FTX Mulls Buying Top South Korean Exchange Bithumb

Though absolutely nothing is validated yet, talks have actually been happening for numerous months, experts state.

Key Takeaways

• FTX remains in talks with Bithumb about a prospective acquisition, a brand-new report from Bloomberg suggests.
• The 2 companies have actually supposedly remained in sophisticated talks for numerous months. A Bithumb representative commented that absolutely nothing might be validated "at this phase."
• FTX appears to be on a buying spree; it just recently got crypto loaning platform BlockFi after it suffered a liquidity crisis.

Leading crypto exchange FTX is apparently working out a possible acquisition of leading South Korean exchange Bithumb. No offer has actually been validated as of.

Advanced Talks

Sam Bankman-Fried's crypto empire keeps broadening.

According to Bloomberg, worldwide crypto trading platform FTX remains in sophisticated speak to purchase leading South Korean crypto exchange Bithumb. While no offer has actually been revealed yet, both business have actually presumably remained in conversations for numerous months.

When requested remark, a Bithumb representative mentioned absolutely nothing might be validated "at this phase."

Bithumb is among the leading central crypto exchanges in South Korea, in addition to Upbit and Coinone. Developed in 2014, it presently notes 188 cryptocurrencies. Information from CoinGecko program that Bithumb reached over $3 billion in everyday trading volume in late November 2021; the number has actually now boiled down to approximately $558 million.

The collapse of popular crypto hedge fund Three Arrows Capital has actually led several crypto business to fight with liquidity, with a few of them (such as crypto loaning company Celsius and crypto exchange platform Voyager Digital) stopping briefly consumer withdrawals and declare insolvency.

FTX CEO and co-founder Sam Bankman-Fried, nevertheless, has handled a brand-new function as the crypto market's loan provider of last hope. Through his numerous business, Bankman-Fried has actually offered credit to Voyager (pre-bankruptcy filing) and obtained BlockFi. He has actually likewise specified that over $2 billion is all set to release for additional bailouts.

The Bithumb acquisition appears not likely to be due to current market chaos, thinking about talks have actually supposedly been continuous for numerous months. Rather, FTX might be checking out broadening its existence in South Korea in a relocation similar to its 2020 purchase of Blockfolio.

Disclosure: At the time of composing, the author of this piece owned ETH and numerous other cryptocurrencies.

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After Buying $500 Million Of Bitcoin, What Will Luna Do With It?

Luna Foundation Guard (LFG) has bought over 11,700 BTC worth roughly $520 million so far this week to build a bitcoin reserve to support its stablecoin, TerraUSD (UST). While many in the Bitcoin community were quick to point out that the project is fundamentally different than those built upon on-chain bitcoin, such a significant purchase of BTC had undeniable impact on the Bitcoin ecosystem and, quite possibly, the price.

LFG is a non-profit organization based in Singapore that works to cultivate demand for Terra’s stablecoins and “buttress the stability of the UST peg and foster the growth of the Terra ecosystem.”

Terraform Labs, on the other hand, is a tech startup behind the development of Terra. The firm is currently in a legal battle with the U.S. Securities and Exchange Commission (SEC) as the watchdog alleges that Terraform Labs violated U.S. securities laws with its Mirror Protocol.

Bitcoin Magazine found LFG’s Bitcoin address after rumors online pointed at a $125 million deposit of USDT into Binance. From analyzing Binance’s Bitcoin hot withdrawal wallet, an address was spotted receiving roughly the same amount, in BTC, within a one-hour window. Terraform Labs founder Do Kwon on Wednesday confirmed via email that the address indeed belongs to LFG. As of March 25, LFG has deposited 11,759 BTC to that address over the past few days.

Earlier this month, Kwon said in a Twitter Space that Terra was planning to start acquiring bitcoin to form a billion-dollar stockpile of BTC as a reserve asset to back its main stablecoin, UST.

“$UST with $10B+ in $BTC reserves will open a new monetary era of the Bitcoin standard,” Kwon tweeted a few days later. “P2P electronic cash that is easier to spend and more attractive to hold #btc.”

What Is UST And Is It Needed?

At the core of Terra’s value proposition is the idea that Bitcoin has thus far failed its original objective — to become a peer-to-peer electronic cash system — and best functions as a reserve asset.

Terra’s white paper proposes a system of stablecoins — cryptocurrencies whose value is pegged to an asset such as a fiat currency or a commodity — to bring about the usefulness of a “stable currency” in Terra that it alleges could retain “all the censorship resistance of Bitcoin [while] making it viable for use in everyday transactions.”

However, this stepping-stone assumption — that bitcoin has failed and will never actualize as a P2P currency — is debatable. First, it can be argued that money historically follows a linear adoption phase wherein it progresses through different steps.

“Historically speaking, such a generally esteemed substance as gold seems to have served, firstly, as a commodity valuable for ornamental purposes; secondly, as stored wealth; thirdly, as a medium of exchange; and, lastly, as a measure of value,” wrote marginalist economist William Stanley Jevons.

While in its early days, bitcoin was mostly treated as a collectible item, it is now being seen more widely as a store of value, and its use as a medium of exchange and, eventually, a unit of account should follow, provided adoption keeps rising around the world. Moreover, developments like El Salvador recognizing BTC as legal tender and increasing P2P use of bitcoin in Africa are fast-tracking bitcoin’s progress as a currency and showcasing that BTC can and is already being used as money in the present.

Nevertheless, market appetite for a digital representation of U.S. dollars — the current de facto global money — is strong, a phenomenon that has helped spearhead the development of several stablecoins.

Centralized stablecoins lead the broader industry as the most popular options, with Tether’s USDT, Coinbase’s USDC and Binance’s BUSD heading the ranks, respectively. Terra’s UST, which proposes a decentralized alternative in which its one-to-one peg to the dollar is tentatively ensured algorithmically, currently trails in fourth in market capitalization.

Terra attempts to programmatically maintain UST’s dollar peg by burning $1 worth of LUNA on the Terra blockchain for every new UST created, thereby increasing or decreasing UST supply as needed. However, this setup’s sustainability is still debated.

Even Terraform Labs acknowledges in a blog post that “questions persist about the sustainability of algorithmic stablecoin pegs.”

Cryptocurrency hedge fund Galois Capital also echoed such concerns earlier this month.

“A late implosion of $LUNA would be catastrophic” as risk would spread “through the entire industry and send us into a cold, bitter and long winter,” Galois Capital tweeted earlier this month, calling LUNA the “biggest and most dangerous” example of a “doomed-to-fail” project.

Notably, Terraform Labs’ blog post mentioned above also discusses how there needs to be enough demand for Terra stablecoins in the broader cryptocurrency ecosystem to “absorb the short-term volatility of speculative market cycles” and guarantee a better chance of achieving long-term success.

Notably, the use of bitcoin as a reserve asset for UST does not make the stablecoin directly backed by BTC, as its peg is still related to the dollar, but only establishes an indirect peg. Terra intends to increase the demand for the alternative cryptocurrency by leveraging Bitcoin’s more well-established reputation as a vote of confidence for users, as a sharp drop in the demand for UST could risk the stablecoin’s ability to maintain its peg.

“Adding a BTC reserve helps the Terra protocol to scale demand more effectively by providing a separate backstop (from the Terra protocol) to volatile redemption periods with a hard asset,” a Terraform Labs spokesperson told Bitcoin Magazine. “It also confers more confidence in peg sustainability by users who want a decentralized stablecoin supported by a credibly neutral reserve asset like bitcoin.”

Bitcoin Reserves As A Release Valve For UST

According to the current proposal, the idea is to construct a BTC reserve pool setup that can quickly support UST — and indirectly LUNA — in times of crisis when the stablecoin slides and ends up trading below its $1 peg.

During such a crisis, retail would then be given the opportunity — and presumably, economic incentive — to exchange their depreciated UST for an equal amount of bitcoin. The assumption is that Bitcoin’s enduring success over the years poses it as an attractive asset for investors seeking to “fly to safety” in the midst of a crisis. LFG would then supply them with the BTC they want at a discount, while getting UST back and thereby ensuring demand for the algorithmic stablecoin. (For example, if UST was trading at $0.99, an investor could send 1 UST to the LFG bitcoin reserves pool and receive $0.99 worth of BTC back.)

After the period of crisis ends, LFG assumes that UST would be back to its $1 peg, or even trade at a premium — above the $1 value mark. The foundation would then slowly replenish its bitcoin reserves by selling the UST reserves it accumulated during the crisis period in exchange for BTC. This assumes traders would be interested in making that arbitrage and exchanging their BTC for a then-appreciated UST.

A visual description of the minimum-viable product for the BTC reserve pool, according to Terraform Labs’ research paper. Source: Terra.

The paper outlines that the reserve pool will launch with around $2.5 billion worth of bitcoin in reserve and later grow through revenue obtained from seigniorage — minting and burning tokens on Terra.

LFG recently raised $1 billion to start allocating funds to its BTC pool in an over-the-counter, private sale of LUNA tokens to a cohort of venture capitalists, including Jump Crypto and Three Arrows Capital.

As Adam Back, cypherpunk and CEO of Bitcoin infrastructure company Blockstream, has noted, “VCs/institutional investors seems a bit like a private fractional reserve dollar, a pegged parallel currency that they hope tracks USD via marker” — an assessment Kwon doesn’t disagree with.

Bitcoin Reserves? More Like Synthetic BTC

According to the research paper, LFG’s pool will not be made up of actual BTC, but of wrapped BTC instead — a synthetic one-to-one representation of actual BTC that will supposedly be kept locked up and guarded on the Bitcoin blockchain.

This change is arguably required so the pool can operate natively on Terra on a smart contract basis for its liquidity needs as it arbitrages BTC and UST. Consequently, however, retail investors and traders who exchange value to and from LFG’s pool will deal with wrapped BTC instead of actual BTC. The paper details that the wrapped bitcoin will be likely implemented in the CW20 standard.

However, most of the details about the wrapping process, including custody, tradeoffs in its trust model, and its functioning thereafter are still unclear. Moreover, the process by which users who arbitrage UST for wrapped BTC will be able to get actual on-chain bitcoin is also unclear at this point.

“The actual specifics of wrapping native BTC are still under consideration (including bridging details) and more information will be released at a later date, but the goal is for a non-custodial, on-chain model of the BTC in the reserve,” the spokesperson said.

As such, those who seek investment in bitcoin as a permissionless and sovereign asset that serves as a decentralized alternative to fiat currencies or cryptocurrencies governed by powerful third parties should not confuse UST with BTC.

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Purchasing And Selling Real Estate With Bitcoin In 2022

Bitcoin hasactually developed a brand-new type of wealth, especially for those who bought bitcoin at its leastexpensive worth. Bitcoin is being utilized in over 270,000 deals everyday, and its use is just increasing.

So, why not usage your Bitcoin to make your genuine estate deals? This guide will discuss whatever you requirement to understand about residentialorcommercialproperty deals including bitcoin.

How To Make Your Real Estate Transactions Using Bitcoin

Finding Real Estate Agents That Use Bitcoin

When utilizing bitcoin to make your real estate deals, you should be mindful of genuine estate representatives and business that have experience of utilizing bitcoin in the sale or purchase of a house.

Some genuine estate representatives that have experience utilizing bitcoin consistof:

• Magnum Real Estate Group - This is a New York-based genuine estate business adjusted to the moreyouthful generation’s desire to make business deals utilizing bitcoin possible.

• Kuper Sotheby’s International Realty - This Texas-based genuine estate business was the first in Texas to make a genuine estate deal utilizing Bitcoin.

• Sand Key Realty - This genuine estate business is Florida-based and has a history of listing homes for sale, with the seller accepting bitcoin as the kind of payment.

• Open Listings - websites like Open Listings are making it mucheasier to purchase houses utilizing bitcoin, with choices to limitation search results to homes being offered for bitcoin.

The future of genuine estate is altering to accommodate the usage of bitcoin in home deals, and more genuine estate business are helpingwith bitcoin deals. In truth, bitcoin is endingupbeing as popular an financialinvestment as genuine estate.

Using Bitcoin To Purchase A Property

If you strategy to usage bitcoin to purchase a home, you needto veryfirst inquire whether the seller is accepting bitcoin. If the seller does not accept bitcoin, you should transform your cryptocurrency into conventional currency utilizing a third-party site.

If the seller accepts bitcoin, you should workout the sale cost in bitcoin.

You might just usage bitcoin to purchase a home if you do not requirement to acquire a homemortgage for the home, like a money purchaser. This is since banks are reluctant to accept bitcoin, partially because of its associations with cash laundering, and it is an unsteady currency.

Once the sale hasactually been workedout, you should likewise figure out the technique of payment if your genuine estate representative charges can’t be paid utilizing the currency.

Using Bitcoin To Sell A Property

If you dream to sell your home in exchange for bitcoin, you should veryfirst discover a genuine estate business that has experience utilizing bitcoin to make genuine estate deals (see the list above for assistance).

When listing your residentialorcommercialproperty, you needto identify whether you are listing it just for bitcoin purchasers or if you are prepared to accept other cryptocurrencies or standard currency. Once it is noted, purchasers will make uses in your chosen currency, and you can accept the deal and sell your house for Bitcoin.

Buying A Home With Bitcoin: The Benefits And Disadvantages

There are numerous benefits to acquiring a house utilizing bitcoin, consistingof:

• If you haveactually made a earnings from investing in bitcoin, purchasing residentialorcommercialproperty utilizing the currency is a terrific method to combine your revenues.
• Investing in residentialorcommercialproperty offers you a possibility to diversify your possessions.
• Real estate deals favor money purchasers, and utilizing bitcoin is like being a money purchaser, which can offer you more workingout power

However, there are likewise some disadvantages to purchasing a house with bitcoin, consistingof:

• One of the disadvantages of getting a residentialorcommercialproperty utilizing bitcoin is the absence of sellers. There is restricted accessibility of homes being offered for bitcoin, and you might have a difficult time finding homes in your preferred place.
• If you choose to invest in home, you might missouton out on future gratitude and returns on your bitcoin.
• You will requirement to employ the aid of a tax professional, as making genuine estate deals can be quite complex in terms of taxes.

Selling A Home With Bitcoin: The Benefits And Disadvantages

Some of the benefits of selling a house utilizing bitcoin consistof:

• The possibility of gratitude provided by owning bitcoin.
• If you open up the sale of your house to bitcoin purchasers, you will broaden your audience and drawin more money purchasers.

Some of the disadvantages of selling a house utilizing bitcoin consistof:

• The possibilities of gratitude are similarly weighed with the possibilities of bitcoin’s worth diminishing, resulting in losses.
• The intricacy of taxes included in bitcoin genuine estate deals uses to both the seller and the purchaser.
• You will likewise requirement to develop a protected virtual wallet for your brand-new bitcoin, which might include employing aid, depending on how skilled you are in cryptocurrency storage.

Summary

Like lotsof other deals, genuine estate deals are beginning to accommodate the usage of bitcoin to buy and sell homes. Since bitcoin is an emerging currency, there are limitations to the sellers, purchasers, and genuine estate business ready to offer in bitcoin.

However, selling with bitcoin is undoubtedly possible and grants sellers the chance for gains with bitcoin. Buying with bitcoin likewise uses purchasers the possibility to combine their revenues and diversify their financialinvestment portfolio.

This is a visitor post by Paul Gilbert. Opinions revealed are totally their own and do not always show those of BTC Inc or Bitcoin Magazine.

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