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Investing in bitcoin comes with its share of rewards and risks, and understanding these is key to making an informed decision. As Sciberras puts it: Investing in bitcoin isnt a straightforward yes or no. It depends on many factors, including the global economic climate, regulatory landscape, technological developments and your own personal situation.

In scenarios where there is large-scale money printing or loosening of monetary policy by the US and other nations, bitcoin could fare well. Sciberras explains: bitcoin was created as an alternative to the current system during the 2008 GFC. If we return to these conditions, bitcoin could perform well in such an environment.

Bitcoins halving, a preprogrammed event that decreases the reward for mining new blocks, could potentially drive prices higher, as it has done in previous cycles. With the next halving fast approaching in April 2024, there is a significant catalyst for positive price action which investors should be aware of. If bitcoin follows a similar trend to past market cycles, the upcoming halving could drive prices higher as the market adjusts to the new decreased block reward, says Sciberras.

The continued development of scalability solutions such as the lightning network could also boost bitcoins value. Sciberras believes that if we see businesses creating Lightning Network or Bitcoin-focused products, we could see an expansion of its use as payment, increasing adoption and possibly price.

However, bitcoins future isnt without potential hurdles. If bitcoin continues to be (targeted) by governments and its energy consumption is further politicised, then it could put pressure on bitcoins long-term sustainability, warns Sciberras.

One of the significant long-term concerns for bitcoin is its security in the face of a decreasing block reward. If there is lacklustre adoption and demand for Bitcoin or fee revenue is inadequate to incentivise miners to upgrade their hardware and mine new (less) bitcoins, security could decrease and threaten the network. While this is unlikely to be an issue in the next decade, it does remain an unanswered question for Bitcoins future in the long term.

Sciberras reminds us of an often overlooked possibility: Bitcoin can go to zero, just like any innovation surpassed by a newer incumbent or a combination of the above, reducing trust, accessibility, or demand for bitcoin.

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Bitcoin Price Prediction Forbes Advisor Australia - Forbes

Among the crowds at the Bitcoin 2023 conference in Miami last week were pockets of Ethereum developers, drawn to the world's biggest and oldest cryptocurrency by Ordinals.

Several developers with roots in Web3 attended Bitcoin 2023 because of Ordinals, the protocol launched earlier this year thats taken Bitcoin by stormsparking a wave of innovation, hype, and experimentation.

OrdinalSafe, a self-custodial Bitcoin wallet built for Ordinals, was among the startups present with Ethereum in its veins. The majority of its development team has experience working with the second-largest token by market capitalization.

The startup participated in Bitcoin 2023s Pitch Day, and it ultimately won second place in the competitions infrastructure category. The endeavor was a notable achievement and memorable experience, said OrdinalSafe CEO Esad Yusuf Atik.

It's your first time on that stage, and you're trying to sell the vision of your product to other people, so you want to do a good job, he said. I was really nervous, but going to the stage for the prize, it felt great.

Atik, a 22-year-old developer from Turkey, first caught the Web3 bug when he attended a hackathon in 2020. He, along with a couple of other members from the OrdinalSafe team, previously developed a protocol called Proof of Innocence under the firm Chainway.

Built for Tornado Cashan Ethereum coin mixer sanctioned by the U.S. last summerProof of Innocence is designed to help users prove they didnt deposit funds into the privacy tool from a sanctioned wallet address.

The project got really good attention, Atik said, adding he and developers that worked on the protocol recently got to meet Ethereum co-founder Vitalik Buterin in Montenegro. He added that Buterin talked about Proof of Innocence on stage at the Community Ethereum Development Conference.

But, in February, Atik learned about Ordinals on Twitter and became transfixed. So, he and his fellow developers dove head-first into creating OrdinalSafe, ultimately leading the crew to Miami.

Not all Bitcoiners see value in Ethereumor any other coin, for that matter. At Bitcoin 2023, a few vocal conference-goers booed BitMEX founder Arthur Hayes on stage when he told author Michael Lewis he absolutely owns Ethereum and other tokens.

Come on, guys. Yall know you trade some PepeCoin, Hayes said in response to the boos, referring to Ethereums amphibious meme coin du jour. Dont sit here like that.

Along similar lines, a company called LayerTwo Labs invited attendees to smash piatas resembling Ethereum, Solana, and Shiba Inu symbols at its booth. People urged Bitcoiners to smash a shitcoin like carnival barkers.

But despite any sense of BTC superiority permeating the air at Bitcoin 2023, Atik said that the conferences crowd was welcoming.

Even though we came from an Ethereum background, it felt like home, Atik said. If you're developing on Bitcoin, you're part of the community, right?

Whether Ordinals itself is accepted by the Bitcoin community is entirely up for debateas evidenced by tension on stage during The Great Ordinal Debate.

The conversation touched on whether Ordinals could be considered an attack on Bitcoin, as some critics say. Their argument: Experimental BRC-20 tokens, built using Ordinals, have put an enormous strain on Bitcoins network and driven up transaction fees. BRC-20 tokens, pioneered in March, are fungible tokens that exist on Bitcoincomparable to ERC-20 tokens on Ethereum, like PepeCoin.

There was also discussion about projects that could potentially be built on Bitcoin using Ordinals, like a decentralized exchange. Matt Corallo, an Open Source Engineer at Spiral, expressed concerns during the panel that new innovations with Ordinals could push Bitcoin miners more toward MEV to stay competitive and introduce centralization or censorship issues if not managed effectively.

MEV, or maximal extractable value, refers to the value that miners or validators can derive from changing the sequence of transactions in a block as its being added to the ledger. While developers on Ethereum and other chains have spent years figuring out how to mitigate MEVs negative aspects, its potentially a new hurdle for cryptos oldest coin, said Corallo.

The Ethereum space has spent a lot of time doing this, Corallo said, in terms of addressing MEV. We do need to learn from that world, in so far as were building protocols that start to look more like that world. We absolutely do.

Udi Wertheimer of Bitcoin Wizards said its noteworthy that well-established Web3 tech and concepts have worked their way into Bitcoin-related dialogue, contrasting it with events held by Bitcoin Magazine in years past.

This year, were on [...] the main stage of Bitcoin Magazine talking about rollups, were talking about MEV, were talking about decentralized exchanges on Bitcoin, Wertheimer said. I dont have the answers [...] but I think the culture is getting there.

Before Bitcoin 2023, OrdinalSafe didnt have any investors. But after the teams performance during Pitch Day, its already got significant commitments from investors, CEO Atik said.

But the OrdinalSafe team was not the only group represented by developers with an Ethereum background, using Ordinals to find their footing in the Bitcoin community.

Eril Ezerel is the founder of Subjective Labs. His team of crypto-natives has been building BestinSlot.xyz, an Ordinals explorer that lets people track inscriptions, NFT-like assets on Bitcoin, as well as BRC-20 tokens.

The service currently tracks over 1,100 Ordinals collections, with names like Bitcoin Frogs, DogePunks, and BTC Virus. It also collects data on the more than 28,000 BRC-20 tokens.

Ezerel described Ordinals as a hornnow that its been blown, people are coming back to cryptos oldest coin en masse. A lot of people in his projects Discord server are approaching Bitcoin with limited knowledge of how to use the network, he said, but theyre still passionate about the prospect of digital art and collectibles.

All day in Discord, we're dealing with NFT degens from Solana and Ethereum, Ezerel said. Theres been a bit of a learning curve, he said: Lots of people have been asking for help buying Bitcoin inscriptions.

Ordinals is in its infancy, and where the protocol goes is anybodys guess, as people from throughout Web3 enter the Bitcoin fold. And even if Ordinals has its critics, many approve of the experimentation, Ezerel said.

He put forth the idea that Bitcoin miners are on board with Ordinals because of the increased transaction fees they receive for validating transactions. There are also major developers and Bitcoin owners that are supportive of the protocol, he noted.

Everybody's excited about it, Ezerel said. The Bitcoin maxi stuff, it's mostly in our heads.

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Ordinals Is Drawing Former Ethereum Devs to Build on Bitcoin - Decrypt

The United States is barreling toward a date that could have historic consequences for global markets, running the risk of its first-ever debt default. It's a potential black swan event that could have an outsized impact on Bitcoin, Ethereum, and the rest of the crypto market.

U.S. Treasury Secretary Janet Yellen warned weeks ago that the government would soon run out of funds if the debt ceiling isnt suspended or raisedpossibly as early as June 1. If lawmakers remain deadlocked and cant come to an agreement on spending, Washington wont be able to pay its bills, she said.

Similar standoffs over the debt ceiling have rattled markets in the past, like a prolonged disagreement over the debt ceiling that sent the S&P 500 tumbling 16% in 2011, startling investors before a resolution was reached.

This time around, Wall Street has yawned. The S&P 500 is down less than 1% since Yellen issued her sobering remarks on May 1. However, Bitcoin has fallen more than 7% and Ethereum is down nearly 3% during the same period, according to CoinGecko.

Typically, debt ceiling debacles create more noise than market-moving news, Amberdatas Director of Derivatives Greg Magadini told Decryptbut he acknowledged that a U.S. debt default is far from off the table.

It feels like a pretty intense game of chicken right now, he said. And given how crazy things have gone in the past couple of years, I think anything is possible.

In the event that the government defaults on its debts, risk assets like stocks and crypto would face short-term pain, Magadini said. He explained thats because a drop in the quality of government-backed debt would likely raise borrowing costs, counterintuitively increasing its yield and strengthening the dollar compared to other assets.

Similarly, the dollar could strengthen during a U.S. default as American traders tend to onshore their dollarsswapping foreign currencies and assets for the greenbackduring risk-off events, CoinShares Head of Research James Butterfill told Decrypt.

Technically speaking, the dollar should sell off in the event of a default, but it won't because people tend to onshore their dollars in periods of market stress, he said. The dollar might actually strengthen, perversely, because people are getting worried, and that actually wont be so great for Bitcoin.

Butterfill envisions the dollar will strengthen and Bitcoin will slide as the U.S. approaches what the White House has described as America's X-date, the official date at which the government can no longer pay its bills.

This is a really complicated scenario, Butterfill said, noting he doesnt think a default is likely. Its not that obvious what exactly will happen.

Bitcoin and Ethereum could react differently in the event of a default, Amberdatas Magadini said. Bitcoin may bounce alongside gold after an initial slideas a check on government-issued currencywhile Ethereum would likely remain depressed alongside tech stocks, he said.

The sentiment was echoed by Genesis Co-Head of Trading Gordon Grant, who told Decrypt that Bitcoin has more upside than Ethereum if the government can no longer meet its debt obligations, but both coins would face pressure initially.

Maybe there's an initial wick down, as risk assets get absolutely trounced, because the stock market is going to get decimated, he said. But Bitcoin is probably going higher.

For Ethereum, Grant said that the second largest crypto by market cap is often tied to indexes tracking tech stocks like the NASDAQ, making it likely to underperform compared to Bitcoin if a default takes place.

It doesn't matter whether I think that that's a fair comparison, he said, noting that thats how certain models trade the relationship between things like the NASDAQ and Ethereum. So, we would tend to expect underperformance of Ethereum.

As an example of how crypto has performed during recent risk-off events, Grant pointed to Bitcoins outsized gains compared to Ethereum in the wake of several bank collapses in March, including Silicon Valley Bank. However, he noted that theres zero data to suggest how cryptocurrencies could react if the government defaults for the first time in history.

Both Grant and Magadini highlighted increased activity in the options market for Bitcoin as a potential default draws closer, saying it suggests that tradersmostly institutional onesare betting the coin will see increased volatility.

At the end of the day, Grant said hes confident that lawmakers will exhaust their differences on Capitol Hill and reach an agreement like they always have. But, pointing to the logic of Bloombergs Tom Keene, Grant said the bigger question is whether events like these become more common in an ever-more-polarized political climate, and if theyll ever go away.

We can ruminate and pontificate, but the real story is this phenomenon of the US government, as a debtor nation, bumping up against a debt ceiling, Grant said, adding its become how the sausage gets made in the 21st century.

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What Happens to Bitcoin and Ethereum If the US Defaults on Its Debt? - Decrypt

At some point, you may have believed that Bitcoin is the same as cryptocurrency. You may even still believe this. People frequently use these terms interchangeably, although each has distinct functionalities and identities.

So, are crypto and Bitcoin truly synonymous? Or, if they're different, what's the distinction between the two?

Cryptocurrency is a broad term for all virtual currencies, including Bitcoin. Virtual currencies are a medium of exchange on blockchains that aren't reliant on centralized authorities like banks and governments.

On the other hand, Bitcoin (BTC) is a digital currency that uses cryptography to facilitate decentralized monetary transactions. As the first cryptocurrency, BTC's popularity gave rise to the idea that it's the same as crypto.

The key difference between cryptocurrency and Bitcoin is that Bitcoin is one crypto among the thousands of cryptocurrencies available. In contrast, cryptocurrency is a general term describing all virtual currencies.

Here are the specific ways in which Bitcoin and crypto differ:

Satoshi Nakamoto, a pseudonym for a Japanese group, created Bitcoin in 2009 using blockchain technology based on decentralization, cryptography, and consensus.

Bitcoin is entirely run by peer-to-peer global computer networks, making it one of the most decentralized cryptos. The premier crypto is based on public key cryptography or asymmetric cryptography, which means Bitcoin holders have a public address for receiving Bitcoin and a private key for spending the asset.

Also, Bitcoin uses a Proof of Work (PoW) consensus algorithm to verify and confirm transactions. PoW involves the miners (participants in the Bitcoin network) solving complex cryptographic puzzles to verify and confirm new blocks.

However, this is not the way all cryptocurrencies are created. Not all cryptos are controlled or created by P2P networkssome are managed by a particular organization. For instance, Binance Coin (BNB) is run by Binance, which controls the supply of BNB.

Although most cryptos use public key cryptography like Bitcoin, they do not all use the same algorithms. For instance, Bitcoin uses the RSA algorithm, which enables the simultaneous generation of public and private keys. Meanwhile, Ethereum uses the Elliptic Curve Digital Signature Algorithm (ECDSA), allowing you to choose a private key and generate a corresponding public key.

Similarly, not all cryptos employ Bitcoin's consensus model. A commonly utilized consensus algorithm is Proof of Stake (PoS), where blockchain participants lock their crypto assets for the chance to verify and confirm transactions. While Bitcoin uses PoW, Ethereum uses PoS, Bitshares uses Delegated Proof of Stake (DPoS), and Ethereum Kovan uses Proof of Authority (PoA).

Bitcoin was created to facilitate peer-to-peer monetary transactions and serve as a store of value. Because of its privacy and anonymity, you can securely use the digital asset to perform and record various financial transactions. Due to fluctuating demand and supply, Bitcoin is also an investment and trading instrument.

Meanwhile, cryptocurrency encompasses all types of digital currencies, which have various use cases and functionalities. Many blockchains have cryptocurrencies supporting services like carbon offsetting, decentralized finance, and gaming.

While Bitcoin focuses on providing decentralized transactions, cryptocurrencies like Ethereum support smart contracts and decentralized applications. Cryptos like Chainlink (LINK) or Binance Coin (BNB) serve as crypto utility tokens for specific digital ecosystems, so you can't use them outside their platforms, unlike Bitcoin.

All crypto, including Bitcoin, is stored in cryptocurrency wallets. Since crypto is intangible and can't be held physically, these wallets keep your private and public keys. They could be software-based or hardware-based.

Crypto wallets interact with several networks to enable you to send, receive, or use your digital currencies. As a result, each crypto has a unique wallet.

You can only store Bitcoin in a Bitcoin wallet; the same applies to other cryptos. This is because Bitcoin is a different blockchain from other cryptocurrencies, and its underlying wallet is designed only to support Bitcoin.

Remember that cryptocurrencies use different public key cryptography algorithms. This also contributes to the incompatibility between cryptos and other wallets.

Bitcoin has a fixed supply capacity of 21 million coins. This means there will only be 21 million Bitcoins in existence.

Bitcoin's supply cap is a unique part of its design and distinguishes it from other cryptocurrencies. Unlike Bitcoin, other cryptocurrencies have a higher maximum supply rate. For instance, Ethereum has an infinite maximum supply capacity, Dogecoin has 129.5 billion, and Shiba Inu has one quadrillion.

Bitcoin's monetary policy also includes regular halving events, where block rewards from mining are reduced by half every four years. Only a few other cryptos that use the same consensus algorithm as Bitcoin, like Litecoin and Monero, perform this halving event.

Because of its fixed supply cap and regular halving events, Bitcoin is quite deflationary; its value increases over time as less is created. In contrast, some cryptocurrencies have monetary policies tied to economic and government policies. Therefore, their supply limits are adjustable. As a result, their inflationary and deflationary rates are flexible.

Bitcoin's market capitalization represents the value of Bitcoin as a single cryptocurrency. Meanwhile, the market capitalization of cryptocurrency is the combined value of all the cryptocurrencies in circulation.

Bitcoin, mainly because it's the premier digital currency, has the highest market capitalization in the crypto space. Because of its large market cap, it is a benchmark for the general cryptocurrency market.

Bitcoin's market capitalization is over $500 billion, while the broader cryptocurrency market capitalization is around $1 trillion. This means that Bitcoin has a market dominance of about 40% in the general crypto market. Significant price declines or increases in Bitcoin's value will impact the crypto market. However, changes in smaller cryptocurrencies may not have much effect on the crypto market.

Additionally, introducing new projects and innovations does not influence Bitcoin's market capitalization. Since Bitcoin has a well-established position as the most popular and valuable cryptocurrency in the industry, its price value is not entirely controlled by competitors. In contrast, the market capitalization of many other cryptocurrencies varies depending on adoption, utility, new projects, and popularity among investors.

Despite their differences, Bitcoin and cryptocurrency fall under the umbrella of virtual currencies, so they have several similarities.

Cryptocurrency and Bitcoin are digital currencies that exist electronically. They do not have physical forms like banknotes and coins. Typically, they serve as digital payment methods and means of financial exchanges.

Bitcoin and other cryptocurrencies rely on blockchain technology, a distributed ledger. Blockchain technology records all information and transactions across the network to Bitcoin or other cryptos' security and transparency.

Cryptography plays a vital role in digital currencies. Bitcoin and cryptocurrency use cryptographic techniques to maintain the privacy and security of all transactions made on the blockchain. Cryptography also makes digital currencies immune to infringement and fraud.

Digital currencies have made a mark in the financial sector, delivering swift, low-cost, secure, and transparent transactions. Bitcoin has had a head start over other cryptocurrencies. Its popularity as the first cryptocurrency gives it dominance over the crypto industry.

However, while Bitcoin is a cryptocurrency, not all cryptocurrencies are Bitcoin. Understanding the differences and similarities between cryptocurrency and Bitcoin is essential for you to leverage the benefits of digital currencies.

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Are Crypto and Bitcoin the Same Thing? - MUO - MakeUseOf

In a recent CNBC interview, hedge fund billionaire Paul Tudor Jones discussed why he's buying Bitcoin(CRYPTO: BTC). Interestingly, he did not once mention blockchains, smart contracts, decentralized applications, or non-fungible tokens (NFTs). There was no crypto mumbo-jumbo, and no outlandish price predictions.

Instead, this billionaire hedge fund investor analyzes Bitcoin the same way he analyzes every other asset in his portfolio. Correlations, risk premiums, economic scenarios, and statistical probabilities matter. If you're thinking of investing in Bitcoin now, this investment framework might be helpful.

The starting point is viewing crypto as a unique asset class. Once you do that, you can compare Bitcoin against other asset classes, to see which ones you should be holding in your portfolio, and how much should be allocated to each. Every asset comes with its own unique risk-reward profile, and that's where Bitcoin really stands out. Yes, there is significant risk involved with investing in Bitcoin, but there's also significant upside potential.

Paul Tudor Jones refers to Bitcoin as "a great tail event," and that has a very specific meaning in the investment world. It refers to the possible distribution of events. In statistical terms, a tail event is a 3 standard deviation event, meaning that there is only a 0.3% likelihood of it occurring. If you think about a standard bell curve distribution, for example, there will always be a giant hump in the middle, and very flat tails on either side. Most assets are part of that giant hump in the middle.

But Bitcoin is different -- it's seemingly always the "tail." Sometimes, it's the tail of negative distributions (as was the case in 2022). But more often, it's the tail of positive distributions. As a result, from 2011-2021, Bitcoin was the top-performing asset in the world, and it wasn't even close.While those historical returns are no guarantee of future performance, they do showcase Bitcoin's upside potential.

Bitcoin is also interesting in terms of its correlations. Over the past few months, Bitcoin has started to become more and more correlated with gold. The elevated level of economic uncertainty right now is causing people to search out so-called safe haven assets, and many people consider Bitcoin to be in that class.

This is not because Bitcoin is inherently safe -- it's because Bitcoin is outside the traditional banking system. Thus, if more banks run into trouble, then Bitcoin theoretically won't feel the bite as much as other financial assets.

Image source: Getty Images.

Right now, Paul Tudor Jones still views Bitcoin as a potential inflation hedge, similar to gold. That makes Bitcoin valuable, since it is a potential way to hedge away inflation risk. Thus, over time, the expectation is that Bitcoin will maintain its correlation with gold. However, he warns, once the Fed stops hiking interest rates, the case for Bitcoin as an inflation hedge might start to wane.

Paul Tudor Jones also uses economic modeling to predict the future path of asset prices. This, after all, was what allowed him to predict the 1987 stock market crash and generate tremendous profits in the process. He modeled the stock market crash of 1929, compared it to what was happening in the 1980s, and concluded that stock prices were going to plummet. He's now doing the same with the current situation, comparing it to what occurred during the 2008 financial crisis, to see what might happen next.

You don't need to have a degree in economics to do this same type of modeling. All you need to do is think in terms of potential economic scenarios. In short, think about a few economic scenarios that might happen, and then think how Bitcoin will respond in each scenario. What happens in a rising rate environment? What happens if the economy goes into recession next quarter?

Taking all of this into account, Paul Tudor Jones obviously likes what he sees in Bitcoin. "I've never sat on a horse that long," he says. He started investing in Bitcoin in 2020 when it was trading for around $9,000, rode it up to its all-time high of $68,790, and then watched it plummet all the way to $15,000 before rising once again to near $30,000. He's still holding on to it, nearly three years later.

Of course, you don't want to overdo things when it comes to Bitcoin. We don't know exactly how much Paul Tudor Jones has allocated to Bitcoin right now. Back in 2021, he suggested he might be willing to hold as much as 5% in Bitcoin. However, more recently, he suggested that he was allocating just 1% to 2% of his portfolio to Bitcoin.

Even if you don't agree with Paul Tudor Jones, one thing is clear: You can become a better crypto investor by changing the way you analyze Bitcoin. Instead of relying on popular crypto narratives (many of which sound like marketing slogans for Bitcoin), use the same tried-and-true approaches used by billionaire investors.

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Billionaire Investor Paul Tudor Jones Is Buying Bitcoin Now. Should ... - The Motley Fool