it ranked third—behind Huobi and Binance.

While funds that belong to exchanges are made up of customer funds, it’s unclear who actually owns the Bitcoin in this address. It’s possible that it could also be an exchange wallet, or belong to large Bitcoin investors such as the Winklevii.

(After this article was published, one Redditor claimed that the wallet belongs to crypto exchange BitStamp via custodial platform BitGo. We have reached out to both companies. Debra Bar, director of marketing at BitGo, said, “Thank you for reaching out. For privacy reasons, we cannot confirm clients or their addresses.”)

The funds were then sent to more unknown wallets. According to Bitcoin block explorer Blockchain.com, the recent $933 million transaction was split between two anonymous receiving wallets. The first one got 5,000 BTC ($45.8 million) while the rest got 96,857 BTC ($887.4 million) as “change.” The larger wallet is now the second biggest Bitcoin wallet, according to BitInfoCharts. It trails only Huobi’s cold storage wallet.

The original wallet was first funded on April 1 this year—through a rather similar transaction—and very little of its Bitcoin had moved until now. Perhaps the investor wants to move their Bitcoin to a new wallet every few months. But why?

Author: Liam Frost

Source: Decrypt: The most secretive Bitcoin wallet just moved nearly $1 billion

In brief

Honeywell says that its newly-launched quantum computer is the most powerful in the world.
The machine has achieved a quantum volume score of 64—twice as powerful as rivals from IBM and Google.
Quantum computers could theoretically be used to attack Bitcoin, although the crypto industry is preparing defenses.

Honeywell has announced that its newest quantum computer has reached a quantum volume of 64—twice that of IBM and Google’s rival machines.

North Carolina-based conglomerate Honeywell has raised the stakes in the quantum computing race, announcing that its newest machine has reached a quantum volume of 64—making it twice as powerful as quantum computers operated by rivals IBM and Google.

First teased in March this year, Honeywell’s new quantum computer is “twice as powerful as the next alternative in the industry,” the company claims. “That means we are closer to industries leveraging our solutions to solve computational problems that are impractical to solve with traditional computers,” it said in a statement.

What is quantum volume?

Quantum volume is a metric created by IBM that measures quantum computers’ capabilities and error rates. In comparison, IBM itself announced that its latest quantum computer, Raleigh, achieved a score of 32 in January.

At the heart of Honeywell’s quantum computer is an ultra-high vacuum chamber the size of a basketball. The sphere contains a vacuum with five times fewer particles than outer space, and is cryogenically cooled by liquid helium to a temperature of just 10 degrees Fahrenheit above absolute zero—at which point atoms practically stop vibrating.

“Within the chamber, electric fields levitate individual atoms 0.1 mm above an ion trap, a silicon chip covered in gold about the size of a quarter. Scientists shine lasers at these positively charged atoms to perform quantum operations,” Honeywell explained.

According to Forbes, following the successful launch of the quantum computer, Honeywell now plans to commercially lend its capabilities to other companies. The service may cost around $10,000 per hour, Tony Uttley, president of Honeywell Quantum Solutions, told the outlet.

While Honeywell did not disclose how many customers have already signed up to use its quantum computer, the company shared that it has a contract with JPMorgan Chase. The latter’s own team of quantum experts will likely use Honeywell’s machine to perform enormous calculations such as building fraud detection models, Forbes added.

Uttley also said that Honeywell’s achievement has demonstrated that quantum computers are almost at the point when they stop being a fascinating novelty from sci-fi novels and are becoming a real solution to real-world problems.

In the future, Honeywell aims to increase the quantum volume of its machine by a factor of 10 every year, reaching a score of 640,000 by 2025, Uttley added.

Can quantum computers crack Bitcoin?

According to a June 2017 paper, a quantum computer would need to have around 2,500 qubits of processing power in order to break the 256-bit encryption used by Bitcoin. If that were to happen, it would theoretically be possible for the owner of the quantum computer to take control of the Bitcoin blockchain; in that event, it’s likely that the price of Bitcoin would plummet.

As Decrypt reported previously, when Google achieved a breakthrough in quantum computing last November, blockchain experts claimed that it will take at least ten years before this becomes a problem for the industry. Others predict that quantum computers could be powerful enough to threaten Bitcoin as soon as 2022.

In the wake of Honeywell’s latest announcement, that timeline might need to be reviewed.

Author: Liam Frost

Source: Decrypt: Honeywell’s new quantum computer edges closer to threatening Bitcoin

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