- A UBS economist opined that cryptos are not fit to make actual currencies.
- This is based on the supply rate, which can’t be reduced when demand drops.
Cryptocurrencies are have been gaining attention over the years with recent surges in price. The confidence in this technology is raising narratives that they can actually serve as currency for trades, and a store of value, especially Bitcoin (BTC). However, an economist at UBS Global Wealth Management, Paul Donovan, thinks otherwise. Donovan blamed the fact that the supply of some of these cryptocurrencies can’t be controlled when the demand plummets.
This is the flaw with cryptos, says UBS economist
According to the UBS economist, the fact that the supply rate of cryptocurrencies like Bitcoin can’t be adjusted in accordance with a declining demand is a “fundamental flaw” that limits BTC and other cryptocurrencies from serving as “actual currencies.” For instance, about 900 new BTC enters into circulation every day, regardless of the demand. “That means they can’t be considered currencies,” the UBS economist added.
This is not the case for fiat currencies, which are controlled by the governments or the central banks. These authorities have the capacity to reduce the reduce supply when demand for the currency is declining, Donovan said. “People are unlikely to want to use something as a currency if they’ve got absolutely no certainty about what they can buy with that tomorrow,” he added.
So, the lack of this mechanism for most cryptos doesn’t qualify them as actual currencies, as their purchasing is likely to collapse down the path.
Maybe, not for Bitcoin
While the opinion from the UBS economist could be a fact, this may not be a problem for Bitcoin, which has seen continuous growth in demand. Bitcoin has a supply cap of 21 million, out of which over 18 million are already in circulation. Institutions are flocking to the cryptocurrency, shooting up the demand for the cryptocurrency, which is also causing a scarcity for the BTC.
Companies like Grayscale are buying a large number of Bitcoin, more than miners can produce in a day. Also, It’s safe to say that the halving event was basically designed to addresses this issue, as the supply rate of the crypto would cut by halving every four years
Binance’s Trading Volume Hits $100 Billion in Just One Day
Binance continues to see unprecedent trading activity while attempting to sail through regulatory hurdles
Binance’s daily volume hit an eye-popping $100 billion on Oct. 20, according to a tweet by CEO Changpeng Zhao.
The leading crypto exchange recorded this crucial milestone on the day Bitcoin, the largest cryptocurrency, reached a new all-time high of $67,276.
Despite introducing stricter measures for users due to severe regulatory scrutiny, Binance enjoys a comfortable lead over other crypto exchanges in both spot and derivatives trading, according to data provided by CoinMarketCap.
Eerier this month, the trading platform also announced a $1 billion ecosystem fund.
Meanwhile, the decentralized finance sector is catching up with centralized behemoths. The total value locked in DeFi protocols has hit $100 billion for the first time.
Binance Smart Chain DeFi protocol PancakeHunny suffers flash loan attack
As the users argue “what’s better,” Ethereum or Binance Smart Chain, the latter saw another decentralized protocol being exploited. PancakeHunny on BSC was attacked by a flashloan and no, this wasn’t a first for the protocol.
Blockchain security and data analytics company Peckshield Inc. announced the attack on Twitter.
The last time that this protocol was exploited, was in June, wherein the team had noted the creation of a smart contract to exploit the Hunny Minter Smart Contract. The contract was subsequently executed 91 times, as per the team.
The team took a long time to respond to the hack this time but assured the users that their funds were safe. The team added in a preliminary report,
“On 20 October 2021, at 0920 UTC. A smart contract was created to exploit the Hunny TUSD vault. The Contract was subsequently executed 26 times.”
PeckShield provided some details about the same noting,
According to the agency, this hack was possible due to a profit inflation bug, which converts the relatively small amount of harvested ALPACA, to a large amount of TUSD for staking. PeckShield added,
“These converted TUSDs are then counted as profit, now inflated to mint large amount of $HUNNY!”
Actions taken by the team
The PancakeHunny team has stopped the minting process for the TUSD vault while assuring that funds in Hives were all SAFE. The exploit did not affect other Hives and Vaults but the price of HUNNY.
They added that the issue has been identified and the team will change its rooting to higher liquidity pools to prevent the aftereffects of price manipulation of LP pools.
NBA Makes Coinbase Its Exclusive Crypto Partner
Coinbase has joined FTX in scoring major partnerships in the sports industry
The National Basketball Association has announced a multi-year deal with Coinbase, America’s biggest crypto trading platform in an Oct. 19 press release.
Coinbase will act as the exclusive partner of the NBA, NBA G League, Women’s National Basketball Association (WNBA), and other leagues.
As part of the deal, the exchange will have a brand presence during televised games as well as unique content and activations that are meant to boost crypto awareness.
Kate Rouch, Coinbase’s chief marketing officer, says that the company is proud of joining forces with the NBA:
The freedom to participate and benefit from the things you believe in is at the heart of Coinbase’s mission. Nobody believes this more than NBA and WNBA fans. We’re proud to become the Leagues’ official cryptocurrency partner.
The shares of Coinbase are up roughly 3% at press time.