Ben Strack

As business leaders prepare for a cashless economy in which crypto could play a larger role, the ability to protect customer and client data remains a concern.&nbsp;



About a third of executives expect the shift to a cashless economy to occur in the next five years, according to a survey published by consulting firm Protiviti and Oxford University.&nbsp;



Roughly 85% expect such a future to come 10 years from now, with 87% expecting assets like bitcoin, ether and tether to impact their businesses.



The <a href="https://images.learnmore.protiviti.com/Web/Protiviti/%7Be37fda91-b9cf-4f86-8612-80b070237cee%7D_Executive_Outlook_on_the_Future_of_Money__2033_and_Beyond.pdf">survey</a>, conducted between July and September gathered responses from 251 board members, C-suite executives and other business leaders in North America, Europe and Asia.&nbsp;



Cory Gunderson, Protiviti’s executive vice president of global solutions, said in a statement that transforming the global monetary system could cause “significant disruptions for business operations worldwide.”



Nearly nine of 10 respondents said they are concerned about their ability to protect customer and client data in a future that leans more heavily on digital currencies.



More needs to be done around preventing fraud and improving security to boost user confidence, noted Protiviti managing director Mike Brauneis.



&#8220;Contrast crypto transfers to mainstream banking and credit card transactions, which benefit from decades of development in regulatory frameworks and insurance schemes that limit consumers&#8217; liability for unauthorized transactions,” he said in a statement.&nbsp;



Regulatory agencies will seek to put in place more guardrails within the payments and crypto space, according to a KPMG <a href="https://kpmg.com/us/en/articles/2022/ten-key-regulatory-challenges-2023-payments-crypto.html#:~:text=Regulatory%20authority%20and%20guardrails,-Agencies%20will%20continue&amp;text=Grant%20clear%20regulatory%20authorities%2C%20including,non%2Dsecurity%E2%80%9D%20crypto%20assets.">report</a> — with a focus on areas including <a href="https://blockworks.co/tag/stablecoins">stablecoins</a> and central bank digital currencies (<a href="https://blockworks.co/tag/cbdc">CBDCs</a>).



Read more: <a href="https://blockworks.co/news/congress-cbdc-privacy-concerns">Privacy remains sticking point in America’s ongoing CBDC debate</a>



Price volatility has also created a barrier to adoption of certain crypto assets created as a reliable store of value, according to Brauneis.&nbsp;&nbsp;



The price of bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>) are up 110% and 58%, respectively, year to date — but are still well below all-time highs reached in November 2021.&nbsp;



<a href="https://blockworks.co/news/pantera-stablecoins-competition-btc-eth">Stablecoins are poised to offer benefits</a> bitcoin and ether don’t always offer, a Pantera Capital executive argued in a letter last week — enabling peer-to-peer transactions, as well as helping protect against unstable currencies and avoid trusting service providers.



The market capitalization of stablecoin tether (<a href="https://blockworks.co/price/usdt">USDT</a>) stands at roughly $85 billion, behind only BTC and ETH.&nbsp;&nbsp;



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 85% expect cashless future in 10 years: Survey

James Cirrone

Few would argue that Bitcoin today closely reflects the vision Satoshi Nakamoto, its pseudonymous creator, presented in their white paper exactly 15 years ago.



Yes, the broad strokes remain relevant. Bitcoin is still a proof-of-work blockchain that relies on consensus between nodes to operate properly.&nbsp;



But the pitch made in the 2008 white paper —&nbsp;bitcoin as a form of digital cash — has evolved and expanded over time. Some now look to bitcoin as more of a reserve asset, akin to a digital form of gold.



But a framework for digital cash, without the need to trust a central intermediary or administrator, was at the heart of Nakamoto’s initial proposal:&nbsp;&nbsp;



“What is needed is an electronic payment system based on cryptographic proof instead of trust,



allowing any two willing parties to transact directly with each other without the need for a trusted



third party. Transactions that are computationally impractical to reverse would protect sellers



from fraud, and routine escrow mechanisms could easily be implemented to protect buyers,” Nakamoto wrote in the white paper.



Read more: <a href="https://blockworks.co/news/bitcoin-anniversary-satoshi-nakamoto">Bitcoin white paper turns 15 years old</a>



But what Bitcoin would ultimately become, and how it was perceived by those who used it and invested in it, began to take shape in the first years since the white paper’s publication.



<h2 class="wp-block-heading">Mining pools and hardware</h2>



The advent of mining pools was arguably one of the first notable departures from the blueprint laid out by the white paper.&nbsp;



<a href="https://blockworks.co/tag/satoshi-nakamoto">Satoshi</a> originally intended for individuals to be able to use their personal computers to mine bitcoin. This remained technically true, but over time, bitcoin <a href="https://blockworks.co/tag/bitcoin-mining">mining</a> grew to center around one defining principle: scale.



Satoshi’s original conception ensured that anyone could participate in the validation and security of the network without needing specialized equipment, thus making the ecosystem more inclusive and resistant to central control. The rise of mining pools and advanced mining hardware shifted the dynamics, leading to increased centralization.



“The proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote.” Nakamoto wrote.



The first mining pool, initially dubbed bitcoin.cz and later renamed to Slush Pool, was <a href="https://braiins.com/pool/story">created</a> by Marek “Slush” Palatinus in 2010 to address the fact that people were beginning to use GPUs instead of CPUs to mine bitcoin. Mining pools were supposed to aid the solo miner in finding blocks, even if they didn’t have access to a high powered gaming computer.



GPU mining continued to take off throughout the early 2010’s until Canaan Creative released the world’s first set of application-specific integrated circuits (ASICs) for bitcoin mining.&nbsp;



ASICs continued getting more and more efficient throughout the years, which drove the cost of these specialized devices up into the tens of thousands of dollars. Plus, powering them requires massive amounts of electricity. This effectively made bitcoin mining completely unprofitable for at-home solo miners.&nbsp;



Now, large corporations dominate what has become a commodities production industry —&nbsp;albeit, entirely digital.&nbsp;



<h2 class="wp-block-heading">Bitcoin improvement proposals</h2>



Discounting the wholly different dynamics of mining, the very mechanics of the Bitcoin network have also changed in the last 10 or so years.&nbsp;



In 2012, the Bitcoin network introduced Pay to Script Hash (P2SH) through BIP 16 to simplify multi-signature transactions. Before P2SH, multi-signature transactions were cumbersome and risk-prone, requiring the entire redeem script—defining spending conditions—to be revealed upfront.&nbsp;



With P2SH, users send funds to a standardized Bitcoin address representing a hash of the redeem script, concealing its complexity. Only when spending the coins is the full script disclosed and its conditions met, which was meant to streamline transactions, enhance user-friendliness and improve scalability.



Segregated Witness, also known as SegWit, was another significantly important bitcoin improvement proposal (BIP) that became effective in 2017. It addressed transaction malleability and effectively raised the block size limit from the original 1MB to 4MB.



SegWit opened the door for a 2021 proposal called Taproot. Taproot made transactions more efficient and private, while also allowing users to engage in more complex transaction types.



<h2 class="wp-block-heading">Exchanges, ETFs and traditional instruments</h2>



The trading market for bitcoin has also become far more complicated over the years, with companies offering a variety of products.



The possibility of large institutions offering bitcoin-associated financial products didn’t come up in the white paper. Nakamoto’s intention was for bitcoin to act as an alternative, decentralized method of exchange, likely not as a means for traditional investors to make money.



Not to mention, the concept of buying something like a bitcoin ETF inherently means the user is giving custody of their funds over to large financial institutions instead of holding bitcoin on their own.



Nakamoto’s distrust of banks was elucidated in the first two sentences of the white paper.&nbsp;



“Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model,” Nakamoto wrote.



Last week’s <a href="https://blockworks.co/news/bitcoin-etf-price-rally">spot bitcoin ETF speculation</a> was arguably evidence that, despite Satoshi’s apparent wishes to the contrary, segments of the crypto ecosystem are eager for some connection to that trust model. Bitcoin’s (<a href="https://blockworks.co/price/btc">BTC</a>) price rose sharply on speculation that a bitcoin ETF was nearing approval.



Though spot bitcoin ETFs are not allowed in the US at this time, <a href="https://blockworks.co/news/us-europe-spot-bitcoin-etf">Europe saw the launch of its</a> first one in August 2023.



Bitcoin futures ETFs have already been allowed by the US Securities and Exchange Commission, with ProShares Bitcoin Strategy ETF (BITO) becoming the first to go live in October 2021.&nbsp;



Read more: <a href="https://blockworks.co/news/proshares-bito-bitcoin-futures-etf">BITO volumes soar Tuesday in midst of BTC price rally</a>



<h2 class="wp-block-heading">DeFi, Ordinals, and more</h2>



Enter DeFi with Bitcoin Ordinals — an attempt to merge a more archaic blockchain with an Ethereum-like appetite for digital collectibles or <a href="https://blockworks.co/tag/nfts">NFTs</a>.



Though, it’s impossible to discuss Ordinals without mentioning its precursor, Counterparty. The protocol launched in 2014 on Bitcoin and allowed people to exchange rare digital collectibles long before the NFT boom of 2021. Rare Pepe, an NFT collection inspired by the Pepe the Frog meme, originated on Counterparty.



Of course, non-fungible tokens weren’t around at the inception of Bitcoin. However, the 2021 Taproot upgrade, which allowed for much faster verification of multi-signature transactions, <a href="https://blockworks.co/news/new-bitcoin-ordinals-marketplace">opened the door to inscribing text, images, SVGs and HTML</a> on the smallest denomination of bitcoin, known as a satoshi (Sat).



Ordinals have seen significant success. On May 1 of this year, Ordinals contributed to Bitcoin’s largest number of transactions in a single day up to that point.&nbsp;



That record — over 682,000 — was later broken in September 2023 with <a href="https://bitinfocharts.com/comparison/bitcoin-transactions.html#1y">over 703,000 transactions</a> on Sept. 15, 2023, with Ordinal inscriptions reaching new peaks simultaneously.



When bitcoin was in its infancy in 2009 and 2010, less than 1,000 transactions on average were processed a day. By 2011 and 2012, transactions were often in the single-digit thousands.



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How Bitcoin has evolved since Nakamoto’s white paper debut

Casey Wagner

With a rocky September behind us and federal funding ensured until mid-November, stock and crypto investors are hoping for a successful October, but Monday’s rally has proved short-lived.&nbsp;



“October is typically a strong month for bitcoin, earning it the term ‘Uptober,’” author of Crypto is Macro Now and former head of market insights at Genesis, said. “And while we know that patterns don’t necessarily repeat (after all, this past September turned out to be positive, breaking a six-year trend), they are comforting.”&nbsp;



More than $70 million in cryptocurrency short positions were liquidated on Oct. 1, pushing bitcoin and ether more than 3% and 4% higher, respectively. An eleventh hour deal on Capitol Hill to prevent a government shutdown, at least for the next 45 days, could have spooked short traders.&nbsp;



Short positions are still ahead, with about 50.5% of the futures market in shorts as of Monday. A short squeeze could propel prices higher. Cryptos had lost their momentum by Monday afternoon though, with bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) losing around 0.6% and ether (<a href="https://blockworks.co/price/eth">ETH</a>) in the red more than 4%.&nbsp;



“Over the past few months, we’ve seen a few of these sharp spikes up. Usually they are followed by a correction, sometimes sharp and sometimes gradual, but almost always reverting to where the market was before the upward move,” Acheson said.&nbsp;



Stocks posted a disappointing month at the end of the third quarter. The S&amp;P 500 and Nasdaq Composite indexes lost 4.9% and 5.8%, respectively, in September, marking it the worst month for returns in 2023.&nbsp;



Read more: <a href="https://blockworks.co/news/nasdaq-pulls-plug-crypto-custody">Nasdaq says it’s not the ‘right time’ to launch crypto custody business</a>



“Market breadth deteriorated last week but the percentage of S&amp;P 500 constituents trading above their 200 day moving averages stabilized near the 2023 lows, another potential sign of a relief rally forming,” Tom Essaye, founder of Sevens Report Research, said. “Investor sentiment indicators dropped to the lows of the year last week but ended off the worst levels Friday. If the lows in the Fear-and-Greed index hold, that further supports an emerging relief rally.”&nbsp;



Cryptocurrencies, on the other hand, were able to stay in the green. Bitcoin and ether gained about 4% and 1.5% in September 2023, respectively. These mild returns came after a bad August, where both cryptos lost more than 11%.&nbsp;



Stocks look poised to end the first trading day of October relatively flat. The S&amp;P 500 is down by approximately half a percentage point, while the Nasdaq Composite is marginally positive at the time of writing.



Traders are still betting on the <a href="https://blockworks.co/tag/fed">Fed</a> extending its interest rate pause at its next policy meeting in a month, according to CME <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a>, which currently shows about a 74% likelihood the central bank opts to hold rates.



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Uptober? May be too early to tell, analysts warn 

<div id="highlights-block_61e1edc18dd2c" class="highlights">
 <ul>
 <li>Rio de Janeiro Mayor Eduardo Paes said the Brazilian city will put 1% of its treasury into crypto</li>
 <li>The announcement is in line with Fidelity Digital Asset researchers’ predictions </li>
 </ul>
 
</div>



Brazil’s second-largest city is allocating 1% of its treasury to cryptocurrencies, Rio de Janeiro mayor Eduardo Paes said Friday. 



The announcement confirms a 2022 prediction from Fidelity Digital Asset researchers: that more governments and central banks will acquire digital assets. It comes down to keeping up appearances and staying on top of new innovations, they said.&nbsp;



“We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers,” Fidelity Digital Asset researchers wrote in a <a href="https://www.fidelitydigitalassets.com/articles/2021-trends-impact" target="_blank" rel="noreferrer noopener">report</a> published on Jan. 6, 2022.&nbsp;



Other cities and sovereign states are going to have to start thinking ahead if they want to maintain an edge, even if the value proposition of cryptocurrencies is not immediately clear, researchers said.&nbsp;



“While Rio de Janeiro is a city, and technically the mayor mentioned cryptocurrency, not bitcoin specifically, we see the overall game theory as the same,” said Chris Kuiper, head of research at Fidelity Digital Assets. “In other words, entities are viewing bitcoin acquisition now as a small insurance premium to pay.”&nbsp;



Paes also mentioned plans to offer citizens who pay property taxes (known in Brazil as IPTU) in bitcoins a discount, according to a report from the Brazilian newspaper <a href="https://oglobo.globo.com/economia/eduardo-paes-quer-aplicar-parte-do-tesouro-do-rio-em-criptomoeda-dar-desconto-para-iptu-pago-em-bitcoin-25353018" target="_blank" rel="noreferrer noopener">O Globo</a>.&nbsp;



Long-time <a href="https://cms.blockworks.co/new-york-mayor-eric-adams-i-will-take-first-three-paychecks-in-bitcoin/" target="_blank" rel="noreferrer noopener">cryptocurrency fan</a> Miami Mayor Francis Suarez also spoke at the Rio Innovation Week summit where Paes made the announcement. Suarez is looking to allocate a portion of Miami’s treasury to digital assets, he said last year.&nbsp;



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