Bitcoin

The live Bitcoin price today is €26,010.26 EUR with a 24-hour trading volume of €33,304,868,497 EUR. We update our BTC to EUR price in real-time. Bitcoin is down 0.58% in the last 24 hours. The current CoinMarketCap ranking is #1, with a live market cap of €502,616,501,639 EUR. It has a circulating supply of 19,323,775 BTC coins and a max. supply of 21,000,000 BTC coins.

If you would like to know where to buy Bitcoin at the current rate, the top cryptocurrency exchanges for trading in Bitcoin stock are currently Binance, OKX, Deepcoin, BTCEX, and Bybit. You can find others listed on our crypto exchanges page.

What Is Bitcoin (BTC)?
Bitcoin is a decentralized cryptocurrency originally described in a 2008 whitepaper by a person, or group of people, using the alias Satoshi Nakamoto. It was launched soon after, in January 2009.

Bitcoin is a peer-to-peer online currency, meaning that all transactions happen directly between equal, independent network participants, without the need for any intermediary to permit or facilitate them. Bitcoin was created, according to Nakamoto’s own words, to allow “online payments to be sent directly from one party to another without going through a financial institution.”

Some concepts for a similar type of a decentralized electronic currency precede BTC, but Bitcoin holds the distinction of being the first-ever cryptocurrency to come into actual use.

Who Are the Founders of Bitcoin?
Bitcoin’s original inventor is known under a pseudonym, Satoshi Nakamoto. As of 2021, the true identity of the person — or organization — that is behind the alias remains unknown.

On October 31, 2008, Nakamoto published Bitcoin’s whitepaper, which described in detail how a peer-to-peer, online currency could be implemented. They proposed to use a decentralized ledger of transactions packaged in batches (called “blocks”) and secured by cryptographic algorithms — the whole system would later be dubbed “blockchain.”

Just two months later, on January 3, 2009, Nakamoto mined the first block on the Bitcoin network, known as the genesis block, thus launching the world’s first cryptocurrency. Bitcoin price was $0 when first introduced, and most Bitcoins were obtained via mining, which only required moderately powerful devices (e.g. PCs) and mining software. The first known Bitcoin commercial transaction occurred on May 22, 2010, when programmer Laszlo Hanyecz traded 10,000 Bitcoins for two pizzas. At Bitcoin price today in mid-September 2021, those pizzas would be worth an astonishing $478 million. This event is now known as “Bitcoin Pizza Day.” In July 2010, Bitcoin first started trading, with the Bitcoin price ranging from $0.0008 to $0.08 at that time.

However, while Nakamoto was the original inventor of Bitcoin, as well as the author of its very first implementation, he handed the network alert key and control of the code repository to Gavin Andresen, who later became lead developer at the Bitcoin Foundation. Over the years a large number of people have contributed to improving the cryptocurrency’s software by patching vulnerabilities and adding new features.

Bitcoin’s source code repository on GitHub lists more than 750 contributors, with some of the key ones being Wladimir J. van der Laan, Marco Falke, Pieter Wuille, Gavin Andresen, Jonas Schnelli and others.

What Makes Bitcoin Unique?
Bitcoin’s most unique advantage comes from the fact that it was the very first cryptocurrency to appear on the market.

It has managed to create a global community and give birth to an entirely new industry of millions of enthusiasts who create, invest in, trade and use Bitcoin and other cryptocurrencies in their everyday lives. The emergence of the first cryptocurrency has created a conceptual and technological basis that subsequently inspired the development of thousands of competing projects.

The entire cryptocurrency market — now worth more than $2 trillion — is based on the idea realized by Bitcoin: money that can be sent and received by anyone, anywhere in the world without reliance on trusted intermediaries, such as banks and financial services companies.

Thanks to its pioneering nature, BTC remains at the top of this energetic market after over a decade of existence. Even after Bitcoin has lost its undisputed dominance, it remains the largest cryptocurrency, with a market capitalization that surpassed the $1 trillion mark in 2021, after Bitcoin price hit an all-time high of $64,863.10 on April 14, 2021. This is owing in large part to growing institutional interest in Bitcoin, and the ubiquitousness of platforms that provide use-cases for BTC: wallets, exchanges, payment services, online games and more.

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How Much Bitcoin Is in Circulation?
Bitcoin’s total supply is limited by its software and will never exceed 21,000,000 coins. New coins are created during the process known as “mining”: as transactions are relayed across the network, they get picked up by miners and packaged into blocks, which are in turn protected by complex cryptographic calculations.

As compensation for spending their computational resources, the miners receive rewards for every block that they successfully add to the blockchain. At the moment of Bitcoin’s launch, the reward was 50 bitcoins per block: this number gets halved with every 210,000 new blocks mined — which takes the network roughly four years. As of 2020, the block reward has been halved three times and comprises 6.25 bitcoins.

Bitcoin has not been premined, meaning that no coins have been mined and/or distributed between the founders before it became available to the public. However, during the first few years of BTC’s existence, the competition between miners was relatively low, allowing the earliest network participants to accumulate significant amounts of coins via regular mining: Satoshi Nakamoto alone is believed to own over a million Bitcoin.

Mining Bitcoins can be very profitable for miners, depending on the current hash rate and the price of Bitcoin. While the process of mining Bitcoins is complex, we discuss how long it takes to mine one Bitcoin on CoinMarketCap Alexandria — as we wrote above, mining Bitcoin is best understood as how long it takes to mine one block, as opposed to one Bitcoin. As of mid-September 2021, the Bitcoin mining reward is capped to 6.25 BTC after the 2020 halving, which is roughly $299,200 in Bitcoin price today.

How Is the Bitcoin Network Secured?
Bitcoin is secured with the SHA-256 algorithm, which belongs to the SHA-2 family of hashing algorithms, which is also used by its fork Bitcoin Cash (BCH), as well as several other cryptocurrencies.

Bitcoin Energy Consumption
Over the past few decades, consumers have become more curious about their energy consumption and personal effects on climate change. When news stories started swirling regarding the possible negative effects of Bitcoin’s energy consumption, many became concerned about Bitcoin and criticized this energy usage. A report found that each Bitcoin transaction takes 1,173 KW hours of electricity, which can “power the typical American home for six weeks.” Another report calculates that the energy required by Bitcoin annually is more than the annual hourly energy usage of Finland, a country with a population of 5.5 million.

The news has produced commentary from tech entrepreneurs to environmental activists to political leaders alike. In May 2021, Tesla CEO Elon Musk even stated that Tesla would no longer accept the cryptocurrency as payment, due to his concern regarding its environmental footprint. Though many of these individuals have condemned this issue and move on, some have prompted solutions: how do we make Bitcoin more energy efficient? Others have simply taken the defensive position, stating that the Bitcoin energy problem may be exaggerated.

At present, miners are heavily reliant on renewable energy sources, with estimates suggesting that Bitcoin’s use of renewable energy may span anywhere from 40-75%. However, to this point, critics claim that increasing Bitcoin’s renewable energy usage will take away from solar sources powering other sectors and industries like hospitals, factories or homes. The Bitcoin mining community also attests that the expansion of mining can help lead to the construction of new solar and wind farms in the future.

Furthermore, some who defend Bitcoin argue that the gold and banking sector — individually — consume twice the amount of energy as Bitcoin, making the criticism of Bitcoin’s energy consumption a nonstarter. Moreover, the energy consumption of Bitcoin can easily be tracked and traced, which the same cannot be said of the other two sectors. Those who defend Bitcoin also note that the complex validation process creates a more secure transaction system, which justifies the energy usage.

Another point that Bitcoin proponents make is that the energy usage required by Bitcoin is all-inclusive such that it encompasess the process of creating, securing, using and transporting Bitcoin. Whereas with other financial sectors, this is not the case. For example, when calculating the carbon footprint of a payment processing system like Visa, they fail to calculate the energy required to print money or power ATMs, or smartphones, bank branches, security vehicles, among other components in the payment processing and banking supply chain.

What exactly are governments and nonprofits doing to reduce Bitcoin energy consumption? Earlier this year in the U.S., a congressional hearing was held on the topic where politicians and tech figures discussed the future of crypto mining in the U.S, specifically highlighting their concerns regarding fossil fuel consumption. Leaders also discussed the current debate surrounding the coal-to-crypto trend, particularly regarding the number of coal plants in New York and Pennsylvania that are in the process of being repurposed into mining farms.

Aside from congressional hearings, there are private sector crypto initiatives dedicated to solving environmental issues such as the Crypto Climate Accord and Bitcoin Mining Council. In fact, the Crypto Climate Accord proposes a plan to eliminate all greenhouse gas emissions by 2040, And, due to the innovative potential of Bitcoin, it is reasonable to believe that such grand plans may be achieved.

What Is Bitcoin’s Role as a Store of Value?
Bitcoin is the first decentralized, peer-to-peer digital currency. One of its most important functions is that it is used as a decentralized store of value. In other words, it provides for ownership rights as a physical asset or as a unit of account. However, the latter store-of-value function has been debated. Many crypto enthusiasts and economists believe that high-scale adoption of the top currency will lead us to a new modern financial world where transaction amounts will be denominated in smaller units.

The smallest units of Bitcoin, 0.00000001 BTC, are called Satoshis (or Sats in short), in a nod to the pseudonymous creator. At Bitcoin price now, 1 Satoshi is equivalent to roughly $0.00048.

The top crypto is considered a store of value, like gold, for many — rather than a currency. This idea of the first cryptocurrency as a store of value, instead of a payment method, means that many people buy the crypto and hold onto it long-term (or HODL) rather than spending it on items like you would typically spend a dollar — treating it as digital gold.

Crypto Wallets
The most popular wallets for cryptocurrency include both hot and cold wallets. Cryptocurrency wallets vary from hot wallets and cold wallets. Hot wallets are able to be connected to the web, while cold wallets are used for keeping large amounts of coins outside of the internet.

Some of the top crypto cold wallets are Trezor, Ledger and CoolBitX. Some of the top crypto hot wallets include Exodus, Electrum and Mycelium.

Still not sure of which wallet to use? Check out CoinMarketCap Alexandria’s guide on the top cold wallets of 2021 and top hot wallets of 2021.

How Is Bitcoin’s Technology Upgraded?
A hard fork is a radical change to the protocol that makes previously invalid blocks/transactions valid, and therefore requires all users to upgrade. For example, if users A and B are disagreeing on whether an incoming transaction is valid, a hard fork could make the transaction valid to users A and B, but not to user C.

A hard fork is a protocol upgrade that is not backward compatible. This means every node (computer connected to the Bitcoin network using a client that performs the task of validating and relaying transactions) needs to upgrade before the new blockchain with the hard fork activates and rejects any blocks or transactions from the old blockchain. The old blockchain will continue to exist and will continue to accept transactions, although it may be incompatible with other newer Bitcoin clients.

A soft fork is a change to the Bitcoin protocol wherein only previously valid blocks/transactions are made invalid. Since old nodes will recognise the new blocks as valid, a soft fork is backward-compatible. This kind of fork requires only a majority of the miners upgrading to enforce the new rules.

Some examples of prominent cryptocurrencies that have undergone hard forks are the following: Bitcoin’s hard fork that resulted in Bitcoin Cash, Ethereum’s hard fork that resulted in Ethereum Classic.

Bitcoin Cash has been hard forked since its original forking, with the creation of Bitcoin SV. Read more about the difference between Bitcoin, Bitcoin Cash and Bitcoin SV here.

What Is Taproot?
Taproot is a soft fork that bundles together BIP 340, 341 and 342 and aims to improve the scalability, efficiency, and privacy of the blockchain by introducing several new features.

The two major changes are the introduction of the Merkelized Abstract Syntax Tree (MAST) and Schnorr Signature. MAST introduces a condition allowing the sender and recipient of a transaction to sign off on its settlement together. Schnorr Signature allows users to aggregate several signatures into one for a single transaction. This results in multi-signature transactions looking the same as regular transactions or more complex ones. By introducing this new address type, users can also save on transaction fees, as even complex transactions look like simple, single-signature ones.

Although HODLers will probably not notice a big impact, Taproot could become a key milestone to equipping the network with smart contract functionality. In particular, Schnorr Signatures would lay the foundation for more complex applications to be built on top of the existing blockchain, as users start switching to Taproot addresses primarily. If adopted by users, Taproot could, in the long run, result in the network developing its own DeFi ecosystem that rivals those on alternative blockchains like Ethereum.

What Is the Lightning Network?
The Lightning Network is an off-chain, layered payment protocol that operates bidirectional payment channels which allows instantaneous transfer with instant reconciliation. It enables private, high volume and trustless transactions between any two parties. The Lightning Network scales transaction capacity without incurring the costs associated with transactions and interventions on the underlying blockchain.

Who Are the Largest Corporate Holders of Bitcoin?
A few years ago, the idea that a publicly traded company might hold Bitcoin on its balance sheets seemed highly laughable. The flagship cryptocurrency was considered to be too volatile to be adopted by any serious business. Many top investors, including Warren Buffett, labeled the asset a “bubble waiting to pop.”

This negative sentiment appears to have been broken, with a number of corporate behemoths buying up Bitcoin since 2020. In particular, business intelligence firm MicroStrategy set the pace after it bought $425 million worth of Bitcoin in August and September 2020. Since then, many others have followed suit, including EV manufacturer Tesla.

MicroStrategy has by far the largest Bitcoin portfolio held by any publicly-traded company. The business analytics platform has adopted Bitcoin as its primary reserve asset, aggressively buying the cryptocurrency through 2021 and 2022. As of August 30, 2022, the company had 129,699 Bitcoin in its reserve, equivalent to just over $2.5 billion.

Other top corporate holders include Marathon Digital Holdings, with 10,054 BTC, Coinbase (9,000), Square Inc. (8,027), and Hut 8 Mining Corp. (7,078).

Is Bitcoin Political?
Bitcoin is becoming more political by the day, particularly after El Salvador began accepting the currency as legal tender. The country's president, Nayib Bukele, announced and implemented the decision almost unilaterally, dismissing criticism from his citizens, the Bank of England, the IMF, Vitalik Buterin and many others. Since the Bitcoin legal tender law was passed in September 2021, Bukele has also announced plans to build Bitcoin City, a city fully based on mining Bitcoin with geothermal energy from volcanoes.

Countries like Mexico, Russia and others have been rumored to be candidates also to accept Bitcoin as legal tender, but thus far, El Salvador stands alone.

On the flip side, countries like China have moved to heavily clamp down on Bitcoin mining and trading activities. In May 2021, the Chinese government declared that all crypto-related transactions are illegal. This was followed by a heavy crackdown on Bitcoin mining operations, forcing many crypto-related businesses to flee to friendlier regions.

Surprisingly, the anti-crypto stance of the Chinese government has done little to stop the industry. According to data by the University of Cambridge, China is now the second-biggest contributor to Bitcoin's global hash rate, only behind the United States.

How Much Is Bitcoin?
The current valuation of Bitcoin is constantly moving, all day every day. It is a truly global asset. From a start of under one cent per coin, BTC has risen in price by thousands of percent to the numbers you see above. The prices of all cryptocurrencies are quite volatile, meaning that anyone’s understanding of how much Bitcoin is will change by the minute. However, there are times when different countries and exchanges show different prices and understanding how much Bitcoin is will be a function of a person’s location.

Where Can You Buy Bitcoin (BTC)?
Bitcoin is, in many regards, almost synonymous with cryptocurrency, which means that you can buy Bitcoin on virtually every crypto exchange — both for fiat money and other cryptocurrencies. Some of the main markets where BTC trading is available are:

Binance
Coinbase Pro
OKEx
Kraken
Huobi Global
Bitfinex
If you are new to crypto, use CoinMarketCap’s own educational portal — Alexandria — to learn how to start buying Bitcoin and other cryptocurrencies.

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March 21 (Reuters) - As crisis stalks the traditional world of stocks and bonds, bitcoin is suddenly looking like a safe haven.

The infamously volatile cryptocurrency seems positively hale and hearty, just as a banking meltdown drives markets into the arms of a recession.

Bitcoin has risen 21% this month, while a choppy S&P 500 has lost 1.4% and gold has gained 8%.

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"If you were going to describe an environment where there were successive bank runs because central banks are trying to fight inflation with fast rate increases, that is pretty close to as spot-on a thesis for owning bitcoin as you've ever heard," said Stéphane Ouellette, CEO at digital asset investment platform FRNT Financial (FRNT.V).

The cryptocurrency has, for now, severed its ties with stocks and bonds and tagged on to a rally in gold, fulfilling at least one part of creator Satoshi Nakamoto's dream - that bitcoin can serve as a refuge for suffering investors.

Bitcoin's 30-day correlation with the S&P 500 (.SPX) has slid to negative 0.12 over the past week, where a measure of 1 indicates the two assets are moving in lock step.

A selloff in banks has wiped out hundreds of billions of dollars in market value and forced U.S. regulators to launch emergency measures. The past couple of weeks has seen Silicon Valley Bank and crypto lender Silvergate go under, while Credit Suisse has teetered on the brink.

Reuters Graphics
Reuters Graphics
'RETURN TO CORE ETHOS'
Let's not carried away, though. This is bitcoin.

"The bearish argument would be that these dynamics are temporary, and ultimately this rally is not going to sustain," said Ouellette.

It remains to be seen if bitcoin's bullishness will endure as attention shifts to the Federal Reserve's policy meeting this week where the U.S. central bank must walk a fine line as it fights inflation and bank stresses.

Furthermore, the cryptocurrency's allure hasn't all been about safety.

The rapid price rise has forced some short-sellers to cut their bets and buy coin back. Data from Coinglass shows traders liquidated $300 million worth of crypto positions on Monday, with most of that total - $178.5 million - short positions.

Nonetheless, bitcoin is resurgent.

It now commands nearly 43% of the total crypto market, its highest share since last June, according to CoinMarketCap data, while the total cryptocurrency market's capitalization has jumped 23% to $1.1 billion since March 10.

"We're seeing a return to bitcoin's core ethos, that of a financial asset independent from the opacity and meddling of the centralized financial system," said Henry Elder, head of decentralized finance (DeFi) at digital asset investment manager Wave Digital Assets.

The mainstream bank crisis has also fueled some interest in DeFi, with the total value of tokens linked to such platforms rising to $49 billion from $43 billion over the past week, according to DappRadar.

BITCOIN IN A BANK CRISIS
Not all areas of the digital world have been immune to the banking fallout, though. The no. 2 stablecoin Circle USD or USDC lost its 1:1 peg to the dollar after disclosing its reserves were parked at the shuttered Silicon Valley Bank.

As worries spread over USDC's ability to maintain its peg, its market cap slid to $36.8 billion last Friday from $43.8 billion a week earlier, even as leading stablecoin Tether gained around $4 billion.

Market participants said some USDC withdrawals were likely reinvested in bitcoin as well, helping fuel the rally.

"It's too soon to say that bitcoin has proven the narrative that it's an alternative in a banking crisis," cautioned Ed Hindi, Chief Investment Officer at Tyr Capital in Geneva.

But he added: "The rally we are currently witnessing in bitcoin will be looked back at as the point in time where its main property as a decentralized non-sovereign asset was stress tested."

Prices of Bitcoin, the world's most popular and largest crypto by market capitalisation, have picked up the pace again, surpassing the $28,000 mark on Monday for the first time since June 2022. Since the collapse of Silicon Valley Bank on 10th March 2023, Bitcoin prices have zoomed nearly 40%.

"The current BTC rally is driven by the importance of decentralised finance in the global financial system after a series of bank collapses in the US. Bitcoin being the torch bearer of decentralised finance is witnessing a demand from retail and institutional investors amidst the banking chaos as BTC is being deployed as a shield against the ongoing crisis," Dhruvil Shah, SVP of technology at Liminal, said.

Meanwhile, Edul Patel, CEO and Co-Founder of Mudrex, said, "The collapse of SVB and Silvergate was like a Cyprus moment for crypto. As these crypto-friendly banks collapsed, much money flowed directly into the cryptocurrency ecosystem. And a chunk of the smart money usually flows into blue-chip cryptocurrencies, such as Bitcoin and Ethereum."

"With instability in the banking sector, inflation data that exceeded expectations, and renewed optimism about a dovish Federal Reserve, Bitcoin has reached levels unseen in approximately nine months," Edul added.

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Since the collapse of various regional banks in the US and Europe, global equity markets remained under pressure. Nifty, since 10th March 2023, has declined nearly 4%, whereas Dow Jones remained flat during this time. However, Bitcoin outperformed other instruments.

Rajagopal Menon, Vice President at WazirX, said, "Bitcoin has been rallying due to various reasons. First, the recent bank bailout in the United States has increased confidence in banks and markets, causing Bitcoin prices to soar. Another reason is the official announcement of the Ethereum Shanghai hard fork update date (April 12), which will allow users to withdraw their staked Eth and is expected to stimulate Ethereum market demand."

However, Ashish Singhal, CEO and co-founder, CoinSwitch, said, "In general, BTC prices have not shown any significant correlation with banking stocks—on the contrary, the crypto market tends to perform better when the traditional financial markets experience turbulence reflecting the transparency and decentralization of the DeFi world."

"An important factor that could be in play is the expectation of a lower or zero interest rate hike by the US Fed in the next Fed meeting. The continuous rate hikes have had a material impact on the market, both traditional and crypto over the last one year. Therefore, the expectations of a lower or zero hike could also be influencing the BTC prices," Ashish Singhal, CEO and co-founder, CoinSwitch.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Bitcoin climbed to nine-month high as the biggest banking crisis in the US drove away investors towards "safe havens" like digital assets.

Bitcoin has seen its highest jump since June 12 on Sunday to reach $28,474. This comes amid surging expectations that central banks would slow the pace of interest rate hikes.

Bitcoin jumped up 26 per cent last week and has grown by over 35 per cent in just 10 days as turmoil in the banking sector has shocked the global banking scenario. It started with the collapse of Silicon Valley Bank and ended with the UBS' takeover of Credit Suisse at a whopping 60% discount over the weekend.

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"The momentum is all driven by liquidity, as bitcoin is an alternative liquidity vehicle," Markus Thielson, head of research and strategy at digital asset financial services firm Matrixport based in Singapore told Reuters.

He anticipated that bitcoin could hit $45,000 by 2023-end, with liquidity from central banks finding its way into crypto assets, much as it did during 2021, when bitcoin scaled record highs.

Meanwhile, gold prices jumped 1% to their highest since March last year on Monday, erasing earlier losses, as worries about the global banking sector returned to the fore despite rescue efforts by Swiss lender UBS to buy peer Credit Suisse CSGN.S to stabilise broader financial markets.

Spot gold was up 1% at $2,007.30 per ounce, as of 0747 GMT, after sliding 1% earlier in the session. US gold futures climbed 2% to $2,012.50.

The US Federal Reserve on Sunday said it and other big central banks would deepen liquidity by increasing the frequency of dollar supply operations into financial markets.

Ether, the second-biggest cryptocurrency, rose to a seven-month high of $1,846.50 on Sunday and was last at $1,768.

Traditional assets such as banking stocks and bonds plummeted on Monday after UBS sealed its state-backed takeover of Credit Suisse, a deal orchestrated in an attempt to restore confidence in a battered sector.

Top central banks, faced with the risk of a fast-moving loss of confidence in the stability of the financial system, moved on Sunday to bolster the flow of cash around the world. Such a global response has not seen since the height of the COVID-19 pandemic.

Also Read: Crypto Price Today: Bitcoin holds $27,000; Solana & XRP climb up to 6%

Not every bank failure is caused by crypto, and recent ones are no exception.

Out of the many reasons behind the catastrophic collapse of Silvergate Bank, followed by Silicon Valley Bank and Signature Bank, marking the second and third largest banking collapses in U.S. history, the cryptocurrency industry isn’t one of them. To the contrary, the true culprits behind the banking crisis were a mixture of corporate mismanagement and inconsistent regulatory responses.

The reality is far more nuanced, and while findings are still being made public (including questions around stock sales by some management personnel), it does not look like crypto is the primary culprit for this financial instability. Crypto may have been associated with these financial institutions, and a bear market is undeniably underway. But there were several other factors that contributed to the current instability and uncertainty in the financial sector.

First, external economic factors (as always) influenced the health and stability of these financial institutions, including the rapid rise in interest rates from the Federal Reserve, persistently sticky inflation, and a downturn in the fintech, startup, and crypto communities. Secondly, and most notably at Silicon Valley Bank, the decision to invest heavily in long duration instruments that locked in extremely low rates of return led to large unrealized losses. These unrealized losses quickly became realized when – in order to meet a flood of customer withdrawal requests – this security portfolio had to be liquidated quickly.

The speed at which these events occurred became another unique factor that sets these recent bank runs and failures apart. Previous bank runs could take months to play out, whereas these three (3) financial institutions were shuttered in a matter of days. If crypto is to truly become the future of money, and take a leadership position as a medium of exchange, proponents, developers, and investors need to take note of the lessons that can be learned from this experience.

Risk management is imperative. Time and again, as these banks collapsed, in addition to assigning blame to the crypto sector, it became apparent that risk management was questionable in at least some cases. Silvergate, by its very nature, had became heavily exposed to the crypto sector (with FTX as a large customer) during the recent bull market, Silicon Valley Bank made a large bet on low-interest instruments that lost value quickly, and Signature Bank had been the target of multiple investigations in the past; entering the crypto market only amplified this scrutiny.

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Crypto organizations have received a sharp wake-up call during the last year or so, especially as U.S. regulators have cracked down on the sector at large. Setting aside some opinions that this is a targeted campaign to squash the U.S. crypto space, the core takeaway from these recent incidents is that risk management needs to be a priority for financial institutions, fiat or crypto-based. Moving fast and breaking things might be a great ethos for technology firms, but for financial actors, more prudence would be well advised.

Liquidity matters. As financial institutions, crypto and fiat alike, have experienced during the era of rapid rate hikes, such a quick change in the interest rate environment can have a dramatic effect on the financial viability. Managing redemptions and withdrawal requests are part of the fundamentals that any firm seeking to take deposits and make loans need to 1) fully understand and 2) actively manage. Ultimately, and based on the evidence and commentary that has been made public to date, the failure of at least SVBVB +1.4% and Signature were driven in large part by the pace of withdrawal requests and the inability of management to fulfill said requests without destabilizing the institutions.

Stablecoin issuers, including Circle, which was revealed to have over $3 billion on deposit at SVB, should take note of these events, as well as the implications it will have on this market going forward. Already under scrutiny and investigation on multiple fronts, stablecoin issuers have quickly gone from being perceived as a calmer version of crypto to one that has attracted the ire of regulators. Combined with the recent regulatory announcements that cautioned and warned financial institutions of the risks of serving crypto organizations – including stablecoin issuers - liquidity needs to be monitored more than ever.

Redundancy plans. As hopefully should be self-evident at this point, especially given the speed with which banking institutions collapsed over a single weekend, investors and institutions both need to have contingency plans in place to deal with such market volatility. This idea can take many different forms depending on the institution in question, but should involve 1) access to liquidity sources, 2) ways to communicate plans and updates to investors, and 3) a real-time financial reporting protocol to both inform and potentially reassure investors and regulators.

Crypto firms would be well advised to follow many of these same recommendations, especially for crypto firms seeking to issue coins and/or tokens to be used as a medium of exchange. Currency, and financial firms more generally, rely on the confidence and trust placed in them by users and depositors, and stablecoin issuers – already on the hot seat from a regulatory perspective – should take special note. Establishing contingency plans, and communicating these plans out to the marketplace – especially in periods of uncertainty – should prioritized moving forward.

Financial conditions continue to be fluid, and crypto has an opportunity to learn from the mistakes of others to build stronger and more resilient applications as a result.

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