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This is an opinion editorial by Max Keidun, the CEO of peer-to-peer bitcoin exchange Hodl Hodl.

The bitcoin lending space has suffered from several major issues in recent months and years, from the fallout of the Terra/Luna crash, impacting Celsius and BlockFi, and now FTX as well, to liquidity crunches given the sustained price drawdown, varying accusations of market manipulation and more.

All of these have led to significant losses, bankruptcies and a complete reshaping of the lending market. Many users have lost faith in bitcoin-based lending products and the market appears to be at its historical bottom, both in terms of volumes and public confidence.

As usual, the mainstream media blamed these crises on Bitcoin itself. But is any of this Bitcoin’s fault? Does it make Bitcoin any less attractive? Does it even mean that we shouldn’t consider bitcoin as lending collateral? No!Bitcoin Is Super Collateral, It’s The Lenders Who Have Failed

While Bitcoin's code is law, custodial lending platforms are trusted third parties, owned and managed by private entities. Trusted third parties are security holes. This was true before Bitcoin, and it is still true today.

Furthermore, most bitcoin lending platforms are poorly conceived, poorly developed and poorly managed. This doesn’t necessarily imply bad code. The code can be well written, properly audited and verifiably secure, but there may still be poor incentives that emerge from the design of the lending platforms. If the focus is to treat bitcoin as if it were a yielding asset, we are likely in for trouble.

The longer the “bitcoin lending” industry goes on, the clearer it becomes that most involved do not really understand how yield is generated. And as the saying goes, if you don’t know where the yield comes from, then you are the yield. What it really means is that your bitcoin is being used as the principal for risky investments, and it is likely only a matter of time before the house of cards starts to collapse.

I believe that the proper focus for integrating bitcoin into intermediated lending is to appreciate how valuable and unique bitcoin is, and to treat it as something to be borrowed against: to understand that bitcoin is super collateral. But what makes it so unique?

We can identify twelve characteristics that make it so:Bitcoin Is Liquid

Bitcoin is an extremely liquid asset. It is traded 24/7, with no weekend breaks and no banking holidays. Massive liquidity pools across a variety of fiat currencies are available globally. For lenders, this means that if you want to convert your collateral into fiat, you can do it instantly — either because the borrower has been liquidated or because the loan was repaid from the collateral.

This also allows for the hedging of risks. Bitcoin may be the only kind of loan collateral which can be instantly and dynamically hedged: a serious competitive advantage.Bitcoin Is Programmable

Bitcoin enables the creation of programmable lending products and ownership mechanisms. Among other benefits, this feature allows us to solve the problem of trusted third parties by building non-custodial lending mechanisms and storage systems. For example, we can distribute collateral claims or create conditional logic for redemption that will be automatically executed by the Bitcoin network, not the whims of a centralized financial institution.Bitcoin Is Scarce

There will only be 21 million bitcoin.Your collateral is getting more valuable over time, which means there is less incentive for you to sell, and likely more lenders who are willing to accept it. Bitcoin Is Flexibly Transparent

Bitcoin allows us to enable selective transparency of your assets when useful, but also allows complete anonymity when desired. In a lending scenario, for example, you can easily prove to a lender that you own and control the collateral under consideration.Bitcoin Is Sovereign

Bitcoin is yours. You have keys to your bitcoin just like you have keys to your house and your car. Bitcoin is your personal property. If you use a house or a car as collateral, you won't own it — your lender would. With bitcoin, you can still conditionally own it during your lending agreement. In fact, with the right tools, you can not only use but continue to use this collateral during the period of the lending agreement.Bitcoin Is Secure

Bitcoin is protected cryptographically, economically and socially. It is sensible to think of Bitcoin's lowest-level network security expanding to the set of tools built on top of it. For example, you can distribute ownership of your collateral between multiple independent parties, use offline wallets and utilize many more security methods.Bitcoin Is Market Driven

Bitcoin is the essence of a market-driven asset. The price of bitcoin reflects the market almost instantly, and it's not determined by one or several individuals. It is extremely difficult to manipulate the price of bitcoin. Bitcoin costs almost the same in fiat in any part of the world and is determined by a global market. Bitcoin Is A Real-Time Asset

Not only can we track the price of bitcoin collateral in real time, but Bitcoin's blockchain allows you to track your collateral address in real time also. Any price fluctuation can be reacted to appropriately. As mentioned, there are no weekends or holidays, and the market is always open to everyone, so nobody will close the market on a Friday and open on a Monday with different prices.Bitcoin Is Objective

Bitcoin is honest. Bitcoin in Miami costs the same amount of fiat as it does in Lugano or Riga. Bitcoin doesn't care whether you like it or not. The price of bitcoin cannot be determined by your personal views or your forecasting capabilities. To borrow against bitcoin, you only need to have bitcoin. Your credit history, social score or anything else is irrelevant to the lender as long as you have the collateral to borrow against.

Take real estate, for example. The same amount of money can buy you different properties in different countries with the same levels of economic and social development. What makes the difference then? Why can you buy a mansion on the coast of the Mediterranean in Spain or Italy and, for the same amount of money, you won’t be able to afford a proper house in the Bay Area in the U.S.?

It’s due to humans' irrational valuation capabilities. Because real estate valuation is primarily based on human factors, banks evaluate your property as either too expensive or too cheap, depending on market conditions and their plans.

Or take stocks, for example. Your stocks in a certain company can have good underlying conditions and great potential growth opportunities, but suddenly the CEO of this company can tweet some stupid thing, and you are losing money or getting liquidated. Meanwhile, Bitcoin is fair.Bitcoin Is Global

Bitcoin is globally accessible and globally distributed. For lending, this means that you can borrow remotely from anyone in the world, and you can lend money using bitcoin as collateral to anyone in the world. Bitcoin is neither limited to, nor exclusively exposed to, specific local markets.Bitcoin Is Digital

In a digital age, with digital commerce, we need digital collateral. Bitcoin is already online. It's here, on your machine, your phone, your cold wallet. Bitcoin allows you to borrow remotely and instantly. There is no need to digitize bitcoin as you need to do with real estate, land, cars or any other assets. It's already digital. Bitcoin Is Decentralized

There is no single point of failure in Bitcoin. Bitcoin has been attacked multiple times, and yet it is growing and expanding globally. No committee or person is responsible for Bitcoin. Having decentralized collateral significantly decreases your dependence on single events and failures of companies or people. You are protected by a distributed network. Will Lending Ever Match Bitcoin’s Potential?

Powerful collateral requires powerful tools. Is it possible to build lending tools that will match bitcoins' value? In order to do so, we all need to take a step back and check Bitcoin's white paper.

After reading Bitcoin’s white paper, you will understand that in order to build a successful lending product (in fact, any type of Bitcoin product!), you need to meet three main criteria. If your product has all three, congrats you have passed the test. Let's call it “The Satoshi Test.”Your service should be non-custodial. Remember: not your keys, not your coins. When using custodial lending platforms, you are exposed to the risk of losing your collateral completely. Because, as soon as bitcoin hit platform wallets, they are no longer yours. This is exactly what happened to customers of the many lending and trading platforms that have failed in 2022.Bitcoin is a peer-to-peer, electronic cash system. Once again: peer to peer. Instead of acting like a middleman, you need to provide technical tools for individuals or businesses to operate with each other. Or you can be a business that will allow customers to directly interact with your platform. A good example is a platform that allows customers to buy bitcoin directly into their own cold storage. Your platform should be Bitcoin only, meaning that the only collateral you should work with should be bitcoin. Shitcoins are risky, and shitcoins' code is a ticking time bomb. By integrating many blockchains into your product, you are exposing the most valuable to the most vulnerable.

There is an extra criteria that could be met: anonymity. If you are building non-custodial, Bitcoin-only, peer-to-peer products, this can and will allow you to offer anonymity and better privacy for your customers because security is not full without anonymity and the data of your customers should be protected, as well as their funds.

A good way to pass The Satoshi Test is to utilize multisig. Multisig is a simple and secure yet powerful tool. It allows you to offer peer-to-peer interactions to users, leverage non-custodial escrows and use only Bitcoin. It also allows you to offer better privacy for your users.

Take, for example, a multisig setup with three keys where the consensus mechanism is reached by entering at least two keys. This is called “two-out-of-three Bitcoin multisig.” In that type of setup, you — as a technical tool provider — can become one of the key holders, but you won’t have full control over customer funds (because you only have one key!), thus ensuring that these funds won’t be moved and rehypothecated. For example, the lender will have one key, the borrower will have another one, and the provider will have the third key. This kind of setup will allow users to verify that funds are only used by them, and that all parties must act according to rules in order to reach consensus, and that no single party can act in a dubious and shady way.

In fact, there are already powerful platforms that use Bitcoin multisig and offer peer-to-peer interactions. These platforms can provide lenders and borrowers from all over the world with easy two-out-of-three multisig setups, where each side (including the platform itself) has one key. The multisig is created on Bitcoin’s public blockchain, meaning that you can check your collateral at any time through any block explorer. And the best part is that no funds can be rehypothecated because the platform itself only has one key that ensures that every involved counterparty is acting in a good and professional way. Proper Lending Platforms Might Be Useful For HODLers

Although the lending market at the moment is experiencing turbulence and contagion effects, it is a good time to educate yourself about proper lending platforms that might be useful for any true HODLer in the future. As soon as we enter the next bull cycle, there will be less incentive to sell bitcoin and more interest in holding it for the long term and borrowing against it. Be prepared, because bear markets don’t last forever. HODL and learn!

This is a guest post by Max Keidun. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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How Prevent is tackling young extremism 20 years after the 7/7 bombings

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How Prevent is tackling young extremism 20 years after the 7/7 bombings

Radicalised nine-year-olds, teenagers mixing incel culture with extreme right ideologies and a Muslim who idolises Hitler – this is just some of the casework of those tasked with deradicalising young extremists in the UK.

Monday will mark 20 years since the 7/7 attacks on the London transport network when four suicide bombers killed 52 people and injured 770 others.

A year later the government set up its deradicalisation programme Prevent as part of its counter-terrorism strategy.

Sky News has spoken to two leading intervention providers (IPs) at Prevent who both say their work is getting ever more complex and the referrals younger.

The Metropolitan Police’s Prevent co-ordinator, Detective Superintendent Jane Corrigan, has also told Sky News it is “tragic” that when it comes to terrorism, “one in five of all our arrests is a child under 17”.

She believes parents should talk to their children about what they are reading and seeing online.

“Parents instinctively know when something doesn’t feel right when their child is becoming withdrawn or isolated – not wanting to engage,” she says.

More on Prevent

People worried that someone they know has thoughts that could lead to terrorism can refer them to Prevent.

File pic: iStock
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File pic: iStock

‘A pic-n-mix of ideologies’

Home Office figures show 11-year-olds are the largest age group to get referred.

Concerning cases are passed on to IPs such as Nigel Bromage who told Sky News: “Often there will be a pic-n-mix of ideologies.

“From my own examples and experience, we are aware of people looking at the incel culture and mixing that with some far-right elements.”

Jason Farrell with Nigel Bromage
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Sky’s Jason Farrell with intervention provider Nigel Bromage, who was exposed to extremism when he was a child

Incels, meaning “involuntary celibates” are men who have been unable to have a relationship with women despite wanting one and become misogynistic and hateful as a result.

Like many IPs, Mr Bromage from Birmingham comes from an extremist background himself, having once been a regional organiser for the proscribed Neo-Nazi group Combat 18.

For him too, it began as a child.

“It all started with someone giving me a leaflet outside my school gates,” Mr Bromage says.

“It told me a horrific story about a mum getting killed by an IRA bomb explosion – and at the end of the leaflet there was a call to action which said: ‘If you think it’s wrong then do something about it’.”

He developed a hatred for Irish republican terrorism which morphed into general racism and national socialism.

“At the very end I thought I was going to go to prison, or I would end up being hurt or even killed because of my political beliefs,” he says.

Nigel Bromage
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Mr Bromage says his youngest case involved a nine-year-old

Boy, 9, groomed by his brother

Mr Bromage reveals his youngest case was a nine-year-old who had been groomed by his brother.

“He was being shown pro-Nazi video games, and his older brother was saying ‘when I go to prison or I get in trouble – they you’re the next generation – you’re the one who needs to continue the fight’,” he says.

“Really, he had no interest in the racist games – he just wanted to impress his brother and be loved by his brother.”

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Every year, nearly 300 children who are 10 or younger are referred to Prevent.

Home Office figures show that over the last six years 50% of referrals were children under the age of 18.

Eleven-year-olds alone make up a third of total referrals, averaging just over 2,000 a year, with the figure rising even higher in the most recent stats.

Another IP, Abdul Ahad, specialises in Islamic extremism.

He says the catalyst for radicalisation often comes from events aboard.

Ten years ago, it was Syria, more recently Gaza.

“It is often a misplaced desire to do something effective – to matter, to make a difference. It gives them purpose, camaraderie and belonging as well – you feel part of something bigger than you,” he says.

The wreckage of a double-decker bus after the blast at Tavistock Square. Pic: PA
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Fifty-two people were killed on 7 July 2005 when four suicide bombers blew up three London Underground trains and a bus. Pic: PA

Clients want someone to ‘hear them’

Some of his clients “don’t fit into any particular box”.

“I’m working with a guy at the minute, he’s a young Muslim but he idolises Hitler and he’s written a manifesto,” he says.

“When you break it down, some people don’t know where they fit in, but they want to fit in somewhere.”

Mr Ahad says the young individual mostly admires Hitler’s “strength” rather than his ideologies and that he was drawn to darker characters in history.

Often his clients are very isolated and just want someone to “hear them”, he adds.

Read more:
What is Prevent – and why is it controversial?
PM warns of new kind of terror threat

Abdul Ahad
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Intervention provider Abdul Ahad specialises in Islamic extremism

Mr Ahad is also an imam who preaches at the Al-Azar Mosque in South Shields, a well-regarded centre for community cohesion and outreach.

He uses his understanding of the Islamic faith in his Prevent sessions to help guide his referrals away from extreme interpretations of the Koran by offering “understanding and context”.

He says: “We quote the correct religious texts – we explain their responsibility as a Muslim living in the UK and we re-direct their energies into something more constructive.”

Common theme of mental health issues

Mental health problems are a common theme among those referred to Prevent including depression and autism.

A recent inquest into the death of autistic teenager Rhianan Rudd found she took her own life after being radicalised by two white supremacists.

Her mother was critical of Prevent, as well as the police and MI5 after she had referred her daughter to the deradicalisation programme and Rhianan was subsequently charged with terrorism offences.

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Last month a coroner found some failings in the processes around protecting Rhianan, but none of them attributable to Rhianan taking her own life.

Det Supt Corrigan says a referral doesn’t mean individuals end up being arrested or on an MI5 watchlist.

She says: “You’re not reporting a crime, but you are seeking support. I would say the earlier you can come in and talk to us about the concerns you have the better. Prevent is just that – it is a pre-criminal space.

“It’s tragic when you see the number of young people being arrested for very serious charges. Just look at terrorism – one in five of all our arrests is a child under the age of 17. We need to think about how we respond to that.”

Prevent has been criticised for failures such as when Southport killer Axel Rudakabana failed to be recognised as needing intervention despite three referrals, or when MP David Amiss’ killer Ali Harbi Ali went through the programme and killed anyway.

Axel Rudakubana. Pic: Merseyside police
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Axel Rudakubana failed to be recognised as needing intervention despite three referrals. Pic: Merseyside police

It’s harder to quantify its successes.

Mr Ahad says he understands why the failures hit the headlines, but he believes the programme is saving lives.

He says: “I think the vast majority of people get radicalised online because they are sitting in their room reading all this content without any context or scholarly input. They see one version of events and they get so far down the rabbit hole they can’t pull themselves out.

“I really wish Prevent was around when I was a young, lost 15-year-old because there was nothing around then. It’s about listening to people engaging with them and offering them a way of getting out of that extremism.”

File pic: iStock
Image:
File pic: iStock

‘Radicalisation can happen in days to weeks’

Det Supt Corrigan says: “I’ve sat with parents whose children have gone on to commit the most horrendous crimes and they all spotted something.

“Now, with hindsight, they wished they had done something or acted early. That’s why we created this programme, because radicalisation can happen in days to weeks.”

Twenty years on from 7/7 the shape of the terrorist threat has shifted, the thoughts behind it harder to categorise, but it is no less dangerous.

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Volpe toss hits Judge as sloppy Yanks fall again

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Volpe toss hits Judge as sloppy Yanks fall again

NEW YORK — A blunder that typifies the current state of the New York Yankees, who find themselves in the midst of their second six-game losing streak in three weeks, happened in front of 41,401 fans at Citi Field on Saturday, and almost nobody noticed.

The Yankees were jogging off the field after securing the third out of the fourth inning of their 12-6 loss to the Mets when shortstop Anthony Volpe, as is standard for teams across baseball at the end of innings, threw the ball to right fielder Aaron Judge as he crossed into the infield from right field.

Only Judge wasn’t looking, and the ball nailed him in the head, knocking his sunglasses off and leaving a small cut near his right eye. The wound required a bandage to stop the bleeding, but Judge stayed in the game.

“Confusion,” Yankees manager Aaron Boone said. “I didn’t know what happened initially. [It just] felt like something happened. Of course I was a little concerned.”

Avoiding an injury to the best player in baseball was on the Yankees’ very short list of positives in another sloppy, draining defeat to their crosstown rivals. With the loss, the Yankees, who held a three-game lead over the Toronto Blue Jays in the American League East standings entering June 30, find themselves tied with the Tampa Bay Rays for second place three games behind the Blue Jays heading into Sunday’s Subway Series finale.

The nosedive has been fueled by messy defense and a depleted pitching staff that has encountered a wall.

“It’s been a terrible week,” said Boone, who before the game announced starter Clarke Schmidt will likely undergo season-ending Tommy John surgery.

For the second straight day, the Mets capitalized on mistakes and cracked timely home runs. After slugging three homers in Friday’s series opener, the Mets hit three more Saturday — a grand slam in the first inning from Brandon Nimmo to take a 4-0 lead and two home runs from Pete Alonso to widen the gap.

Nimmo’s blast — his second grand slam in four days — came after Yankees left fielder Jasson Dominguez misplayed a ball hit by the Mets’ leadoff hitter in the first inning. On Friday, he misread Nimmo’s line drive and watched it sail over his head for a double. On Saturday, he was slow to react to Starling Marte’s flyball in the left-center field gap and braked without catching or stopping it, allowing Marte to advance to second for a double. Yankees starter Carlos Rodon then walked two batters to load the bases for Nimmo, who yanked a mistake, a 1-2 slider over the wall.

“That slider probably needs to be down,” said Rodon, who allowed seven runs (six earned) over five innings. “A lot of misses today and they punished them.”

Jazz Chisholm Jr.’s throwing woes at third base — a position the Yankees have asked him to play to accommodate DJ LeMahieu at second base — continued in the second inning when he fielded Tyrone Taylor’s groundball and sailed a toss over first baseman Cody Bellinger’s head. Taylor was given second base and scored moments later on Marte’s RBI single.

The Yankees were charged with their second error in the Mets’ four-run seventh inning when center fielder Trent Grisham charged Francisco Lindor’s single up the middle and had it bounce off the heel of his glove.

The mistake allowed a run to score from second base without a throw, extending the Mets lead back to three runs after the Yankees had chipped their deficit, and allowed a heads-up Lindor to advance to second base. Lindor later scored on Alonso’s second home run, a three-run blast off left-hander Jayvien Sandridge in the pitcher’s major league debut.

“Just got to play better,” Judge said. “That’s what it comes down to. It’s fundamentals. Making a routine play, routine. It’s just the little things. That’s what it kind of comes down to. But every good team goes through a couple bumps in the road.”

This six-game losing skid has looked very different from the Yankees’ first. That rough patch, consisting of losses to the Boston Red Sox and Los Angeles Angels, was propelled by offensive troubles. The Yankees scored six runs in the six games and gave up just 16. This time, run prevention is the issue; the Yankees have scored 34 runs and surrendered 54 in four games against the Blue Jays in Toronto and two in Queens.

“The offense is starting to swing the bat, put some runs on the board,” Boone said. “The pitching, which has kind of carried us a lot this season, has really, really struggled this week. We haven’t caught the ball as well as I think we should.

“So, look, when you live it and you’re going through it, it sucks, it hurts. But you got to be able to handle it. You got to be able to deal with it. You got to be able to weather it and come out of this and grow.”

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Former White Sox pitcher, world champ Jenks dies

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Former White Sox pitcher, world champ Jenks dies

Bobby Jenks, a two-time All-Star pitcher for the Chicago White Sox who was on the roster when the franchise won the 2005 World Series, died Friday in Sintra, Portugal, the team announced.

Jenks, 44, who had been diagnosed with adenocarcinoma, a form of stomach cancer, this year, spent six seasons with the White Sox from 2005 to 2010 and also played for the Boston Red Sox in 2011. The reliever finished his major league career with a 16-20 record, 3.53 ERA and 173 saves.

“We have lost an iconic member of the White Sox family today,” White Sox chairman Jerry Reinsdorf said in a statement. “None of us will ever forget that ninth inning of Game 4 in Houston, all that Bobby did for the 2005 World Series champions and for the entire Sox organization during his time in Chicago. He and his family knew cancer would be his toughest battle, and he will be missed as a husband, father, friend and teammate. He will forever hold a special place in all our hearts.”

After Jenks moved to Portugal last year, he was diagnosed with a deep vein thrombosis in his right calf. That eventually spread into blood clots in his lungs, prompting further testing. He was later diagnosed with adenocarcinoma and began undergoing radiation.

In February, as Jenks was being treated for the illness, the White Sox posted “We stand with you, Bobby” on Instagram, adding in the post that the club was “thinking of Bobby as he is being treated.”

In 2005, as the White Sox ended an 88-year drought en route to the World Series title, Jenks appeared in six postseason games. Chicago went 11-1 in the playoffs, and he earned saves in series-clinching wins in Game 3 of the ALDS at Boston, and Game 4 of the World Series against the Houston Astros.

In 2006, Jenks saved 41 games, and the following year, he posted 40 saves. He also retired 41 consecutive batters in 2007, matching a record for a reliever.

“You play for the love of the game, the joy of it,” Jenks said in his last interview with SoxTV last year. “It’s what I love to do. I [was] playing to be a world champion, and that’s what I wanted to do from the time I picked up a baseball.”

A native of Mission Hills, California, Jenks appeared in 19 games for the Red Sox and was originally drafted by the then-Anaheim Angels in the fifth round of the 2000 draft.

Jenks is survived by his wife, Eleni Tzitzivacos, their two children, Zeno and Kate, and his four children from a prior marriage, Cuma, Nolan, Rylan and Jackson.

The Associated Press contributed to this report.

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