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Water & Music’s Cherie Hu says Web3 and AI will revolutionize creativity: The Agenda

Water & Music founder Cherie Hu explains how technology is evolving the music industry — but is it to the benefit of musicians?

Curiosity might have killed the cat, but for musicians, it’s often the launchpad of creativity and innovation. 2023 saw the rapid growth of OpenAI’s powerful ChatGPT artificial intelligence tool, and technologies like Midjourney and Dall-E have provided content creators the ability to literally become a one-man band — or a one-person production studio.

Keeping pace with the rapid evolution of technology and its impact on relevant industries can be a challenge for the average busy person, and one of the goals of Water & Music is to offer a more research-backed approach for music industry professionals to inspect, discuss and experiment with new technologies.

On Episode 19 of The Agenda podcast, hosts Ray Salmond and Jonathan DeYoung speak with Cherie Hu, the founder of Water & Music — “an independent newsletter and research community on a mission to make the music industry more innovative, cooperative, and transparent.”

Change is inevitable

When asked about what’s new in the music industry, Hu recognized that “the old music business very much was driven by a small group of gatekeepers,” and she suggested that the pandemic, new technology and perhaps even some of the ideology that backs the Web3 movement would eventually change this status quo.

“The pandemic, I think, woke a lot of people up,” Hu said. “I think it encouraged people to become a lot more proactive about speaking out about and advocating for changes that they wanted to see.” She added:

“A lot of the most critical, like deeply critical, conversations I’ve heard about streaming have come in the last three years just because, due to the pandemic, artists were put in a position where they had to essentially rely solely on digital sources of income to make ends meet without touring. And then they look at their streaming checks and are like, ‘This is this is nothing. I can’t live off of this.’ And so, there have been a lot more productive conversations around alternative models to monetizing music in a digital context. Web3, of course, has played a huge, huge role in this.”

Historically, breaking into the music industry meant artists either needed to know the right people to get picked up or be able to fund their endeavors in a way that created enough ripples to capture a wider audience. Hu believes that within the traditional music industry, “a lot of those mechanisms haven’t really changed for like the last 10, 20, even 30 years,” but she also acknowledges that new technologies have opened up new methods for creators to completely circumvent the conventional path to success.

Hu said:

“The way that culture is moving, especially if you look at apps like TikTok and the impact that ecosystem has on music culture and what music, what songs get big, it just moves so quickly. The unfortunate part of the music industry is that the financing element has not caught up to it.”

According to Hu, Water & Music aspires to take a more analytical approach to how the music business is evolving and being impacted by emerging technologies.

“So when we think about the new music business, we definitely focus on new technologies that enable people to participate in the music industry. You know, whether it’s creating music, marketing music, building communities around it, monetizing it in totally new ways. We’re interested in that entire stack.”

Related: 5 AI trends to look forward to in 2023 and beyond

Web3 ideas and practices could become endemic to the music industry

Blockchain-based gaming, nonfungible token collections and other Web3 gimmicks were all the rage in 2020 and 2021 when the broader crypto space was in a bull market, but host Salmond wondered how relevant these tactics are today, particularly in the music industry.

Hu explained that with gaming, there are currently “more opportunities for building experiences than for monetizing them and building a business out of them. I would say that element is still missing and still challenging for a lot of indie artists.”

The infrastructure, time and overhead required to build out entire worlds is labor-intensive and not necessarily proven to be sticky, except for major gaming platforms like Roblox. Hu explained that a more pragmatic opportunity for artists might be sync licensing. According to her:

“Sync, or synchronization, licensing is the music industry term for licensing music for any kind of audio-visual multimedia experience, so like a film or a podcast or a game. And there are actually a lot of mobile games, especially, which I think is probably one of the more underexplored areas of music and gaming partnerships. You normally think of these huge games like League of Legends or Fortnite, but there are a lot of emerging mobile games, a lot especially built around music, that are looking for partnerships with the music industry.”

To hear more from Hu’s conversation with The Agenda — including her deeper explanation of how subscribers have benefited from the research published by Water & Music — listen to the full episode on Cointelegraph’s Podcasts page, Apple Podcasts or Spotify. And don’t forget to check out Cointelegraph’s full lineup of other shows!

Related: AI music sending traditional industry into ‘panic,’ says new AI music platform CEO

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

Blockchain takes the stage at Longevity+DeSci summit in New York

This year’s Longevity+DeSci Summit in New York City showcased several decentralized solutions.

Those seeking to slow the progress of time spent a few days immersed in that possibility from Aug. 10–11 at the Capitale conference hall in downtown New York City. 

There, the sixth-annual Longevity+DeSci summit convened for its third in-person event — sequestered to online sessions amid the COVID-19 pandemic — following successful editions at the Cooper Union.

This year also marked the first time that the event’s organizer, Lifespan.io, included decentralized science (DeSci) in the title, despite the growing phenomenon’s close ties to the field of longevity.

DeSci on the rise

Decentralized science has proven a hot byproduct of blockchain’s emergence that researchers and investors are watching — even if the principles underpinning it date back to the early 2000s. Simply defined, DeSci is science that takes place outside of traditional academia.

In his opening remarks on the conference’s first day, mathematician and programmer turned Disney tech head Keith Comito — who founded Lifespan.io in 2014 — likened DeSci to the Jimmy Fund, an advocacy group that conducted telethons throughout the last century to raise awareness and money for cancer research, catapulting their cause to a global health priority.

Attendees line up. Source: Lifespan

Nevertheless, blockchain technology and its many emergent phenomena like play-to-earn (P2E) games and decentralized autonomous organizations (DAOs) have empowered a new chapter in DeSci, opening channels for ambitious biotech firms to fund exploration into their endeavors and forego the narrow pathways to finite (and competitive) National Institute of Health (NIH) grants.

Todd White, steward of the Coordination Working Group at VitaDAO, spoke to this facet of the DeSci equation in his keynote remarks, which truly kicked off the conference’s inaugural morning.

Researchers angling for NIH grants battle for peer-reviewed publications, which are a necessary prerequisite for those funds. Some perceive the process as cliquey, but it protects the scientific process.

However, longevity science still suffers distinct, lingering and perhaps unfair perceptions from traditional researchers. Before the advent of artificial intelligence or camera phones, the possibility that human beings could live for thousands of years seemed like the stuff of science fiction. Those who wanted to “cure aging” said instead they were working on an age-related disease like Alzheimer’s. But technology is advancing, and with it, our collective visions for the future. Massive investments in the field show there’s a shift afoot.

Longevity science’s challenges, and blockchain solutions

Thus far, longevity science’s loudest proponents have been eccentric wealthy people proclaiming they want to live forever. Much like many blockchain supporters can understand, those folks have only worsened longevity science’s image problem. Their presence has drawn attention but also overshadowed the profound possibilities that advancements in each field would pose.

Conference attendees had their feet somewhat on the ground throughout the event’s two-day program of concurrent presentations, panels and workshops.

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Despite the occasional necessary rigor in their post-presentation questions, no one outright named any skepticism about the cause at hand, such as living an extra fifty frail years, overpopulation or whether we’ve made a world worth living in longer. Instead, they questioned practical processes.

But still, anyone who might’ve come into Lifespan’s conference with their mind already made up in opposition would have been met with open ears and strategic explanations. Rather than seeking to “live forever,” there was a sense that longevity research means treating the cause of conditions rather than conditions themselves, which some academics have likened to a game of Whac-A-Mole.

So longevity science’s game at this moment is many-fold. This year’s event continued its focus on fostering interdisciplinary interactions that not only benefit longevity research but also help policy advocates, fundraisers and others share ideas that might not arise naturally in existing silos.

There was, of course, a heavier focus than ever on DeSci, through the lens of its new blockchain capabilities. But on day one, Dr. Vadim Gladyshev of Harvard Medical School presented facets of his research into longevity signatures and treatments; Yuri Deigin of cutting-edge gene therapies developer YouthBio Therapeutics discussed the biotech firm’s studies into cell reprogramming; and Omar Elnaggar, the founder and CEO behind Web3 security framework Weavechain, spoke between both Gladyshev and Deigin’s presentations, debuting a dynamic nonfungible token (NFT) his team developed for the event to support current intentions to gamify philanthropy.

Gladyshev presents at the event. Source: Lifespan

Participants were encouraged to mint their own NFT and then drop it into high-profile wallets, with the token accruing donations along the way. At charitable milestones, new visual elements activate.

Intellectual property-NFTs also proved a hot topic at the intersection of longevity science and blockchain tech. These fractionalized approaches to funding research appeared in University of Copenhagen associate professor Dr. Morten Scheibye-Knudsen’s talk on the Longevity Molecule Project, which outlined its work and how the new tech helped make it possible.

Kelsey Moody, CEO of Ichor Life Sciences, gave an illuminating outline of a drug’s pipeline from discovery to approval, illustrating the current trend of Big Pharma increasingly outsourcing that pipeline’s initial stages to contract research organizations like his, which handle and conduct early testing.

Moody also shared an interesting but contentious use case from Ichor where a “high net worth individual” with a dangerous heart condition approached his firm to determine whether he was part of the clinical or placebo group in a trial for a cutting-edge new treatment.

While those tests ran, Moody’s team then devised a backup plan to treat him — for the cost of a small house in certain semi-rural suburbs.

Fortunately for the client, they learned they were getting the treatment, but this raises questions about the ability of high-net-worth individuals to skirt a blinded study — a critical element in medical research that, if compromised, could spoil the study entirely.

If any conference attendees had ethical questions about Moody’s story, no one said anything. The closest they came was in the Q&A following a presentation by Kennedy Schaal, senior biologist at Rejuve AI, a biotech firm with numerous objectives around decentralizing science, like creating a process for gamified remote clinical studies. One attendee asked how it verifies the results of home tests. Schaal said the firm hadn’t thought about it; it just believed people would act with integrity.

In-person, interdisciplinary problem solving

Disney’s Comito told Cointelegraph that Lifespan’s conference differentiates itself with its commitment to reaching maximal participants. That’s why tickets are much cheaper than the many-figured fees or background checks customary to exclusive events like the Longevity Investors Conference in Gstaad, Switzerland, in 2022.

Not only does this approach increase Lifespan’s reach in evangelizing its mission, but the strategy also helps foster desired collaborations among the conference. Writers came across each other in the crowd, for instance, to share ideas on covering this rapidly evolving field.

A dedicated panel discussed DAOs and decentralized tech in longevity biotech. Source: Lifespan

Fundraising is a typical outcome of the event, and Comito announced that Lifespan had partnered with the development team on a Dragon Tyrant P2E game that will contribute to longevity research.

Panel discussions proved the conference’s most interesting part. In a regulatory discussion at the end of the first day, Montana State Senator Kenneth Bogner presented Alliance for Longevity Initiatives founder Dylan Livingston with the pen that Montana Governor Greg Gianforte had used to sign legislation they’d worked on together.

There are a lot of big personalities in the space at present, and on several occasions, those panels persisted in arguing semantics. But at this stage in the game, perhaps that’s the thing to be done.

Recent: PayPal’s new PYUSD stablecoin faces legal headwinds and ‘less functionality’

Thus, the big questions dogging longevity science right now are manners of labeling: Comito called a biomarker for aging, a shifting variable to quantify it — one of the science side’s holy grails.

Meanwhile, messaging is proving critical on the policymaking and fundraising fronts. Whether or not anyone really believes in living forever, it seems that society might change the way it regards health. An earlier panel discussing whether reversing aging is truly possible dwelled at length on the importance of understanding the body in terms of systems rather than isolated parts. The same approach applies from longevity science to DeSci, and the tech emboldening both.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

Bitcoin mining researchers claim new tech ups winning hash chance by 260%

U.K.-based research company Quantum Blockchain Technologies has developed algorithmic search methods that boost Bitcoin mining efficiency and reward probability.

Quantum Blockchain Technologies (QBT), a research company based in the United Kingdom, has developed artificial intelligence-powered algorithms that could significantly increase the mining winning probability of certain ASIC Bitcoin (BTC) miners, CEO Francesco Gardin said in an interview with Cointelegraph.

Speaking exclusively to the publication, Gardin unpacked how Quantum Blockchain Technologies (QBT) has incorporated AI to enable the smart search of winning hashes as an alternative to conventional random searches.

In the space of two years, the company has developed a number of different patented methods by tapping into the expertise of some twenty experts from the fields of quantum computing, machine learning, cryptography, ASIC chips design and algorithm optimization theory.

Related: Bitcoin miners still bullish despite toughest bear market yet — Hut8, Foundry, Braiins

QBT’s machine learning teams have developed two different algorithmic search methods which reportedly improve performance of ASIC miners by increasing efficiency and winning result probabilities.

“Method A” is said to improve miner efficiency by 10% while “Method B” is set to improve the probability of a miner finding a winning has by 260%.

Gardin said that the company is looking to explore three specific areas, starting with a short term target of increasing mining performance of existing commercial ASIC chips by adding a software AI component running on a mining rig.

The team is also designing a new architecture for ASIC mining chips to optimize Bitcoin mining, which it detailed in a recent patent application.

Meanwhile QBT has a long term goal of using quantum computers to mine Bitcoin using an in-development SHA-256 computation method that can operate on quantum computing systems.

QBT announced a patent application in July 2023 for the latter, outlining its architectural change to Bitcoin mining ASIC chips which it claims pre-processes data used by future blocks on the Bitcoin blockchain.

Gardin said the QBT Message Scheduling for Cryptographic Hashing ASIC (MSFCA) is able to perform pre-calculations of future BTC blocks before the current block is closed. The “anticipatory resource efficiency algorithm” reduces logic gates of SHA-256 ASIC architecture.

Logic gates are software or hardware devices that carry out logical operations. According to Gardin, MSFCA allows miners to use less logic gates, lowering energy costs and improving efficiency of ASIC mining hardware.

Related: Tether’s game plan in El Salvador: Why invest in Volcano Energy?

The firm estimates that miners could free up to 8% of logic gates of SHA-256 ASIC chips by pre-processing data used by future blocks on the Bitcoin blockchain, which would make certain logic gates involved in the computation of that data no longer necessary on the ASIC chip.

Gardin also weighed in on the potential for these new methods to influence the Bitcoin mining industry. The QBT said that BTC mining is highly dependent on hardware configurations and hashing power of miners as well as expending considerable amounts of energy.

Gardin added that the probability of finding the winning hash increases with the number and halving speed of a miners’ fleet or an entire pool as well as the corresponding cost of energy while conducting a “completely random search”.

“There are no methods, intelligence, or strategy in current BTC mining, but simply brute force and luck.”

Although the mining rigs market is dominated by just a handful of ASIC manufacturers, Gardin believes that there are minimal differences, features or distinct advances between hardware aside from differences in hashing rates and power consumption.

He added that QBT’s technology, which was mainly developed using Intel’s Blockscale ASIC chips which were recently pulled from production, would provide advantages to any mining rig.

The firm’s technologies are being touted to give an “uncatchable advantage” using AI and SHA-256 optimization and while QBT does not plan to open source its patented methods, Gardin said QBT is considering different options to take its solutions to the Bitcoin mining market.

This could include subscription, licensing, forming a joint venture or outright purchase of the company and its associated technologies.

Magazine: Bitcoin is on a collision course with ‘Net Zero’ promises

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

Sequoia slashes its crypto fund by 66% after industry collapses: Report

The $85-billion venture capital firm launched the Sequoia Crypto Fund in February 2022.

Venture capital giant Sequoia Capital reportedly downsized its cryptocurrency fund from $585 million to $200 million, amid a liquidity crunch and a pivot away toward smaller crypto players.

According to a July 27 Wall Street Journal report, the tech-focused VC firm told investors in March it would reduce its Sequoia Crypto Fund — along with its ecosystem fund — to better reflect changed market conditions.

The cryptocurrency fund will now focus more on backing early-stage startups, given the recent crypto industry turmoil that took away many of the opportunities to back larger companies.

Another motive behind the cuts is to lower the capital threshold and thus the barrier to entry for investors to partake in Sequoia’s fund offerings, according to the sources.

“We made these changes to sharpen our focus on seed-stage opportunities and to provide liquidity to our limited partners,” reportedly said Sequoia in remarks to the Financial Times. The firm added it had returned more than $15 billion to investors over the past three years.

The firm’s cryptocurrency fund launched in February 2022, when the market cap of the cryptocurrency market was 39.1% down from its all-time high of $3 trillion in November 2021.

One of the firm’s toughest blows in recent times was its $214 million investment into the now bankrupt FTX, which the firm later marked down to $0.

Cointelegraph reached out to Sequoia Capital for comment but did not receive an immediate response.

Related: Crypto VCs share lessons on startup success at EthCC

Sequoia’s reported move is reflective of a broader trend among venture capital firms that are choosing to downsize their cryptocurrency bets.

Venture capital investments fell 29.7% in June, with $779.32 million raised across 62 separate deals, according to data from the Cointelegraph Research Venture Capital Database.

Venture capital inflows have fallen 77.7% from June 2023 compared to June 2022.

VC fund inflows into the cryptocurrency market over the last 12 months. Source: Cointelegraph Research

However not every VC firm is reducing its cryptocurrency portfolio.

Polychain Capital and Coinfund recently raised $200 million and $152 million for respective investment and seed funds earlier this month.

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Crypto VC funding tumbles as economic uncertainty scares off investors

June rejected the three-month trend of rising venture capital investment into crypto, though that’s not necessarily a bearish signal.

The month of June closed out with a 29.73% decrease in venture capital investments, with just $779.32 million raised in 62 individual deals, according to data from the Cointelegraph Research Venture Capital Database. While the United States Federal Reserve halted interest rate hikes in June, the macroeconomic climate remains unchanged due to geopolitical uncertainties and continued efforts to tame inflation across the globe. As the data shows, investors remained cautious and in risk-off mode in June, with the growth trend of the previous three months coming to a halt.

Purchase access to the Cointelegraph Research VC Database.

However, that is not necessarily a bearish signal, as the overall trend for 2023 is still upward. Plus, the recent batch of Bitcoin exchange-traded fund (ETF) applications from the likes of BlackRock, VanEck, WisdomTree and Fidelity as well as Ripple’s legal victory over the Securities and Exchange Commission have helped brighten the mood. The crypto market instantly reacted to those positive events, but VC investments are always a lagging indicator, as institutions tend to be more inert and cautious. It is also important to note that VC activity may be tempered by the uncertainty of overall global economic conditions.

Blockchain infrastructure still dominant

The Cointelegraph Research Venture Capital Database reveals that the breakdown of deals in June didn’t drastically change and that the investment focus of VCs remained relatively stable. Blockchain infrastructure still led the market with 20 individual deals and over $493 million in funding.

Decentralized finance (DeFi) won back some ground with 20 deals and over $144 million invested. Surprisingly, Web3 was less popular for venture capitalists in June, with about $107 million over 18 deals. Centralized finance (CeFi) and nonfungible tokens (NFTs) again closed out the list with about $32 million and $2 million of investment and one and three individual rounds, respectively.

The largest deal in June was Islamic Coin’s (ISLM) $200 million raise from Alpha Blue Ocean’s ABO Digital. The project aims to create a digital financial instrument for Muslims around the globe, and its total funding has surpassed $400 million. Far behind Islamic Coin was the $43 million Gensyn deal led by a16z Crypto with participation from CoinFund, Canonical Crypto and others. Gensyn is a blockchain-based artificial intelligence project connecting buyers and sellers of compute power.

Another entry on the list is Mythical Games, which raised $37 million in Series C deal led by Scytale Digital with participation from ARK Invest, Animoca Brands and others. The funds will be used to launch a new marketplace and pursue other revenue-generating initiatives. Bitpanda Pro, meanwhile, closed a Series A round for $33 million led by Peter Thiel’s Valar Ventures and rebranded to One Trading. The round will help expand its reach to professional traders and institutions throughout Europe.

While March, April and May saw VCs increase their capital inflows into the blockchain space, the trend was rejected in June, signaling that more uncertainty may lie ahead. However, slight deviations month-to-month are less important than the overall trend, which is steadily rising. With the spot ETF fillings and Ripple-SEC lawsuit yet to impact the crypto venture capital market, July and August are expected to offer indications of which will have greater weight — general macroeconomic conditions or crypto market hype events.

To keep on top of VC activity, follow the Cointelegraph Research VC Database, which is updated weekly and tracks over 6,000 deals from 2012 through the present day.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

How the spot Bitcoin ETF filings affected the crypto industry in June: Report

The competition among zk-Rollup-based scaling solutions is tightening while the security tokens market continues steadily.

The news surrounding BlackRock’s application for a spot Bitcoin (BTC) exchange-traded fund (EFT) sent the asset’s price from its local lows in mid-June to a strong monthly close of +12%. To most observers, this was a sign that institutional investment into the cryptosphere is once again on the horizon. A future approval of a spot ETF combined with rate cuts from the United States Federal Reserve could provide the ideal catalysts for the next bull run.

For those keen to gain a deeper understanding of the crypto space’s various sectors and their fundamental trends, Cointelegraph Research publishes its monthly “Investor Insights Report,” which dives into venture capital, derivatives, decentralized finance (DeFi), regulation and much more. This month, Cointelegraph Research examined how various sectors reacted to the bullish news surrounding BlackRock’s ETF filing with the U.S. Securities and Exchange Commission.

The report is available for free on the Cointelegraph Research Terminal.

While crypto-related stocks, especially those of mining ventures, immediately benefitted from the news, other sectors traditionally tied closer to altcoin activity, such as DeFi, continued in bear-market mode unperturbed.

Zk-Rollups race heating up ahead of next bull run

Many suspect that novel layer-2 scaling solutions for Ethereum will be among the big gainers in the next bull run. However, the competition in the space is tight. Zero-knowledge (ZK) rollup technology, which allows a shortened summary of transaction batches and smart contract executions to be submitted to the chain, will arguably be the biggest area of innovation in this crypto market cycle.

ZkSync Era’s ZK Stack, Polygon zkEVM and StarkWare’s Starknet have all been in the news for their recent or newly proposed innovations. But what does the data say about the relative success of these projects?

In June, Polygon zkEVM outperformed zkSync and Starknet in terms of growth in total value locked (TVL), gaining an impressive 71% month-over-month. However, it still lags an order of magnitude behind the dominant zero-knowledge protocol, zkSync, which currently has a TVL of $120 million.

The recent growth of zkEVM can be attributed to the slew of DeFi protocols it has attracted — such as QuickSwap, Balancer and SushiSwap — with many more in the pipeline. These and other recent developments are discussed every month in the DeFi section of the Cointelegraph Research Monthly Trends Report.

Security tokens market chugs along unperturbed

Security tokens are a remarkable sector of the industry in that they seem to have continued their modest but steady growth throughout the bear market, apparently unphased by the ETF filings that rocked the rest of the market.

During the first half of the year, the total market capitalization of security tokens rose from $14.93 billion to $16.76 billion, as seen in the figure below. The 1.65% growth seen in June was connected to several notable deals and security token offerings (STOs).

Though the development of tokenized securities is controversial in the crypto community, banks such as Citigroup and Bank of America have predicted that the tokenization of real-world assets may drive trillions of dollars to blockchains in the future. While most securities offerings currently involve real estate, other types are quickly gaining pace. With a section on STOs, Cointelegraph Research’s monthly Investor Insights Report covers this lesser-known part of the crypto industry — one that may ultimately grow into a multitrillion-dollar sector.

The Cointelegraph Research team

Cointelegraph’s Research department comprises some of the best talents in the blockchain industry. Bringing together academic rigor and filtered through practical, hard-won experience, the researchers on the team are committed to bringing the most accurate, insightful content available on the market.

Demelza Hays, Ph.D., is the director of research at Cointelegraph. Hays has compiled a team of subject matter experts from finance, economics and technology to bring the premier source for industry reports and insightful analysis to the market. The team utilizes APIs from various sources to provide accurate, useful information and analyses.

With decades of combined experience in traditional finance, business, engineering, technology and research, the Cointelegraph Research team is perfectly positioned to put its combined talents to proper use with the latest Investor Insights Report.

The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

Researchers demonstrate ‘unconditionally secure’ quantum digital payments

The research represents a possible breakthrough in quantum communications and, potentially, the onset of the era of quantum fintech.

The dream of a completely secure, unhackable, absolutely private digital payment system could soon be realized thanks to new research out of the University of Vienna.

In a paper published on July 4 titled “Demonstration of quantum-digital payments,” a team of researchers at the Vienna Center for Quantum Science and Technology showed off what may be the first “unconditionally secure” digital transaction system based on quantum mechanics.

To accomplish this, the researchers encrypted a payment transaction using a pair of quantum entangled photons. Through this entanglement, wherein any change in the state featured by one photon is reflected exactly in the other photon, even when separated by distance, the researchers were able to ensure that any attempts to modify the transaction are thwarted by the nature of quantum mechanics itself.

Per the researchers’ paper:

“We show how quantum light can secure daily digital payments by generating inherently unforgeable quantum cryptograms.”

One of the most useful features of quantum entanglement is the fact that we can’t know what state an entangled object is in until we measure it.

A simple way to understand quantum mechanics and measurements is to imagine flipping a coin and then catching it and covering it with your hand before you or anyone else can see what side it landed on. Until you remove your hand, it can be heads or tails with equal probability. Once measured, the uncertainty collapses and you have a measurement.

Scientists can exploit this by using entangled objects, such as photons, to ensure parity and send information that can’t be modified or intercepted.

Related: History of computing: From Abacus to quantum computers

Thus, the researchers generated entangled photons using a laser process and encoded them with transaction information. The photons were then sent through over 400 meters of fiber optic cables to successfully complete a digital payment transaction between parties in different buildings.

Were a bad actor to attempt an adversarial attack on such a transaction, the quantum state of the photons would collapse due to measurement, and the system would generate a new pair of entangled photons with a novel, unforgeable cryptogram.

While it’s possible this could represent a breakthrough in quantum communications for digital payments, there is one small caveat: Currently, the researchers say it takes “tens of minutes” for a simple digital payment to complete using the method.

However, this limitation may only be temporary, as the researchers are adamant that this isn’t a hard stop due to the laws of physics but just a minor technological limitation — one that might be resolved through higher-intensity photons.

“Indeed, brighter sources of entangled photon pairs have already been demonstrated, which could decrease the quantum token transmission time to under a second,” wrote the authors.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

How to use DeFi the right way — This latest guide can help

This latest report is a guide to help the next generation of cryptocurrency users and veterans alike in the ways of decentralized finance.

The cryptocurrency market saw an explosion of growth during the 2021 decentralized finance (DeFi) Summer and increased fear of missing out (FOMO), which drove prices of Bitcoin (BTC) and much of the cryptocurrency market to all-time highs. During that time, the total value locked (TVL) across DeFi rose to nearly $180 billion before crashing down to earth. 

After the past few weeks of the BTC price crossing the $30,000 threshold, some are speculating if the market is gearing up for another bull run. That could signal interest from both veterans of past cycles and those new to crypto to get interested in DeFi, and Cointelegraph Research’s latest report is here to help give insights to past, present and future DeFi users.

Download the report on the Cointelegraph Research Terminal.

“Investing in DeFi: A Comprehensive Guide” report is a perfect start for those new to blockchain, giving an overview of DeFi. Throughout the report are links and references to all the useful resources and tools to help individuals conduct their own due diligence before investing in anything. Cointelegraph Research and Cointelegraph Markets Pro collaborated on several areas of the report to bring tips and tricks to help DeFi users with fundamental analysis to help mitigate the risks associated with investing in cryptocurrencies.

More growth for DeFi in the near future?

Before investing in DeFi, it would be important to know the potential for the sector to grow if there is increased interest in the future. If we look at the chart below of DeFi’s dramatic rise during the 2021 DeFi Summer, it would seem to indicate that there is plenty of room to grow to at least the levels achieved during the last bull cycle.

There is no guarantee that the crypto markets will replicate the move, but it does indicate that there was at one point a market appetite for DeFi at these levels. The question potential investors have to ask themselves is: “Is there more or less adoption today than in the past?” and “Could there be more or less adoption in the future than today?”

So many tools, so little time

Unlike the early days of cryptocurrency, there is a multitude of different tools and applications at DeFi participants’ fingertips. It would be impossible to put all of the different solutions that have been founded and launched into one chart.

The illustration below serves as a starting point for DeFi investors to begin researching the different protocols and possible investments in the cryptoverse. Cointelegraph Research’s latest report is a starting place to help bring new people into the world of DeFi.

The Cointelegraph Research team

Cointelegraph’s Research department comprises some of the best talents in the blockchain industry. Bringing together academic rigor and filtered through practical, hard-won experience, the researchers on the team are committed to bringing the most accurate, insightful content available on the market.

Michael Tabone is the deputy director of research at Cointelegraph. The research team comprises subject matter experts from across the fields of finance, economics and technology to bring the premier source for industry reports and insightful analysis to the market. The team utilizes APIs from a variety of sources in order to provide accurate, useful information and analyses.

With decades of combined experience in traditional finance, business, engineering, technology and research, the Cointelegraph Research team is perfectly positioned to put its combined talents to proper use for its “Investing in DeFi” report.

The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

Robust crypto fundamentals pull through after May’s monthly red candle: Report

What are the current trends in VC investment in the crypto sector, and when will the bear market finally end?

In May, Bitcoin (BTC) posted its first monthly loss since December 2022 with a negative 6.98%. However, this consolidation was not obviously driven by a change in fundamentals or the broader macroeconomic environment. The crypto market was looking for direction and liquidity in this phase before the United States Federal Reserve announced a pause on the rate hiking cycle in June. 

Many indicators, such as the futures market and VC investment, point to an optimistic underlying sentiment. But while traditional markets and tech stocks were able to continue their rally in May, actual price action in the crypto market remained suppressed and took some time to spring from its woodworks.

The report is available for free on the Cointelegraph Research Terminal.

For those keen to gain a deeper understanding of the crypto space’s various sectors and their fundamental trends, Cointelegraph Research publishes a monthly Investors Insights Report that dives into venture capital, derivatives, decentralized finance (DeFi), regulation and much more.

Mining stocks rally, while VC activity shows signs of life

Blue chip crypto stocks also saw a strong month posting a month-over-month return of 7%. Mining operations and other established ventures continued to benefit from the previous phase of the market’s recovery back in March. The most notable gains were again made by mining stocks. After the explosion of TeraWulf’s evaluation, Bit Digital followed suit, and its stock rose by an astonishing 77% after mining operations in Iceland were announced.

Many overleveraged mining companies had been battered throughout the bear market due to tightening credit conditions and decreasing BTC prices, which now gives competitors a chance to rapidly raise evaluations. As most now expect Bitcoin to already have hit its low for the current cycle, new mining facilities with low electricity prices and the newest hardware appear less risky to investors than other sectors of the crypto market.

Meanwhile, according to Cointelegraph Research’s Venture Capital Database, VC investment surpassed $1 billion for the first time since September 2022 last month. It rose by 34% from April, and 81 deals were recorded. This is the third consecutive uptick in VC investment, but it is unclear if this means activity will rise sustainably from bear market levels. In a greater context, inflows remain below one-fourth of bull market levels.

BTC sees strongest network activity of the bear market

Historically, there have been many ways to inscribe data on the Bitcoin blockchain. For a long time, the most popular options were OP_Return scripts, which formed the backbone of Omni and Counterparty nonfungible tokens (NFTs). However, through a loophole introduced via the Taproot scripting language, the recently hyped-up Ordinals protocol permits much larger inscriptions — in theory, up to 4MB.

After the addition of fungible, so-called BRC-20 tokens to the Ordinals protocol, the Bitcoin network experienced its first significant fee spike since 2021. This was a positive for miners, who benefitted from spikes in revenue. The ratio of fee revenues to total mining revenues briefly hit its second-highest level in history at 43% on May 8. In the weeks after, it dropped to around 5%, which is still significantly elevated from levels at the start of the year.

It remains to be seen whether the recently added feature to migrate ERC-721 tokens from Ethereum to the Bitcoin blockchain can revive the hype, or if fee revenues will fade back into insignificance within the greater context of mining economics. The mining section of the Cointelegraph Research Monthly Trends report provides a monthly round-up of quantitative mining metrics and will monitor this development closely.

The Cointelegraph Research team

Cointelegraph’s Research department comprises some of the best talents in the blockchain industry. Bringing together academic rigor and filtered through practical, hard-won experience, the researchers on the team are committed to bringing the most accurate, insightful content available on the market.

Demelza Hays, Ph.D., is the director of research at Cointelegraph. Hays has compiled a team of subject matter experts from finance, economics and technology to bring the premier source for industry reports and insightful analysis to the market. The team utilizes APIs from various sources to provide accurate, useful information and analyses.

With decades of combined experience in traditional finance, business, engineering, technology and research, the Cointelegraph Research team is perfectly positioned to put its combined talents to proper use with the latest Investor Insights Report.

The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

Bitcoin think tank rejects science behind ‘limited adoption problem’ paper

The researchers claim the ideas driving the conclusions found in the original paper were based on flawed assumptions about the nature of Bitcoin.

A team of researchers from the Bitcoin Policy Institute, a nonprofit think tank, have roundly rejected the conclusions reached in a 2022 paper claiming that Bitcoin has an intrinsic scaling problem that will lead to limited adoption in the future.

According to the Bitcoin Policy Institute’s researchers, the original paper, dubbed “Bitcoin’s Limited Adoption Problem,” is predicated on three faulty assumptions.

First, the authors of the original paper claim that payments on the Bitcoin (BTC) network require full network consensus for settlement. Second, they assert that the addition of miners to the network prolongs time to settlement by “delaying network consensus.” Third, they claim there’s an upper limit on Bitcoin payments due to the architecture of Bitcoin’s blockchain.

The Bitcoin Policy Institute researchers reject each premise in a recently published paper cheekily titled “Bitcoin works in practice, but does it work in theory?”

The institute researchers, who hail from six different prestigious universities in the United States, claim that the so-called “limited adoption problem” is theoretical and counterintuitive to the reality of how Bitcoin operates:

“Hinzen, John, and Salah argue that the design of the Bitcoin protocol results in a negative network effect. […] This is an interesting theoretical result, but rests on faulty assumptions about how bitcoin actually works.”

In rebuking the first paper’s assertions, the institute researchers argue that its authors “fundamentally misunderstand how Bitcoin achieves consensus and how the entry and exit of miners affects the timing of new transaction blocks” and that their research ignores “existing, widely-implemented scaling solutions.”

While the institute's research paper does conclude that the work being criticized comes to a sound conclusion — namely, that “Bitcoin’s blockchain does not scale well for on-chain payments” — it also points out that these scaling issues have been known since Bitcoin’s inception and have thus been properly mitigated in the time since.

Ultimately, the institute team observes that the original paper’s authors are “tilting at windmills” because Bitcoin "scales through off-chain payments, not by increasing throughput at the base layer. Off-chain protocols afford more scalability precisely because they do not require consensus of the entire network.”

Related: Bitcoin think tank: Reject CBDCs and look to BTC and stablecoins instead

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report