• Chainalysis, a blockchain analysis firm, found that 25% of the digital tokens introduced in 2022 were scams designed to make off with investor funds.
• These scams involve developers or executives talking up the token and getting investors interested, then running away with their money once the price of the token has risen.
• Pump-and-dump schemes are seen as destructive to the reputation of cryptocurrency and could be preventing mass adoption.
Chainalysis Report: Most Tokens in 2022 Were Fake
Chainalysis, a blockchain analysis firm, recently released a report detailing its findings on digital tokens introduced in 2022. According to their research, nearly 25 percent of these tokens were fake – scams set up to defraud investors out of their money.
Many of these tokens had clear signs of being pump-and-dump schemes. In such schemes, developers or executives talk up a certain token and get investors excited about it – often through fear of missing out (FOMO). Then when enough people have put their money into it and the price has risen significantly, the scammers shut down the operation and run away with everyone’s funds.
Ease Of Execution
Chainalysis noted that pump-and-dump schemes are easy for bad actors to execute due to how simple it is to launch new tokens and establish an artificially high market capitalization for them by controlling supply levels. Furthermore, teams launching new projects can remain anonymous which makes it possible for serial offenders to carry out multiple pump-and dump schemes.
Destructive To Crypto Industry Reputation
The company also pointed out how damaging this is for crypto’s reputation since pump-and -dump schemes have become so common within this industry. Many believe that cryptocurrency is approaching an inflection point that could spark mass adoption but if people perceive crypto as full of fraudsters looking to take advantage of unsuspecting newcomers then this will be difficult to achieve.
The report discussed more than one million transactions from over 1,000 digital asset addresses related to pump-and -dump schemes in 2021 alone showing just how widespread these scams really are. It’s important for investors and traders alike to be aware of suspicious activity surrounding any given crypto asset before investing in it so they don’t fall victim themselves.
• The International Monetary Fund (IMF) has warned that El Salvador’s adoption of Bitcoin as legal tender carries certain risks.
• The IMF believes the legal risks, fiscal fragility, and speculative nature of crypto markets should be reconsidered by the authorities.
• The IMF plans to closely monitor El Salvador’s use of Bitcoin in order to ensure transparency and safety.
El Salvador Declares Bitcoin as Legal Tender
In September 2021, El Salvador became the first nation to declare bitcoin as legal tender, allowing businesses within its borders to accept BTC alongside the local fiat currency USD for goods and services. This decision was met with caution from the international community, particularly from the International Monetary Fund (IMF), who were concerned about the potential risks associated with this move.
The IMF’s Warning
In response to El Salvador’s decision, the IMF issued a statement warning that government exposures to bitcoin should be reconsidered given its „legal risks, fiscal fragility, and largely speculative nature“. Despite this warning, El Salvador remains steadfast in their support for bitcoin and is now facing an increase in volatility due to its recent decline from a peak price of $68,000 per unit down to $21,000 at time of writing.
The IMF Will Keep an Eye on El Salvador
Despite expressing concerns over El Salvador’s adoption of bitcoin as legal tender, the IMF has stated that no major issues have arisen yet but they will continue to monitor the situation closely in order to ensure transparency and safety. Furthermore, they predict that tokenized bonds based on bitcoin may emerge in the near future due to how heavily regulated it has become in this country.
Bitcoin Price Fluctuations
The rapid fluctuations in value of BTC during this period have had a significant impact on El Salvador’s economy which is already burdened with limited resources. Many experts believe that these fluctuations could potentially lead to a sharp decline if proper precautions are not taken by authorities in order to protect citizens from any potential losses incurred from investing or using digital assets such as bitcoin.
While it remains uncertain whether or not El Salvadors dedication towards BTC will pay off in terms of economic growth or stability over time however one thing is for certain -the International Monetary Fund will continue watching closely and voicing their opinion regarding any changes or updates pertaining to this matter.
• Riot Blockchain – one of the largest and most recognized crypto mining facilities in the world – reported that January was its best month to date in terms of crypto extraction.
• Mining has taken a real hit due to inflation, energy prices skyrocketing, and bitcoin hitting recent lows.
• Despite damage from heavy storms and harsh weather, Riot Blockchain was still able to set a new record for extracting 740 BTC units from the blockchain.
Riot Blockchain Reports its Best Month
Riot Blockchain, one of the largest crypto mining facilities in the world, reported that January was its best month ever in terms of crypto extraction. The company managed to pull as many as 740 BTC units from the blockchain two months ago, their highest number ever.
Mining Becomes More Difficult
Since mid-2022, reports have suggested that mining has become much harder given the bearish sentiment of the space. 2022 saw an overall drop in all assets resulting in a loss of more than $2 trillion in valuation over 12 months with bitcoin taking a 70 percent plunge from its mid-November 2021 high into the mid-$16K range. This caused mining costs to outweigh asset scopes leading many miners to pay more for their rewards than receive them.
Riot Suffers Setbacks
Despite this success story, Riot has also been forced to shut down temporarily due to damage caused by heavy storms and harsh weather conditions in Texas where they are situated. Due to this setback, CEO Jason Les announced that they are expected to delay their target of reaching 12.5 EH/s hash rate capacity by Q1 2023.
Record Results Despite Setback
Nevertheless, Riot was still able to set a record despite such trouble and Les commented on their progress: “We are thankful for our team’s progress despite difficult weather conditions” and mentioned they were evaluating several options going forward regarding their future plans.
Hope for Miners Everywhere
This is good news giving hope not only for Riot but also miners everywhere that even though mining has become increasingly difficult due to recent market trends there is still potential profit out there if done correctly.