Crypto Scoop: JP Morgan says, "Ethereum May Soon Lose Its Dominance In The Crypto Space!"

This week, we bring you more exciting updates from the crypto space. In this edition of the crypto scoop, we will be reviewing:

• Morgan Stanley’s prediction that Ethereum may lose its dominance
•  Bitcoin hashrate’s new ATH and Cardano’s recent milestones
• Marshall Islands recognition of DAOs as legal entities 
• FSB proposition on the risks associated with cryptocurrencies
• President Bukele’s warning to U.S. Senate Committee
• Twitter’s new ETH payment option
• Metaverse projects in Hong Kong

Morgan Stanley Predicts Ethereum May soon Lose its Dominance in the Crypto space

Morgan Stanley in a recent paper, “Cryptocurrency 201” predicts that attempts to regulate DeFi and NFTs may lead to fewer demands for Ethereum transactions. Morgan Stanley explained that ETH is less decentralised than Bitcoin with the top ETH addresses holding 39% of ether as compared to 14% of BTC. 

However, Ethereum has a dominant market in DeFi and NFTs, and attempts to regulate these sectors which are evolving may lead to reduced demand for transactions on the network. 

Also, Ethereum may need to improve its scalability to make it less expensive to use per transaction. “High transaction fees create scalability problems and threaten user demand,” the analysts said, adding that high costs make the platform too expensive for small-value transactions.

Analysts also pointed out that volatility might be a risk issue, and that ETH's dominance in NFT is dwindling due to congestion and expensive gas fees. In fact, Solana has been acquiring the most NFT volume at the expense of Ethereum since August. Earlier last month, the bank cautioned that Ethereum's DeFi dominance was in jeopardy, as the network scaling required to retain its dominance could arrive too late.

According to the report, Ethereum's stake of the NFT market is anticipated to be greater than its share in decentralized finance (DeFi) because NFTs are the "fastest-growing universe in the crypto ecosystem." If Ethereum's loss of NFT market share continues in 2022, JPMorgan warns, it could be a bigger challenge for its valuation.

Bitcoin Hashrate Soars to A New ATH and Cardano Surpasses 30 million transactions milestone

Bitcoin’s price after several weeks of a bearish run was able to regulate above $40,000. While bitcoin enthusiasts remain glued to their sit-in anticipation of a bullish run, bitcoin’s hashrate has soared to a new All-time high. 

Bitcoin's hashrates reached 248.11 million terahashes per second (TH/s), increasing from 180 million TH/s the week before. Hashrates are a measure of the computational power required to mine blocks on the Bitcoin network.

The Cardano blockchain has crossed a significant milestone, with the network already having handled over 30 million transactions. According to Cardano blockchain insights released on Google's Data Studio, the Cardano blockchain has processed over 30.4 million transactions, and the number of daily active addresses on the network swings between 150,000 and 200,000. Cardano wallets are on the rise,  with the total number of wallets currently above 1.1 million. 

Marshall Islands officially recognizes DAOs as legal entities

The Pacific island state, Republic of Marshall Islands has announced that (Decentralised Autonomous Organisations) DAOs henceforth would be considered as legal entities after passing the Non-Profit Entities Act 2021.   DAOs are built on a smart contract that enforces specific rules which are embedded in its code on members, therefore, creating a trustless organisation.

The amendment permitted Shipyard Software, a bitcoin trading infrastructure platform, to create Admiralty LLC, the island country's first DAO. The new regulation makes it possible for any DAO to register and operate in the Marshall Islands. According to Bloomberg, the Marshall Islands also authorized the development of a new cryptocurrency, Sovereign (SOV), in February 2018, despite fears from the IMF that it might jeopardize the country's financial stability.

DAOs will play a significant role in developing "more efficient and less hierarchical" companies, according to Bobby Muller, the former chief secretary of the Republic of the Marshall Islands. The Marshall Islands, according to Muller, is aiming to become a global hub for DAOs, "both in terms of registering and domicile, as well as developing use cases and promoting widespread adoption."

Colorado residents will also be allowed to pay state bills with digital assets soon, according to Governor Polis. Governor Jared Polis explained that cryptocurrencies such as Bitcoin and Ethereum would be accepted as a payment option for state taxes, demonstrating the mainstream public's continuous adoption of digital assets.

FSB positions that Cryptocurrencies could Affect Global Financial Stability

Fast-evolving crypto markets could be a threat to global financial stability, according to the Financial Stability Board .

The FSB evaluated potential risks associated with crypto-assets like as bitcoin, stablecoins, and decentralised financing (DeFi), as well as crypto trading platforms, in a report released on Wednesday. Although the global crypto industry is still small, and the level of crypto use differs around the world, financial stability risks "may swiftly grow," according to the FSB. 

 "Crypto-asset markets are rapidly emerging and may soon pose a threat to global financial stability as a result of their magnitude, structural vulnerabilities, and growing interconnection with the traditional financial system," according to the 

FSB also explained that stablecoins although the sector is valued at $133B are not being used in significant scale for payments. FSB, however acknowledged that stablecoin use has increased over the last two years and could contribute to facilitating better cross-border payments. 

Josh Gottheimer, a US Representative, has introduced a bill to establish government-backed stablecoin insurance.  The law would certify certain stablecoins as "qualified," making them exchangeable for US dollars on a one-to-one basis. Banks and non-bank financial institutions would issue them if they met certain reserve requirements and retained cash collateral in a segregated Federal Deposit Insurance Corporation (FDIC)-insured account.

According to the bill, Stablecoin issuers would be overseen by the Office of the Comptroller of the Currency (OCC), which would set rules on leverage ratios, auditing standards, anti-money laundering/know-your-customer compliance, and so on. The policy is set to be discussed by the Senate Banking Committee.

President Bukele warns U.S senate Committee to Stay out of Its Internal Affairs.

The "Accountability for Cryptocurrency in El Salvador Act," or "ACES Act," has been introduced by the United States Senate Committee on Foreign Relations. According to the release, the proposed law mandates a report from the State Department on El Salvador's use of bitcoin as legal money, as well as "a plan to manage possible threats to the US financial system."

The State Department report would examine El Salvador's use of bitcoin as legal cash, as well as the implications for cybersecurity, economic stability, and democratic government. El Salvador's adoption of bitcoin as legal cash raises serious concerns about the economic stability and financial integrity of a vulnerable US trading partner in Central America, according to Senator Risch.

In response, President of El Salvador, Bukele asserted “OK boomers… You have 0 jurisdiction on a sovereign and independent nation. We are not your colony, your back yard or your front yard. Stay out of our internal affairs. Don’t try to control something you can’t control”

Twitter Announces New Ethereum tip feature

In September, Twitter launched its first cryptocurrency payment option: bitcoin tipping, which was made available through its tipping jar. The social media site introduced a host of new payment systems, including Ether, to these current tipping choices on Wednesday.

Users who want to receive ETH tips only need to enable the platform's tipping functionality and add an Ethereum address to their profile's dedicated area. An effort to use an ENS domain name instead of a full alphanumeric address, however, failed, resulting in an error box indicating that punctuation was invalid. However, because ENS domains have not yet been incorporated, users will need to supply a full Ethereum address.

For the time being, ETH tips are only available to iPhone and Android users. Twitter also explained that users keep 100% of the tips they get.

Hong Kong and Victoria’s Secret pursue metaverse projects

The CSOP Metaverse Concept ETF, Hong Kong's first metaverse-themed exchange-traded fund (ETF), is set to launch on the Stock Exchange of Hong Kong on February 21. 

The metaverse ETF will invest at least 70% of its net asset value in securities businesses that are directly or indirectly connected with the metaverse business. Metaverse infrastructure, construction technologies, applications, and content are the four main areas of focus for the fund.

An Indian dating app has decided to start off a metaverse dating trend. Mingout, a dating app in India, has pioneered metaverse dating by arranging a virtual date for two of its customers in a moon-themed setting. In India, metaverse or virtual dating is still a relatively new concept, and Mingout intends to usher in a dating revolution by making it more accessible, enjoyable, and immersive.

Metaverse meetings, also known as virtual meetings, have grown in popularity, particularly during the pandemic, when physical gatherings were limited and the virtual world provided a safer and more efficient way to socialize. This is definitely an interesting trend that would be fun to watch. 

Victoria's Secret, the world-famous designer underwear brand, has also filed a number of trademark patents, indicating that it is ready to sell its items in the metaverse. Mike Kondoudis, a trademark attorney, made the announcement, stating that these steps might be the company's first step in presenting their products using blockchain technology, indicating the use of NFTs.

NFT adoption increases as sales plummet in the past week

At Hoseo University's graduation ceremony on Friday, all 2,830 graduates of the class of 2021 will receive non-fungible token (NFT) degrees and certificates. The university envisions that switching from a paper-based degree to an NFT will improve administrative services and prevent degree fabrication or change. Sungkyunkwan University in South Korea, which is funded by Samsung has also, awarded NFT credentials to three students during its graduation ceremony earlier this week..

NFTs have been adopted by a wide number of sectors and entities in South Korea, with the country's largest companies, Samsung, SK, and LG, integrating NFTs in their newest line of goods and services. 

However, Non-fungible token (NFT) sales have plummeted 29.35 percent in the last week, according to current data. Despite a recent $23 million cryptopunk sale, weekly non-fungible token sales are falling. While Ethereum and Solana have the largest NFT sales volume, both blockchain networks have experienced NFT sales drop by 27 to 32 percent in the last seven days.

Uber’s intentions to adopt cryptocurrency as payment option

In a recent interview, Uber CEO Dara Khosrowshahi stated that uber will ultimately accept cryptocurrency as payment. 

The ride-hailing service Uber,   is actively looking into introducing a cryptocurrency payment option, but has yet to make a decision. "Someday," Khosrowshahi said in a recent interview with Bloomberg, adding that the business is talking about it "all the time." "I think what we're seeing with Bitcoin and some of the other cryptos right now is that they're quite valuable as a store of money," says the Khosrowshahi.

According to Khosrowshahi, who cited environmental worries about digital mining as a major reason for Uber's delay, the exchange mechanism's hefty transaction fees are also a stumbling block. "As the exchange mechanism gets less expensive and more ecologically friendly, I believe you will see us leaning more into crypto," said the CEO.