The week in review: Two password guesses worth $265m

It was a shaky start to the week, but bitcoin looks to be firmly back in its saddle as we head full-tilt into the weekend. The largest cryptocurrency by market cap has now rebounded back above $38,000, while Ethereum is currently over $1,200 and going strong. And if you’re ready to take financial advice from Lindsay Lohan – and who didn’t love The Parent Trap? – we could be set to hit $100,000 and $10,000 respectively in the not-too-distant future! We’re joking – she may well be right, but we would urge you not to take financial advice from Lindsay Lohan.

Elsewhere, there’s been the usual mix of FUD, adoption and tomfoolery. Here are all this week’s headlines.

Two password guesses worth $265m

Every bull run brings with it tales of lost fortunes and 2021 is no exception. This time, it’s the turn of German programmer Stefan Thomas, who has 7,002 bitcoin (worth roughly $265m at the time of writing) locked in an IronKey digital wallet he can’t access. Thomas was paid the bitcoin in exchange for work he did back in 2012, when bitcoin was selling for somewhere in the region of just $5. Unfortunately, he promptly lost the paper he’d written the password on. He has already used 8 of the ten password guesses allowed to no avail. If he gets the final two guesses wrong, the contents are encrypted permanently.

“I would just lay in bed and think about it,” Mr. Thomas said. “Then I would go to the computer with some new strategy, and it wouldn’t work, and I would be desperate again […] I got to a point where I said to myself, ‘Let it be in the past, just for your own mental health.’”

Fortunately, Thomas made enough in cryptocurrency to still live very comfortably. He’s one of the lucky ones, though. Chainalsysis data estimates that around 20% of the existing 18.5 million BTC (~$704bn) have been lost or abandoned in digital wallets. A great advert for custodial wallets – like Luno’s!

ECB President urges global Bitcoin regulation

Christine Lagarde, president of the European Central Bank (ECB) told Reuters in a press conference on Wednesday that bitcoin is a speculative asset that must be regulated.

The conference followed a meeting of the ECB’s governing board. Lagarde said the “asset” has “conducted some funny business and some interesting and totally reprehensible money laundering activity.” The activity she referred to has been “very clearly” demonstrated by previous and current criminal investigations, citing an incident last month whereby Italian police arrested the CEO of crypto exchange BitGrail and accused him of laundering $2m in crypto.

Lagarde added: “There has to be regulation. This has to be applied and agreed upon…at a global level because if there is an escape that escape will be used.” She also said, “global cooperation, multilateral action is absolutely needed, whether it’s initiated by the G7, moved into the G20 and then enlarged.”

Regulation is not necessarily a bad thing, and at Luno we’ve always pushed for sensible regulatory oversight that encourages innovation in the space. It’s also worth mentioning that Lagarde’s claims have been proven to be overblown, with a SWIFT and BAE Systems report from February 2020 titled “Follow the Money” clarifying that: “Identified cases of laundering through cryptocurrencies remain relatively small compared to the volumes of cash laundered through traditional methods.”

Additionally, Lagarde herself was convicted over her role in a controversial €400m payment to a businessman back in 2019, despite not having been given a sentence or punishment. How does that saying go again – something about a pot and a kettle?

Crypto’s future under the Biden administration

President-elect Joe Biden will name Gary Gensler to lead the Securities and Exchange Commission (SEC), according to Reuters. Gensler is set to replace acting SEC chair Michael Piwowar. During former President Obama’s first term, Gensler was the chair of the Commodity Futures Trading Commission (CFTC).

The appointment will have big implications for crypto and XRP in particular, which is currently under investigation. Gensler is expected to be a progressive and knowledgeable voice in the future of crypto regulation, though. Representative Patrick McHenry of North Carolina said: “Gary’s worldview is well-known as it pertains to his previous role in the Obama administration. His views in many respects have been shaped by his post-regulator career, and I think he has a broad understanding of financial technology and financial innovation. And in that regard I have a sense of optimism that he may bring a thoughtful approach to his new role as a regulator.”

What does Gensler’s appointment really mean, though? Only time will tell.

More financial advisers are allocating funds to crypto

A survey published yesterday by index provider Bitwise found that the number of financial advisors in the US allocating crypto increased by almost 50% between 2019 and 2020.

According to Bitwise, only 6.3% financial advisors said they allocated crypto in 2019, with 9.4% saying they did in 2020. Additionally, 17% of advisors are considering making their first crypto allocation this year, of which 2% are “definitely” allocating crypto and 15% are “probably” doing so.

When asked about their primary motivation, 54% of advisors stated “unrelated returns”, in line with last year’s survey results too. In 2019, the most common response was “inflation hedging”. 81% of advisors said they were asked questions about crypto by their clients in 2020, up 76% in 2019.

Looking through Lindsay Lohan’s “crypstal” ball

Finally, what bull run would be complete without weird celebrity endorsements? Thoughts and prayers to Paris Hilton who shilled a now-defunct digital token on Twitter back in 2017.

Hopping on the bandwagon this time is actress Lindsay Lohan, who recently recorded a now-deleted video shilling bitcoin and ether. The video was commissioned by a crypto news outlet via Cameo, a platform that allows people or businesses to hire celebrities to record personalised video messages. According to the site, you can request for Lohan to record you a video for around $350.

In the 12-second video, the actress told viewers “I’m just here to say that Ethereum is going to $10,000 and Bitcoin is going to $100,000. Enjoy a prosperous 2021 and I hope you all get to drive your lambos to the moon.”

It’s since been deleted, which suggests she didn’t really give it much thought and wasn’t necessarily a fan of the sentiment. Still, always exciting.

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