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After FTX collapse, cryptocurrency sector fights back

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A screen grab from the FTX website last week. The exchange platform's failure has hit the sector
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The failure of the FTX platform has undermined investor confidence and threatened the young cryptocurrency sector, pushing its main players to mobilise to save it.

The boss of the largest cryptocurrency exchange platform, Binance, did everything to reassure investors on Tuesday.

“The projects that survive this difficult time will be much stronger later on,” said Changpeng Zhao in response to questions from Internet users on Twitter.

But for now, the market is shaken.

Cryptocurrencies are valued at $870 billion, according to data from Coingecko, a site that lists more than 13,000 of them through 600 exchanges.

Less than ten days ago it was over $1 trillion, and at its highest a year ago, $3 trillion, most of which evaporated as bitcoin prices crashed (- 74% over one year), but also Ethereum (-73%) or Dogecoin (-67%).

The bankruptcy of FTX, which even in early November was still considered one of the most reliable platforms, is a reminder to investors of the sector’s uncertainty.

The company must liquidate its cryptoassets and its stakes in companies to pay off its creditors, flooding the market.

Cryptocurrencies are already recovering from a similar crisis in the first half of the year when the cryptocurrency Terra saw its price collapse, dragging bitcoin down with it.

– ‘Pour water on fire’ –

But this time around, FTX was an even bigger player.

“There are parallels to be drawn with Lehman Brothers”, the Wall Street giant whose bankruptcy in 2008 amplified the financial crisis, said Walid Koudmani, analyst at XTB, who told AFP that the possibility of an outright end to cryptocurrencies may even arise.

The fall in cryptocurrencies, however, comes in a rising global market, and seems to indicate that cryptoassets are not yet significantly correlated with the real economy.

“But I don’t think it’s going to fail as an industry, or as a concept,” said Koudmani.

For many observers, the survival of the sector will see a calming down period far from those first decentralised and deregulated ideals.

In 2017, bitcoin saw its price soar before collapsing, but after several lean years, nicknamed “crypto winter”, it came back with a vengeance at the end of 2020, rising to a record almost $65,000 at the start of 2021.

Marion Laboure, analyst at Deutsche Bank, said she believed the setbacks of FTX would  help clean up the sector.

“We believe this second ‘crypto winter’ will be a net positive because the FTX collapse will edge the crypto ecosystem closer to the established financial sector,” she said.

For now “market concentration is greater than ever, with Binance being the biggest winner”, Laboure said.

“They’re trying to pour water on the fire, but if you followed the FTX situation, Binance had quite an important role,” added Koudmani

– Platforms in turmoil –

It remains to be seen whether the current main players, exchange platforms such as Binance and Coinbase, will be among the survivors.

They allow users to buy and sell cryptoassets, but also offer more or less complex derivative products on these already very volatile assets, and are at the heart of the ecosystem.

But they are often based in regions with loose legislation: FTX is headquartered in the Bahamas, while Binance has no centralised headquarters, making the job of regulators difficult. 

The bankruptcy of FTX is causing some users to withdraw their funds because they fear that their buying platform has also used their cryptoassets to invest.

Among the platforms in turmoil, the most important is now Crypto.com, whose boss has acknowledged an erroneous transfer of several hundred million dollars, but claims to have recovered the funds.

Binance, for its part, claims to have the necessary liquidity to face the crisis, and says it is ready to publish “proof”.

Zhao announced on Monday the launch of a rescue fund and also proposed the creation of an industry body that would bring together the biggest players in the sector. But he also said he was going to rescue FTX early last week, before giving up due to the magnitude of the task.

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Journalists have much to lose if Twitter dies

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There has been fevered talk of Twitter's imminent demise since billionaire Elon Musk took over
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Few will lose as much as journalists if Twitter dies, having grown reliant on its endless sources and instant updates despite the dangers and distortions that come with it.

There has been fevered talk of the platform’s imminent demise since billionaire Elon Musk took over last month and began firing vast numbers of staff.

But most journalists “can’t leave,” said Nic Newman, of the Reuters Institute for the Study of Journalism. “It’s actually a really important part of their work.”

Newman was working at the BBC when Twitter started making waves in 2008 and 2009.

“It was a new Rolodex, a new way of contacting people — fantastic for case studies and… experts,” he said.

But Twitter also became a competitor, replacing newsrooms as the source of breaking news for the public when terrorist attacks, natural disasters or any fast-moving story struck.

“Journalists realised they wouldn’t always be the ones breaking the news and that their role was going to be different — more about contextualising and verifying that news,” said Newman.

It also meant journalists were tied to the platform for announcements by politicians and celebrities — most famously the dreaded late-night and early-morning tweets from Donald Trump that left hundreds of journalists sleep-deprived throughout his presidency.

– ‘Tribal melodrama’ –

The dependency has bred many problems.

New York Times columnist Farhad Manjoo spoke for many in 2019 when he wrote that “Twitter is ruining American journalism” with the way it “tugs journalists deeper into the rip currents of tribal melodrama, short-circuiting our better instincts in favor of mob- and bot-driven groupthink.”

By rewarding the most vehement voices, the platform tends to drown out the majority of the population — both moderates and non-elites.

“The debates that happen on Twitter are very much the debates of the elite,” said Newman. “It has definitely been a problem in newsrooms.”

“Paying attention only to Twitter tends to distort the way that many people, including journalists, see the world,” agreed Mathew Ingram, digital media specialist at the Columbia Journalism Review.

Though he hopes they have grown savvy enough to deal with the distortions, journalists have been subjected to a “huge tide of disinformation and harassment”.

But for all the frantic talk over Musk’s volatile tenure, many believe the site will survive.

“For the record, I don’t think it’s all that likely that Twitter will shut down anytime soon,” said Stephen Barnard, a sociologist at Butler University in the United States.

But he said journalists have good reason to fear its disappearance.

“They would lose access to what is for many a very large, powerful and diverse social network… (and) also a positive source of prestige and professional identity,” Barnard said.

“There is no real heir apparent in that space, so I’m not sure where they would go,” he added.

On the plus side, Ingram said, it could spur a return to “more traditional ways of researching and reporting”.

“Perhaps that would be a good thing,” he added.

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Medical community frets over fate of Twitter

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The social media giant symbolized by the blue bird has let go of half of its 7,500 employees, while several hundred others have resigned, creating doubts over its future
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For days, doctors, scientists and public health experts have been telling their Twitter followers where to find them on other platforms if Elon Musk’s newly-acquired company tanks.

The social media giant symbolized by the blue bird has laid off half of its 7,500 employees, while several hundred others have resigned, creating doubts over its future.

Even if it survives, the unpredictability of the new boss has raised fears his policies could profoundly alter the character of the so-called digital town square.

That would be a deep loss for medical experts, who have used Twitter since the start of the Covid pandemic as a tool to quickly gather information, share their research, communicate public health messages and forge new collaborations.

The pandemic was a “tipping point for the use of social media as a primary resource for researchers,” Jason Kindrachuk, a virologist at the University of Manitoba in Canada, told AFP.

As the coronavirus began its global march in January 2020, researchers embarked on studies to understand how the virus spreads, its health effects, and how best to protect oneself. 

They shared findings immediately on Twitter to assist the wider medical community and an anxious public, often in the form of “preprints” — early versions of scientific papers before they are submitted to a journal.

“In the middle of a pandemic, the ability to rapidly share information is critical for knowledge translation and dissemination, and Twitter is able to do this in a way that is typically not feasible for textbooks or journals,” said a commentary published in the Canadian Journal of Emergency Medicine.

The process of peer review effectively took place in real time on Twitter, with scientists publicly sharing their interpretations and critiques of each new study.

Of course, there was also a downside: unworthy work received outsized attention, and non-specialists held forth on subjects far from their areas of expertise.

– International collaborations –

On the other hand, it was thanks to Twitter that experts from around the world were able to find one another easily and team up.

“There are people that I collaborate with now that have been based on interactions that were born out of Twitter,” said Kindrachuk, who has around 22,000 followers. 

“To think that that could change in the very near future, that to me does kind of bring some feelings of concern and regret.”

For example, it was the vital work of researchers from South Africa and Botswana that alerted the world to the dangerous Omicron variant in late 2021.

The loss of Twitter would be compounded by the fact it has long been frequented by experts of another profession: journalism.

“Because Twitter is a platform that is followed by a lot of journalists, it helps, there’s a feedback loop. It gets amplified,” explained Celine Gounder, an infectious disease specialist and epidemiologist with 88,000 followers.

She added she had moved a private Twitter discussion with a dozen colleagues to Signal, and started once more posting her thoughts to LinkedIn as well as the Post News platform.

Many experts have now put their handles on rival service Mastodon on their Twitter bios, or directed their followers to their newsletters on Substack.

If Twitter doesn’t work out, “we will all adapt, we will find other social media platforms,” said Kindrachuk. 

“But it will take time and unfortunately, infectious diseases don’t wait for us to find new mechanisms to communicate.”

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A greener ride: West Africans switch on to electric motorbikes

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For many drivers in Cotonou, electric motorcycles are more a question of cost than pollution
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Beninese hairdresser Edwige Govi makes a point these days of using electric motorbike taxis to get around Cotonou, saying she enjoys a ride that is quiet and clean.

Motorcycle taxis are a popular and cheap form of transportation in West Africa. 

But in Benin and Togo, electric models are gaining the ascendancy over petrol-powered rivals.

Customers are plumping for environmentally-friendlier travel and taxi drivers are switching to machines that, above all, are less expensive to buy and operate. 

“They are very quiet and do not give off smoke,” says Govi, 26, who had just completed a half-hour run across Benin’s economic hub.

In African cities, road pollution is becoming a major health and environment issue, although for taxi drivers, the big attraction of electric motorcycles is the cost.

“I manage to get by,” said Govi’s driver, Octave, wearing the green and yellow vest used by Benin’s zemidjan taxis — a word meaning “take me quickly” in the local Fon language. 

“I make more money than with my fuel motorcycle.”

Local environmentalist Murielle Hozanhekpon said the electric motorbikes do have some disadvantages “but not on an environmental level”.

Alain Tossounon, a journalist specialising in environmental issues, said electric bikes were prized by taxi drivers as they were less expensive to maintain or run.

The cost factor has become more and more important in the face of an explosion of fuel prices this year triggered by Russia’s invasion of Ukraine.

– Credit carrot –

In Benin, an electric motorcycle costs 480,000 CFA ($737 / euros) against 490,050 CFA ($752 / euros) for a petrol-driven equivalent.

But this significant price difference is only one factor which explains the trend towards “silent motorcycles,” said Tossounon. 

Many taxi drivers are also lured by flexible credit deals — instead of making a hefty one-off purchase, many are able to get loans that they pay off monthly, weekly or even daily. 

Two companies in Cotonou have been offering electric models and say they are overwhelmed by demand. 

“The queue here is from morning to evening. Every hour, at least two roll out of the shop,” said vendor Anicet Takalodjou. 

Oloufounmi Koucoi, 38, director of another company delivering the models to Cotonou, said they had put thousands of e-motorcycles in circulation.

“The number is growing every day.” 

By assembling the motorcycles locally in Benin, his electric models are cheaper than if they had been imported. 

To attract customers, his company, Zed-Motors, offers solar panels to facilitate recharging for those who do not have electricity at home. 

For decades, Benin and its economy have struggled with power cuts. The situation has improved, but outages remain common.

In rural areas, especially, electricity remains largely inaccessible.

 – Battery change – 

In Lome, capital of neighbouring Togo, Octave de Souza parades proudly through the streets on his brand-new green electric motorcycle. 

One point in particular makes him and his wallet happy: no more fuelling up.

“All you need to do is change the battery,” he smiled. “There are sales outlets, you go there and it’s exchanged for you.” 

A recharge costs 1,000 CFA ($1.50 / euros) and can provide three days’ mobility. For the same price, Octave said, he would only be able to ride for one day using petrol, which is subsidised by the government.

Local authorities also are encouraging the switch to electric in a bid to replace old, highly polluting motorcycles. 

But some drivers remain wary of electric models, citing range anxiety — the worry of coming to a halt with a flat battery.

Taxi driver Koffi Abotsi said he struggled with the “stress” of having to quickly find a charging station so as not to break down. 

“This sometimes leads us to swap (the battery) even with 10 percent or 15 percent charge remaining so as not to have any unpleasant surprises along the way.”

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