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Johns Hopkins Economists Compare Crypto to Cocaine in Scathing Takedown

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In a scathing op-ed for the Wall Street Journal, Johns Hopkins economics professors Steve Hanke and Matt Sekerke eviscerated the cryptocurrency industry, comparing it to “part cocaine.” The two experts argued that the existing links between traditional banks and crypto show how easily a cryptocurrency crisis could spill over, and that regulation wouldn’t transform crypto into finance.

Hanke and Sekerke likened crypto to casino chips, arguing that it’s worse than gambling because the odds in crypto are subject to gross manipulation. They concluded that, in a post-FTX world, there are two options: regulate crypto to tamp down its free-for-all nature, or let it burn – and they think the entire industry needs to be kiboshed by the government.

The JHU economists continued their elaborate metaphor, likening crypto to ozone-depleting chemical compounds, antiquated trash bonds, and cocaine. “It isn’t the future of finance,” they wrote. “More than malign neglect, the US needs policies that will eliminate cryptocurrencies and their metastases.”

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Crypto

Crypto Payments Can Give E-commerce Much-Needed Boost

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From Microsoft, Google, to Starbucks and numerous other large brands, crypto is being supported as a payment method. Although BitPay reported an increase in monthly transaction count, crypto adoption in e-commerce is happening at a slower pace. Retailers must come up with new strategies to attract customers, and it seems the adoption of crypto payments might be one of the ways that could give a much-needed boost to the e-commerce market.

Compared to traditional payment methods like bank transfers and card payments, cryptocurrencies offer benefits such as reduced costs for merchants while processing digital asset transactions with a payments partner. Transactions arrive near-instantly to merchants’ accounts; analysts consider computer systems highly secure while executing public-key cryptography on blockchains. Merchants do not face any risks of chargebacks with cryptocurrency payments.

E-commerce giants such as Amazon show strong interest in cryptocurrency that started years ago. Last year, Bitcoin surged 14% after a new job posting signaled Amazon’s intent to dive deeper into the cryptocurrency industry. These together signal continuing strong interest in digital assets within the company.

Crypto prices are highly volatile at present but many individuals and industry projects see this as an opportunity for investments and preparations for an incoming bull run. In addition to investors and crypto firms, online marketplaces and e-commerce brands should think long-term and embrace trends like NFTs and DeFi early since every new cycle comes with its opportunities for capitalization.

The number of crypto holders is rising rapidly; those who refuse to adopt this innovation are missing out on enormous opportunities. As more people become aware of cryptocurrencies, adding them as an alternative payment method can help businesses cater to newer demographics.

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Signature Bank Shutdown Fuels Concerns Over Cryptocurrency Industry

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The recent seizure of Silicon Valley Bank resulted in the mandated shutdown of Signature Bank, a significant lender in the cryptocurrency industry. The joint statement released by the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation cited “systemic risk” as the reason for this action.

The bank’s deposits were nearly 90% uninsured at the end of 2022 per regulatory filings. As part of its protocols, only deposits exceeding $250,000 would be insured. This led to a situation where many lenders who paid in crypto saw their money decline in value considerably after the market crash last year.

In a show of support to depositors affected by Signature and SVB’s closure, regulators promised that they would create a special emergency insurance fund that would reimburse depositors entirely. The move is welcome news for those feeling anxious about their deposits’ status at either institution.

Since Signature Bank was one of the first financial institutions to begin accepting crypto deposits back in 2018, it played an integral role in fostering trust among investors initially; however, it now appears that its association with digital assets has contributed significantly to its downfall.

The current state of both the fiat and cryptocurrency financial industries raises questions about who or what enabled these situations to arise initially.

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Bitcoin Value Increases Almost 20% in a Day

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The surge of Bitcoin’s value has shocked the world amidst a financial crisis. The cryptocurrency experienced an almost 20% increase in just the last 24 hours, now hovering around $24,000. This rise was accompanied by an additional $70 million increase in the entire crypto market, which now exceeds $1 trillion.

The recent closure of Silicon Valley Bank (SVB) and Signature Bank created panic among investors. Yet despite this uncertainty, regulators established emergency insurance to repay SVB and Signature Bank’s clients after their closure. Due to this assurance, investors turned to Bitcoin, making it one of the key players in the market.

A Luno crypto exchange executive stated that “markets have turned euphoric” since depositors’ money has been secured and there is no chance of a bank run occurring. Regulators intended this sort-of-bailout as a way of avoiding any further financial crises.

Although traditional Wall Street may not be thrilled with this move, investors continue investing their money into cryptocurrencies like Bitcoin breaking new records during these uncertain times.

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